Topic: Payroll Management System: An Effective Means Of Mitigating Against Fraud In An Organization
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Payroll in the sense of “money paid to employees” plays a major role in a company for several reasons.
From an accounting perspective, payroll is crucial because payroll and payroll taxes considerably affect the net income of most companies and because they are subject to laws and regulations (e.g. in the US, payroll is subject to federal, state, and local regulations).
From a human resource viewpoint, the payroll department is critical because employees are sensitive to payroll errors and irregularities: Good employee morale requires payroll to be prepared timely and accurately. The primary mission of the payroll department is to ensure that all employees are paid accurately and timely with the correct with holdings and deductions, and that the with holdings and deductions are remitted in a timely manner. This includes salary payments, tax with holdings, and other deductions..
The most common payroll fraud scheme includes Ghost Workers schemes which occur when a person not employed by the company is on the payroll. Falsified Pay is another scheme type where fraudster who inflate hours worked, Inflating benefits, Inflating pay rates and overstated salaries and Payroll tax theft. Commissions Schemes is another approach which occur when the amount of sales made or the rate of commission is fraudulently inflated.
The most daring scheme involves creation of a ghost employee. A ghost employee is someone recorded or placed aid on the payroll system, but who does not work for the business. The ghost can be a real person who knowingly or not is placed on the payroll, or a fictitious person invented by the fraudster. The fraud attacks the payroll system with false paid employees. The aim of the fraud is to have a wage paid to the ghost and collected by the dishonest employee. This is done by entering the ghost employee into the payroll system. The fraud does not require an accomplice but, depending on how wages are paid, an accomplice may make the fraud easier to conduct because it will eliminate any need to convert the payment from the ghost to the fraudster.
1.2 OBJECTIVES OF THE STUDY
- Main aim of developing Employee Payroll Management is to provide an easy way not only to automate all functionalities involved in managing leaves and Payroll for the employees of Company, but also to provide full functional reports to management of Company with the details about usage of leave facility.
- How payroll system can mitigate fraud in an organization
- Review the effectiveness of payroll system management in an organization.
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