Most organisations like to believe that they hired trustworthy and honest employees who will prove to be beneficial for the company in the long run. Unfortunately, no employer can guarantee their sincerity. One dishonest employee can cause massive destruction for the company; especially in a case where an employee can manipulate the accounts and payrolls – arising Ghost employee frauds.
Ghost fraud is usually used to define the fraud in which a non-existence employee who does not work in the company, receives salary and remunerations. It can be seen as the wage paid to the ghosts, which is actually collected by none other than the dishonest employees of the organization. Ghost employee frauds are often committed single-handedly; they don’t need any accomplice but having one makes it easier for them to stay unnoticed.
Detecting Ghost Employee Fraud Cases:
In simple words, ghost fraud is the assets misappropriation performed by the employees for monetary funds theft. However, sometimes these ghosts can be the ex-employees of the company getting paid for the services which they are not performing.
Ghost employee frauds can take place in different forms:
- Dissatisfied Payroll Manager:
There are many cases seen in organizations where the managers are not satisfied with their current salaries and think they deserve more. In such scenarios, the payroll managers modify the payroll records, adding a fictitious employee record. That record is then linked directly with their bank accounts.
- Multi-tiered Fraud:
Sometimes, due to strict payroll access and process, multiple employees conspire to defraud the payroll system and then divide the embezzled money equally. Such fraud isn’t possible without the help of an authorised person who is responsible for maintaining and accessing the employee record.
- Peer Compensation:
If you lack online identity verification for your business, employees can easily create a record of an original person (family member, friend, ex-employee etc.) in the system so that they can benefit from the paycheck received from the company. However, it depends on employees whether to keep it to them or share it with their peers.
How to Fix?
There are a large number of factors that influence ghost employee frauds, one being the blind trust on the payroll manager. Due to lack of proper monitoring of higher managers, adding fictitious employees into the system is made more apparent. Nevertheless, such activities can be stopped by taking certain preventive measures.
Identifying the Fictitious employee from HR database:
Fictitious or ghost employees can be classified from the HR database in two ways:
- Identifying the employees with missing records (e.g phone number, address, SSN, etc.)
- Searching for the duplicate information (e.g. address, bank account numbers, etc.)
Analysing this information from the database, the management can easily identify if the employees meet the budget owner criteria or not. In the case of redundant employees or ambiguous information, fictitious employees are identified, mitigating the risk of ghost fraud.
Automating the Process:
Ghost employee fraud is the aftermath of improper monitoring of employees and manual payroll checks. It is difficult for the organizations to observe their payroll system 24/7 and that too manually. Automating the whole process through online identity verification of your business will be a great solution to fix this increasing ghost employee fraud. Using the AI and data computing algorithms, the system will be able to identify the suspicious2 and fictitious employee alerting the organization. Also by use of biometrics, the employees won’t be able to alter any records, e.g. employee attendance, office timings etc.
