ACC614DiscussionsWeek 4 - Discussion 2- Payroll Authorization in a Computerized System

Week 4 - Discussion 2

Payroll fraud is something that I think a person or people might easily pull off. It is still conceivable for fraud to occur, even in the case of a computerized payroll system, as the senior accountant pointed out. It may be hacked even if an automated system has a safe, password-protected system. For fraud prevention, controls should be set up to require several levels of approval from various parties. Our literature identifies the following as some of the most significant threats any business might encounter:

• “Making payments to invisible workers (non-existent employees).
• Employees who have been fired but are still on the payroll must be paid.
• It costs more than it’s worth to produce something (wrong time reporting).
• Expenses and expenditures have been wrongly accounted for.
• We are guaranteeing proper tax payment “.

Fraud may be mitigated by instituting and frequently testing measures. Checks and balances system may be maintained and data security improved by preventing a single person from completing all aspects of payroll processing. Any time payroll records need to be discarded, and care must be taken to ensure they don’t get into the wrong hands and are used fraudulently. Correct separation entails authorization by individuals who do not have payroll processing, paycheck distribution, or reconciliation responsibilities (Louwers et al., 2015). It would be best if you had a paper trail of what’s happening, so ensure your internal controls include sufficient documentation and communication. They should also undergo testing regularly to ensure everything is working well and make any necessary modifications.

Reference

Louwers, T. J., Ramsay, R. J., Sinason, D. H., Strawser, J. R., & Thibodeau, J. C. (2015). Auditing & assurance services (6th ed.). Retrieved from https://vitalsource.com