How to prevent Payroll Fraud?

What is payroll fraud? What can your business do to prevent it?

Payroll fraud is theft from a business that occurs via its payroll processing system, usually by an employee. Miscalculations in the payroll process can cause massive issues fluctuating from financial losses to a weakened company reputation. There are many ways payroll fraud can be committed, including from salary, hourly and commission workers, as well as ways to prevent and detect it.

Spot it, stop it, and then make sure it never happens again – fight payroll fraud at your business with our top five ways

i. Check information carefully

First rule for avoiding payroll fraud is to know what it looks like and that means being able to spot the signs. To do this, you’ll need to check all your payroll information carefully. That means wages, taxes, and personal details like names and bank account numbers.

ii. Outsource payroll

Outsourcing payroll frees up internal resources, lessens the risk of penalties and can provide increased security around sensitive documents. It also can help initiate other benefits for a company, like improving direct deposit enrollment, which is cost-effective and less susceptible to payroll errors

iii. Use a time and attendance system

Installing a time and attendance system can go a long way in avoiding payroll fraud at your business. Not only does a time and attendance system work to remove the effects of buddy punching , it also records breaks, punctuality, and annual leave too – reducing your admin load while safeguarding you from payroll fraud.

iv. Improve internal controls and policies

Help companies detect cases of fraud, allow a platform for training, or if needed a channel for whistleblowing. This could include options like re-delegating authority. Warranting quality of your new policies is also important. Applying suitable monitoring and lapse strategies is imperative.

v. Review Reports Every Time

Set up a review process every pay period to help eliminate fraud and errors in the payroll. Send data to the payroll processor earlier to allow enough time to review payroll reports before printing checks or making direct deposits 

Did you know that at PAQ Group, we have an in-house Chartered Accountant (CA) that you can leverage to your advantage? What does this mean for you? This means that you get that additional business knowledge, advice and insights when you have your initial consult.

If you’re still unsure about payroll services or where to start, please don’t hesitate to get in touch with us; we’ll be happy to answer any payroll questions you may have.

About the Author

Justin Wong is the Financial Comrade at PAQ Group.


The mission of PAQ Group is to create a stress-free bookkeeping experience.


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