From time to time we are reminded of the importance of rigorous payroll processes and controls.
Last month, Sally Woodall, the former payroll manager of Hassell was jailed for three years for systematically defrauding her employer of $737,000 between April 2006 and December 2009 and from August 2010 to April 2016.
Over this period, the fraud was able to continue and was only discovered after Ms Woodall had resigned from the company. She’s not someone you might expect to commit payroll fraud. Her resume looks impressive, having worked in high profile organisations including Hassell, and experienced in a wide variety of payroll technology.
Hassell, with an employee population of 520, using modern payroll systems, this is most certainly a stand-alone payroll role. Someone would have been signing off the payroll, but did they know what they were checking?
The majority of payroll professionals are diligent, honest people with very high integrity and pride in their work. But payroll fraud is a regular occurrence in Australia. We should
certainly not assume that every person working in payroll is a potential fraudster like Sally Woodall and Sonya Causer of Clive Peeters infamy.
So the question is, how can business executives and directors put their hands on their hearts and guarantee that there is no fraud happening in their payroll? How many organisations might be like Hassell and have absolutely no idea that the fraud is being committed? How do we protect all payroll professionals by ensuring they are above suspicion?
When I write or speak about payroll fraud, I deliberately don’t talk about how the payroll fraud was committed. How the person got away with it, in Ms Woodall’s case, for a decade, and how they get caught. I never want to write a ‘how to’ manual for potential fraudsters!
But there are certain strategies that fraudsters typically use and my consulting team have developed a 7 step methodology which by running certain tests on your database and checking particular steps in a payroll process, can guarantee that your payroll operation isn’t able to be compromised by potential fraud.
The steps in our anti-fraud methodology aren’t things that a standard audit or process review might pick up on, so we encourage our clients to see it as part of their wider risk mitigation strategy. It’s not designed just to detect payroll fraud, but to eliminate the possibility of it happening and deter potential fraudsters who will know if they do the wrong thing they will be caught.
But most importantly, it assures employers that everyone in their payroll team are not, and cannot, commit payroll fraud.
We won’t be spelling out our methodology on our website for obvious reasons, but please let me know if you’d like to discuss this further for your payroll operation.
In the meantime, a big thank you to the vast majority of payroll professionals who diligently manage the payroll function in their organisations and who will never be a payroll bad news story on the front page of a national newspaper. Just the way we like it!