Leon Jones worked in the warehouse of a large building supply company. One day he unexpected left for Fiji, never to return. His supervisor seized the opportunity to continue submit time cards for Leon to the payroll department. Each week, as part of his normal duties, the supervisor received the employee pay cheques from payroll and distribute them to the workers on his shift. As Leon was not present to collect his pay cheque, the supervisor forged Leon's name and cashed it.

Required: Describe two control techniques to prevent or detect this fraud scheme. (10 marks, maximum 300 words)

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Business

Alexia

18 June, 05:29

Leon Jones worked in the warehouse of a large building supply company. One day he unexpected left for Fiji, never to return. His supervisor seized the opportunity to continue submit time cards for Leon to the payroll department. Each week, as part of his normal duties, the supervisor received the employee pay cheques from payroll and distribute them to the workers on his shift. As Leon was not present to collect his pay cheque, the supervisor forged Leon's name and cashed it.

Required: Describe two control techniques to prevent or detect this fraud scheme. (10 marks, maximum 300 words)

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Arden · Answer 1

This is an example of payroll fraud.

Pay roll fraud is a fraudulent practice where an employees take an advantage of a loophole in the internal control system to claim payment that they are not entitled to. One way of practicing it is by keeping record ghost workers

Two methods of controlling it are

A clock - in-system : This requires an employee to use a unique pass code to sign in and our of work. Some technology even finger print for this purpose which strictly restrict signing in to the assigned user. This information are used for payment process

Another method is the direct deposit of pay checks into employees bank account. This method will prevent and other person to divert pay checks for other use.