Top 10 Risk Management Articles from 2014

By Lowers & Associates,

risk management articles

We’re pleased to kick off the new year by sharing our most-read blog posts from the Risk Management Blog in 2014.

1. Protecting Against Ghost Employee Fraud

Payroll fraud accounts for about 9.3% of occupational fraud at a cost of over $300 million per year across all types of organizations. One of the most common forms of payroll fraud is the use of “ghost employees” to divert money to fraudulent identities. Like all organizational frauds, this is a hidden crime that can best be prevented by controls designed to expose all payroll transactions.

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2. Key Components of a Fraud Risk Prevention Policy

In this post, we offer an overview of the elements of a fraud prevention program that would be useful in any organization. Summarized from, Managing the Business Risk of Fraud: A Practical Guide, produced by a consortium of associations, the guidelines point to specific steps managers can take to implement an effective fraud prevention program.

Read full post > … Continue reading

Protecting Against Ghost Employee Fraud

By Mark Lowers,

fraud perpetrators

Payroll fraud accounts for about 9.3% of occupational fraud at a cost of over $300 million per year across all types of organizations. One of the most common forms of payroll fraud is the use of “ghost employees” to divert money to fraudulent identities. Like all organizational frauds, this is a hidden crime that can best be prevented by controls designed to expose all payroll transactions.

The Ghost in the Payroll Machine

A “ghost employee” exists only as an identity in payroll records, although the ghost may be a real person who does not actually work for the company. The ghost employee scam is only successful if the perpetrator has unmonitored access to company systems, so it is typically an inside job. The scheme works if:

  • The ghost identity can be added to payroll records.
  • The system has to be set up to make payments to the ghost, either for false time and/or wages, or for other types of payments, e.g., expense reimbursements.
  • Payments made to the ghost must be concealed, especially from existing controls.
  • Actual disbursement – the point of the fraud – occurs.  … Continue reading