Close this search box.

Detect and Prevent Payroll Fraud in Your Business

Payroll fraud is one of the most common frauds in a company, especially medium and large-scale companies because it involves complying with various rules and regulations related to payroll functions. However, it is not always an easy task to detect and prevent payroll frauds in your business, especially when you are not familiar with what you should look out for in your business.


This article will help you learn what payroll fraud is and the top strategies you should implement to prevent payroll fraud.

What is Payroll Fraud?

Payroll fraud occurs when the employees or employers manipulate the payroll system to receive the payment they have not earned, or the employers withhold the rightfully earned wages. It is difficult to detect payroll fraud because it can occur in many different forms. Hence, it is important for businesses to be vigilant and make sure there is no embezzlement in the finances.

Types of Payroll Frauds

Some of the most common types of payroll fraud are:

1. Timesheet Fraud

Timesheet fraud means the employees falsify their timesheet submissions to get paid for those hours for which they did not work. It can cause significant losses in a business. It is also possible that employees might be asking their coworkers to clock in and out for them when they are not working in an organization.


If you choose to outsource accounting services in Singapore, you are less likely to face this issue because a team of independent experts will oversee the payroll functions.

Detect and Prevent Payroll Fraud-02

2. Changing the Pay Rate

It can be classified as a high-level fraud that occurs due to corruption and fraud practices throughout an organization. It means the employees work with the payroll department to increase their salary by changing the hourly pay rate in the payroll system.


This kind of fraud typically occurs only a few days before payday and is then changed back to the original pay rate to avoid fraud detection. Hence, the regular and continuous security of the payroll system is essential to avoid fraud.


The corporate secretary is typically responsible for ensuring the security and efficiency of payroll services.

Detecting and Preventing Payroll Fraud

Now that you are familiar with the various types of payroll fraud, you can also understand and implement the following strategies to prevent payroll fraud in your business:

References Check

It is common for companies to ask for references but never check them for different reasons. You should never make this mistake and, instead, thoroughly check the provided references to ensure your new employee does not pose any risk to your company.

Limited Access

Only trained and certified professionals should have access to your HR and payroll services. Make sure that you provide restricted access to your systems as a company has a lot of confidential details like bank details. This will significantly reduce the risk of a data breach in your company.

Implement Reliable Policies

Ensure that employees are educated about payroll operations, including changing spending or personal information, in any workplace policy. You may also wish to provide a description of what constitutes payroll fraud and the consequences of being found guilty of it.


You should conduct regular training sessions. On the other hand, you can easily avoid this issue by choosing to outsource accounting services in Singapore and letting a professional and experienced firm handle your accounting and payroll services.

Detect and Prevent Payroll Fraud-03

Implement Password Management

It is important to have an effective password policy in place so that every employee has a different and strong password. The critical systems and software of your business should have two-factor authentication for better security.

Payroll Team

A company should have at least two people as part of the top-level payroll team. The purpose of having two experienced and trained individuals at the top level is to ensure transparency and make sure that no one individual is controlling the entire payroll. You should also use modern payroll systems to minimize risks and ensure compliance with the law.

Review Payroll Data

You should regularly review the payroll data to minimize mistakes and avoid legal issues in the company. Regular inspection helps you eliminate fraud in the initial stages, making sure there are no malpractices in your business.


Similarly, conducting a random review of the expense claims should also be part of your payroll policies. This will help you in collecting data more frequently and improve your payroll practices to get better results and prevent fraud.

Update Policies

Keeping your insurance up to date, when needed, will help you avoid becoming a victim of cost fraud. For example, examining your policy may reveal that you need to make changes due to inflation, resulting in increased food and service expenses.

In a Nutshell

Payroll services are an integral part of your business, so it is better to outsource accounting services in Singapore to let professional and experienced accountants and experts handle these procedures for your business. It will help you in mitigating payroll fraud and running a successful business.

Accounting Call to action

Need More Info?

Speak with our friendly team today!