Term
| What is a Ghost Employee? |
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Definition
| An individual on the payroll of a company who does not actually work for the company. This individual can be real or fictitious. copied from the book |
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Term
What is a Rubber stamp Supervisor?
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Definition
| A supervisor who neglects to review documents, such as timecards, prior to signing or approving them for payment. |
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Term
How did Jerry Harkanell change raise his wages? Case "Say Cheese" |
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Definition
He submitted the unit's manually prepared timesheets to his supervisor, she would sign the timesheets and make copies to retain for her records, Harkanell would then alter the orginal time sheets before he delivered them to the payroll department. |
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Term
| Case "Say Cheese" How did management if out that Jerry Harkanell was altering his time card? |
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Definition
| An exception report for the month showed Harkanell working overtime on a particular pay period. The pay period coincided with a time of low occupancy in Harkanell's unit. |
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Term
How did they catch Jerry Harkanell
after he fled? |
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Definition
| His picture was on the front page of the business section of the newspaper. |
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Term
What happened to Jerry Harkanell, for payroll fraud? |
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Definition
| If he had pleaded guilty to the felony charge, the judge would have given him, 25 years, but he continued to try and get the charges dropped when another forgery claim caught up with him and he was sentenced to 35 years in prison. |
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Term
What are the
main categories of payroll fraud?
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Definition
1. Ghost Employees
2. Commision Schemes
3. Workers Compensation
4. Falsified Wages
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Term
What are the duties which should be segregated in the payroll cycle? |
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Definition
1. Authorization
to add the new employee to the payroll
2. Distribution
the delivery of payroll checks
3. Reconciliation
the records of payroll and personel records |
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Term
How do employees who work commission defraud a commpany? |
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Definition
1. Falsifying the amount of sales they have made or by falsifying the prices of items they have sold.
2. Salespersons might also change the rate of their commissions to increase their pay. |
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Term
How did Katie Jordan increase her income when one of her employees quit? |
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Definition
Katie Jordan managed a large apartment complex. Manuel quit his job, and Katie just kept sending in his timesheet and then cashing his check at the liquor store. Then she
began to alter rent payments, and hired
an assistant who did not exist. |
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Term
How did Katie Jordan get caught?
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Definition
She added an assistant. Her boss made a visit to the complex and the assistant did not have a desk? |
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Term
What happened to Katie Jordan, for adding fake employees to the payroll, and skimming rents?
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Definition
Katie was fired, she paid back $12,0000, the company filed charges, but she served no jail time. |
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Term
What are some computer tests for
detecting payroll fraud? |
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Definition
Stratify on hourly rates, hours worked, net pay amount, commission amounts overtime hours by employee |
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Term
What are the four ways that employees can
obtain authorization for a falsified time
card in a manual system |
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Definition
1. Forging a Supervisor's signature
2. Collusion witha Supervisor
3. A Rubber Stamp Supervisor
4. Failure to maintain proper controls
over payroll records. Once management
authorizes timecards they should be directly sent to payroll |
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Term
What are some reports which
can detect payroll fraud? |
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Definition
Calculate the average payroll per employee and sort from high to low
Reports high and potentially
unauthorized overtime
expenses |
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Term
What are some of the
red flags that are typically
associated with commision schemes?
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Definition
1. If commission expensesincrese as a percentage of total sales.
2. Track uncollected sales
3.Track overstated sales |
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Term
What are the four steps
to making a ghost employee scheme
work? |
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Definition
1. the authorization & information to add
a ghost employee to the payroll record
2.Provide payroll with a time record of
hours worked
3. Issuing the ghost employee a check
4. Delivery of the paycheck |
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Term
What are the method of
preventing and detecting ghost employee
schemes?
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Definition
1. periodically check payroll against personel
records
2.Comparision of payroll expenses to production
3.Hand pay checks out manually, and have
employees sign for their checks
4.Generate exception reports testing for any employee whose compensation has increased by a large percentage.
5. Compare net payroll to payroll checks issued.
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Term
What is the relative cost and frequency
of payroll frauds. |
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Definition
In the ACFE's survey payroll schemes ranked 4th amoung fraudulent disbursements in
terms of frequency. As for median loss payroll
schemes rank 3rd in an average of
$50,000 per case |
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Term
In terms of frequency of occurance
in
disbursement schemes from
highest to lowest what is the highest
to the lowest? |
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Definition
Billing 43.6%
Expense Rembursement 29.9%
Check Tampering 26.2%
Payroll 20.3 %
Register Disbursements 2.7%
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