Fraud prevention through use of technology

The latest FraudTrack report from BDO shows that the value of fraud in the UK fell from £2.1 billion to £746.3 million between 2017 and 2018.

BDO have been tracking UK fraud cases over £50,000 since 2003, and suggest that the true scale of the fraud, bearing in mind underreporting, could actually be as high as £37.5bn.

The three most common types of fraud in 2017 were employee fraud (increasing from £83.2m to £474.3m), tax fraud (dropping £351.8m from £1.37 billion in 2016) and money laundering.

Notable cases include the Finance Director who stole £6.5 million for holidays and clothes, a West Midlands man who stole more than £2.5 million from the evangelical Christian charity he worked for, and a group of elderly nuns who are accused of fraudulently profiting by up to £31 million from the sale of a plot of land.

Sat Plaha, partner and national head of regional forensic services at BDO, added: “While the continued reduction in the value of fraud in the West Midlands may seem positive, our experience suggests that as few as one in 50 cases of fraud in the UK are likely to be reported so the figures only shine a spotlight on the visible part of a much wider problem.

“There is no chance for complacency in the face of increasingly sophisticated scams. As the largest reported fraud in the region shows, sometimes the perpetrator of fraud is not a faceless name or external scam, but an employee in a position of trust with access to key data or the firm’s financial accounts.

“Companies and organisations must continue to adopt stringent systems and provide discrete channels for employees to securely flag potential cases of fraud for further investigation.”

TENSOR WINTA.NET TIME AND ATTENDANCE SOFTWARE – HELPING YOU AVOID TIMESHEET FRAUD

Switching from a manual time and attendance management system to an automated one will save you money and time, but perhaps most importantly it will reduce the chances of several types of fraud.

Timesheet Fraud

This is when employees using a timesheet to self-report their hours will deliberately enter incorrect information in order to alter their pay cheque. For example, overtime that they didn’t do, or falsifying shifts on premium pay days like weekends and Bank Holidays. (Less overtly harmful forms include acts like taking a much longer lunch break than they recorded, or not recording the fact that they arrived 5 minutes late.)

If their manager doesn’t work alongside them (e.g. construction, some factory work sales or cleaning) then it can be very difficult to spot these fraudulent entries.

• Our Solution

Changing to an automated system means that the workers have to clock in and out every day in order to be paid correctly. Shift patterns can be entered into the software, so that it is obvious if a worker has skipped work, or is continually staying longer than they should be with no visible work output.

Clocking in and out with swipe cards or even proximity cards is not entirely free of fraudulent opportunities (since they can be swapped amongst workers), so next we will address …

Buddy punching

This has many different names, but is the phenomenon whereby staff members clock in or out on behalf of other people. For example, if their friend is stuck in traffic, or needs to go home early to deal with an issue. (Obviously, both of those scenarios would be better dealt with by getting hold of the manager.) While it is often done on that casual basis, there are horror stories of entire shifts messing around with their clockings and causing payroll havoc.

• Our Solution

Buddy punching can only happen when the clocking-in system is not directly connected to the individual. Biometrics eliminate the possibility of this fraud, since not even identical twins have exactly the same fingerprints!

Payroll fraud

Finally, there is payroll fraud. This can take many forms, but we will focus on one common payroll process in a manual system: needing to transfer every single timesheet onto the computer (often Excel) in order to create a database from which they can start to run the payroll.

Not only is this open to natural human error (in misreading illegible entries, or in entering them with a typo), but it is also a prime spot for a criminally-minded employee to deliberately alter the data. This could be for themselves, or they could be accepting money to alter it for others.

• Our Solution

Using an automated system from Time and Attendance UK removes this step completely. Our clocking data can be exported straight from the system in a format suitable for all of the major payroll systems. No more laborious transferring necessary!