Payroll Fraud Risk: HR Payrates vs Accountant Hours

Payroll Fraud: Why HR Should Enter Payrates & Accountants Only Enter Hours

Payroll systems are fraud magnets – but proper segregation of duties (SoD) stops it cold.

HR enters payrates (fixed employee data like $25/hr base).
Accountants enter hours only (variable time punches).
Let one person do both? Instant risk for inflated rates + hours = embezzlement. Our 60-second video explains – ideal for business owners and forensic audits.

The Payroll Fraud Triangle: Opportunity via Poor SoD ACFE reports payroll schemes cost $50B+ yearly. Key vulnerability:

HR Role: Input payrates (salary, overtime multipliers) – verified against contracts. –
Accountant Role: Input hours/approvals – no access to change rates.
Fraud Scenario: Single user jacks rates 20% + pads hours undetected.

Takeaways

HR: Payrates entry (secure, audited quarterly).
Accountant: Hours only (time clocks, approvals). –
Red Flag: Combined access logs in payroll software.
Fix: Role-based permissions (e.g., ADP, QuickBooks).

Implement Today

Review access:

Who edits rates vs. hours?
Add approvals/workflows.
Forensic audit?

Why should HR enter payrates and accountants only enter hours?

Segregation of duties prevents fraud. HR verifies fixed payrates from contracts; accountants input variable hours. Combined access lets one person inflate both undetected.

What payroll fraud happens without SoD?

Employees/vendors overstate rates + pad hours (e.g., $25/hr → $30 + 10 extra hours/week). ACFE: Top scheme, averaging $100K loss per case.

How do I check payroll access logs for fraud?

Review software audits (ADP/Paychex): Flag users editing both rates/hours. Forensic tools reconstruct changes – we do this in embezzlement probes.

What are red flags in payroll rate/hour entry?

Rate changes without HR approval, hours exceeding norms, unverified overtime. Cross-check BLS medians ($25-60/hr by role).

How does Hovland Forensic fix payroll SoD issues?

Audit systems, implement role controls, quantify losses via data analytics. Get rebuttal reports for disputes – free initial consult available.