It seems like every week there’s a story in the news about fraudulent activity occurring at a business. The type of fraud committed can vary widely, but according to the Association of Certified Fraud Examiners’ (ACFE) Occupational Fraud 2022: A Report to the Nations, asset misappropriation schemes, such as fraud in accounts payable and payroll, are the most common fraud schemes. The report estimates the median loss per fraud case is $117,000. Given this cost and the almost constant stream of headlines related to internal fraud, it’s important to review internal controls and consider additional measures to fight against fraud.
It’s not uncommon for fraudsters to commit multiple fraud schemes at one time. As someone continues to commit fraud without getting caught, confidence builds, and the individual often gets greedier. A way someone could expand fraudulent activity is to commit fraud in multiple areas of a business. Through years of working on fraud investigations, our teams at FORVIS have seen patterns where individuals commit fraud in accounts payable and payroll.
While there are numerous ways for someone to commit fraud in accounts payable and payroll, below are a few common schemes to watch for.
- Accounts Payable
- Fraudsters can commit fraud by submitting fake invoices more than once, perhaps first under a legitimate vendor ID and a second time under a fictitious vendor ID. This could be uncovered by looking for potential duplicate invoices.
- As a result of increased confidence and greed over time, fictitious vendors often display an acceleration pattern, which is an increase in payments over time. Examining payments over time by vendor can help identify unusual patterns that can be indicative of fraud.
- Payroll
- Fraud can be committed by submitting forged hours, such as overtime that was not worked, to receive supplemental pay. By analyzing hours for employees, patterns of excessive hours can be identified.
- It’s not uncommon that someone committing fraud will refrain from taking time off work to avoid someone else taking over their job responsibilities. Individuals who are eligible for leave time but have not taken time off can be a red flag for fraud.
How Payment Risk Analytics Can Help
Payment Risk Analytics at FORVIS uses sophisticated pattern-recognition models and proprietary techniques to examine your organization’s data. Harnessing the power of data analytics can help you pinpoint possible violations of company policies and identify patterns or trends that may be hard to find on paper.
We help identify potential red flags and visualize these higher-risk items so they are easily identified. The results are then evaluated by a Certified Fraud Examiner at FORVIS, who applies their fraud investigation experience. We then provide your organization with a detailed overview of our findings and training on how our Payment Risk Analytics dashboards can help your organization further analyze results.
For questions about our Payment Risk Analytics product line, please reach out to an Analytics professional at FORVIS or submit the Contact Us form.