How to Avoid Payroll Fraud by Automating Time and Attendance in the Philippines

Human resources fraud has been listed as one of the most disruptive types of economic fraud especially for businesses where automating time and attendance remains to be an alien concept. This type of fraud, which includes recruiting and payroll fraud, seems to be more prevalent in the Philippines, based on the 2018 PwC Global Economic Crime Survey (GECS) Report. More respondents from the Philippines answered that they have experienced human resources fraud in their organization compared to global and Asia Pacific respondents.

The actual figures on how much money is lost by businesses in the Philippines due to payroll fraud remain to be seen. However, the Association of Certified Fraud Examiners noted that businesses are likely to lose more money from this type of fraud since it can be committed over an extended period of time. It’s therefore important to identify the common types of occupational fraud that could be affecting your company.

1. Time And Attendance Tampering

Perhaps the most common type of payroll fraud, time and attendance tampering comes in different forms.  For those using time cards for their bundy clocks, a co-worker could be clocking in or out for an employee. Meanwhile, paper-based time recording sheets are too easy to tamper with. If time and attendance records have to be inputted when working on payroll, the data can be easily manipulated.

2. Payroll Padding

Last year, the Philippine Sports Commission (PSC) divulged that some of its employees were involved in a “payroll padding scam,” amassing P15 million since 2015. The padding scheme, which forced a shake up within the PSC, revealed that the indicted employees included in the payroll names of athletes and coaches who are not with the national team anymore. The allowances were said to have been collected and deposited to an employee’s bank account. Manual payroll without proper auditing makes this type of fraud possible.

3. Ghost Employees

The Sandiganbayan couldn’t have said it better: “The existence of ghosts, or other paranormal phenomena, remains up for debate. But the existence of – and detriment caused by – ‘ghost employees’ is real.”

Ghost employees is the act of creating false employee profiles with a linked bank account to reroute wages. One common practice is using real tax identification and social security numbers so a routine audit won’t be able to spot something off. It’s a common type of fraud especially in small government agencies where automating time and attendance is unfamiliar in the Philippines. However, companies that are large enough are not immune to this human resources fraud.

Ghostbusting: Automating Time and Attendance in the Philippines

Now that you’re familiar with the most common types of payroll fraud, it will be easier to spot them and know how to avoid them. One way is not to rely on one person to do your payroll and by having a routine auditing system. However, this will take more manpower and more time and effort from your employees. A more cost-effective way to avoid payroll fraud is by automating your payroll system.

Automating time and attendance in the Philippines is easy and secure with Salarium’s payroll software system. Employees can clock in and out through a biometric device or through a digital bundy clock that can be accessed anywhere on their mobile devices or desktop computers. Salarium’s timekeeping solution is transparent and both employers and employees can monitor attendance in real time. 

Salarium’s clock-in to payout solution leaves no room for human error as everything is automatically calculated including tardiness, leaves, undertime/overtime, mandatory contributions, tax, loans, and more. Learn more about Salarium’s products and services and try it for free for 30 days.