You are perusing through your financial statements at the end of your financial period and you keep seeing the name Bob in your Employee payroll accounts. He has consistently been paid for 12 months, but you don’t know and have never heard of any Bob in your company. Keep in mind that your company may be a large one, and you can’t possibly know everyone, but you’ve just got that weird feeling in your gut that something’s not right. You order an employee check and you find out that currently there’s no one by that name in your company. You’ve been paying salary to a non- existent person for months, if possibly, years. Congratulations.
Ghost worker fraud is when someone is recorded on the payroll system but does not work in the organization. It might be a dead or former employee, a retired employee, a fictitious person created by another, or even a real person who may be aware or unaware of the situation. Major victim is the government of your country, but many individual businesses are also affected.
Few stats on Ghost Worker Fraud…
According to the Association of Certified Fraud Examiners, in the US, it is the number one source of accounting fraud and employee theft. In developing countries worldwide, it is said to cost the governments losses in millions of dollars per month. Cameroon is said to lose about $12 million every month to ghost workers.
How then do we curb this practice?
Controls, controls, controls. This cannot be over emphasized. Internal controls on payroll systems need to be re-evaluated. Changes should be made to strengthen weak, already existing controls and new internal control systems should be built. All employees should be scanned in bio-metrically. Identity cards, pin codes, paper slips and other forms of entry cards should be used minimally with a great focus on the use of bio-metric scanners including fingerprint scanners, iris image capture, and facial recognition software. Routine checks quarterly should be carried out on employee stats and irrelevant or old data deleted.
How will this help?
There will be an increase in employee punctuality and efficiency due to the existence of audit trails through computerized data stored in immutable files.
Employee fraud will be reduced to a minimal point. Offending employees would be punished according to the Memorandum and Articles of Association of the company. In the case of governments, jail time may even be in the works.
What does this tell us? Don’t do fraud or willingly aid and abet. It usually doesn’t end well. And for companies that seem to be operating in the red, go through your internal controls. You just might find a Bob there!
