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Chapter 6 Notes

Chapter 6 Notes - Chapter 6 Payroll Schemes Payroll Schemes...

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Chapter 6 –Payroll Schemes Payroll Schemes – Similar to billing schemes in that they are based on a fraudulent claim for payment that causes the victim to unknowingly make a fraudulent disbursement. 1. Payroll Scheme Data a. Frequency and cost: 20% of cases at about $90,000 b. Detection i. Detected by external audit at twice the rate of all occupational frauds ii. Half as likely to be detected by internal controls. c. Perpetrators of Payroll Schemes: 62% management and owner/executive d. Victims: 45% were small organizations Payroll Schemes – may be identified as occupational frauds in which a person who works for an organization causes that organization to issue a payment y making false claims for compensations 1. There are three main categories of payroll fraud a. Ghost Employee schemes b. Falsified hours and salary schemes c. Commission schemes Ghost Employees – refers to someone on the payroll who does not actually work for the victim company 1. May be fictitious or real and they simply do not work there.
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