Dealing with Payroll Fraud

By Charles K. Trainor

Autumn has arrived, and district activities are in full swing. Days are shorter, nights longer, and youngsters are looking forward to Halloween. Dressed in costumes, communing with ghosts and goblins, they roam the neighborhood gleefully demanding candy and other treats.

Although the ghosts of Halloween vary from short and sweet to downright terrifying, they all disappear by the first of November. Unfortunately, there are other types of ghosts that do not.

Ghost employees

Believe it or not, ghosts can haunt school districts all year long. You say you don’t believe in ghosts? Well, ghost employees are real, and their tricks can play havoc with your district’s payroll and budget.

Who are ghost employees? Some are individuals who are enrolled on the district payroll but who do not actually work for the district. Typically, a friend or relative within the business office adds the name to the payroll without official approval. The ghost employee may keep the whole paycheck or, in some cases, split the proceeds with the payroll accomplice.

Alternatively, a ghost employee may be a legitimate employee who doesn’t show up for work but who still collects a paycheck. Also, fraudsters sometimes use a deceased employee’s information to arrange automatic payroll deposits that are directed to a bank account under their control.

Absent actual fraud, if a deceased employee is not removed from the payroll and other records, the district may unwittingly continue to pay taxes and health insurance premiums long after the employee’s demise. 

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