Chronicle Editor
Alec Jemwa
GHOST employees are employees on paper only or who are not employed at the organisation but receiving salaries.
Auditing of payroll could therefore be very important to the business as the business could be losing thousands or millions of dollars.
Auditors may come up with detailed procedures to audit the payroll. Engaging those procedures assist the auditor to verify each person that worked for the company during the work time period that is listed on your payroll ledger and that the pay rate for each of your employees is accurate.
The auditor is also able to verify whether the amount paid for wages and salaries is commensurate with the recorded hours and the reported number of workers in the register.
Reconciliations are reviewed to ensure that the amount reported for wages and salaries is the actual amount paid or withdrawn from the bank.
This is all great work indeed.
The work of auditors is greatly appreciated.
However, in spite of numerous audits, large organisations, particularly governments, have a challenge of a “ghost employee”.
The situation can arise in large companies where most employees are unknown to management. Fraudsters are sometimes able to falsify personnel or payroll records to make it look as if they have a valid, paying job within a company.
Whatever form, a ghost employee takes, it is a way to steal money from a company.
Ghost workers can bleed an organisation of thousands, or even millions of dollars.
Below are some practical experiences of flushing out ghost workers:
Withhold salary
The technique involves withholding salaries for all employees in the organisation. Genuine employees are quick to make noise once the pay day is missed.
The organisation will have to ask employees to physically come to claim their salaries. Ghost workers will never come because they do not exist.
A reconciliation of those that have claimed and the one who would have not claimed is then done to flash out ghost workers. Investigate those that would have not claimed their salaries and wages.
Check for funeral and medical aid contribution
The auditor should approach the payroll with a professional skepticism. Ghost workers do not contribute to funeral and Medical Aid Societies as they are already “dead”.
At the same time fraudsters are not clever enough to complete the whole circle hence they will not make such contributions.
Check for Statutory payments
Statutory payments require that employees must register and provide personal details which in most cases will not be available for ghost workers.
Therefore a reconciliation of the Return for Statutory return (for example ITF 16, and NSSA Returns) may assist to identify possible ghost workers.
Biometric time clock system
One of the biggest issues with traditional timesheets or other time clock systems is something called “buddy punching.” “Buddy punching” refers to employees who clock in their co-workers when they are absent or running late. This is obviously a big financial problem for business owners.
Luckily, fingerprint time clock or face recognition options can help to eliminate these inaccuracies.
Leave forms
Ghost workers do not go on leave as they do not exist. Fraudsters usually overlook these finer details of payroll management. As a result, workers with unusual leave-days balance on the payroll are probably ghost workers. A sudden change of leave days on the payroll can also suggest the possibility of ghost workers as the
Unauthorised change of bank accounts
The auditors need to check unauthorised changes of bank accounts on the payroll. This might however be difficult if the organisation does not have proper pay roll procedures.
In conclusion it is important to note that in addition to the usual audit procedures, an auditor may need to go an extra mile to flush out ghost worker.
-Alec Jemwa is the Technical Manager of The Institute of Chartered Secretaries and Administrators in Zimbabwe (ICSAZ).
For your Board induction and training, finance for non-finance people, Corporate governance training contact ICSAZ on 242 700553-5
Online Reporter