The Lasting Impacts of Timekeeping Fraud
In down economies, instances of timekeeping fraud can increase. There have been several examples in the press recently highlighting examples of individuals submitting fraudulent timesheets to inflate their pay. In this blog, we have reported on some of them and offered tips to help prevent this kind of fraud from occurring in your organization as well. We have provided tips ranging from requiring multiple levels of approval for all employees, including managers, to deploying mobile devices for employees to record their time in the field. Implementing these measures will help prevent the fraud from occurring in the first place.
A topic that does not get as much attention as it should is the lingering impact that the acts of fraud have on the long term health of the organization. This is obviously most true in cases where the perpetrators do not get caught. The following represent three ways that timekeeping fraud can have lasting impacts on the long term health of an organization
Lack of funds for needed projects. Let's face it, every company has limits to the amount of money it can spend on projects to make itself better. In an increasingly competitive market, any money that is spent on fraudulent paychecks is money that is not being spent to innovate, putting the company at a competitive disadvantage.
Impact on pension payments. A recent news story highlights a hidden cost of timekeeping fraud. According to news reports, a Vermont state police officer has been charged with fabricating timesheets. In addition to the money that has been stolen, he stood to benefit even more, as "pension benefits are calculated on the last two years of earnings" according to WPTZ Channel 5 in Vermont. Had this individual gotten away with his crime, he would have received higher pension payments because of the timesheet fraud.
Lack of confidence in management. When instances of timekeeping fraud are brought to light, they often result in serious questions about management being raised. How could this have been allowed to happen? Why wasn't it caught before? What was management doing? In addition to the financial impact then, timekeeping fraud impacts morale in ways that are hard to measure - and hard to recover from.