6 Ways to Secure Payroll Processing and Fraud Prevention

6 Ways to Secure Payroll Processing and Fraud Prevention

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Payroll processing is a core function for organizations to be able to compensate their employees for the work they are doing. A payroll system also holds a massive amount of sensitive employee information.

If best practices to secure payroll processing are not properly implemented, sensitive information is left vulnerable, which can put both the employee population and the employer at serious risk of fraud, embezzlement and a host of legal issues potentially resulting in millions of dollars in damages.

To prevent that outcome from happening to your organization, you can use these strategies to help keep your payroll processing secure from inside and outside threats of fraud.

Fraud Prevention

Keep your payroll software up to date (if you are using an automated platform currently)

For those organizations who use automated software to run their payroll processing, the number one thing they need to do is make sure the software is up-to-date. This ensures that their payroll processing has all the latest deployed codes and firewalls to help prevent from devious intent from online thieves outside the organization.

Businesses should be working diligently with their I.T. department to keep up-to-date on the best security practices.

Provide common sense online security protocol for employees

Failure to secure payroll processing can often be attributed to human error. As it’s 2018, we’re still struggling to motivate our employee populations to keep online security top-of-mind. Employees who practice bad online security practices put themselves and their organization at risk to the following hazards:

  • Phishing schemes
  • Malware
  • Trojan horses
  • Spam
  • Ransomware
  • Spyware
  • Viruses and more

Human resources, I.T., and leadership need to make some decisions on what strategies and company initiatives they perform to help keep payroll processing secure from fraud by putting data security at the forefront of their operations.

 Restrict payroll access diligently

This one should be simple to implement. Simply allow access to payroll and the sensitive information it holds to the select one or a few employees whose job it is to run processing for the organization. You’re going to have stakeholders in different departments who may need access to data in payroll, however, everyone needs to be accounted for in this process.

Organizations need to keep an updated list that specifies who has access to payroll. This will allow them to immediately check back on their list easily in the event some payroll shenanigans are afoot in the company.

Be wary of 3rd parties

It’s normal for internal people or departments to need specific information from the payroll department at various times. However, businesses are always being spammed by 3rd party companies looking to acquire the data they hold.

In the event, your organization is considering sharing payroll processing data with a 3rd party, it’s important that businesses consult with their state labor department for clarification on work-related information releases. These businesses should also create a documented procedure that forces whoever wants data from payroll to sign and acknowledge it for auditing purposes later.

Disposal of older documentation

Businesses need to keep their legal documentation cleaned up and disposed of properly. Even if the information is old, it can still lead a person with fraud on their mind to other places that can harm employees and employer interests.

Organizations should be auditing their sensitive payroll documentation held online, or hard copy in the office for older and unneeded materials. By cleaning out the older, sensitive data in their filing systems, businesses will not have to worry about it getting into the wrong hands. They will also have less to sift through when it comes to tax season or other auditing duties.

Secure your payroll area(s)

Whether the department is on-premise or located on another campus, organizations should be doing the following to their physical space to secure payroll processing:

  • Desks should be positioned so computer screens are not facing any windows or doors
  • All physical documentation should be locked up at all times when not being used
  • The doors to payroll should always be locked with access only allowed to assigned personnel
  • For offsite operations, the rules above apply

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