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HR Magazine, October 2003 - Cover Story

By Robert J.Grossman  10/1/2003
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HR Magazine, October 2003

Vol. 48, No. 10

The Five-Finger Bonus

Minimizing Moral Hazards in HR

To help prevent abuses within your HR and/or payroll department, consider implementing the following fiscal controls:

  • Make everyone on the payroll at some time each year identify themselves with a drivers license before paying them. Check out employees who have the same address. HR embezzlers sometimes create ghost employees, whose checks are mailed to the HR employees home.


  • Look at canceled payroll checks periodically. You usually see one signature. If you see a second signature and its been endorsed from one employee to another, check further.

  • Check salaries of all employees to see if theyre making more money than they should be, or if theyve received unaccounted-for bonuses.

  • Compare employee addresses with vendor addresses. If you dont test and re-test your controls, youll never know if theyre effective. And it pays to be unpredictable.

I try to convince managers to do something out of the ordinary, advises Ray OHara, vice president, Western Region, Pinkerton Consulting and Investigation in Carlsbad, Calif. Change your habits, look at things you usually let pass.

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