Minding your own business: Preventing payroll fraud with internal controls

Small businesses are particularly susceptible to payroll fraud, and they can go under as a result. Here’s a story about a controller who used many tricks in the books to rob a medical practice and some lessons on how to detect and avoid such scams.

How would you like to double your salary? No, this isn’t about some “get-rich-quick” scheme, but it’s a case of how a controller at a medical practice took to heart this dubious route to riches and used her position to perpetrate a payroll fraud scheme against her employer. Her attempts to garner a bigger paycheck ultimately failed, but her story provides important lessons for fraud examiners investigating these types of scams.

Medical practices are often susceptible to fraud because their owners — usually physicians — are focused on patient care instead of the day-to-day operations of running a business. Often, they designate someone else to manage the practice with little oversight.