Question

Connie works in the Human Resource department of a company and is

head of payroll. She needs some extra money and so she creates bank accounts in the name of employees who get fired or who leave the companyvoluntarily. Then she has those people stay on the payroll in order to have fraudulent payroll checks or bank transfers made to these people, but the checks or the transfer (direct deposit) goes to those bank accounts that Connie created in those names at the banks where she set them up (and she has her name on those account also - so she has access to the money). Unfortunately for the company this goes on for 5 years before the scheme is uncovered and Connie is caught.
Describe:
What type of fraud is this known as?
What do we call the employees that Connie was paying to accounts she controlled?
The fact that this took 5 years to catch indicates what?
Speculate as to what the company failed to do, in general.

Answer 1

Step-by-step explanation:

A This scenario describes a payroll fraud ; This is a form of fraud where an employee or an employer manipulates the payroll system in order to fraudulently receive an un earned wages.

B The employees that Connie was paying to their account that she controls are called Ghost employees. These are fictitious person put on a payroll for fraud purposes.

C The fact that it took the company 5 years to discover the fraudulent practice indicates a weak internal control environment

D

1. Some of the actions that the company failed to do are
2. No proper authorization in place before employees are added to payroll
3. No segregation of duties as Connies appears to have been the person that add employees to payroll , approve and also disburse salary
4. There has been no headcount of employees for a long time
5. The entire payroll system has not been audited and reviewed for a long time