How To Avoid Salary Fraud and Fake Employee Claims

Asset misappropriation, fraudulent statements, corruption and even collusion may occur in your business activities. Of course these can affect  the company's performance in achieving its goals.

In this article, we will discuss one of the most common incidents that often occurs in a company - falsification of proof of payment and salary fraud, to gain personal and organizational benefits. What are the characteristics of counterfeiting? Let’s dive into them.

Receipts and Their Policies

Companies provide benefits to their employees in the form of health facilities, melas and drinks for employees, mobile credit and internet packages, transportation facilities and many others. The processes to claim these benefits can be carried out through employee claims procedures, using receipts, notes, paid invoices, or other valid proof of payment.

Receipt is proof of purchase or payment that has been approved, which is divided into two parts, where the right side will be kept by the payee and the left side will be received by the buyer or customer. Receipts have special characteristics such as:

1. There is a receipt issuance serial number as proof of data collection;
2. Consisting the date and year the receipt was issued;
3. Consisting nominal amount relating to the value of goods or services;
4. There is a description specifying related goods and services along with their quantity;
5. Signature, clear name and stamp of the related company; and
6. Duty stamp is affixed with value according to government regulations (physical or electronic stamp).

The same applies to other proof of payment such as invoices and notes. The two documents are usually made on a copy sheet which serves as a proof in billing and bookkeeping.

Both receipts, invoices and notes generally require a duty stamp as proof of approval. PMK No 134 /PMK.03/2021 discusses the use of a duty stamp, which has to be fully affixed under the signature, intact and undamaged. 

Still according to the same regulations, the duty stamp fee is a fixed rate of Rp. 10,000 (ten thousand rupiah). The signature is affixed partly on paper and partly on the duty stamps accompanied by the date, month and year of the signing.

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Fake Claims and Salary Fraud

Fraud is a behavior or act that violates the law, which is carried out intentionally for a specific purpose, for example fraud or conveying a wrong view (mislead) to a person or group, which is carried out by people from within or outside the organization.

Fraud can be carried out intentionally in an employee claim system. A forged receipt or payment note can be used to support this action. For example on:

1. Misuse of company facilities (cars and cellphones) by showing proof of fuel filling receipts or purchasing mobile credit and internet packages for personal gain;
2. Marked up prices for purchases of office supplies on receipts and notes;
3. Collusion with vendors or contractors; and
4. Misuse of tactical funds (Petty Cash).

Fraud loopholes can also be found in payroll activities, whether it is done by employees or top management. Other examples of fraud in the wage aspect are manipulation of attendance data, fictitious overtime data, manipulation of turnover reports and fictitious lists of salary recipients.

Fraud that commonly occurs in the wage system mostly occurs due to loopy systems and lack of supervision from company management. Companies can take several steps to anticipate this, including:

1. Digitization of the Wages Ecosystem

The attendance revolution from manual to electronic machine, submitting overtime claims and calculating payroll through an integrated digital system, is designed to be more resistant to fraud. The system will automatically calculate attendance data and reports to later be reviewed by the responsible division.

2. Evaluation of the Financial Processing Structure

Manipulative activities occur because of loopholes in the current procedures. In order to prevent these activities from recurring, it is necessary to have a multi-level verification, for example the results that have been published from the system can be reviewed again by the supervisor or manager level.

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Legal Sanctions

Forgery of documents with the aim of benefiting oneself can also be categorized as a criminal act of fraud, and can be subject to Article 263 of the Criminal Code (KUHP), which reads:

1. Any person who makes a fake letter or falsifies a letter that can give rise to a right, agreement or debt relief, or which is intended as evidence of something with the intention to use or order someone else to use the letter as if the contents were true and not forged, is threatened if its use can cause harm, due to forgery of documents, with a maximum imprisonment of six years; and
2. Any person who deliberately uses a fake document or one that has been forged to pretend to be genuine shall be punished with the same penalty, if the use of said letter can cause harm.

Salary embezzlement and falsifying proof of payment is included in the category of benefiting oneself or others, which can be charged under Article 378 of the Criminal Code (KUHP), stating:

“Whoever with the intent to unlawfully benefit himself or others by using a false name or false prestige (hoedaningheid); by means of deception, or a series of lies, inducing another person to hand over something to him, or to give him a debt or write off a debt, is threatened, for fraud, with a maximum imprisonment of four years."

Then in Article 374 of the Criminal Code reads:

"Fraud committed by a person holding the goods in connection with his work or position or because he received a monetary wage, is punishable by imprisonment for a maximum of 5 (five) years".

Disgraceful activities such as embezzlement of funds, mark-up of transaction values, forgery of signatures, manipulation of attendance, system breaches and many more, can be anticipated by everyone involved in the company's operations. As long as it is handled correctly and responsibly. 

Ensuring all systems are automated and initiating changes to a digital system is not an easy thing. Therefore, it is important for businesses to choose platforms and software that suit their business needs. Especially for growing businesses to find a platform that could accommodate the growing number of teams and their expenses.

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Automate Your Claim Processes with Aspire Claim Management

To facilitate all of this, Aspire provides claims management features and expense management as part of Aspire's all-in-one financial platform. The difference that you can feel right after switching to Aspire claims management includes:

• Automating collection of bills and receipts for each incoming claim
• Separated reports based on the expenses of each team, division, employee or service provider (vendor/supplier)
• Approval system with real-time notifications to control spending efficiently 
• Disbursement of funds automatically if the reimbursement claim are within predetermined conditions and limits
• Direct integration with bookkeeping softwares to avoid data entry mistakes and reduce costs and time needed to process claims

Claims management systems can be applied early to manage finances easier as the company grows. While the time needed to process claims is insignificant when the team members are still few, it will continue to increase as the number of employees grows. Therefore, start your finance management automation now to simplify the company's financial processes in the future and reduce risks of fraud or manual errors.