Payroll Fraud. Whistleblow… Or Not

Another Question from one of our readers:

Hi, my name is Jeanette and I need some advice. I really don’t know who I can talk to about this so maybe you can give me some advice. I work for a large company and my position is Payroll Clerk. I have a boss over me and he is the Payroll Director and he reports directly to the Chief Financial Officer. I think the Payroll Director is committing fraud by making checks out to people for amounts under $1,000.00 and having the Chief Executive Officer sign them.

We don’t require two signatures if the amount of the check is less than $1,000.00. The Chief Executive Officer really likes the Payroll Director so she would never question him about it. The checks don’t have to be signed by the Chief Financial Officer, so he doesn’t see them.

We are supposed to have an internal audit system in place so this can’t happen, but when your Payroll Director audits the bank statements against the checks he can catch the fraudulent checks and not report the discrepancy.

The reason I think he is doing this because I was over in the CEO’s office dropping off some mail and the CEO handed me three checks she signed. I am the one who processes all of the employee’s payroll inquiries. I was sick yesterday so I understand my boss would have processed the payroll inquiries because we try to get the problem corrected within 24hours. I ran into one of the employees whose check I had just picked up and told the employee she could pick up her check up before 5:00pm. The employee looked at me strangely and said, “What are you talking about. I don’t have a check coming – I was paid correctly”. I thought that was strange, so I called the other two employees that the checks were made out to and guess what, they never submitted a payroll inquiry either. I knew then something was going on.

My boss came in frantic asking about the checks and wanted to know where the checks were? I said, “I put them on your desk”. He said thank you and then asked me, “Did you contact the employees?” I responded back, “No, I thought that you were handling the checks. I can if you want me to”. He got nervous, and responded, “Oh no, that is okay I will handle it, thanks”.
I know I am right about my boss stealing funds. Here is my question. Who should I go to and report my suspicions? I fear for my job. My boss is well liked by both the CEO and CFO. I hope you can help me. I can’t wait to hear back from you. Thanks, Jeanette

 

Hi Jeanette,

Wow, it sounds like there are some major things going on within your organization.

I just want to summarize for you what I understood you to say. You think your boss is embezzling money from the organization. There is an internal audit mechanism in place, but it is circumvented because the person cutting the fraudulent payroll checks is the same person who does the bank account reconciliations. So this makes it easy for them so they can catch what is done and cover it up.

Your question is: Who should I go to and report my suspicions?

Jeanette, you need to report this to the Chief Financial Officer immediately!

He/she is in charge of the overall financial responsibilities of the organization and you work in a department that he is responsible for. Not only that, this individual is your bosses’ boss.

Do not fear for your job.

It is against the law to retaliate against someone for turning someone in for violating company policy and for breaking the law. You are doing the right thing by speaking up.

I would document what has happened in writing.

• Be clear.
• Concise.
• Specific.
• Make sure you include the names of individuals you spoke with and the dates and times.

It’s better to document it while it is fresh in your mind.

By doing this, you can give it to the Chief Financial Officer in writing and you can of course verbally convey this when you meet.

We promise you, the Chief Financial Officer will ask you to document it. Express your fear of losing your job by coming forward. Do nott be surprised if the Chief Financial Officer asks the Director of Human Resources to sit in with you when you meet. The Director of Human Resources will ultimately be the one conducting the investigation.

These are very serious allegations and not only that; criminal charges could be filed depending on the findings and outcome of the investigation. You just need to know you did what was right.

I hope this answers your question. Please keep us posted. Good luck!

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