Preventing Timecard Falsification
Steven Elias and Steve Capper – Flexible Funding - July 21, 2017
At one time or another, just about every agency has experienced losses, known or unknown, due to timecard fraud. Yet industry-wide, little is known about how to prevent it.
Client Relations and Accounting Controls: Make sure you have a start and end time to an assignment. In your database, show a
temp assignment with an expected close date. Timecards beyond the end date are a red flag.
Print a timecard report and check with the client supervisor to see who he/she asked back for the following week. Don’t just let the client supervisor tell the temp to return. Do call your employee and communicate about the job. Temporary workers should understand overtime policy, meal and rest periods, phone numbers and procedures for calling when late or absent.
Avoid an early-in-the-week payroll. A Thursday or Friday payroll allows ample time for all timecards to be turned in. Allowing faxed timecards is dangerous. There is a greater chance that some part will be unreadable, and you cannot see if the ink is all one color. A black and white faxed card does not give you the contrast of an original. Also when timecards are faxed, there is the chance that your office personnel won’t photocopy it and send a copy to the client.
An authentic and original timecard tends to be worn and used, whereas an absolutely perfect non-crumpled card is more likely to be forged. Stay alert for smudged time sheets, misspelled words, and poor spacing of letters and numbers. Check that a form is free from erasures and amounts that have been written over.
Filling all blank spaces on the timecard with an “X” helps avoid extra hours being added after it is signed. And be especially careful about signatures if the customer hasn’t paid in a reasonable length of time.
A simple timecard numbering system is a useful control. Gaps in sequential numbers can be pinpointed, and omissions and duplications will be readily apparent.
Client Company Environments: Be alert for company environments where fraud can occur, and establish stronger controls for those situations.
During special times of crisis or pressure, there are additional opportunities to commit fraud. During events at the client’s workplace such as remodeling or retooling, or when a special project is being hurried for completion, the normal system of internal controls may be overlooked.
Any firm that habitually operates on a crisis basis with unrealistic productivity measurements or expectations is a potential problem. Inadequately supervised and staffed accounting departments which are always behind in their work and continually operating in a crisis atmosphere is also an environment for fraud. Rapid turnover of key employees is also dangerous. Inexperienced people may be placed in positions that are sometimes beyond their current capabilities.
Deterrents: Time card fraud is often not perceived as real crime, therefore you should make it known that there are criminal sanctions and civil remedies for timecard falsification. Cover it during the orientation and in an employee booklet.
Start or designate a “protection department” or assign a trusted person the responsibility of preventing timecard fraud and protecting your company interests at all levels. Make it someone’s responsibility to devise a program to meet your security needs.