Mitigating Fraud in Statutory Payments


Statutory payments are made to employees to compensate for lost earnings when they are away from work either due to an illness or parental obligations. In Australia, statutory payments include super for employers (the minimum an employee can pay is called the Super Guarantee and currently stands at 9.5% of the ordinary time earnings of the employee), paid parental leave, redundancy pay and dad and partner pay among others.

However, these payments are often subject to fraud and can be manipulated in various ways by individuals intent on committing some kind of fraud. In this article, we will focus on some of the opportunities for fraud in superannuation payments and in the tax returns lodged with the Australian Taxation Office (ATO).

Fraud in ATO Returns

The various tax returns such as income tax returns, business activity statements (BAS), payroll tax returns and fringe benefit tax returns may be subject to manipulation if filled internally by an in-house tax accountant. Calculations might be manipulated and money siphoned off to other bank accounts, even off shore. An in-house accountant may for example update their bank account details in the ATO portal in order to redirect the tax refunds to their personal bank account.

When doing tax lodgements and amendments, it is advisable to have the returns reviewed by a senior employee that is perhaps not part of the finance department. You can also hire an outside accountant Melbourne professional or auditor to go through your returns and books to see if everything is in order.

A review of the historical trends for your ATO payments or returns may also help you determine if your current refunds are conforming to type or whether anything is amiss with the refunds. If the amounts appear unusual, they may warrant a second look.

Fraud in Superannuation Payments

Most companies use a superannuation clearinghouse when making superannuation contributions to their employees. However, in the event that you are not using a superannuation clearinghouse, you can create a validation or authentication loophole that some employees can exploit to alter superannuation details and divert super contributions to their personal bank accounts. Most employees will not notice this type of fraud as the contribution goes to a third party and they rarely check their superannuation balances on a regular basis so they are unlikely to notice if there is a missing payment. To be on the safe side, you can follow the following tips to mitigate fraud in superannuation payments:-

  • Employees should be encouraged to regularly check their superannuation accounts to determine if the payments have arrived on time.
  • Instead of making payments directly to employees super accounts, user a superannuation clearinghouse to make payments.
  • Make sure that all the rejected payments have been resubmitted correctly and successfully.
  • Ensure that you review the authorisation process for changing the employees’ superannuation details to ensure it is foolproof.

Does your business pass the prudence test? While no business is fully protected from fraud, there are measures that you can undertake to minimize the instances of fraud. The management must also review the business’ fraud tolerance and institute measures that will help mitigate fraud.

Is your business haemorrhaging money due to internal or external fraud? An accounting firm Melbourne practice can help you make sense of where the leakages are coming from so you can curtail the loopholes and alleviate fraud.

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