Name two common red flags of payroll fraud?

• A. Forensic accounting of vendor payments and bank reconciliations.
• B. Timely payroll processing and uniform overtime hours.
• C. Duplicate payroll payments and ghost employees; inconsistent time records.
• D. Strict segregation of duties and password controls.

Answer: (C)

Payroll fraud tends to show up when the payroll data doesn’t align with who actually works. Paying someone twice or paying a worker who doesn’t exist (ghost employee) are classic signals that money is leaving the system without legitimate work backing it. Inconsistent time records—hours that don’t match approved schedules or what others report—point to manipulation of timesheets or fraudulent entries. Other options describe safeguards or general processes rather than warning signs, so they aren’t as indicative of fraud. Together, duplicate payments, ghost employees, and inconsistent time records most clearly signal payroll fraud risk.