Ghost Employee (a fake identity on a company’s payroll)

A ghost employee refers to a fictitious person or a fake identity that is added to a company’s payroll system, allowing for fraudulent activities to occur. This deception involves listing the ghost employee as a regular employee, entitling them to salary, benefits, and other compensations. However, in reality, this individual does not exist or perform any work for the organization.

Ghost employees are often created by individuals within the company who misuse their positions and have access to the payroll system. Their objective could be to embezzle funds by directing the ghost employee’s salary into their own accounts or diverting it to someone they know. These fraudulent activities can go unnoticed for some time as the payments are typically small, making it harder to detect. Implementing strict internal controls, segregation of duties, and regularly conducting audits can help prevent ghost employee fraud.

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