Orange Publishing hired Moe McDonnell, CFE, to investigate some large variances

Question

Orange Publishing hired Moe McDonnell, CFE, to investigate some large variances in the company’s labor costs. While looking through the payroll records for the shipping department, McDonnell noticed several employees who claimed extensive overtime during pay periods in which the company’s incoming and outgoing shipments were minimal. McDonnell pulled the timesheets for these pay periods and noticed that those belonging to the suspect employees had signatures that didn’t match the signatures on the other timesheets. What type of fraud might these findings indicate?

Explanation / Answer

Solution-

A business using timesheets are exposed to fraudulent time reporting. In this, Workers are needed to complete the timesheet with the worked hours during a particular time period.

If the hours worked are not filled by the supervisor, the worker can overstate hours worked on the timesheet. The supervisor may sign the timesheet in conspiracy with such worker or in ignorance due to poor memory or recordkeeping. Another possibility is that another employee can fill behalf of another worker even such worker does come on work and leave the place soon.

In this case, either supervisor or other workers are filling the timesheet for worker which are not actually working for specified time ,workers come and might leave early and other workers are filling sheet on their behalf and that's why there is the difference of signature.By doing this ,they are able to show more worked hours in spite of actually less working hours which will result in high labor cost and high labor variance.

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