What type of fraud involves falsifying payroll records to generate paychecks for non-employees?

The ghost employee scheme is characterized by the practice of creating fictitious employees or keeping former employees on the payroll, thereby generating paychecks for individuals who do not actually provide any work to the company. This type of fraud often involves manipulating payroll records to include these non-existent or inactive employees, allowing the perpetrator to cash or redirect the paychecks for personal gain.

Understanding the nature of a ghost employee scheme is crucial, as it can have significant financial implications for an organization, including losses associated with paychecks issued to individuals who do not contribute to the company. Moreover, this type of fraud can be difficult to detect, especially in larger organizations where extensive payrolls exist and regular oversight may be lacking.

Record alteration schemes involve manipulating existing records rather than creating fictional entries, which doesn't specifically focus on non-employees. Meanwhile, inflated commission schemes and falsified salary schemes relate to altering compensation structures or records for current employees rather than involving individuals who aren't actually part of the payroll system.