Test 10 - Multiple Salary Increases

Typically, employee salaries are reviewed annually and any changes will take effect at the beginning of either the fiscal or calendar year. With this in mind, a useful test is to review for issues where employees receive multiple salary increases in a year, which is what we'll look for in our test today.

Keep in mind that employees might receive legitimate salary increases throughout the year due to a promotion, or a position/department change.

Risk

Multiple salary increases may be indicative of fraud.

Objective

Identify employees who received more than one salary increase in the year.

Supporting Documentation

Salary Review

Employee salaries are reviewed annually and take effect at the beginning of the calendar year. The employee master record only shows the current salary (no historical salaries). Some employees may receive a legitimate pay increase during the year due to promotions, etc.

Analyzing Data

  1. In the Payroll table, create a character computed field, c_ActualGross, that calculates each employee's actual gross pay, using the syntax: 

    • grosspay + vacationpay

    OPEN Payroll
    DEFINE FIELD c_ActualGross COMPUTED STRING( grosspay + vacationpay, 12 )

  2. Now calculate the number of salary adjustments for each employee by running Summarize on Employee Number and c_ActualGross. From Other Fields, select paydate. Name the new table t_SalaryIncreases.

    OPEN Payroll
    DEFINE FIELD c_ActualGross COMPUTED STRING( grosspay + vacationpay, 12 ) 

    SUMMARIZE ON empno c_ActualGross OTHER paydate TO "t_SalaryIncreases.FIL" OPEN PRESORT 

  3. In the t_SalaryIncreases table, run Duplicates on the Employee Number field. From List Fields, select all fields. Name the new table r_ MultiSalaryIncrease.

    OPEN Payroll
    DEFINE FIELD c_ActualGross COMPUTED STRING( grosspay + vacationpay, 12 ) 
    SUMMARIZE ON empno c_ActualGross OTHER paydate TO "t_SalaryIncreases.FIL" OPEN PRESORT 

    OPEN t_SalaryIncreases

    DUPLICATES ON empno OTHER c_ActualGross paydate COUNT PRESORT TO "r_MultiSalaryIncrease.fil"

Conclusion

Multiple salary increases may well be due to legitimate reasons, such as a promotion. Apart from multiple salary increases throughout the year, we can also look for employees whose salary increases are exceptionally large (above a specified threshold, such as 25%), or we could calculate the average for each position and look for issues where the salary was significantly above or below the average raise.