The oversight came to light as part of the local authority's participation in Audit Scotland’s National Fraud Initiative which aims to prevent and protect public funds from fraud or misuse.
A full investigation into the circumstances is said to be ongoing, and any recommendations arising from the probe will be followed up.
A report to Fife’s standards and audit committee revealed that there were 307 errors and two frauds recorded in the region in the past year which amounted to almost £70,000 in payments which should not have been made.
That sum includes the ex-employee, who has not been named, who left the council at the beginning of September 2019, but continued to be paid until February 2021.
They have since been invoiced for the full amount and recovery is “in progress”, councillors heard, although it is not known if the employee flagged up the discrepancy at any time over the 17-month period in question.
Pamela Redpath, service manager, said the biennial National Fraud Initiative had identified the errors or fraud using data matching, which involves comparing computer records held by one body against other computer records held by the same or another body to identify matches.
She explained: “Computerised data matching allows potentially fraudulent claims and payments to be identified, but inclusion within a data matching exercise does not mean that any specific individual is under suspicion.
“Where a match is found, it indicates that there may be an inconsistency that requires further investigation.
“We cannot assume fraud has been committed until further investigations are carried out.
“The exercise can also help bodies ensure that their records are up to date.”
The report to committee confirmed that one pension fraud was identified which had resulted in an overpayment of over £6,600.
Police Scotland have cautioned the individual concerned and the sum has now been repaid.
Elsewhere, recovery is in progress for £17,359 after changes in business rates liability were uncovered in four cases, while overpayments totalling more than £11,000 were made to five people with Student Loans - with the full amount now being pursued.
The Service reported that income was revised for seven individuals with a Student Loan and their eligibility adjusted. This resulted in overpayments of £11,187.55 for five of the individuals, with recovery in progress from these individuals for the full amount.
As a result of deceased persons information provided as part of the NFI exercise, 16 pensions with a Gross Annual Pension amount of £42,472.00 have also been stopped - resulting in overpayments of £4,548.31.
The same kind of information has also led to 275 Blue Badges being cancelled after information held by the council was updated.
In better news, councillors heard a new approach to council tax fraud had brought in an extra £855,032.
Instead of matching records using the electoral register, Fife Council used a third party, Datatank, to carry out a review of people applying for the Council Tax Single Person Discount using data from a credit reference agency.
A total of 8,728 customers were subsequently contacted in the summer as a result and the sums are being recouped.