Human Resources Certification Institute (HRCI) Practice Exam

The controller of your organization was caught paying herself for additional vacation time that was never authorized or approved. This is an example of which of the following?

1. A. Fraudulent activity

2. B. Deception

3. C. Forgery

4. D. Misrepresentation of financial statements

The correct answer is: A. Fraudulent activity

This situation exemplifies fraudulent activity because it involves a deliberate act of deception for personal gain. The controller knowingly paid herself for vacation time that was neither authorized nor approved, indicating an intent to manipulate the financial resources of the organization for her benefit. Fraud encompasses a range of illicit acts where an individual misleads others to obtain money or property unjustly. While deception is part of this scenario, fraud specifically speaks to the unlawful nature and financial aspect of the act. Forgery typically involves falsifying documents or signatures, which isn't precisely applicable here, as the primary issue is about improper compensation rather than falsified documentation. Additionally, misrepresentation of financial statements refers to inaccuracies in financial reports that affect stakeholders' decisions, which does not directly relate to the individual act of the controller illicitly compensating herself. Thus, labeling this action as fraudulent activity accurately captures both the intent and the consequences of the behavior.