What constitutes payroll fraud?

Payroll fraud encompasses any illegal financial manipulation related to payroll, which includes actions designed to wrongfully gain financial benefits through deceit. This could involve various fraudulent activities, such as creating fictitious employees (ghost employees), altering hours worked, or falsifying information on payroll records to inflate earnings. The key aspect that makes this option correct is the focus on the illegal nature of these actions.

In contrast to the correct answer, intentional errors during payroll calculations could indicate negligence or mistakes rather than intentional deceit, and over-claiming reimbursable expenses is not limited solely to payroll matters, even though it could be considered a form of fraud in a wider financial context. Lastly, failing to file payroll taxes on time, while potentially problematic in terms of compliance and penalties, does not specifically constitute fraud; it may be a matter of oversight or cash flow issues but lacks the intent to deceive that characterizes fraud.