In short
Lapping is a fraud in which an employee steals a customer's payment and hides the theft by applying a later customer's payment to the first customer's account, and so on.
Key takeaways
- It needs one person to both handle cash receipts and post to customer accounts, a segregation of duties failure.
- Auditors detect it by confirming receivables and comparing deposit details with the postings to customer accounts.
- Mandatory vacations and job rotation can expose it.
Where it's tested
AUD: Fraud Risk — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An employee steals customer payments and covers the theft by applying later collections from other customers to the earlier accounts. This scheme is: