Understanding Lapping: A Fraudulent Scheme Explained

Course ACC31 Bjfljraud Prevention 3. Examination720227237TERM5 Test Ut'llt 2 HWZ Starte: 3117113 7:51 PM Submitted 3117113 8:00 PM Status Needs Grading Atten'ct Score Grade not available. Time Elacsed 9 minutes Res Jlts Displayed All Answers. Su omitted Answers, Correct Answers. Feedback. Incorrectly Answered Questions Questiun1 Needs Grading Explain lapping. '4 Selected Answer Correct Answer: Response Feedback. Afraudulenl operalion called "lapping" involves paying accounts receivable. A monetary deposit to an account 13 lirel elulen After then: funds are Iransferred from one account In anolher and credited there The second account is new short As a result money ls sent from a third account to the second the next day Yet because thethird account is now insufllclent, the procedure must go on every day This technique typically fails due to lts complexity That frequently occurs when there ls just one bookkeeper leading to an atmosphere where there is no clear division of labor. Lapping is a fraudulent scheme involving payment of accounts receivable. First, a cash payment to an account is stolen. Then money is taken from a second account and credited to the second account. Now the second account is short. So the next day rnoney is taken from a third account and credited tothe second. But. now the third account is short so the process must continue every day. Normally.the intricacy of this scheme causes it to collapse. it is often perpetrated when there is a sole bookkeeper. thus causing an environment With a lack of segregation of duties. [NoneGiven]