Lapping Scheme

The video explains a lapping scheme, a type of financial fraud involving accounts receivable. It details how funds are stolen and covered up by overlapping payments, making detection difficult. The scheme is possible when one person controls both the receipt of payments and customer billing, allowing them to alter records. The video concludes by summarizing the lapping scheme as a significant financial fraud issue.

What is the primary action involved in the type of financial fraud discussed in the first section?

• Creating fake invoices

• Misappropriating funds from accounts receivable

• Overstating company profits

• Altering accounts payable records

In a lapping scheme, what is the main method used to hide the theft of funds?

• Bribing auditors

• Using overlapping payments

• Destroying financial records

• Creating false bank statements

Why is it difficult to track a lapping scheme if it continues for a long time?

• The records are destroyed

• The payments are too small to notice

• The overlapping payments obscure the original theft

• The company changes its accounting software

What is a necessary condition for an individual to successfully execute a lapping scheme?

• Knowledge of the company's investment plans

• Ability to approve loans

• Access to the company's marketing strategies

• Control over both accounts receivable and customer billing

How is a lapping scheme defined in the context of financial fraud?

• A technique for hiding stolen funds using overlapping payments

• A way to increase cash flow through fake transactions

• A strategy for reducing tax liabilities

• A method of inflating sales figures