The concealment technique where one customer’s payment is credited to another customer's account is called which method?

• A. Lapping
• B. Altered payee designation
• C. Currency substitution
• D. Inventory padding

Answer: (A)

Lapping is a cash-receipts misappropriation where a payment from one customer is posted to another customer's account. The thief records the incoming funds as applying to the second account, then uses a later payment from a different customer to cover the shortfall on the first account. This creates a repeating cycle that hides the theft until a detailed reconciliation reveals mismatches between received funds and posted customer accounts. It’s typically detected through bank reconciliations, accounts receivable aging analyses, or unusual patterns in posting receipts.

This isn’t about changing who a payment is meant for (that would be altering payee designation) or about using different currencies or padding inventory, which are distinct fraud schemes.