Certified Fraud Examiner Practice Exam 2025 – All-in-One Guide to Master Your Certification!

The term that describes the act of stealing a payment and using later payments to cover the theft is known as lapping. This technique typically involves an employee who mishandles customer payments by applying funds from new payments to cover previous thefts. Essentially, it creates a misleading appearance of normalcy in the accounts, as the employee uses incoming funds from one customer to satisfy the outstanding balance of another customer whose payment has been stolen.

This method can be particularly insidious because it may go undetected for a long time, especially if the amounts involved are small and the individuals managing accounts do not monitor them closely. Lapping relies on the continuous influx of new payments to resolve the discrepancies created by the initial theft, leading to an ongoing cycle of deceit.

In contrast, layering refers to the process in money laundering where illicitly obtained funds are separated from their source through layers of complex transfers, embezzlement involves the misappropriation of funds entrusted to an individual, and skimming is the theft of cash from a business before it is recorded in the accounting system. Each of these concepts encompasses distinct methods of financial fraud, but lapping specifically highlights the method of covering up theft by utilizing subsequent payments.