We use cookies to improve security, personalize the user experience,
enhance our marketing activities (including cooperating with our marketing partners) and for other
business use.
Click "here" to read our Cookie Policy.
By clicking "Accept" you agree to the use of cookies. Read less
Lapping: An In-Depth Look at This Embezzlement Practice
Definition & Meaning
Lapping is a fraudulent accounting practice where an employee misappropriates funds by manipulating customer payments. The employee takes cash from one customer's account and uses the payment from the next customer to cover the theft. This cycle continues, creating a deceptive loop that conceals the initial theft. Lapping can occur when the same person handles both cash transactions and record-keeping, making it easier to hide discrepancies. This practice is also known as teeming and lading.
Table of content
Legal Use & context
Lapping is primarily relevant in the fields of criminal law and corporate governance. It is considered a form of embezzlement, which is illegal and can lead to severe penalties, including fines and imprisonment. Organizations may use legal forms to establish internal controls and prevent such fraudulent activities. Users can find templates for policies and procedures that help manage cash handling and accounting practices effectively through resources like US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: An employee at a retail store takes cash from a customer's payment. To cover the theft, they use the cash received from the next customer. This continues until the employee is caught, leading to criminal charges for embezzlement.
Example 2: A bookkeeper at a small business steals funds from customer payments and uses subsequent payments to hide the missing amounts. This practice continues until an audit reveals discrepancies in the accounts. (hypothetical example)
State-by-state differences
Examples of state differences (not exhaustive):
State
Legal Consequences
California
Embezzlement can lead to felony charges and significant fines.
New York
Penalties include restitution and potential prison time, depending on the amount stolen.
Texas
Charges can range from misdemeanors to felonies based on the value of the theft.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Lapping
Fraudulent practice of covering theft by manipulating customer payments.
Involves a cycle of theft and cover-up.
Embezzlement
Misappropriation of funds entrusted to an individual.
Broader term that includes various forms of theft, not limited to lapping.
Fraud
Deliberate deception to secure unfair or unlawful gain.
Includes various schemes beyond financial misappropriation.
Common misunderstandings
What to do if this term applies to you
If you suspect lapping is occurring in your organization, it is crucial to take immediate action:
Conduct a thorough internal audit to identify discrepancies in accounts.
Implement stronger internal controls to separate cash handling and record-keeping duties.
Consider consulting a legal professional for advice and potential legal action.
Explore resources like US Legal Forms for templates that can help establish proper procedures.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.