Lapping of accounts receivable by an employee is can occur when there is adequate segregation of duties with respect to cash disbursements.

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Lapping of accounts receivable occurs when an employee steals a payment from a customer and then conceals the theft by applying a subsequent payment from another customer to the stolen invoice. Adequate segregation of duties with respect to cash disbursements would help prevent this type of fraud because it would require collusion between two or more employees.

Lapping of Accounts Receivable by an Employee Is Can Occur