Lapping schemes are fraudulent activities used by financial institutions to cover up missing or stolen funds. In a lapping scheme, a customer’s payments are applied to a different account than the one from which the funds were originally stolen. This allows the financial institution to continue to collect interest on the stolen funds, while the customer remains unaware of the fraud.
Lapping schemes can be perpetrated by both employees and customers of a financial institution. Employees may engage in lapping to cover up their own theft of customer funds, or to hide errors that they have made. Customers may commit lapping fraud by making payments to their own accounts using funds that were originally stolen from another account.
Lapping schemes are difficult to detect and can cause significant financial losses for both financial institutions and their customers. If you suspect that you have been a victim of lapping fraud, you should contact your financial institution immediately.
Which of the following is the most effective control procedure to detect vouchers? The answer to this question depends on the specific type of voucher that is being detected. Some common control procedures that could be used to detect vouchers include:
- Reviewing bank statements and reconciling them to the general ledger
- Performing spot checks of physical vouchers
- Reviewing supporting documentation for vouchers (e.g. invoices, purchase orders, etc.)
- Running reports to identify unusual patterns or transactions
Which of these control procedures is most effective will depend on the specific circumstances and will need to be determined on a case-by-case basis.
What is kiting what procedures do auditors use to detect kiting?
Kiting is the fraudulent use of multiple bank accounts to artificially inflate the balance of one account by writing checks on the other account. This is typically done by using a check on one account to pay the balance of another account, and then using a check on the second account to pay the balance of the first account. This process is repeated until the desired balance is reached.
There are several procedures that auditors can use to detect kiting. First, they can review the bank statements for evidence of unusual check activity. Second, they can reconcile the bank accounts to identify any discrepancies. Third, they can review the check register for any evidence of check kiting. Finally, they can interview bank personnel to obtain information about any suspicious activity.
What are the different types of lapping? There are four main types of lapping:
1. Bank lapping: This is when a customer pays off one loan with another loan from the same bank. This can be done to avoid paying late fees or to secure a lower interest rate.
2. Mortgage lapping: This is when a borrower takes out a new mortgage to pay off an existing mortgage. This can be done to get a lower interest rate or to access equity in the property.
3. Debt lapping: This is when a borrower takes out a new loan to pay off an existing debt. This can be done to consolidate debt or to get a lower interest rate.
4. Insurance lapping: This is when a policyholder pays off one insurance policy with another policy from the same insurer. This can be done to avoid paying higher rates or to secure a better coverage. What procedures should the auditors perform if there is no response to a second request for a positive confirmation? There are a few procedures that the auditors should perform if there is no response to a second request for a positive confirmation. Firstly, they should try to reach out to the client again and see if they can get a response that way. If that is not possible, they should look through the client's records to see if there is any evidence of fraud or other financial crimes. Finally, they should report their findings to the authorities. What are the advantages and disadvantages of lapping? Lapping is a type of fraud that occurs when a customer pays off a debt with a new payment, but the company does not remove the old, unpaid debt from the customer's account. This can cause the customer to become buried in debt and may not be able to pay it all off. Lapping can also lead to higher interest rates and fees, as well as damage the customer's credit score.