No matter how we want to avoid it, in one or more instances, theft occurs along the way. When this happens, a company thinks of possible ways,
like financial counseling, to remedy or mitigate the implications of the theft incident alongside trying to determine how and where the theft was committed and who committed it. An option available to remedy cases of theft is called Lapping Scheme. It is done when the accounts receivable section of the balance sheet is changed when the amount that is intended for the payment of a receivable is stolen. This is done by first, taking the first receivable collected. Next, use the first receivable amount taken to cover the theft, while the second receivable collected is accounted to the first, the third receivable to the second, and so on.
A
lapping scheme can serve as a first aid, especially to a massive theft that was done. But companies must be cautious not to be too dependent on this accounting method for it cannot ensure a long-term and sustainable solution to theft cases. At the end of each economic year, companies must classify the amount stolen as a loss and deduct it from the net income. Constantly reviewing the processes by which payments and cash flows are being conducted and a regular assessments of the different accounting methods being employed can help solve or at least minimize the probability of theft being done.
