An employee accepts cash payments from customers and does not record the sale. This is an example of which of the following types of fraud?

The scenario describes skimming, which is a form of asset misappropriation where cash is stolen from an organization before it is recorded in the accounting system. The employee accepts the cash payment but intentionally fails to record the sale, thereby creating no record of the transaction. This "off-book" nature is the defining characteristic of skimming. While it falls under the general category of asset misappropriation, skimming is the most precise and accurate classification for this specific act.

A. Asset misappropriation: This is a broad category of fraud that includes skimming, cash larceny, and fraudulent disbursements. While technically correct, "skimming" is the more specific and therefore better answer.
C. Corruption: This type of fraud involves an employee misusing their influence for personal gain, such as through bribery, conflicts of interest, or extortion, which is not occurring here.
D. Lapping: This is a method of concealing the theft of accounts receivable, where a payment from one customer is used to cover the theft of a payment from another, creating a rolling shortfall.

1. The Institute of Internal Auditors (IIA). (2009). Practice Guide: Fraud and Internal Audit (formerly GTAG 13). This guide discusses various fraud schemes, categorizing skimming as a type of cash misappropriation where cash is stolen before being recorded. It is distinct from cash larceny (theft of on-book cash). (Specific reference to the "Fraud Schemes" section).

2. Albrecht, W. S., Albrecht, C. O., & Zimbelman, M. F. (2019). Fraud Examination (6th ed.). Cengage Learning. In Chapter 6, "Skimming," the text defines skimming as "the theft of cash from a victim entity prior to its entry in an accounting system" (p. 154). This textbook is standard courseware in university accounting and auditing programs.

3. Singleton, T. W., & Singleton, A. J. (2010). Fraud Auditing and Forensic Accounting (4th ed.). John Wiley & Sons. Chapter 6, "Cash Larceny and Skimming," explains that skimming schemes are "off-book" frauds, making them difficult to detect because the transaction is never recorded. This is a foundational text used in university-level forensic accounting courses. (DOI: https://doi.org/10.1002/9781118269183)