How does the "lapping" scheme usually end?

The "lapping" scheme typically concludes when an account is compensated or discovered. This form of fraud involves an employee covering up the theft of cash or receivables by using subsequent payments from new customers to pay off the accounts of earlier customers whose payments they have already misappropriated. When an account is compensated or discovered, it indicates that the fraudulent activity has been uncovered, either through reconciliation, discrepancies in financial records, or customer complaints about missing payments. This moment of exposure forces an end to the lapping scheme, as the fraudulent actions are brought to light and can no longer be sustained without detection.

While resignations, audits, or terminations can also lead to the cessation of fraudulent activities, they do not specifically address the direct mechanism of lapping and its inherent reliance on untraced financial transactions. The crux of lapping lies in the cycle of payments and the maintenance of that cycle until such time as the fraud is detected—thus making the discovery or compensation of accounts the primary endpoint of this unlawful practice.