What is often a sign of skimming fraud in a business context?

Skimming fraud typically involves the unauthorized collection of cash before it is recorded in a business's accounting system. This means that the cash is taken before it is reported, resulting in discrepancies in the financial records. Thus, unexplained cash shortages are a strong indicator of skimming fraud, as they suggest that cash that should be accounted for is mysteriously absent.

A business experiencing unexplained cash shortages may notice that their actual cash levels do not align with the recorded amounts, raising suspicion of potential fraudulent activity. This mismatch could prompt further investigation into cash handling practices, employee actions, or other areas where loss might be occurring.

In contrast, while excessive inventory, high employee turnover, and improperly filed tax returns can indicate serious business issues, they are not directly linked to the operational mechanisms of skimming fraud. Excessive inventory might suggest over-purchasing or mismanagement, high employee turnover could indicate workplace dissatisfaction or issues unrelated to fraud, and improperly filed tax returns typically point to issues in compliance or accounting practices rather than outright theft or skimming of funds.