Performing a physical inventory count can help detect what type of fraud scheme?

A physical inventory count is a vital exercise for organizations as it allows them to reconcile the physical stock on hand with the inventory records maintained in the financial systems. This procedure is particularly effective in detecting skimming schemes, which involve the theft of cash before it is recorded in the financial accounting systems.

When an employee skimps cash, they may withhold or remove merchandise without properly recording the transaction, leading to discrepancies between actual inventory and what is recorded. By conducting a physical inventory count, organizations can identify missing inventory that could have been skimming-related theft, as there would be a direct contradiction between physical stock and recorded amounts.

Skimming schemes often go unnoticed for extended periods because the transaction never enters the accounting system, making the physical inventory count a crucial tool in uncovering such fraudulent activities, where real losses may not be immediately apparent.

Additionally, the other options represent different types of fraud that do not directly correlate with the discrepancies detected through physical inventory counts. For example, billing schemes involve fraudulent invoices, cash larceny entails direct theft of cash, and ghost employee schemes involve non-existent employees on payroll to divert funds. These would not typically be revealed through inventory counts but through different investigative processes.