What does skimming involve?

Skimming involves the theft of cash from sales before those transactions are recorded in the accounting system. This fraudulent scheme allows individuals to take money intended for the business without it being documented, making it difficult to detect the theft. By removing funds before they are entered into the records, the perpetrator effectively creates a situation where there is no audit trail or evidence of the transaction, thus facilitating the concealment of the fraud.

Understanding skimming is crucial for fraud prevention because it highlights the vulnerabilities in cash handling and the importance of solid internal controls. Organizations can reduce the risks associated with skimming by implementing measures such as regular audits, segregation of duties, and reconciliations between cash receipts and recorded sales. These practices can help identify discrepancies and deter potential fraudulent activities before they escalate.