What kind of fraud occurs when an employee sells goods but doesn’t record the sale?

The unrecorded sales scheme is a form of employee fraud where sales are made, but the transactions are not entered into the company’s accounting records. This type of scheme allows the employee to pocket the cash received from the sale without it ever being accounted for in the business's financial documentation.

In this scenario, the employee sells goods and intentionally fails to record the transaction, which enables them to misappropriate the funds without detection. This deliberate omission directly impacts the company’s revenue reporting and can lead to significant financial discrepancies over time.

Additionally, other forms of fraud like cash larceny schemes typically focus on the theft of cash already recorded in the books, while lapping of receivables involves manipulating payment applications to hide theft. False invoicing schemes involve creating or using fictitious invoices to extract funds. Each of these fraud types operates on different principles, making unrecorded sales a unique method of financial misconduct.