Teeming and lading is a
bookkeeping
Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business and other organizations. It involves preparing source documents for all transactions, operations, and other events of a business. T ...
fraud also known as short banking, delayed accounting, and lapping. It involves the allocation of one
customer
In sales, commerce, and economics, a customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service, product or an idea - obtained from a seller, vendor, or supplier via a financial transaction or exchange for ...
's
payment to another customer's account to make the books balance, often to hide a shortfall or
theft.
Teeming & lading is a method by which a person who takes or handles payments uses the money personally for some days and posts the transaction later. The handler receives cash, and uses it for personal purposes instead of depositing it. A common practice trait in this fraudulent activity is that the amounts received from the subsequent debtor is credited to the earlier debtor's account so that one debtor's account does not show an outstanding balance for a long time. To make up the shortfall, when another payment comes in, the handler will deposit that money against first money used, and does not show the new amount received until later. Such a process is continued until the time the original amount misappropriated is finally replaced or until the cashier is caught.
Another similar strategy is applied when remittances are received by means of
cheques
A cheque, or check (American English; see spelling differences) is a document that orders a bank (or credit union) to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The per ...
, where cheques are split up to record payments. This is known as ''splitting cheques''. By encashing the cheques, less amount is credited to the debtor and rest of the amount is misappropriated.
Auditors look during the
vouching process as part of the verification of transaction to identify teeming and lading.
References
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Business & Financial Plannings
Finance fraud
Auditing
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