What does skimming refer to in fraud terminology?

Skimming refers specifically to the act of stealing cash or funds before they are recorded in the accounting system. This type of fraud often occurs at the point of sale or in cash-intensive businesses, where an employee may take cash payments from customers and fail to document these transactions in the company's records. By eliminating the record of the transaction, the thief is able to hide the discrepancy, making it difficult for the business to detect the theft.

The focus on the immediate and direct theft of cash differentiates skimming from other types of fraud. For instance, submitting false invoices involves creating fictitious expenses that appear legitimate and is more related to accounts payable fraud. Misappropriating company assets encompasses a broader range of theft, which may include physical property rather than just cash. Fabricating financial reports relates to deception in financial statements and accounting practices, but does not directly involve the immediate theft of cash, which is the essence of skimming. Thus, skimming distinctly centers on the act of stealing cash prior to any accounting entry.