Teeming and lading is a method or practice adopted in accounting. It involves the allocation of one customer's payment to another in order to make the books balance and often in order to detract from a possible shortfall. This process is often continued until it gets discovered. It is also known as short banking or delayed accounting or lapping.
One of the common practices that is performed 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. Such a process is continued till the time the original amount misappropriated is finally replaced or till the time the cashier is caught.
Another similar strategy is applied when remittances are received by means of cheques, where cheques are split up to record payments. This is known as splitting cheques. Here by encashing the cheques, less amount is credited to the debtor and rest of the amount is misappropriated.
Auditors pay special attentions during the vouching process as part of the verification of transaction to identify teeming and lading kind of accounting.
In point of fact it is a practice adopted by the fraudulent rather than standard accounting. Many large defalcations arise from the smallest beginnings through 'teeming and lading'.
