The item was removed/crossed out from the employee’s trust/inventory records by virtue of writing it off as scrap.


http://www.thefreedictionary.com/write off
write off
vb (tr, adverb)
1. (Economics, Accounting & Finance / Accounting & Book-keeping) Accounting
a. to cancel (a bad debt or obsolete asset) from the accounts
b. to consider (a transaction, etc.) as a loss or set off (a loss) against revenues
c. to depreciate (an asset) by periodic charges
d. to charge (a specified amount) against gross profits as depreciation of an asset
2. to cause or acknowledge the complete loss of
3. (Business / Commerce) to send a written order for (something) she wrote off for a brochure
4. (Engineering / Automotive Engineering) Informal to damage (something, esp a car) beyond repair
n write-off
1. (Economics, Accounting & Finance / Accounting & Book-keeping) Accounting
a. the act of cancelling a bad debt or obsolete asset from the accounts
b. the bad debt or obsolete asset cancelled
c. the amount cancelled against gross profits, corresponding to the book value of the bad debt or obsolete asset
2. (Engineering / Automotive Engineering) Informal something damaged beyond repair, esp a car



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Note added at 17 hrs (2012-01-25 08:35:00 GMT)
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http://www.worrells.net.au/Fraud Awareness/stock_inventory_r...

1. False Write-Offs

This fraud is done by writing off the stolen inventory item as scrap or similar in the inventory records so that they coincide with the actual physical inventory levels.