Abstract
<p>Given the important socio-economic role performed by Small, Medium and Micro Enterprises (SMMEs) and the negative consequences of fraud on their businesses, the objective of this study was to investigate the perceptions and management of fraud by SMME owners/managers. Respondents were of the opinion that fraud is a serious and increasing problem in corporate South Africa and viewed ethics policy implementation and internal controls as important measures of fraud detection and prevention. Only 10 per cent of respondents, however, made provision in their budgets for combating fraud. It is recommended that SMME owners/managers gain more knowledge on inexpensive yet effective fraud detection and prevention measures.</p><p><strong>Key words and phrases:</strong> Small, Medium and Micro Enterprises (SMMEs), causes of fraud, fraud detection, fraud prevention, internal controls, ethics programmes.</p>
Highlights
The socio-economic function performed by Small, Medium and Micro Enterprises (SMMEs) is widely recognised, both internationally and in South Africa
Of the SMMEs surveyed, 31 percent were considered to be micro enterprises, 58 percent small businesses and only 11 percent of the businesses met the criteria of a mediumsized business
Despite the negative consequences of fraud in the local SMME sector, very few owners/managers have an adequate understanding of the causes or costs thereof
Summary
The socio-economic function performed by Small, Medium and Micro Enterprises (SMMEs) is widely recognised, both internationally and in South Africa. A report by the Department of Trade and Industry indicates that this sector accounts for almost 75 percent of all employment in South Africa and contributes approximately 28 percent to Gross Domestic Product (Wadula, 2005:1). Despite their important contribution to the socio-economic development of South Africa, many SMMEs are exposed to the high cost of the fraud wave currently engulfing corporate South Africa. From the above definitions it is clear that fraud includes a wide range of activities, from mismanagement, theft and manipulation to white-collar crime, all of which involve some element of deception. For the purposes of this study, fraud was defined as deliberate deceit, planned and executed, with the intent to deprive another of their property or rights
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