PurposeThe purpose of this paper is to present a review of literature on fraud with a specific focus on small and medium enterprises (SMEs). Specifically, it aims to provide further knowledge on recent developments in fraud research and offers suggestions for future research.Design/Methodology/ApproachThis paper systematically reviews the fraud literature, by organising them into five sections; definition, elements, theories, factors and prevention mechanisms.FindingsThe most common factors of fraud in SMEs are the low morale among employees and weak internal control within the organisations. Nonetheless, research on fraud involving SMEs is limited, albeit the importance of SMEs to the economy.Research Limitations/ImplicationsThis paper encapsulates the importance of research on fraud in SMEs by offering directions for future research. Among others, future studies might indicate the link between corruption, financing sources and innovation of SMEs, especially within the context of an emerging country and reveal the cost of the criminal justice system to identify more accurately the cost of fraud in SMEs.Originality/ValueThe focus on fraud in SMEs and the recent period of study offer a foundation for future research directed at the factors of fraud and the prevention mechanisms. Future research can further explore and broaden the literature on fraud involving SMEs through research that focuses on the impact of fraud and the types of control mechanisms that suit the SMEs. Greater understanding of fraud in the SMEs allows in identifying the best approach to prevent and detect fraud for small businesses with limited resources.