Fraud is threatening the affecting the sustainability of South African small and medium Enterprises beware!
Fraud in South Africa is defined as
“The unlawful and intentional making of a misrepresentation which causes actual prejudice, or which is potentially prejudicial to another”.
Fraud does include maladministration, incapacity, or inefficiency
ACFE defines Occupational fraud, as the use of one’s job/occupation to enrich himself at his employers expense.
The Occupational Fraud 2022: A REPORT TO ALL NATIONS, was released by the Association of Certified Fraud Examiners (ACFE).
The report states 44% of occupational fraud cases were perpetrated on SME’s
Your employee rips you off!
SME managers and owners think that they are immune to fraud, due to their small staff size and owner manager supervision.
I know of several companies, clubs and associations, in dear Pietermaritzburg, that have been forced into liquidation due to financial loss caused by Occupational Fraud. They did not recover the funds stolen nor were they properly insured.
The news gets worse, cybercrime and cryptocurrencies are now making an impact on global fraud losses. South Africa fared worst in its region, sub-Saharan, accounting for 43% of the region’s occupational fraud cases. The losses incurred were estimated at USD 18,800,000.
The ACFE survey states that the most common occupational fraud is corruption, making up 62% of fraud losses and misappropriation of assets at 19%. The survey observes that depending on the crime, the fraudster is normally detected approximately 18 months after initiating his scheme, but the funds are gone! The ACFE reports the detection an existing occupational fraud originates from “Tips” from employees, customers and suppliers. These “Tips“ uncover 48% of occupational fraud activities , management review uncover another estimated 11%.
The purpose of my article is that South African SME’s contribute about 60% to GDP. The long term sustainability of these entities is key. Occupational Fraud is a real threat to that sustainability.
Of the 44% SME victimised by occupational fraud, less than half recover.