The Use Of Cash In Maltese

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02 Nov 2017

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Purpose: The main objective of this study is to gain an insight into the utilisation of cash in Maltese SMEs together with their related controls, policies and procedures for safeguarding cash. Information regarding the regulation of cash payment limits in Europe is also addressed.

Design: The objectives were achieved through twelve semi-structured interviews from both the retailing and the services sector.

Findings: The study indicates that the use of cash is minimal and on the decrease, with businesses making less use of it than customers. Nevertheless, adequate internal control practices by enterprises are in place to safeguard cash handling. Knowledge regarding the regulation of cash payment limits in some of the European countries was low among interviewees/participants.

Conclusion: The study concludes that cash is not the most common method of payment by the majority of businesses and their customers. Non-cash payment methods including electronic payments are, however, on the increase. Given the size of the companies, adequate controls, policies and procedures are in place. Positive views emerged from a number of respondents regarding cash payment limits. However, some respondents pointed out certain drawbacks which need to be addressed.

Value: This study increases awareness on the utilisation of cash vis-à-vis other methods of payment. Recommendations to improve controls, policies and procedures with regard to cash are outlined. This study also increases awareness on cash payment limits alongside the feedback obtained from interviewed parties.

Keywords: Cash, SME, Internal Controls, Cash Payment Limit.

Library Reference: 13BACC002

BACHELOR OF ACCOUNTANCY (HONS.)

APRIL 2013

Acknowledgements

I would like to thank all those individuals who have made this dissertation possible, either through their participation, guidance or support in providing the necessary information.

In particular, I would like to express my gratitude to my supervisor, Ms. Lauren Ellul, for her constant assistance, patience and support throughout the entire dissertation writing process.

Heartfelt appreciation goes to all the interviewees who kindly accepted and took time out of their busy schedules to patiently answer and discuss matters on the subject.

Dedication

I would like to dedicate this to my father, Joe, for his everlasting support, care and attention; to my mother, Maria, and my brother James, for their constant patience and encouragement.

Chapter 1: Introduction

Chapter 1: Introduction

Background Information

Cash is commonly used in the day-to-day running of a business; it may be in any form of currency and it must have legal approval and acceptance in the market. The ability of a business to generate cash is vital in order to avoid becoming bankrupt. The following are some main reasons why businesses need cash.

Firstly, the financial operations of a business must be efficient in order to produce positive cash flows, thus ensuring the smooth running of a business. Secondly, businesses also require cash to be able to invest in capital expenditure which leads to company growth. Thirdly, businesses should have cash at hand if unforeseen contingencies arise which should be paid at once. A fourth reason might be when a business wants to acquire another business (Smith, 2011).

Large cash balances kept in a company may lead to misappropriations since cash in itself is of a physical nature and can be easily transported. Misuse of cash is a type of money laundering, thus proper internal controls have to be in place to safeguard cash from being embezzled.

Small and Medium Enterprises (SMEs)

SMEs play an important role in the European Economy since there are more than 23 million SMEs in the 27 European Union (EU) Member States, and this represents 99% of all European businesses (European Commission Enterprise and Industry, 2012). Many businesses in Malta are considered to be SMEs and these are usually family owned businesses.

According to the definition given by the European Commission (2012), an enterprise qualifies as micro, small or medium-sized based on the following factors:

the number of employees;

either the turnover or the balance sheet total.

The criteria for the above mentioned factors are summarised in the table below.

Enterprise Category

Headcount

Turnover

or

Balance Sheet Total

Medium-sized

Less than 250

Less than €50 million

Less than €43 million

Small

Less than 50

Less than €10 million

Less than €10 million

Micro

Less than 10

Less than €2 million

Less than €2 million

Table 1. – Categories of Micro, Small or Medium-Sized Enterprises. (European Commission, 2012) [1] 

Studies carried out

Previous studies relating to cash were mainly focused on cash flows and cash management, such as the study by Vella S. (2000).

Other studies have been undertaken on other aspects of working capital, such as the study on bank overdrafts in local companies by Anastasi S. (2001). Other aspects of working capital on which studies were carried out are debtors and stocks. There is no specific study on the utilisation of cash so far.

Need for the Study

Since cash is a valuable asset in a business, there is the need to gain an understanding on the use of cash in SMEs and whether the right controls and policies are in place to prevent misuse of cash. This understanding might create awareness for certain systems and procedures in an entity to be updated.

This study might be useful for policymakers in the country in helping them to reduce tax evasion. This study will also include the views and opinions of the interviewed parties with regard to the regulation of cash payment limits.

Research Aims & Objectives

The main aim of this study is to analyse the use of cash in local SMEs. This dissertation shall focus on cash held at the business, namely, ‘cash-in-hand’.

The following objectives are set to achieve this aim:

The first objective is to assess the extent of utilisation of cash transactions by Maltese corporate entities and its officials vis-à-vis other methods of payment. This will also include whether SMEs have a cash policy in place as a norm.

The second objective is to examine the internal controls and policies in place for safeguarding cash.

The third objective is to gain insight on the regulation of cash payment transactions in Europe together with feedback from participants on the topic.

Purpose and Limitations

This dissertation shall focus on gaining information regarding cash transactions and related procedures from a number of companies in different industries.

The main limitation for this topic is the extent of information disclosed by the parties involved during the interviews. This is due to the sensitivity of the subject since interviewees might be reluctant to divulge such information. In an attempt to overcome this limitation, great attention was given when structuring the interviews.

A sample of twelve SMEs was included in the study. This was mainly due to the time constraint since the qualitative research approach was adopted. Also, attempts to conduct interviews with other companies proved futile since some declined an interview when contacted, given the sensitivity of the subject under consideration.

This study will refer to research carried out up to March 2013.

Dissertation Layout

Table 1.2 outlines the chapters of this dissertation.

Chapter One

This chapter gives background information on cash and its use in businesses. It also explains the overall aims and objectives of the dissertation.

Chapter Two

This chapter includes general information on cash, and reviews the internal controls that must be in place to safeguard the misuse of cash. It also contains information on cash payment limits that are being enforced in some EU countries.

Chapter Three

This chapter describes the research methodology adopted in the study and how the data was analysed.

Chapter Four

This chapter documents the research findings from the interviews carried out.

Chapter Five

This chapter provides a discussion on the findings.

Chapter Six

A summary, recommendations and conclusions are provided in this chapter.

Table 1. – Dissertation Layout

Chapter 2: Literature Review

Chapter 2: Literature Review

Introduction

This chapter provides a review of the literature on the three objectives outlined in Chapter 1. Sections 2.2 and 2.3 deal with general information regarding cash and the internal controls that should be in place. This is then followed by Section 2.4 which provides information on SMEs in Malta. Section 2.5 gives an insight on legislation regarding cash payment limits, while Section 2.6 includes other observations. Section 2.7 provides statistics on non-cash payments and Section 2.8 concludes this chapter.

Cash

Defining Cash

The term ‘cash’ is defined in the Oxford Dictionary (2012) as

"money in coins or notes, as distinct from cheques, money orders, or credit".

Categories of persons making use of Cash

According to Akrani (2012), every person makes use of cash and they can be generally grouped into three categories, namely consumers, entrepreneurs and employees.

Customers spend cash primarily to satisfy their basic necessities such as food, clothing, shelter and education. Apart from this, they may also use cash for other needs such as holidays.

Businesses providing services or selling goods will normally receive cash payments. Thus, most businesses end up with a build-up of cash in the form of profits earned.

Employees receive salaries, benefits and allowances in return for the work they have carried out.

Individuals and entities have their own perceptions on the definition of cash. For an individual, cash usually means having tangible money in hand, while for a business, cash is considered as one of the main line items of the current assets on their Balance Sheet.

For the purpose of this dissertation, the term ‘cash’ will be referred to as ‘cash-in-hand’, that is, cash held at the entity.

Reasons for Holding Cash

As stated by Vella (2000), the rationale as to why firms hold cash "to some extent depends upon management’s subjective attitude towards risk". There has to be a balance between keeping cash-in-hand to be able to make prompt payments and investing cash wisely which will eventually reap profits in the future.

The transactions motive, the precautionary motive and the speculative motive are the three main reasons why firms may sometimes want to keep cash.

Mishandling of Cash

Cash is considered the most liquid of assets in a business. Unlike credits cards and other methods of payment which have some form of theft protection, cash cannot be traced. This may allow cash to be mishandled, thus leading to physical theft and fraud.

According to Albrecht, et al (2010), fraud arising from asset misappropriation can be categorised in two forms: theft of cash, and theft of non-cash assets. For the purposes of this dissertation, the theft of cash will be considered.

Mishandling of cash can take place well before such cash arrives in the business. In fact, the Association of Certified Fraud Examiners [2] (ACFE) published a report titled the 2008 Report to the Nation on Occupational Fraud and Abuse where it mentioned instances that lead to asset misappropriation. Skimming, cash larceny [3] and fraudulent disbursements have been mentioned in relation to cash fraud.

Skimming occurs when cash is misappropriated before it is posted in the accounting records of the business. Skimming may take place at the cashier’s desk, from accounts receivable or from refunds.

Cash larceny schemes take place after the cash has been recorded in the books, that is, while it is being held by the company.

Lastly, fraud disbursements occur during the process when the company is acquiring goods or services. Such disbursements range from payments made by the employer, which are not business related, to acts carried out by employees, such as tampering with cash systems in order to conceal the withdrawal of cash (ACFE, 2008).

The above mentioned three classes all relate to misappropriation of cash by employees. Small businesses must take caution and supervise employees. Such supervision may be direct monitoring by managers, or indirect such as segregation of duties.

Figure 2.1 below is an extract from the 2012 ACFE Report which depicts the elements of asset misappropriation.

Figure 2. – Extract of the Asset Misappropriation Classification (ACFE, 2012, p.7)

Tax Avoidance

One of the major implications of having a business dealing in high cash balances is tax avoidance. For example, business people may declare a lesser amount than that originally received in order to pay lower taxes. Another instance might be that since some SMEs still pay their employees in cash, this might lead the employees to report lower income, to end up paying less income tax.

In a report published for the European Parliament’s Progressive Alliance of Socialists & Democrats Group by Murphy (2012), it is reported that Malta is losing an estimated €577 million in taxes each year as a result of underground economy [4] .

Tax evasion measures should be emphasised by Governments in order to reduce tax evasion in their countries. Such measures should be in place to act as a deterrent for persons who are tempted to abuse the system (Times of Malta, 2012).

Internal Controls

Organisations with weak internal controls are vulnerable and more likely to be abused by asset misappropriation schemes (KPMG 2004, as cited in Albrecht, et al, 2010).

Albrecht, et al (2010) listed the weaknesses of internal controls: a lack of separation of duties, a lack of physical safeguards, checks carried out by independent personnel not being observed, the absence of necessary authorisations, existing controls being overridden and a lack of maintaining appropriate accounting records and relevant documentation.

In an article by Heinke (2009), the author stated that

"Internal controls are the built-in safety features that safeguard assets and mitigate liability".

(Marsha Heinke, 2009, p. 56)

When businesses acknowledge that handling assets, such as cash, is risky, then management must address that risk and introduce internal controls to act as a deterrent (Heinke, 2009). Internal controls vary depending on the type of SME, however, certain basic controls are common to all.

Risks Relating to Cash Handling

Theft and mishandling of cash in a small business may be carried out by falsifying accounting records; destroying accounting records; creating fictitious invoices or refunds; or not recording the cash received, among others (Fraud Prevention, n.d.).

Cash Policy

A cash policy often includes how cash should be handled; by whom and for which purposes. Cash policies should mainly specify the duties and responsibilities of the persons

in charge of cash once it has been received;

securing the asset;

in charge of reconciling cash.

All of these functions will be explained in further detail in the next part of this section.

Policies create "an expected level of behaviour in the company" (Vitez, 2008). Therefore, cash policies have to be created and implemented in such a way to allow employees to work in an efficient and consistent manner.

Internal Controls relating to Cash

Cash related internal controls can be divided into four main categories, being: segregation of duties, cash accountability, security of assets and cash reconciliation.

Segregation of duties involves the business having different persons carrying out the cash process, that is, from the moment the cash is received in the company to the moment such cash is deposited in the bank. In reality, this is not very practical since the owner of the small business or the accounts administrator usually takes care of this function.

If businesses require their employees to obtain certain approvals from authorised personnel there will be more accountability; thus ensuring that cash is documented appropriately and transactions can be traced to the employee who performed such task. In small businesses, the owner must take charge and be the only person who authorises and approves certain documentation.

Security of assets must be one of the main priorities in a business. Cash must be put in a secure location and access to such cash should be given to few people. Again, in small businesses, usually the owner of the business has sole access to the safe.

Lastly, cash reconciliations of cash receipts and bank statements must be carried out in order to confirm that accounting transactions have been recorded properly. Frequent reconciliations will flag any irregularities which could be occurring in the business.

(UC San Diego, 2009)

Since small businesses have limited resources, generally less anti-fraud controls are implemented, thus leaving the business more vulnerable for abuse and fraud (ACFE, 2012).

SMEs in Malta

Malta’s membership in the EU in 2004 facilitated the entry of Maltese SMEs into the European Market. Thus, since the EU in itself is a single market, Maltese businesses are capable of trading within Europe as if they are trading in their own country. Another aspect which made trading easier for Maltese businesses was the introduction of the Euro in 2008 since Maltese companies can carry out business in Europe using Europe’s single currency (European Commission – The EU in your Country, 2012).

The majority of businesses in Malta are considered to be SMEs and they are typically family owned businesses. The following table has been extracted from the Small Business Act (SBA) Malta Fact Sheet 2010/11 (European Commission Enterprise and Industry, 2012). It gives an insight into the number of small, medium and large enterprises in Malta.

Number of Enterprises

Malta

Number

Share

Micro

33.772

95,8%

Small

1.200

3,4%

Medium-sized

246

0,7%

SMEs

35.218

99,9%

Large

48

0,1%

Total

35.266

100,0%

Table 2. – Enterprises in Malta. [5] 

(European Commission Enterprise and Industry, 2012)

As can be seen from Table 2.1 above, Malta’s economy is made up of small businesses which are mainly micro-enterprises representing 95.8% of total businesses. Only 0.1% of the total number of enterprises is considered to be large companies.

Limits on Cash Payments

During recent months a number of Governments have been introducing cash caps in order to reduce the amount of cash that a business may accept from their customer; and alternatively using controlled financial flows such as credit cards. The primary reason for some countries is to reduce tax evasion and fraud, while for other countries, their main aim is to slowly move their country towards a ‘cashless’ society.

The Concept of Traceable Methods of Payment

Cash is not considered traceable since cash payments cannot be tracked down. Examples of traceable methods of payment include the use of credit cards, cheques and online banking facilities. Payments effected by one of these methods will be documented in one’s bank statement and thus can act as a proof should the receiver of the payment claim that such payment was not effected.

Individuals and businesses can keep track of their receipts and payments through bank statements issued by the banks which can nowadays be viewed securely over the Internet.

The following sub-sections discuss some of the countries that have adopted or are in the process of adopting the cash payment limit. Italy was the first country to adopt such a measure followed by Spain.

Italy’s Legislation on Cash Payments

On 4 December 2011, the Italian Government, headed by Prime Minister Mario Monti, introduced a new limit with regard to the use of cash in Italy in an attempt to reduce and limit tax avoidance in the country. The Decree Law 201/11 [6] provides that the maximum allowed cash payment that businesses can accept is €1,000 (Migliaccio & Sirletti, 2011). In her article, Lomas (2012) documented that any payment of an amount above this limit should be made using other methods of payment which are considered traceable. This legal cash cap was initially set for Italians and foreigners. However, in late February 2012, the Italian Government sought to revoke the law only for foreigners since retailers, especially those operating in luxury goods, claimed that such restriction would lead to losing foreign business (O’Connell, 2012).

The Decree Law 201/11 was converted to Law No. 214 [7] , whereby Article 12 [8] of this law focuses on the limit of cash payments. The latter was published in Italy’s Gazzetta Ufficiale, on 27 December 2011. (Medico & Leggi, 2011).

Spain’s Legislation on Cash Payments

Ross-Thomas (2012) reported that the Spanish Government, headed by Prime Minister Mariano Rajoy, proposed the implementation of a cash transaction limit of €2,500 in April 2012. Any transaction which involves at least one business person and an amount above the previously mentioned limit is not permissible to be made in cash.

Furthermore, the Government imposes fines of 25% on the value of the cash payment if citizens do not comply with the limitation.

Hussain (2012) continued to report that the new law on financial transactions is not applicable to private transactions, but is applicable to individuals and businesses. The new Spanish law does not present this restriction to non-residents since they can carry out cash payment transactions of up to €15,000. This law was published on 30 October 2012 (White, 2012).

Greece’s Limit on Cash Payments

In March 2010, the Greek Government requested an opinion from the European Central Bank (ECB) with regard to a draft law on tax and tax evasion. In a report produced by the ECB (2010) in late April 2010, reference was made with respect to restrictions on cash transactions. In the case of business transactions, any payment of an amount over €3,000 shall be made by way of cheques or through the businesses’ bank accounts. On the other hand, in the case of consumer spending, any amount over €1,500 has to be made using payment methods other than cash.

Belgium’s Limit on Cash Payments

Peeters (2012) reported that the Belgian Government introduced a cash limit of €15,000 with the aim of reducing black economy in commercial transactions. However, this threshold has decreased to the present amount of €5,000. Any amounts above €5,000 have to be made either by credit cards or bank transfers. The Belgian Government is discussing and proposing to further decrease the limit to €3,000 in the next two years.

The introduction of the law to limit cash transactions is relatively new since such changes started during the past year or so. While the main aim for this measure is to combat tax evasion and other related fraud, it may also eventually lead to more surveillance in the EU. One still has to determine whether this measure is really effective in the long-run and what repercussions it might have on other aspects of the economy.

Other EU Countries

France introduced a cash payment limit of €3,000 for professional and personal expenses in 2010 (Galindo, 2012). However, this limit changes to €15,000 for persons who have a tax residence outside France. The latter limit applies for personal expenses only (PaySys Consultancy GmbH, 2012).

Germany and Poland have also initiated the process to limit cash transactions whereby businesses must only identify customers who pay in cash over the amount of €15,000 (PaySys Consultancy GmbH, 2012).

The Government of Denmark has proposed the introduction of a cash payment limit of 10,000 kroner; equivalent to €1,500. However, payments made in cash over the amount of 10,000 kroner will still remain legal. Nevertheless, adhering to the suggested limit ensures that "the buyer won’t be culpable in a major case of tax evasion" (Buley, 2011).

In 2011, the Bulgarian Government introduced the ‘Limitation on Cash Payments Act’. This Act applies to payments made of an amount equal to or greater than BGN 15,000; equivalent to €8,000. Payments over this amount should be carried out via a transfer or a deposit to the payment account. The provisions of this Act do not apply to personal transactions. Penalties will be imposed on those who breach the provisions of this Act. (KPMG Bulgaria , 2011)

Other Observations

Sweden might be the first country where the presence of cash will be almost inexistent. As Rising (2012) reported, according to the Bank of International Settlements, only 3% of the financial transactions in Sweden are effected in cash as opposed to the average of 9% in the Eurozone.

Older generations seem to contribute to this minimal percentage since people aged 65 years or over have been brought up to always carry cash and some of them might be reluctant to change their ways. Apart from this, cash is still used for items costing insignificant amounts. (Nyberg, 2012)

The significant increase in the use of both Internet banking and mobile phones has lead to a decrease in cash utilisation (Nyberg, 2012).

Statistics on Non-Cash Payments in the EU

The ECB issued statistics containing percentages of non-cash payment transactions for each EU Member State in 2011. An extract has been reproduced in Table 2.2. The payment instruments presented are considered as traceable methods of payment.

Credit Transfers

Direct Debits

Cards

Cheques

2011

Change from 2010

2011

Change from 2010

2011

Change from 2010

2011

Change from 2010

Belgium

40.99

-1.14

10.58

0.27

46.15

1.44

0.26

-0.04

Bulgaria

72.23

0.57

0.19

-0.07

27.58

-0.50

0.00

-

Denmark

17.39

-1.02

11.46

-0.48

70.82

1.62

0.33

-0.12

Germany

34.26

0.39

48.73

-1.45

16.58

1.13

0.23

-0.05

Greece

36.45

2.20

11.42

2.22

39.56

-3.11

10.27

-1.94

Spain

14.67

0.25

39.94

-2.27

43.11

2.29

1.71

-0.14

France

16.98

-0.55

20.15

0.15

45.11

1.77

16.94

-1.36

Italy

30.33

-0.31

14.44

-0.37

37.67

0.15

7.01

-0.87

Malta

21.67

1.71

4.18

0.21

43.47

0.99

30.62

-2.97

Poland

60.76

-2.12

0.87

-0.10

38.36

2.22

0.00

0.00

Sweden

27.04

0.92

9.41

0.15

63.54

-1.07

0.01

0.00

Table 2. – Extract of the Main Payment Instruments in the EU (2011) [9] , [10] 

(European Central Bank, 2012)

With respect to Malta, the use of cards and cheques was ranked higher than credit transfers and direct debits among non-cash payment transactions. It can be noted that while the use of cheques has decreased by 2.97% since 2010, the other three methods have increased in their use.

With respect to the other countries, it can be noted that, overall, the percentage use of credit transfers and cards is significant when compared to direct debits or cheques.

Conclusion

Creating and maintaining proper internal controls will help businesses in safeguarding their assets, especially those dealing with high cash balances. Information on whether SMEs are sufficiently aware of the importance of safeguarding cash at their business premises and what measures have been adopted are to be examined. This study will also gather information on the knowledge of the interviewed parties of the existence of the cash payment limit.

The next section sets out the research methodology to be employed in attaining the objectives of the study.

Chapter 3: Research Methodology

Chapter 3: Research Methodology

Introduction

This chapter delineates the research methodology used to obtain the data required for this dissertation. The research process commenced in July 2012 and took nine months to complete.

Preliminary Research and Planning

The initial part of the research process involved obtaining a general understanding about SMEs in Malta and the EU, whereby it was established that the majority of Maltese enterprises are SMEs. The second part involved gathering general information about cash and its related internal controls. Apart from this, detailed information was gathered regarding the existent cash payment limits in Europe in order to gain knowledge on the subject. From this preliminary research, the dissertation objectives and some initial limitations were formulated, followed by a draft of the overall structure of the dissertation.

Data Collection

Data was gathered using both primary and secondary sources. These are further explained in the following sub-sections.

Examination of the Literature

Secondary data such as articles, books, reports, laws, online sources and past dissertations were consulted in order to gain the necessary knowledge and information. Research was also carried out at the library of the University of Malta. A cautious approach was adopted when the Internet was used for resources, to make sure that appropriate and reliable material was being collected.

Field Work

Research Method

As part of the research process, it was deemed appropriate that primary data was to be collected using a qualitative approach rather than a quantitative approach. The reason for such a preference was that qualitative data "includes virtually any information that can be captured that is not numerical in nature" (Trochim, 2006).

As a result, primary data was gathered through personal semi-structured interviews with local SMEs. Although semi-structured interviews involve a set of pre-defined questions to be discussed with the interviewee, this type of interview allows some form of flexibility during the interview. This is due to the fact that both parties have more opportunity to delve and discuss certain issues, thus obtaining supplementary information. Since different industries were interviewed, there had to be some leeway to be able to adapt the pre-defined questions to the respective industry being interviewed. Thus, semi-structured interviews were used in order to make sure that all the necessary issues were discussed.

This dissertation analysed a sample of twelve local SMEs from different industries. The selection of the interviewees from different industries and the way the interview questions were designed should portray a clear picture of the use of cash across the Maltese economy from both retailers and services based companies.

Table 3.1 contains details of the industries chosen, together with the position of the person interviewed.

Industry

Position of Interviewee

I.T. Related Institutions:

I.T. Education School

I.T. Consultancy & Website Development

Managing Director

Managing Director

Insurance Industry:

Insurance Company

Insurance Broker

Senior Executive Manager

Managing Director & the Accountant

Tourism & Hospitality Industry:

Two Hotels

Restaurant

Finance Executives

Owner Manager

Healthcare Industry:

Pharmacy

Managing Director

Retail Shops:

Supermarket

Stationery shop

Hardware store

White goods shop

Accounts Clerk

Owner Manager

Owner Manager

Owner Manager

Table 3. – Research Participants

The Design of Interviews

The interview schedule was based on three sections, each section pertaining to the respective objectives of this dissertation set out in Section 1.3. The questions were formulated at a later stage, after the literature had been reviewed and the first two chapters already drafted.

Due to the sensitivity of the subject, interview schedules were designed in such a way whereby such schedules included open-ended questions, ‘yes’ or ‘no’ questions, and questions containing ranges. The latter was included since some questions could have impinged upon areas of confidentiality. Thus, certain questions allowed the interviewee the choice of circling a range, rather than stating the exact figure.

Copies of the letter of introduction together with the interview schedule can be found in Appendix 3.1 and Appendix 3.2 respectively.

The Interview Schedule

The first few questions were general questions about the company being interviewed.

This was followed by Section A which dealt with the utilisation of cash together with the establishment of the common method of payment both from the customers’ and the suppliers’ point of view. This section also included questions regarding cash policies in place.

Section B specifically dealt with the internal controls in place to safeguard cash and whether the company suffered any fraud by its employees.

In Section C, respondents were asked whether they were aware of the cash payment limit together with their views and concerns on this matter.

During the interviews, data was recorded by writing notes and not using other means such as audio or video recording due to the sensitivity of the subject. After each interview, a transcript was written in order to have all the information in an orderly and typed manner.

Data Analysis and Presentation of Findings, Discussion, Conclusion & Recommendations

Data analysis involved an initial careful summary of the information obtained from the interviews in a spreadsheet, in order to simplify the data analysis required to prepare the findings presented in Chapter 4. This is followed by a discussion in Chapter 5. A summary, concluding remarks and recommendations are discussed in Chapter 6.

Limitations

Limitations of Qualitative Research

Qualitative research is broad by nature. Therefore, difficulties might be encountered when verbal data from interviewees is reproduced for analysis. This is because, for every interview, respondents might deviate from the topics presented for discussion leading to the gathering of unsystematic data.

Qualitative research may be labelled as being subjective in nature since it depends on the approach taken by the interviewer to gather such information.

Due to the limited number of companies interviewed, findings of qualitative research should not be generalised since respondents’ views do not reflect the views of all SMEs in Malta.

(Bryman, 2008)

Limitations of the Study

Attempts to gather statistics or information on the use of cash in the local scenario from the National Statistics Office, the Central Bank of Malta and the Ministry for Fair Competition, Small Business and Consumers proved futile since neither institution gathers such data.

Statistics on the common types of asset misappropriation are not compiled in Malta, thus specific remarks on the local scenario could not be made. One must appreciate that collection of such data might be difficult to gather given that not everyone will be willing to participate and make such information public. Nevertheless, reference was made to ACFE Reports to classify the elements of asset misappropriation, including types of cash fraud.

Since cash payment limits have only been implemented in recent years, there is no literature on the effects these might have on businesses in the long-term and on other aspects of the economy.

Conclusion

This chapter presented the research methodology used to obtain the necessary information to attain the research objectives of this dissertation. Chapter 4 incorporates the findings from the analysed data.



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