INTRODUCTION
1.1 Introduction
The purpose of the study is to explain why the misappropriation of asset happens in the public sector. Asset misappropriation is where the frauds involved the perpetrator employs trickery or deceit to steal or misuse an organization’s resources. The individuals committing asset misappropriation may be among the employees of an organization, customers or vendors of an organization, or may be the individuals unrelated to the victim organization. According to the KPMG Malaysia Fraud Survey Report 2009, 66% of the survey respondents believed that fraud is perceived to be a major problem in Malaysia reflecting an increase of 4% from the 2004 survey. From previous reading, fraud happened in developed countries such as States of America which have Enron and WorldCom. Malaysia also has no exception where also has examples of fraud cases such as Transmile, Megan Media and Bank Bumiputra (Gomes, 2010). The latest fraud cases that appeared in headline news are the uncovering of the National Feedlot Corporation (NFCorp) and Port Klang Free Zone (PKFZ). PKFZ is having a massive scandal which involves corruption by government officials involving a large amount of RM12.45 billion according to a report by PriceWaterHouseCoopers (PWC) Advisory Services (Arrests in Malaysian Port Scandal : Malaysia Today Online News, 2009). Besides that, Tuna Port Authority also having a fraud that involves the amount of RM243.88 million and it is also the case after the PKFZ and the government has to pay for the sake of it (Auditor’s General Report, 2007). Based on research, percentage of organization reported fraud in previous 12 months are 37% from government and state-owned enterprise, 31% from listed companies, 28% from private sector and 4% from other organizations (Global Economic Crime Survey by PWC, 2011). Asset misappropriation frauds are divided into two categories which are: (1) the theft of cash and (2) the theft of non-cash assets.