This paper aims to provide administrators with a better understanding of the issue of asset misappropriation in order to provide better ethical practices and governance among public sector employees. Data for this study were gathered from 180 employees of three Malaysian municipal councils. The findings revealed that Municipal Council B faces the greatest risk of asset misappropriation by its employees. Municipal Council A comes next, and Municipal Council C is the least risky. This study contributes greatly to the literature by presenting evidence on the level of likelihood of asset misappropriation in local governments. The results of a survey and an interview disclosed that asset misappropriation was a problem for the selected local governments. The study is conducted on only three Malaysian municipal councils and covered only one form of fraud.
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