Abstract:
The aim of this study was to evaluate the drivers of fraud risk among state corporations in
Mombasa County Kenya. The study was guided by one specific objectives namely; asset
misappropriation. The study was anchored on the Clark Study theory. This research study
employed descriptive research design. The target population comprised of 64 internal auditors
and accountants of state corporations in Mombasa County. A census survey was carried out on
all the internal auditors of state corporations in Mombasa County. Structured questionnaires
were used for data collection. The questionnaire was self-administered. SPSS 21 package was
used to carry out descriptive and inferential analysis. Inferential analysis involved the use of
correlation and regression analysis. Model R
2
, F-Statistics and regression coefficients was
generated and interpreted. Inferential statistics was carried out at 95% degree of confidence.
Results were presented using tables and figures. Correlation results showed that asset
misappropriation has a positive and significant association on fraud risk among state
corporations in Mombasa County. The study concluded that presence of cases of
misappropriation of funds in the organization, presence of ghost employees, presence of
unauthorized cash transfer and the presence of misappropriation of funds cases positively and
significantly affects fraud risk among state corporations in Mombasa County. The study recommends that management of state corporations in Mombasa County put in place punitive
measures to curb misappropriation of funds. The study also recommends that the management
of corporations in the county, audit their personnel databases to get rid of ghost employees. The
study further recommends for the implementation of strict cash transfer policies so as to reduce
misappropriation of funds.