The State of Texas may potentially have severe problems. State agencies and their employees are vulnerable to occupational fraud, and the agencies are not all equally prepared to fight fraud. The main purpose of this paper is to call attention to the problem of occupational fraud in Texas State Agencies. In addition, this paper will attempt to link personal and organizational ethics with fraud. The reason for discussing ethics is that it is the discipline, which deals with what is right or wrong. It is a basis in which people guide their behavior. In terms of employee fraud, agencies need to understand the connection. Lastly, there will be an attempt to determine what actions are being undertaken to raise fraud awareness within agencies, as well as to analyze their perceptions about employee fraud.