Page 30 - CMA Journal (Jul-Aug 2026)

F oc us S ec t ion

Machine learning permits these mechanisms to further help detect corrupt activities in public CASE STUDIES: Anti-Fraud System using AI
advance and get better over time, as they are exposed procurement, such as repeated bidder groups, unusual
to increasingly more data to ag suspicious activity. supplier activity, etc., which can aid in doing due Consider Brazil's Robo Laura which is an AI-powered platform to investigate public procurement agreements,
Supervised learning datasets consist of transactions diligence including risk assessments. The use of this as an e ect to high-pro le corruption scandals. With the enactment of Robo Laura, distinctiveness in public
infrastructure contracts could be detected early on, averting millions of dollars being lost.
which are labelled as fraudulent and legitimate, and methodology was applied to information from Chilean
classi cation models are developed using these public procurement, where it showed its possibilities The Government of India's project demonstrated AI and data analytics to reconcile data from tax returns, bank
datasets. Machine learning (ML) algorithms have of improving transparency and risking the reduction of statements, property records, and even social media interactions. The results have seen greater tax revenues,
proven successfully e ective in sleuthing and corruption. higher numbers of voluntary lers, and condensed tax o cial prejudice during tax assessment
Introduction Economic Crime Survey prioritizing investigations of reported purchases in AI Use-Cases in Audit and Tax (Atta-ur-Rahman, 2025).
that
Public procurement contains governments and 2024 found fraud enterprise data, as this helps advance the e ectiveness Compliance The Clean Portal is the AI-driven digital center of South Korea, which combines and examines large datasets
procurement
state-owned enterprises attaining goods, services, and ranked among the top of an organization’s control for the bene t of the from di erent ministries. The process includes arti cial intelligence systems to analyses nancial disclosures,
works, revealing substantial public funding that organization. Rather, unsupervised learning AI-Enhanced Audit Processes government agreements and the action of civil servants, comparing declared nancial assets to procurement
produces prospects of e ciency and ethical three (along with techniques, like clustering and anomaly detection, AI is substantially changing audit processes in the decisions or to patterns of contracts awarded and concluding about potential con icts of interest.
procurement practices (Sampaio et al., 2026). Yet, fraud revenue fraud and detect patterns that deviate from those the training public sector. Audits of bene ciary schemes using the
in the buying and sourcing procedure is a major issue, transfer pricing fraud) data has seen, and can therefore be utilized in spotting supremacy of AI/ML have exposed many more cases of This comprises a detailed concern about algorithmic compliance systems restructure and increase
and high amounts of money are lost in the process, and most disruptive new fraud patterns, without the requirement of frauds, evading the misuse of huge nancial resources. bias, such as the Dutch tax agency's penalty for tens of e ciency and e ectiveness. But ethical challenges
public con dence eroded (Alves Batista, 2024). It is economic frauds in the labelled training information. AI-driven forensic audits can reveal fraud trends which thousands of families, mostly from lower-income and regarding transparency, fairness and accountability
projected that the global economy loses more than 5% past two years, VigIA is a tool developed to monitor public can only be deducted by fraud machine learning. ethnic groups, on using a self-learning algorithm to need to be improved, which can be done by
of its GDP due to corruption, and the leakage of over impacting 59% of all the procurement using machine learning models in order deduct bene ts fraud (Anonymous, 2024). developing systems like PRO-Trust. Therefore, to
one trillion dollars in bribes annually (Sampaio et al., respondents. Likewise, to assist detection of ine ciencies as cost overrun and In the domain of auditing, intelligent invoice The PRO-Trust Framework appreciate the advantages and reduce the dangers of
2026). Procurement fraud is often among the top three only 26% of delivery delay, and risk indicators to highlight veri cation systems prove to be a practical use of AI. AI, procurement professionals and auditors will need
most disruptive economic crimes the world over, after organizations leverage irregularities in the public procurement process Enhanced Apriori algorithm has very high veri cation The PRO-Trust pipeline delivers an ethics-focused to invest in developing their technical expertise and
cybercrime and corruption (PwC, 2024). data analytics to identify (Salazar et al., 2024). In this data-driven method, the e ciency, and its application, particularly in nancial framework to building reliable AI-based Fraud the framework of ethical governance.
As procurement systems have engraved their path into unusual bidding oversight agencies can focus their scarce resources on robots for normal, abnormal taxation, fraud supplier Detection solutions for the sector of Public References
Procurement. PRO-Trust covers ve recurring ethical
the virtual world, transactional information has grown behavior, which is signi cant as there is still plenty of highest-risk contracting activities. Risk Guard is also invoice, can be used in practice. These systems enable questions system opacity, user transparency, explain • Alves Batista, D. (2024). Enhancing transparency and accountability in public
in important and substantial volumes, providing potential to make use of the technology in areas of one of the leaders in machine learning and transparent you to scan the procurement invoices against the ability instruments and, role of the operator, and procurement: Exploring blockchain technology to mitigate records fraud. Records
opportunities as well as di culties for fraud detection. detecting potential fraud techniques (PwC, 2024). decision-support tools that detect unusual procurement contracts, the delivery record, and tax Management Journal, 34(2-3), 151–170. https://doi.org/10.1108/RMJ-
10-2023-0054
Over time, the traditional fraud detection means based Limitation of Traditional Approaches procurement patterns and risks, which include led documents on real-time basis. strategic consideration of ethical principles with • Anonymous. (2024). Applied Machine Learning to Anomaly Detection in Enterprise
measures that can be taken during the advancement
on rules are becoming inadequate to deal with the supervised and unsupervised machine learning, AI for Tax Compliance Monitoring Purchase Processes. Harvard ADS. https://ui.adsabs.harvard.edu
/abs/2024arXiv240106234A
volume and complication of procurement data (OECD, Conventional methods of fraud deterrence and network science, and statistical/probabilistic modeling of the AI-based technology, deduction of the • Anonymous. (2024). Arti cial intelligence for detecting and preventing
2024). Arti cial Intelligence (AI), including machine detection are profoundly reliant on manual audits, (Anonymous, 2024). AI is intensifying tax administrations' capabilities to responsible actors, and application of technological procurement fraud. OUCI. https://ouci.dntb.gov.ua/en/works/7Xxg0G9Q/
learning (ML), o ers a transformative mechanism– and rules-based systems and random sampling methods. reduce fraud and corruption by re ning risk strategies to operationalize ethical principles. In • Anonymous. (2024). Challenges in Addressing the Ethical Aspects of Arti cial
methods to deduct, envisage and lessen fraud and The complicated and extensive nature of the Natural Language Processing for Fraud Detection management processes, accompanying taxpayer conclusion, PRO-Trust puts its e orts into the making Intelligence to Detect Fraud in Public Procurement Processes. OUCI.
https://ouci.dntb.gov.ua/en/works/7Xxg0G9Q/
corruption threat in a scale not possible before with procurement processes makes it challenging for these Using Natural Language Processing (NLP) practices, compliance, and decreasing taxpayer burdens (OECD, of more reliable, transparent and accountable AI-based • Anonymous. (2024). Detection of Structured Fraud Supported by Shell Companies
traditional means (OECD, 2024). methods to deduct highly developed fraud designs anyone can get automated insight into unstructured 2024). Tax administrations can evade non-compliance fraud detection systems in public administration. on Goods and Services Trading Operations. Mendeley. https://www.mendeley.com/
(Salazar et al., 2024). A high number of false-positives is by nding ways to mediate at earlier stages of taxpayer • Anonymous. (2025). Data-Driven Transparency: Machine Learning and Social
It looks at how technologies powered by AI can be generated by rules-based systems, which are procurement documents, such as tender documents, phases. AI-driven network analysis, blockchain Challenges and Future Directions Network Analysis for Corruption Detection in Public Procurement. ScienceDirect.
https://www.sciencedirect.com/science/article/pii/S1877050925029722
used for Fraud Detection in Public Procurement mainly non- exible to new types of fraud and human auditors assessments, and contracts. The study directly aimed at veri cation, and computer vision have already proven Though there is great promise, there are also • Anonymous. (2025). Intelligent Invoice Dynamic Veri cation for Accounting-Type
through Audit and Tax Compliance Applications. The struggle in processing large volumes of data (Sampaio evaluating the potential of automated corruption risk operative for customs fraud detection, including under important issues to reduce when it comes to AI and its Financial Robots Based on an Improved Apriori Algorithm. Semantic Scholar.
https://www.semanticscholar.org/
analysis re ects three main areas – (1) Anomaly et al., 2026). Furthermore, outdated approaches are indicator detection and identi cation in procurement valuations, smuggling, and false goods classi cation enactment in the world of procurement fraud • Atta-ur-Rahman. (2025). AI against corruption. The News. https://www.thenews.
detection with AI for detecting procurement fraud, (2) texts has been completed by analyzing state-of-the-art (Anonymous, 2024). Similarly, AI solutions in VAT fraud detection. Data quality and availability remain to be com.pk/print/1315923-ai-against-corruption
AI applications for monitoring tax compliance, and (3) reactive and not practical, meaning fraud is deducted technologies for automated corruption risk indicator vigorous issues and AI practices demand large, • European Commission. (2024). Member States' measures to combat tax fraud and
protect EU nancial interests. EUR-Lex. https://eur-lex.europa.eu/
AI changes to the audit process with automation. after a signi cant amount of money has been lost, and detection and making a comparative analysis of these have e ectively drive to the investigation of carousel high-quality datasets for training and validation • OECD. (2024). Arti cial Intelligence: Anti-Corruption and Integrity Outlook 2024.
Furthermore, the ethical and practical insinuations of not in real-time. technologies, and suggesting the application of the fraud, fake invoice systems, and handlings of refunds, purposes. Capacity limitations in the organization are a OECD Publishing. https://www.oecd.org/
using AI in this eld are observed, with a precise focus AI-Powered Fraud Detection Contextual Transformer Models for scalable, and therefore allowed tax authorities to recover hurdle to implementation, including lack of technical • PwC. (2024). Global Economic Crime Survey 2024. PwC. https://www.pwc.com/
on the challenges of depending on AI tools so broadly. Technologies transparent and operational anti-corruption billions of dollars in loss in tax revenues. knowledge and/or resistance to change (OECD, 2024). • Salazar, A., Pérez, J. F., & Gallego, J. (2024). VigIA: Prioritizing public procurement
oversight with machine learning models and risk indices. Data & Policy, 6.
The Landscape of Procurement Fraud Machine Learning for Anomaly Detection monitoring systems (Salazar et al., 2024). Ethical Challenges and PRO-Trust Though there is a massive investment in AI solutions https://www.semanticscholar.org/paper/VigIA%3A-prioritizing-public-procurement-o
versight-Salazar-P%C3%A9rez/de20e997a6d549da1655e838bd1f795a25fcb526
and Tax Evasion Machine learning algorithms are most superior in Social Network Analysis Applied to Collusion Framework for procurement fraud detection, the market is still in • Sampaio, I. G. B., de Oliveira Andrade, E., de Souza Barbosa Fontes, S., Bernardini, F.
C., & Viterbo, J. (2026). Trustworthy AI in public administration: The PRO-Trust
its infancy, having reached USD 1.98 billion with a
Detection
The Scale of the Problem analyzing complex information, and provide excellent Traditional tools of detection fail to work as well with Ethics of AI Fraud Prevention CAGR of 23.6% in 2024 (Anonymous, 2025). pipeline for ethical fraud detection in public procurement. Government
Information
Quarterly.
https://www.sciencedirect.com/science/article/pii/
S0740624X26000547
Procurement fraud can be considered as any type of capability to detect anomalies that might easily be supplier collusion and con icts of interest. With the As AI is employed in fraud detection, there are Conclusion • Taxmann. (2024). Combatting 'Procurement Fraud' – Classi cation | Key Risks |
illegal act that is committed with the intention of overlooked by human auditors. AI algorithms can help of Machine Learning and Social Network Analysis, substantial ethical challenges at stake, including Mitigation Strategies. Taxmann. https://www.taxmann.com/
securing economic or other advantages in the examine massive amounts of data in just a few minutes it is feasible to identify fraudulent supplier respect for human privacy, prevention of harm, AI technologies transform fraud detection, audit About the Author: Mahwish Mehmood is an Inspector at the
procurement process of goods/services or contracts when handling with public procurement data, tax relationships. Machine Learning together with Social equality, and explain ability (Sampaio et al., 2026). procedures and tax compliance in public procurement. Inland Revenue Department of the Federal Board of Revenue
(Taxmann, 2024). Some general illustrations are invoice records, or government expenses, which supports Network Analysis can be a powerful tool to detect System opacity, lack of user transparency, automated The use of machine learning algorithms and natural (FBR), Pakistan. She holds a Bachelor’s degree (2015) and a
explain ability tools con nes, lack of operational error
fraud, shell company schemes, supplier collusion, deduction anomalies that could show bribery, fraud, or suspicious supplier relationships (Anonymous, 2025). language processing (NLP), along with social network Master’s degree (2018) from Islamia University Bahawalpur, and
con ict of interest and bid rigging. The PwC Global embezzlement (Atta-ur-Rahman, 2025). and lack of strategic control are recurring ethical analysis, can support in assessing fraudulent patterns is currently pursuing a PhD-DBA at INTI International University,
CASE Studies: Anti-Fraud S using AI. The models can problems. on a large scale, and AI-driven audit tools and tax Malaysia.
28 ICMA’s Chartered Management Accountant, Jul-Aug 2026