Page 37 - CMA Journal (Jul-Aug 2026)

F oc us S ec t ion
Digital Intelligence in Procurement:
Strengthening Controls and Combating Fraud
Introduction Arti cial
Procurement fraud does not arise from a single weak Intelligence and
control. It arises as a consequence of a whole system Machine
involved, proper planning and manipulation of the Learning
system, involvement of unauthorized management,
ignoring the internal controls checks. Arti cial Intelligence (AI)
and Machine Learning
In this article I would like to explore all these possible (ML) can make
weaknesses and explain how gaps in procurement procurement process
procedure can create opportunities for fraud and more e cient, cost
manipulation. And then how AI, ML and data analytics e ective and provide
tools work as anti-fraud technologies to overcome accurate results. With Muhammad Saleem, ACMA
Manager Internal Audit
these weakness and frauds. help of AI large and Barqtron Engineering Solutions
The Association of Certi ed Fraud Examiners (ACFE), in complex data can
its report to the nations, estimated that a loss of 5% of provide excellent results. AI and ML identify and
revenue due to fraud each year based on cases studied. prevent ctitious suppliers, duplicate or fake invoices,
The report analyzed 1921 occupational fraud cases control quality of goods and alert about large and
unusual transactions.
from 138 countries, and corruption was identi ed in
48% of the cases. Machine learning can analyze historical and current
data relating to suppliers, purchase order, goods
The World Bank also identi es warning of fraud and receipts records, prices, quantities, description of
corruption in procurement. These ndings show that goods and bank account details of suppliers. AI based
fraud prevention should be treated as responsibility of monitoring of large volumes of transactions can
management and governance rather than only audit highlight risky areas. AI and ML should support
concern. professional judgements rather than replace
Common Procurement Fraud Risks management accountants or internal auditors. Here,
an important point is that input data in AI and ML must
In this section, I would like to explore the common be correct and accurate in order to produce accurate
procurement fraud risk that may arise in this function. results.
These include creating ctitious suppliers, fake or OECD research also notes that AI and machine learning
duplicate invoices, placing most orders with the same can support the identi cation, prediction and
suppliers, ordering goods in large quantities, goods mitigation of fraud and corruption risks, including
not meeting the required standards, description of irregularities in public spending and procurement.
goods not being properly mentioned.
Data Analytics: The Foundation of
Failure to properly disclose the relationships of Continuous Monitoring
employees or management with suppliers may also
create a possibility of fraud. The risk of fraud does not Among all anti-fraud technologies, data analytics plays
arise only at the stage of payment but can happen an important role in monitoring the organization’s
throughout the overall procurement procedure. internal control system and procurement function.
Most e ective strategies by data analytics are as
Failure to follow up the procedure of procurement follows:
such as obtaining quotations, conducting rate and
quality comparison analysis, approval of quotation, • Identifying suppliers receiving unusual high
generating purchase orders (PO), preparing goods volumes or values of transactions
receipt notes (GRNs) and nal payments, should also • Reviewing the history and pattern of business
be checked. relationships with suppliers
ICMA’s Chartered Management Accountant, Jul-Aug 2026 35
• Analyzing goods descriptions, quantities, qualities, Blockchain is therefore mainly valuable for improving
prices and other details transparency, accountability and the reliability of
procurement records. It’s e ectiveness still depends
• Identifying sudden changes in supplier ledgers and upon accurate information being entered into the
bank account details system, together with appropriate governance and
• Detecting payments made before getting approvals access controls. OECD research identi es blockchain as
an emerging technology that can support
or goods receipts
• Monitoring frequent or unusual changes in accountability, vendor compliance and transparency.
purchase orders (POs) E-Procurement and Automated
Controls
These tools can check and identify red ags at an early
stage and focus resources on higher-risk transactions. A properly well designed and automated procurement
Recent OECD work identi es data and predictive
system can improve e ciency, transparency and
analytics for detecting fraudulent activities and control. E-procurement means managing
improving risk assessments. procurement through a structured and digital system.
Blockchain and Procurement In this system required procurement activities are
Transparency carried out through proper documentation, approvals
pre and post control activities and adoption of system
Blockchain is a distributed ledger technology designed protocols.
to record transactions in a secure and tamper-resistant For example, an invoice should proceed for processing
only when the required purchase order, approvals,
manner. In procurement, it can support preventive goods receipt and other relevant information have
controls by maintaining transparent records of
transactions, approvals and other procurement been completed and recorded. Such controls can
reduce manual intervention, prevent incomplete
activities. transactions from moving forward and strengthen the
When combined with appropriate systematic rules and procurement process.
smart contracts, blockchain-based systems can restrict The OECD's 2025 work on digital transformation of
or prevent a process from moving forward when public procurement identi es applications across
de ned conditions, approval requirements or pre-tendering, tendering and post-tendering,
thresholds have not been met. This can reduce the risk including supplier’s performance monitoring, fraud
of unauthorized transactions, record manipulation and detection, risk assessment, automated invoice
bypassing established controls. processing and blockchain-supported transparency.
Role of Management Accountants and
Internal Auditors
Advanced technologies, AI tools and data analytics
alone cannot eliminate the risk of fraud or misconduct.
Management accountants and internal auditors still
remain responsible for ensuring that technology
enabled control are well designed, implemented,
monitored and regularly evaluated for results.
ML and AI depends on quality and accuracy of input
data, proper supervisions continuous monitoring and
professional evaluations and de ned threshold. • Identify procurement red ags: Establish clear
Inaccurate and incomplete input data may lead to indicators for unusual employees’ suppliers’
inaccurate results.
relations, suddenly changes in prices, invoices and
Management accountant can also connect payment patterns
procurement fraud analytics with nancial planning, • Introduced Auto Preventive Controls: Use
cost e ective and evaluating the performance. A system-based approaches, Entry Checks, Alerts to
procurement anomaly that initially appears prevent and highlight unusual transactions
operational may ultimately a ect pro t margins,
project cost and cash ow. Professional input, • Maintain Human Reviews: Maintain regularly basis
monitoring and evaluation the results are essential
management accountant and internal audit
when advanced technologies are used. reviews, monitoring and take signi cate corrective
actions.
Challenges and Limitations
Technology introduces new capabilities like time Conclusion
saving, accurate results and cost e ectiveness. But, on Throughout the overall article, I describe that in
the other hand, creates new risks and challenges. modern era, Technologies like AI, ML, Data analytics
Procurement needed review, system updating and the tools and other forms are important in procurement
introduction of technologies in order to eliminate the function eliminating the risk of fraud and misconduct
risk of fraud.
in an organization, but at the same time human review,
AI and ML tools should not be trusted blindly. Regular monitoring and results evaluation still more important.
human review and professional supervision remain AI, ML, Data analytics, blockchain and e-procurement
important. The e ectiveness of technology depends can strengthen procurement controls, but technology
on data quality proper system con guration and
is not a substitute for sound procedures and
continuous system monitoring. professional judgment.
New technology adoptions can itself be challenging References
because of cost, employee’s acceptance, training, • Association of Certi ed Fraud Examiners (ACFE), Occupational Fraud
system integration and changing existing work 2024: A Report to the Nations. ACFE, 2024.
patterns. For successful adoption therefore required • World Bank, Warning Signs of Fraud and Corruption in Procurement,
planning, management support and continuous Integrity Vice Presidency / Integrity Compliance Knowledge Sharing
Platform.
evaluation.
• OECD, Anti-Corruption and Integrity Outlook 2024, section on Arti cial
Recommendations Intelligence and its use in preventing and detecting fraud and
corruption.
Organization’s procurement function required to • OECD, Analytics for Integrity: Data-Driven Approaches for Enhancing
assess either through advanced technology or just by Corruption and Fraud Risk Assessments, OECD Publishing, 2019.
strengthen internal policies and control systems. • OECD, Digital Transformation of Public Procurement, Public Governance
Technologies should be adopted according to actual Policy Papers, 2025.
requirements, risk level and available resources rather
than simply because it is available.
Four factors are important in this regard:
• Clean and accurate Suppliers Data: Ensuring
suppliers data, banking details and transaction data
accurate and complete