The New Financial Risk Equation: How AI Is Changing Fraud, Controls, & Oversight in Government

Artificial intelligence is changing the financial risk landscape for state and local government. As AI makes it easier to create convincing receipts, invoices, vendor documentation, and other financial records, traditional controls and manual review processes may be increasingly challenged to identify what is legitimate, what is an error, and what could signal fraud.

At the same time, AI and automation are giving government finance teams new ways to strengthen oversight. By identifying unusual spending patterns, flagging potential policy violations, detecting anomalies earlier, and focusing attention on higher-risk transactions, emerging technologies can help organizations move from reactive review toward more proactive financial controls.

Learning Objectives:

• Understand how AI is changing the nature and sophistication of financial fraud
• Identify where manual processes and traditional controls may leave gaps in detection and oversight
• Outline how AI and automation can help identify anomalies, policy exceptions, and potential fraud earlier
• Evaluate ways to strengthen financial controls without adding unnecessary administrative burden
• List key considerations for balancing AI-enabled capabilities with governance, transparency, and human oversigh