A STUDY ON​

AI-DRIVEN INNOVATION IN FRAUD DETECTION AND

PREVENTION OF MODERN ACCOUNTING

Rabiya unnisa begum,Fatima unnisa begum​

Final year B.COM(CA) second year B.COM(gen)​
Author
Mrs.B.Nalini
Principal
DEWAN BAHADUR PADMARAO ​
MUDALIAR COLLEGE FOR WOMEN
 ABSTRACT:
In today's fast paced digital world ,the area of business in accounting faces
increasing challenges from evolving fraud tactics .Traditional fraud detection
methods struggle to keep up with modern fraudsters.AI provides a revolutionary
solution by advanced alogrithms and machine learn to analyze vast amount of
data in real-time ,detecting subtle patterns and anomalies that indicate fraud
.Unlike rule based systems ,AI can identify fraud early ,preventing significant
financial losses. and reputational damage .this study explores the role of AI in
fraud detect,its benefts ,and how effectively applied in the area of business in
accounting .the paper deals with in studying the various types of AI techniques
that are present in fraud detection .​
​
KEYWORDS:
KEYWORDS: Artificial intelligence ,Accounting ,Fraud detection
 INTRODUCTION:
INTRODUCTION:
Accounting fraud poses a significant challenge, consequences for business ,government
and individuals alike (kaur et.al., 2023)According to association of certified fraud
examination (ACEF) ,estimated that organization lose approximately 5% of their
annual revenues to fraud ,amounting to trillions of dollors on a global scale.beyond
monetory losses,its effects include reputational harm,legal consequences ,and reduction
in stakeholder trust(campa et.al.2023)notable corporate scandals ,such as
enron,worldcom highlight the severe consequences of fraudulent activites and
underscore the critical need to effective fraud detection mechanisms.​
AI powered international fraud detection is crucial for identifying suspicious
transactions and stops fraud ,protects money and boosts security worldwide.through
methods like machine learning(ML),natural language processing (NLP),Data mining
,Robust Fraud ,etc
To know about data
security

To know the various techniques

of preventing frauds through AI

To examine the speed of

improving fraud detection
through AI
To understand how human
errors can be reduced
 NEEDOF
NEED OF
TECHNIQUESOF
TECHNIQUES OFAI:
AI:
STUDY:
STUDY:
The study of AI's role in fraud detection and
prevention in accounting is essential due to rising
sophisticated of fraud and the limitations of
traditional detection methods.AI allows to
analyvast amount of data in real time using
techniques like anomaly,ML,NLP to detect
hidden patterns and to identify. Suspicious
activities. It provides data security to business
fraud prevention also helps in predicting risks
and addressing the issues. As financial fraud
becomes more complex,studying AI's application Machine learning(ML) is a branch of artificial intelligence (AI) that
enables system to learn and improve from data without being explicitly
challenges,and benefits which help to eradicate programmed . ​
frauds by the help of AI. Supervised learning is labeled data ​
Unsupervised learning is unlabele
 AI TECHNIQUES IN FRAUD DETECTION
AI TECHNIQUES IN FRAUD DETECTION

According to Shahaana et al.,2023. Traditional fraud Data mining involves

detection methods in accounting have relied heavily on extracting useful patterns ,
manual processes ,audits and rule based
system.Traditional auditing involves reviewing financial insights and knowledge from
statements,conducting substantive tests,and assessing large datasets.its uses
internal control to identify potential fraud . Auditors use
methods like sampling,ratio analysis,comparing financial
techniques like clustering and
data to uncover discrepancies or unusual classification for fraud
patterns.Traditional auditing involves reviewing financial Natural language processing (NLP) is a detection AI alogrithm in fraud detection use
statements,conducting substantive tests,and assessing field of AI that plays a key role in machine learning techniques to
internal control to identify potential fraud . Auditors use
between machine and human language identify suspicious activities in
methods like sampling,ratio analysis,comparing financial
data to uncover discrepancies or unusual patterns. processing.it is widely used in financial transaction .in supervised
applications like chatbots,voice assistants learning methods like logistic
and traslator tool. It works for regression ,decision tree,neutral
communication pattern and textual networks help classify transaction as
content for user​ fraudalent .
 CONCLUSION:
AI is reshaping fraud detection in modern accounting by enabling smarter, faster, and more
adaptive financial security systems. Traditional rule-based approaches struggle to keep pace
with evolving fraud tactics, but AI-driven solutions use machine learning, data mining, and
natural language processing to detect anomalies in real time. This shift from reactive to
proactive fraud prevention enhances accuracy, reduces risks, and strengthens financial
integrity.​
As AI technology advances, its integration into accounting will drive greater automation,
efficiency, and compliance. However, continuous innovation and ethical oversight are essential
to address emerging challenges, such as data privacy and regulatory adherence. By responsibly
adopting AI-driven fraud detection, organizations can build a transparent, secure, and future-
ready financial ecosystem that benefits all stakeholde
RESERCH METHODOLOGY:
The Data collected for this study is taken from Internet ,Articles ,Magazines
,Newspapers and literature review.
 Network
Device Security Protection Data Privacy
AI can help to secure IoT AI can protect IoT
networks from attacks by AI can help to protect
devices by identifying and
detecting and preventing the privacy of data
mitigating vulnerabilities.
malicious activity. generated by IoT
devices.

Cryptographic Techniques, For long term - AI AI-Driven Fraud

anti-money laundering ,and includes improved
prevention system will
AI can help in organising accuracy,efficiency
comply with SOX,FCP and
reduce Financial
,security and
GDPR complaince losses,enhance consumer
trust and optimize fruad
detection process

As AI technology evolves ,businesses and regulators must adapt it strategically to stay ahead of emerging fraud
threats is an increasingly digital world.
 B I B L I O G R A P H Y:

•⁠ ⁠Campa, D., Quagli, A., & Ramassa, P. (2023) The roles and interplay of enforcers and auditors
in the context of accounting fraud: a review of the accounting literature. Journal of
AccountingLiterature.
•⁠ ⁠. Kaur, B., Sood, K., & Grima, S. (2023). A systematic review on forensic accounting and its
contribution towards fraud detection and prevention. Journal of Financial Regulation and
Compliance, 31(1), 60-95.
•⁠ ⁠Shahana, T., Lavanya, V., & Bhat, A.R. (2023). State of the art in financial statement fraud
detection: A systematicreview Technological Forecasting and Social Change, 192, p.122527.
•⁠ ⁠https://www.ijraset.com/research-paper/credit-card-approval-prediction-using-classification-
algorithms
•⁠ ⁠IWEI YI et al.: Artificial Intelligence in Accounting and Finance: Challenges and Opportunities
•⁠ ⁠Finance & Accounting Research Journal, Volume 6, Issue 6, June 2024
www.fepbl.com/index.php/farj
DEWAN BAHADUR
PADMARAO MUDALIAR
DEGREE COLLAGE FOR
WOMEN