Fraud and technology: How to handle the double-edged sword

A report on the challenges facing audit committees as they convene during busy season placed technology disruption and AI integration risks atop a list of risks standing between organizations and their financial targets in 2026.

Leaders from the Center for Audit Quality (CAQ) recently shared the idea that technology also can be a disruptor in a positive way.

“Amidst this dynamic environment, technology really gives us an opportunity to raise the bar in the fight against fraud,” said Erin Cromwell, CPA, senior manager for professional practice at the CAQ. “It’s going to be the combination of humans and technology that are going to enable us to be successful.”

A report from the EY Center for Board Matters, “2026 audit committee priorities: navigating the complexity and change,” can serve as a reference guide for audit committees, laying out four areas of focus for 2026 (risk management, financial reporting, tax and other policy-related developments, regulatory developments) and detailing questions that committees should ask themselves in their efforts to manage each area.

The threat posed by fraud is a factor in all of the areas. At the recent AICPA Conference on Current SEC and PCAOB Developments, representatives from the CAQ, which is affiliated with the AICPA, detailed their efforts as a part of the Anti-Fraud Collaboration to combat the growing challenge.

“It’s important to recognize that we are currently operating in a dynamic fraud risk environment where emerging risks are being shaped by rapid technological advancements, shifting regulatory priorities, and the evolving tactics of fraudsters and bad actors,” said Lucy Wang, CAQ director for anti-fraud activities. “During this period of change and uncertainty, I think it’s critical for organizations and their stakeholders to remain vigilant. They can do so by continually monitoring internal and external fraud risks, reassessing existing anti-fraud efforts, maintaining professional skepticism, and adapting to new challenges as they arise.

“The success in the fight against fraud depends on the collective effort of all the participants in the financial reporting ecosystem.”

Dennis McGowan, CAQ vice president for professional practice and anti-fraud initiatives, reminded attendees that despite the depth of the challenges, anti-fraud efforts are generally effective.

“The tools are working,” he said. “While we all should remain vigilant — and I think the Anti-Fraud Collaboration is a way for stakeholders to remain vigilant — we don’t need an overhaul of the system. We just have to keep our eye on the ball.”

The latest AFC resource, a report released last month featuring insights gleaned from a fraud forum the group hosted, echoed the EY report by calling AI “likely the biggest risk for organizations.”

The report, “Navigating a Dynamic Fraud Risk Environment,” includes a list of ways to apply technology to deter and detect fraud and a list of priorities for organizations to combat technology-enabled fraud:

• Define “normal” behavior: Establish baselines of “normal” behavior or trends. This allows organizations to more easily identify anomalies both in behavior and in documentation.

• Human-plus-technology approach: When using AI to combat technology-enabled fraud, keep humans in the loop. Organizations should encourage employees to augment their skepticism when using AI to combat technology-enabled fraud and allocate additional time for consideration and collaboration when important decisions need to be made.

• Prepare talent across functions: This should not be limited to information technology and engineering professionals. It should include employees across all business functions. It is essential to develop a comprehensive strategy that equips talent with the skills.

Editor’s note: The CAQ update was a small part of what the AICPA Conference on Current SEC and PCAOB Developments offered. If you attended, you can log in to view the session and other archived sessions. 

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.