New report explores internal audit’s role in addressing AI-enabled fraud

Artificial intelligence is transforming business operations, but it is also creating new opportunities for fraud. A new report by the Internal Audit Foundation in collaboration with AuditBoard examines how internal audit functions are responding to this emerging risk.

The report “Internal Audit and AI-enabled Fraud” explores how organisations perceive AI-driven fraud risks, how prepared internal audit teams are to detect them, and what actions are needed to strengthen resilience.

Based on a survey of 373 senior internal audit leaders, the research highlights growing awareness of the threat. Eighty five percent of respondents consider AI-enabled fraud a moderate to high risk, yet fewer than four in ten believe their internal audit function is adequately prepared to detect it.

The report also identifies the most common concerns organisations face, including AI-powered phishing, fabricated financial documents and automated social engineering. At the same time, internal audit teams are increasingly adopting AI tools themselves, which can help strengthen their ability to assess controls and detect misuse.

Several barriers still limit preparedness, including limited access to technology, shortages of specialised skills, and competing organisational priorities.

The research underlines that effective responses require continuous skill development, organisational alignment on AI use, and close collaboration between internal audit, cybersecurity, and risk management teams.

As AI adoption accelerates across organisations, internal audit has an important role in helping management understand and address the associated fraud risks.

Curious about the findings and recommendations?

Download the full report Internal Audit and AI-enabled Fraud