This article originally appeared in the March/April 2025 issue of the Delaware Business Magazine HERE.
The Government Accountability Office estimates that fraud in the federal government costs taxpayers between $233 billion and $521 billion each year. Our current presidential administration has promised an increased focus on fraud, waste, and abuse. Tech giants are visibly aligning with these initiatives and recommending artificial intelligence (AI) to help detect fraud in government. But is AI really the magic bullet that can stop these losses?
Last year, the Association of Certified Fraud Examiners released its first-ever Anti-Fraud Technology Benchmarking Report to give professionals a sense of what tech products are available to combat fraud and how they are being used in both the private and public sectors. Ninety-one percent of organizations surveyed were already using some form of automated data analysis—such as flagging suspicious transactions—to prevent fraud, and the top risk areas being monitored were disbursements and purchasing. The use of AI is expected to triple over the next two years due to widespread adoption of generative AI. Even now, professionals can use programs like ChatGPT to analyze datasets, read contracts, and identify inconsistencies in text exchanges that may indicate fraud.
What about state government? Are there fraud detection use cases in Delaware? The answer is yes—many of them, even in niche areas. For example, New York state is currently piloting FraudFindr, a software for aging services agencies to detect financial exploitation of older consumers. Social service caseworkers are analyzing consumer financial records for suspicious transactions and stopping abuse faster. AI categorizes the transactions and looks for trends and anomalies indicative of financial abuse. Law enforcement agencies nationwide also use the software, and their findings support prosecution and other forms of intervention.
For our state to successfully deploy technology to combat fraud, here’s our advice:
- Assess data readiness and integrity: Before investing in software, departments need to ensure they have the appropriate data available for analysis—and in the proper format. As the adage goes, “garbage in, garbage out,” and we cannot afford more waste.
- Assess skill sets within departments: Does the department have the resources for implementation, not just in terms of bandwidth but also experience? If not, should they hire or outsource the task?
- Embrace public-private partnerships: Out of the box anti-fraud tech solutions are readily available. While many states and municipalities have historically developed their own databases and other programs, the rapid pace of technological change is too fast for governments to manage alone. Nor should departments attempt change management without experience. Private businesses in Delaware are ready to assist with procurement and implementation of projects like these.
No organization is immune to fraud. If you need further guidance or have any questions on this topic, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
