ARTIFICIAL INTELLIGENCE AND AUDIT QUALITY: EVALUATING ITS ROLE IN FRAUD DETECTION AND FINANCIAL REPORTING INTEGRITY IN NIGERIAN PUBLIC INSTITUTIONS

Abstract

The adoption of artificial intelligence (AI) in auditing offers significant potential to address persistent challenges of fraud and weak financial reporting in public sector institutions. This study examines the impact of AI adoption on audit quality in Nigerian Ministries, Departments, and Agencies (MDAs). Using a cross-sectional survey design, data were collected from 378 auditors, accountants, and finance officers. Ordinary Least Squares (OLS) regression analysis revealed that AI adoption has a strong positive and statistically significant effect on audit quality (β = 0.426, p < 0.001). Auditor competence and internal control systems were also significant predictors. The findings demonstrate that AI enhances fraud detection and improves financial reporting integrity, but its effectiveness depends on complementary investments in human capital and institutional controls. This study contributes empirical evidence from the public sector context in a developing economy and offers practical policy recommendations for regulators and public institutions.