This paper contributes to the existing gap in understanding the application of artificial intelligence (AI) for detecting financial statement manipulation in the Iraqi-specific institutional setting, including the technological constraints and sociopolitical barriers. Using a sequential mixed-methods design with 407 professionals and 25 follow-up interviews, the results demonstrate AI's strong predictive power in detecting financial manipulations, explaining 95.7% of the variance for content manipulations and 94.8% for timing manipulations. Despite this effectiveness, uptake remains limited due to interference by tribal governance (68%), inadequate infrastructure (72%), and ineffective regulatory enforcement. New perspectives include the presentation of Iraq’s first empirical AI-audit framework. They also propose a fragile economy-specific cultural-technical alignment model. Additionally, AI is positioned as a “digital principal” that can address agency issues in weak institutional environments. It advocates step-by-step integration of cloud-based AI efforts, the use of tribal liaison roles as “a culturally sensitive way to reduce pushback,” and the creation of Sharia-compliant AI standards. At the policy level, it demands that AI be audited by 2027, for the creation of a national subsidy fund for SMEs and for regulatory sandboxes to enable experimentation. Fundamentally, this research redefines AI as not just a technological tool but a socio-political force that can reinforce economic integrity in developing nations.
Muhammad Fathullah Hakim Bin Jaafar (Thu,) studied this question.
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