This descriptive study titled “Financial Management Vulnerabilities in Public Universities: A Descriptive Study of Imo State University and Kingsley Ozumba Mbadiwe University, Nigeria, with Insights on the Potential of Artificial Intelligence for Fraud Detection and Budget Optimization” examined financial management challenges at two public universities in Imo State, Nigeria. The population comprised administrators, finance officers, bursary staff, and academic staff at Imo State University (IMSU) and Kingsley Ozumba Mbadiwe University (KOMU). A purposive sample of 80 participants (40 per university) was drawn from the target population. Five research questions guided the investigation. The instrument for data collection was a structured questionnaire with four Likert scale sections. Reliability testing using Cronbach’s alpha coefficient yielded an overall reliability score of 0.87, with section scores ranging from 0.81 to 0.89, indicating high internal consistency. Key findings revealed that 95 per cent of IMSU respondents identified infrastructure deficits as the most pressing challenge, while 87.5 per cent reported procurement irregularities. The admission racketeering scandal at IMSU involved 230 fake admission letters and approximately ten staff arrests. IMSU exhibited more severe vulnerabilities than KOMU due to institutional age and complexity. One key recommendation is that university administrators should establish AI and Digital Governance Committees within governing councils and digitise financial records for the past five years as immediate priority before full AI deployment. 

Keywords: Financial management vulnerabilities, Fraud detection, Artificial intelligence, Budget optimization, public universities.