This research presents the architecture and development of an AI-powered compliance engine tailored for the Workforce Innovation and Opportunity Act (WIOA). The system is designed to automate adherence to complex federal and state mandates with high precision and minimal manual oversight. By integrating machine learning (ML), natural language processing (NLP), and regulatory knowledge graphs, the engine enables real-time compliance monitoring, automated documentation validation, and dynamic error correction. The proposed framework addresses long-standing inefficiencies in the public workforce system, where manual processes often lead to audit errors, delayed service delivery, and data inconsistencies. In simulated deployment environments, the engine achieved a documentation validation accuracy of 97%, resolved compliance flags within 48 hours, and reduced audit preparation time by over 60%. When tested with anonymized case data from a regional workforce board, the system showed the potential to cut audit findings by 80% and reduce per-case audit processing time from 90 minutes to just 22 minutes. Manual interventions dropped by over 40%, freeing staff to focus more on participant engagement, career planning, and service coordination. These projected outcomes highlight the engine’s potential to transform WIOA compliance from a reactive, labor-intensive process into a proactive, intelligent workflow. Beyond automation, the system functions as a decision-support tool for frontline staff, administrators, and policy analysts—bridging the gap between regulatory rigor and service delivery. This paper details the system’s technical architecture, key components, validation simulations, and proposes a roadmap for scalable implementation across regional and state workforce agencies.