Well, what about these notes from patch 1.06:
It seems to me that the AI is unbounded by "Cash", so it can utilize its entire manpower. I have 120k soldiers unutilized because I simply don't have the cash for it. This doesn't make for very fair battles. It seems the more I win, and the more I take risks to decisively destroy an enemy army, the more I suffer in the next battle, because unlike the AI, I can't utilize everything available to me, unless I have the cash for it.