Deloitte’s $290,000 Government Report Revealed to Contain AI Errors

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The accounting firm has committed to partially reimbursing Australia’s Labor Department for “hallucinations” found within its work product

Deloitte’s Australian branch, part of the ‘big four’ UK accounting firms, has consented to partially refund the expense of a report it prepared for the Canberra government. This decision follows the discovery that the document contained multiple factual inaccuracies generated by artificial intelligence, as reported by the Australian Financial Review on Sunday.

The Department of Employment and Workplace Relations (DEWR) quietly replaced the initial report, which was released in July, with an updated 237-page version last Friday, just before a long weekend. Officials initially stated that the revision incorporated new information and corrected “some footnotes and references.”

Earlier, Sydney University academic Chris Rudge had highlighted numerous apparent “hallucinations” typical of large language models, prompting Deloitte to initiate an internal review in August.

The revised report now includes a fresh disclosure confirming the use of AI—specifically Microsoft’s Azure OpenAI GPT-4o model—in its preparation. It also rectifies over a dozen errors, including citations of a non-existent court ruling and academic papers, as well as a fabricated quote attributed to Justice Jennifer Davies (misspelled “Davis” in the original version), the deputy president of the Australian Competition Tribunal.

Rudge informed the Financial Review that Deloitte’s admission transformed what he had previously considered “a strong hypothesis” into certainty, even though the confession was “buried in the methodology section.”

A DEWR spokesperson confirmed that Deloitte had “agreed to repay the final installment under its contract,” though the exact amount was not disclosed. The comprehensive study on the computerized application of automated penalties in Australia’s welfare system had cost 440,000 Australian dollars (approximately $290,000 USD).

Rudge, a welfare expert, reportedly first noticed an irregularity when the report referenced a book purportedly written by his Sydney University colleague, Lisa Burton Crawford. The title appeared outside her area of expertise and was ultimately found to be non-existent.