Deloitte was caught using AI in $290,000 report to help the Australian government crack down on welfare after a researcher flagged hallucinations
From the Dossier
Entry 3 of 26. Section A: Firm-specific scandals and accountability failures. Back to the Dossier
Summary
A 237-page “independent assurance” report Deloitte Australia produced for the Department of Employment and Workplace Relations contained fabricated academic citations, a misattributed quote from a federal court judgment, and references to nonexistent studies. University of Sydney researcher Chris Rudge flagged the errors; Deloitte revised the report, disclosed that generative AI (Azure OpenAI) had been used, and refunded part of the government’s payment. Rudge told the AP he “instantaneously knew it was either hallucinated by AI or the world’s best kept secret” upon encountering a fabricated book attribution. The revised report includes a disclosure that Azure OpenAI was used in its creation.
Source description
Fortune’s account is grounded in the department’s own statements and the original Australian Financial Review reporting.
Credibility assessment
This is a textbook case of Rule 3 (Audit the Definitions) failure: the “assurance” report’s definitions of expertise and verification broke down. Under Rule 4, this is an inductive claim about a specific instance, verified through multiple sources including the department’s own statements. The sponsorship context per Rule 6: Deloitte had announced a $3 billion investment in generative AI development, creating a commercial incentive to underplay AI risks.
| Dossier, Section A: Firm-specific scandals and accountability failures | |
|---|---|
| McKinsey & Company | Entry 1Entry 2 |
| Deloitte | Entry 3Entry 4 |
| PwC | Entry 5Entry 6 |
| EY | Entry 7Entry 8 |
| Boston Consulting Group (BCG) | Entry 9Entry 10 |
| Bain & Company | Entry 11Entry 12 |
| Accenture | Entry 13 |
| KPMG | Entry 14 |