Deloitte to refund Australian government after AI hallucinations found in report

"Deloitte Australia will partially refund the 440,000 Australian dollars ($290,000) paid by the Australian government for a report that was littered with apparent AI-generated errors, including a fabricated quote from a federal court judgment and references to nonexistent academic research papers. The financial services firm's report to the Department of Employment and Workplace Relations was originally published on the department's website in July."

"A revised version was published Friday after Chris Rudge, a Sydney University researcher of health and welfare law, said he alerted the media that the report was "full of fabricated references." Deloitte had reviewed the 237-page report and "confirmed some footnotes and references were incorrect," the department said in a statement Tuesday. "Deloitte had agreed to repay the final instalment under its contract," the department said. The amount will be made public after the refund is reimbursed."

"Asked to comment on the report's inaccuracies, Deloitte told The Associated Press in a statement the "matter has been resolved directly with the client." Deloitte did not respond when asked if the errors were generated by AI. A tendency for generative AI systems to fabricate information is known as hallucination. The report reviewed departmental IT systems' use of automated penalties in Australia's welfare system. The department said the "substance" of the report had been maintained and there were no changes to its recommendations."

Deloitte Australia agreed to partially refund AUD 440,000 to the Australian government after a 237-page report on automated penalties in the welfare system contained apparent AI-generated fabrications, including a fabricated federal court quote and references to nonexistent academic papers. A revised version disclosed that Azure OpenAI had been used in writing the report and removed quoted material and false references. The Department of Employment and Workplace Relations said Deloitte confirmed some footnotes and references were incorrect and that Deloitte agreed to repay the final contract instalment. The department maintained the substance and recommendations of the report remained unchanged.

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