"A breakdown in AI governance at Deloitte Australia has forced the consulting giant to refund part of an AU$440,000 (US$290,000) government contract after AI-generated fabrications were included in a final report, exposing vulnerabilities that analysts said are symptomatic of broader challenges as enterprises rapidly scale up AI adoption. Deloitte used OpenAI GPT-4o to help produce a 237-page independent review for Australia's Department of Employment and Workplace Relations (DEWR), but failed to detect fabricated academic citations and non-existent court references before delivery."
"The firm also did not disclose its AI use until after errors were discovered. The Australian government told ComputerWorld that Deloitte "has confirmed some footnotes and references were incorrect" and agreed to repay the final installment under its contract. The Secretary provided an update, noting that a correct version of the statement of assurance and final report has been released."
Deloitte Australia used OpenAI GPT-4o to help produce a 237-page independent review for the Department of Employment and Workplace Relations, but the final report contained fabricated academic citations and non-existent court references. Deloitte failed to detect the fabrications before delivery and did not disclose AI involvement until after the errors were found. Deloitte agreed to refund part of an AU$440,000 government contract and the government released a corrected statement of assurance and final report. Analysts warn the incident reflects broader governance gaps as organizations rapidly scale AI in regulated, high-stakes domains. Dr. Christopher Rudge discovered the fabrications while reviewing the report.
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