Avoid the AI blunder that cost Deloitte dearly

Deloitte, one of the world’s most reputed professional services companies, was hired by Australia’s Department of Employment and Workplace Relations last year. The company was asked to help assess problems with a welfare system for automatically penalising jobseekers who fail to meet their mutual obligation requirements.

Inaccuracies in Deloitte report

Deloitte published the report in July this year. Soon after, The Australian Financial Review exposed multiple inaccuracies within the document. The report had non-existent references and fabricated citations. This resulted in widespread criticism of the consultancy firm.

When AI hallucinates

Experts attributed these inaccuracies to the phenomenon called AI hallucinations. Now, what’s an AI hallucination? Basically, it’s a phenomenon where Large Language Models (LLMs) make things up. It’s a bug in the code that exists in all AI LLMs currently in the market.

So, when these models don’t know the answer to something you have asked them, they give you fake information, citations, etc. These are often written so well that most people don’t even think something could be amiss.

One of the best examples of this phenomenon is how AI LLMs have referred to US President Donald Trump after his return to power in 2025. On many occasions, if you asked any of these models about any decision taken by Trump in his second term, they would correct you, calling him ‘Former President Trump’.

Deloitte’s partial refund

The errors in the Deloitte report for the Australian government are also believed to be a result of AI hallucinations, though the company has denied it. However, after facing widespread criticism for its report, Deloitte admitted that it used generative AI to help produce the report. It also agreed to partially refund the Australian government the A$439,000 it had been paid in fees.

“Substandard work, partial apology”

But this move has triggered further criticism for Deloitte. An Australian lawmaker said the partial refund looks like a partial apology for substandard work, batting for a full refund in this matter.

Talking to The Australian Financial Review, Labor senator Deborah O’Neill said,

Deloitte has a human intelligence problem. This would be laughable if it wasn’t so lamentable ... too often, as our parliamentary inquiries have shown, these consulting firms win contracts by promising their expertise, and then when the deal is signed, they give you whatever [staff] costs them the least.

Avoid the embarrassment

While the Deloitte store has triggered global commentary on the issue, the crux of it all is in case you are over-dependent on AI, be careful and avoid such embarrassment. Always be original, using AI just as an assistant and not as the captain of your ship.