AI-generated errors force Deloitte to repay part of Australian government contract

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Deloitte Australia will refund part of the 440,000 Australian dollars ($290,000) it received from the Australian government for a report found to contain apparent AI-generated errors, including a fabricated quote from a federal court judgment and references to non-existent academic papers.

The report, prepared for the Department of Employment and Workplace Relations, was first published on the department’s website in July. A revised version was released on Friday after Chris Rudge, a Sydney University researcher specialising in health and welfare law, alerted the media that the document was “full of fabricated references.”

After reviewing the 237-page report, Deloitte “confirmed some footnotes and references were incorrect,” the department said in a statement issued Tuesday.

“Deloitte had agreed to repay the final installment under its contract,” the department added, noting that the amount will be disclosed once the refund is processed.

The revised version of the report includes a disclosure that a generative AI language system, Azure OpenAI, was used in its creation. It also removes the fabricated quotes attributed to a federal court judge and references to nonexistent reports attributed to law and software engineering experts. Deloitte noted in a “Report Update” section that the updated version, dated September 26, replaced the report published in July.

In response to questions about the report’s inaccuracies, Deloitte told The Associated Press that the “matter has been resolved directly with the client.” The firm did not comment on whether artificial intelligence was used in preparing the original report.

The incident highlights the growing challenge of “hallucination,” a term used to describe the tendency of generative AI systems to produce false or fabricated information.