Western Australia Demands Deloitte Refund for Report Containing Fake References

The Western Australian state government is seeking a prompt refund from Deloitte after a report prepared by the firm contained AI-generated references to non-existent sources, along with errors in total costs. The state paid AUD 166,000 for the study, which examined merging three universities.

A government spokesperson told Guardian Australia that the state was "very disappointed" and had written to Deloitte to expedite the response process. The firm prepared the cost-benefit analysis for the proposed merger of the University of Western Australia, Curtin University, and Murdoch University, noting in the report that it used generative AI to assist in gathering research, summarizing information, and proofreading text.

Critics first raised concerns about the fabricated references in October, starting from a Reddit post reported by Times Higher Education. At the time, Deloitte described the errors as "minor," and the government asked the firm to correct and reissue the report. However, Guardian Australia later discovered errors in the appendix figures, where the sum of two costs for merging Curtin and Western Australia totaled AUD 659 million, whereas the report stated AUD 399 million.

The government stated it was advised that the errors did not alter the report's models or findings, and that Deloitte would correct and reissue it. The firm did not respond to questions from Guardian Australia. This is not the first time; in 2025, Deloitte agreed to a partial refund to the federal government for an AUD 440,000 report containing similar errors, while KPMG and PwC faced comparable issues with AI-written reports this year.

What do these terms mean?

Generative AI: A type of artificial intelligence that produces text, images, or summaries based on user prompts, and may fabricate convincing-sounding information.

Cost-benefit analysis: A study that compares a project's expenses with its expected benefits to help decision-makers choose the best alternative.

Fake reference: A citation to a study or source that does not exist in reality, which may be generated by generative AI without adequate human verification.