AI Risk Wire

Cases › made things up › LR-2026-0316

Deloitte report with AI-fabricated citations for an Australian federal welfare review (DEWR)

Preliminary Why: 1 report: HRD (Human Resources Director) · subject to change · 1 independent report

Status: fix reported

Severity moderate
Reported 4 Nov 2025
Developer and model ChatGPT and MyAssist

No source states: loss or records, agent tool, could do, deployer, industry.

Severity moderate: tier: the data of others was touched with a bounded scope stated (over a dozen fabricated points attributed to colleagues in one report); no regulator or count of two or more affected parties is stated.

Deloitte produced a report for Australia’s Department of Employment and Workplace Relations (DEWR) on a welfare compliance framework, and used generative AI tools in publishing-related tasks. The report contained fabricated academic sources and a fabricated quote from a leading case. University of Sydney academic Chris Rudge identified the fabricated points. Deloitte first told the department the errors were limited to footnotes and the reference list, and later corrected its statements about whether it had told DEWR that generative AI caused the errors. DEWR requested repayment of $97,587.11 and the final instalment of the contract was withheld. A republished report dated 26 September, released publicly on 3 October, was said to have been reviewed without AI, with citations done manually.

What happened

1 · What went wrongThe department wrote that Deloitte confirmed these tools likely contributed to the errors in the report.
2 · What it reached or didThe report reached the government with mistakes, including made-up citations.
3 · How it was caughtWelfare academic Chris Rudge of the University of Sydney first identified the errors, including over a dozen fabricated points.

What was done

DEWR requested repayment of $97,587.11, citing the issues with the final product and the failure to follow Deloitte's internal policy on telling the client about AI use.
Fix reported

“Republished report with review and citations done manually without AI”

Risks

Sorted by rule from the case's fields; not yet read from the sources.

Controls

Application

Not effective User policy and training

Control failure chain

L1 · Model Not stated in sourcesChatGPT and MyAssist
L2 · Harness Not stated in sourcesHarness not named
L3 · Application Not effectiveDeployer not named
L4 · Infrastructure / target Not stated in sourcesOrganisation hit

L1 · ModelChatGPT and MyAssistModel provider

No source mentions a control at this layer.

Model version not linked to a model card.

L2 · HarnessHarness not namedAgent framework vendor

No source mentions a control at this layer.

L3 · ApplicationDeployer not namedDeployer

Not effectiveUser policy and training“In light of the errors and the disclosure breach, the DEWR deputy secretary requested repayment of $97,587.11 “given the issues identified with the final product, and your acknowledgement that internal Deloitte policy regarding communicating the use of AI to the client was not followed”.”Human Resources Director

Other controls for this risk at this layer, not mentioned in the sources: Grounding and fact checks, Human approval for high-impact actions, Output filtering and redaction, People told they are dealing with AI.

L4 · Infrastructure / targetOrganisation hit

No source mentions a control at this layer.

EffectiveNot effectiveNot effective (bypassed)Did not existNot stated in sourcesNot yet checkedAttacker's ownOrder: model · harness · application · target

Controls for this risk: result in this incident

ControlPart of the systemResult
User policy and trainingL3 ApplicationNot effective
Human approval for high-impact actionsL3 ApplicationNot stated in sources
People told they are dealing with AIL3 ApplicationNot stated in sources
Output filtering and redactionL3 ApplicationNot stated in sources
Grounding and fact checksL3 ApplicationNot stated in sources

Similar incidents

All cases of this kind ›

Evidence

No source states: what the AI was doing, when it happened, when it was found, how many records were exposed, the direct loss, a count of the other parties affected, any court case, the cause, what set it off.

Show the full account: 3 items from the primary sources

What happened, in order

Not dated in the sources:

  • Deloitte's assurance was later undercut by discovery of a fabricated quote from a leading case on robo-debt.
  • A DEWR deputy secretary contradicted Deloitte's account, stating the department was never advised that generative AI caused the errors.
  • DEWR requested repayment of $97,587.11.
Show every field, with its source and grade

The AI system

Model
ChatGPT and MyAssist
C one secondary source states it
What it was for
Review of the welfare compliance framework for the Department of Employment and Workplace Relations
C one secondary source states it

What happened

Earliest source we hold
2025-11-04
D inferred by us from the described behaviour, reason shown
Cause in detail
Generative AI used for writing tasks beyond the approved scope and not disclosed to the client
C one secondary source states it
What was done
Republished report with review and citations done manually without AI
C one secondary source states it
What went wrong
made things up
C one secondary source states it
control chain
layer: L3; party: deployer; party name: Deloitte; control id: I4; outcome: failed; quote: In light of the errors and the disclosure breach, the DEWR deputy secretary requested repayment of $97,587.11 “given the issues identified with the final product, and your acknowledgement that internal Deloitte policy regarding communicating the use of AI to the client was not followed”.; source index: 1
C one secondary source states it

Impact

Severity
moderate
D inferred by us from the described behaviour, reason shown
Why this severity
tier: the data of others was touched with a bounded scope stated (over a dozen fabricated points attributed to colleagues in one report); no regulator or count of two or more affected parties is stated.
D inferred by us from the described behaviour, reason shown

Context

Country
Australia
C one secondary source states it

Notes on gaps

The year 2025 for the 22 August disclosure is inferred from the article date. Controls were not reported as held because no source states that. The sources do not say whether a fact-check step existed.

LR-2026-0316 · version 1 · published 2026-11-01 after automatic checks; not yet checked field by field by a person · JSON