Partner responsible for Deloitte AI bungle reportedly leaving the firm

The partner responsible for Deloitte’s now-infamous AI-assisted report is apparently in the process of ‘retiring’ from the firm’s partnership, The Australian Financial Review reported on Wednesday (3 December).

In October, Deloitte came under fire for using AI to write a report for the government, which included dozens of fabricated references that had apparently been hallucinated by AI tools.

While the firm stood by the report’s broader findings, the inclusion of fake references drew widespread criticism and prompted the firm to refund the government approximately $97,000 of the $440,000 contract.

Eddie Senatore, ex-Deloitte partner and principal of Eddie Senatore Advisory, said high-profile scandals affecting large accounting firms had tipped the playing field towards smaller and mid-tier companies.

“The PwC and Deloitte AI scandals have shattered the idea that bigger is better and may have led to questioning service standards,” he said.

“Therefore, it is arguable that the barriers to entry for smaller players have lowered. Now boutique players have a compelling argument.”

Because accounting services were a ‘credence good’ – one that the recipient could not easily assess the quality of – Senatore said reputation was paramount for accounting and advisory providers.

Following the Deloitte AI bungle, the Department of Finance said it was investigating whether the firm had breached its supplier code. It also wrote to other government agencies that had engaged Deloitte recently to seek views on the quality of the firm’s work.

Deloitte maintained that the errors had not impacted the report’s findings. It uploaded a new version of the report, later uploading it again with a note saying “a small number of corrections to references and footnotes.”

“Deloitte conducted the independent assurance review and has confirmed some footnotes and references were incorrect,” a spokesperson for the Department of Employment and Workplace Relations (DEWR) confirmed.

“The substance of the independent review is retained, and there are no changes to the recommendations.”

The issues with the paper were first reported by Financial Review journalist Paul Karp, when welfare academic Chris Rudge from the University of Sydney identified errors in the report after finding over a dozen fabricated points attributed to his colleagues.

“I was in no doubt, when I read the names of the works, that they were fake because I work in the area and I know my colleagues’ work,” he said.

“Once I discovered one, I just discovered more and more,” he continued, adding that he had no doubt that the errors were the fault of AI.

“I think it’s good if it’s AI, because to think of a person doing that is almost worse. It’s very disrespectful to those who have done the research to just not get it right.”