AI failures · Fabricated content
Deloitte Australia — Fabricated References and a Misstated Court Judgment in DEWR Assurance Review; A$97,587 Refunded on a ~A$440,000 Contract
Verified Checked against its sources on 5 sources quoted
- Where it happened
- Australia
- Organization
- Deloitte Touche Tohmatsu (Australia); Department of Employment and Workplace Relations
- Date
- August 2025 (first reported by the Australian Financial Review; AI Incident Database lists August 22, 2025)
- Function
- Consulting / Government
- Where it happened
- Policy research; report writing
- System
- Azure OpenAI GPT-4o based tool chain (licensed by DEWR, hosted on DEWR's Azure tenancy)
- Technology
- Generative AI
- Type of failure
- Fabricated content
- Caught by
- A researcher, A journalist
Summary
Deloitte Australia's independent assurance review of the Targeted Compliance Framework, the IT system the Department of Employment and Workplace Relations uses to automate welfare payment penalties, was found to contain references to academic works that do not exist and a fabricated quotation attributed to a Federal Court judgment. A University of Sydney researcher alerted the media and the Australian Financial Review reported the errors in August 2025. The department published a corrected version on October 3, 2025, in which Deloitte disclosed that part of the work used an Azure OpenAI GPT-4o tool chain hosted on the department's own Azure tenancy; the department said the recommendations were unchanged. Deloitte repaid A$97,587, less than a quarter of a contract of about A$440,000. A further corrected version was published on February 3, 2026.
Consequence
- Deloitte refunded A$97,587 of a contract of about A$440,000
- Corrected report published on October 3, 2025, and again on February 3, 2026
Who caught it A researcher, A journalistFound outside the organization
Analysis
What could have been done
Checking AI output against its sources
Every factual element of AI output (citations, figures, quotations) is checked against its source before reliance.
The independent assurance review, prepared partly with a generative AI tool chain, contained references to academic works that do not exist and a fabricated quotation attributed to a Federal Court judgment.
A named owner and disclosure of AI use
A named person owns the AI-assisted output, and its use is disclosed to those relying on it.
The use of the generative AI tool chain was disclosed in the corrected version published on October 3, 2025, after the errors had been reported, not in the report as first released.
Oversight of suppliers' AI use
Suppliers' use of AI is disclosed, contracted for and checked.
The fabricated references in the report the department commissioned and published were identified by a University of Sydney researcher who alerted the media, not by the department or the firm.
What would likely have prevented it
- Require an assurance or advisory deliverable to pass a reference check, in which each cited work is opened and each quotation found in its source, before the engagement lead signs it off.
- Write into engagement terms that the supplier discloses any AI use in the deliverable itself and states how AI-assisted content was checked.
- Make the commissioning organization's acceptance of a report include its own sample check of references and quotations before the report is published or relied on.
What would likely have caught it earlier
- Sample references and quotations in AI-assisted deliverables in the supplier's quality review and again at client acceptance, so errors are found before publication rather than by outside researchers.
Key dates
- August 2025Event
- October 16, 2026Checked against sources
- October 18, 2026Checked against sources
- October 21, 2026Checked against sources
Developments are added when the record is reviewed. Next review: October 16, 2027.
Evidence
Each passage is quoted from its source. The quoted passages are re-checked against the live pages every month.
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This Report was updated on 3 February 2026 to address identified corrections. It replaces the report dated 26 September 2025 previously published on 3 October 2025.
Supports: corrected report published October 3, 2025 (dated September 26, 2025); further corrected version February 3, 2026
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the Finance Department revealed that Deloitte had refunded just $97,587 (less than a quarter) of the $440,000 contract.
Supports: refund amount and contract value, as stated at Senate estimates
-
Australian academics reportedly identified fabricated references and a misattributed legal quote in a $439,000 Deloitte report for the Department of Employment and Workplace Relations on welfare compliance.
Supports: nature of errors; incident date listed as 2025-08-22 (aggregator lead only)
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It was re-uploaded to the DEWR website on Friday, after the Australian Financial Review in August reported that multiple errors had been found, including nonexistent references and citations.
Supports: first reported by the AFR in August 2025; corrected report re-uploaded
included the use of a generative artificial intelligence (AI) large language model (Azure OpenAI GPT – 4o) based tool chain licensed by DEWR and hosted on DEWR’s Azure tenancy.
Supports: AI disclosure added to the corrected report: Azure OpenAI GPT-4o on DEWR's tenancy
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A revised version was published Friday after Chris Rudge, a Sydney University researcher of health and welfare law, said he alerted the media that the report was "full of fabricated references."
Supports: detection by a University of Sydney researcher
The department said the "substance" of the report had been maintained and there were no changes to its recommendations.
Supports: recommendations unchanged
Suggested citation. Eminence Scan, “Deloitte Australia — Fabricated References and a Misstated Court Judgment in DEWR Assurance Review; A$97,587 Refunded on a ~A$440,000 Contract”, Eminence Growth Solutions, last verified October 16, 2026, https://eminencegrowthsolutions.com/tools/eminence-scan/record/fail-012/.
Using our research: you may read and quote Eminence Scan with credit to “Eminence Scan, Eminence Growth Solutions” and a link; all other rights reserved. Terms: Using our research.
Spotted an error, or a development we have missed? Report a correction. How we check records: research methodology.