Deloitte partner exits over AI error-riddled report
The partner responsible for Deloitte’s welfare report which was riddled with artificial intelligence-authored errors is leaving the consultancy after the firm flagged disciplinary action would be taken over its preparation.
Senior public servants revealed on Wednesday that the Department of Finance is now checking the quality of Deloitte’s work for the rest of the public service, after TheAustralian Financial Review revealed the errors in August.
The firm has apologised, reissued the report and repaid $98,000 of its $440,000 fee, but Employment Department officials said on Wednesday they could seek further repayments if Deloitte is found to have breached the supplier code of conduct.
The report on the targeted compliance framework for the Department of Employment and Workplace Relations contained dozens of incorrect citations, including fake references and a hallucinated quote from a leading case on robo-debt.
The partner responsible for the report is in the process of “retiring” from the Deloitte partnership, according to a source not authorised to talk publicly about the matter. The partner has not been named.
Answers to questions on notice reveal the Department of Finance has written to all Commonwealth agencies that engaged Deloitte in the past year “to flag this specific issue and seek entities’ views on any broader concerns about the performance and standards” of the firm’s work.
In a letter dated October 27, the Finance Department quizzed Deloitte about the independence of the investigation team from the project team and whether “any other client previously raised concerns of a similar nature in relation to the use of AI in work undertaken by Deloitte”.
“What steps has Deloitte taken to assure itself that similar issues have not occurred in other engagements or remain undetected elsewhere?” it asked.
Greens finance and public service spokeswoman Barbara Pocock renewed scrutiny on Deloitte’s TCF report at Senate estimates on Wednesday, noting the firm has since faced a similar controversy over AI errors in a report for a Canadian provincial government.
“Removing one bad apple from Deloitte won’t change the organisational culture of the big consultancy firm.”— Barbara Pocock, Greens senator
Employment Department secretary Natalie James said the TCF report had “made news around the world for reasons we’d prefer not to be making news”.
She revealed that the Finance Department’s investigation into whether the supplier code of conduct might have been breached is still under way. This included Deloitte’s conduct “since the first errors were identified” and its performance “with respect to other parts of government”, she said.
James revealed she believed Deloitte had now disciplined staff for failing to vet output produced by AI, but said she was not aware how many were punished.
“The CEO of the firm discussed some actions that were underway in the firm that related to personnel in the meeting that we had on October 14,” James said. “It was clear at that time the firm was taking steps.”
Pocock told the Financial Review that “Deloitte’s AI bungle was expensive corner-cutting disguised as consultancy”.
“Removing one bad apple from Deloitte won’t change the organisational culture of the big consultancy firm,” she said. “Retiring one person isn’t good enough. We need transparency from Deloitte about what happened. There are serious questions to answer over how this consultancy firm could use AI to carry out core government work.”
Earlier, James clarified her evidence on October 9 that Deloitte had failed to apologise by confirming the firm did apologise – but only for “inconvenience” caused – on August 22.
James said she was motivated by Deloitte being “more expansive” in communications to the Finance Department about the cause of errors. Deloitte later clarified it had not initially owned up to the Department of Employment and Workplace Relations about using AI.
James tabled an October 14 letter from Deloitte chief executive Joanne Gorton sincerely apologising to the secretary, department and whole government “for the issues which have arisen with the targeted compliance framework final report”.
“The quality of the TCF Report did not meet the quality standards that you would rightly expect and that we set for ourselves. We take responsibility for the fact that appropriate review and oversight processes were not followed on this occasion. We take these matters seriously and appropriate actions are underway, in line with our internal policies.”
Deloitte did not immediately respond to requests for comment.
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Paul Karp is The Australian Financial Review’s NSW political correspondent.
Edmund Tadros leads our coverage of the professional services sector. He is based in our Sydney newsroom.Email Edmund at edmundtadros@afr.com.au
