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As we start a new year, 2026, it is a given that artificial intelligence (AI) is going to be the big issue for authors, publishers and the copyright industries generally. The issue of whether it is legal to use copyrighted materials to train AI platforms without the consent of rightsholders will continue to be fought out in courts and legislatures. The use of AI to create content will also continue as an ongoing issue, both the extent to which assistance from AI renders outputs non protectable by copyright and whether content produced using AI is reliable and trustworthy. Deloitte, by revenue the world’s largest consulting firm has just learned that lesson in spades. As well it should.
Would you hire an expensive consulting firm that used AI to supplement its research, didn’t inform you it was doing so, and when it got caught serving up AI-fabricated citations claimed that the false documentation in no way invalidated its policy recommendations and conclusions? I wouldn’t but apparently the Government of Canada has no such qualms, according to a Canadian Press story. We are talking about Deloitte, one of the world’s four largest consulting and accounting firms (the others being PwC, EY and KPMG), a company that charges a premium for its specialized services, and which ought to know better. It’s not as if Deloitte was caught just once with its hand firmly embedded in the AI cookie jar. First it happened in Australia, where the company was forced to reimburse the client, Australia’s Department of Employment and Workplace Relations, for a report that was reportedly “riddled with fake citations, phantom footnotes, and even a made-up quote from a Federal Court judgment.” It also pulled the same stunt in Canada where it produced a report on health care for the Newfoundland and Labrador provincial government. The 500-page report contained at least four citations of research papers that do not exist. These were used, with others, to support recommendations related to recruitment strategies, monetary incentives, virtual care, and the impact of the COVID-19 pandemic on healthcare workers. However, as the Independent, a local digital news outlet reported, Deloitte, having been caught redhanded, stated it is “revising the report to make a small number of citation corrections, which do not impact the report findings.”
What a joke! Of course the fabricated citations impact the report’s findings, as any first year university student knows. Frankly, this is a disgrace and I think Deloitte should be put in the penalty box for six months to a year as punishment, i.e. no government should contract with them until they learn to clean up their act. The irony is that Deloitte advertises itself as providing consulting services to governments to enable them to use AI effectively. Consulting firms are supposed to bring new expertise and perspectives to management problems that governments, in this era of cutbacks, no longer have the resources to solve. They are expensive but provide a quick turnaround for public service managers who don’t have the in-house resources to deal with emerging issues, and who often don’t have the luxury of time to staff up to meet immediate needs. But the dirty little secret is that in many cases the consulting firms apply their cookie-cutter templates to inform their findings whether the template suits or not. They also employ junior staff to do much of the grunt work without, apparently, providing them with adequate supervision or guidance. But even if the labour-intensive task of finding citations to justify the “researched conclusions” of the commissioned report was subcontracted to an AI bot, someone senior at Deloitte signed off on the final product. It didn’t take the client or journalists very long to track down the fabricated citations, so why couldn’t Deloitte have run the same quality check? Because they couldn’t be bothered, I guess.
Despite having been caught, Deloitte may be big enough to shrug this one off, but I sincerely hope they have learned a lesson. Even one false or fabricated citation undermines the credibility of research. As I noted in a recent blog post (Delegating Research to AI is a Risky Proposition: The “Hallucination” Phenomenon-User Beware), “In our rush to embrace AI, many seem to have forgotten the value of human creativity and judgement”. Deloitte has egg on its face, and needs to wear this. A consulting firm is only as good as its reputation, and as far as I am concerned, Deloitte has just put its reputation through the shredder.
This is a cautionary tale, one that has enmeshed not only the world’s largest consulting firm, but various law firms that have been caught citing fabricated precedents. Students would be sanctioned for using AI this way (if they were caught) and academics would suffer major hits to their reputation. Research results and qualifications might be invalidated. If these are the sanctions for misuse of AI, then we should expect no less from entities like Deloitte and its ilk. Let’s hope there are no further AI fabrication horror stories in 2026. (A vain hope, I am sure).
© Hugh Stephens, 2026. All Rights Reserved
Great article. It seems fitting and satisfying, too, to challenge the smugness of these gigantic and expensive consulting firms. As you so rightly point out, Deloitte and others like them should be chastised and exposed for sloppy, irresponsible work.