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Deloitte authored a $1.6 million health workforce report for the Newfoundland and Labrador government that contained multiple fabricated academic citations. Deloitte confirmed that generative AI was used to support the citation work, though they maintained that the core findings of the report remained valid. This incident follows a similar controversy involving Deloitte in Australia, raising concerns about the reliability of AI-assisted consulting work in public policy.
A Deloitte-authored Health Human Resources Plan released by Newfoundland and Labrador in May 2025 was later reported by The Independent to contain several inaccurate or apparently non-existent research citations. Researchers named in the disputed citations reportedly denied authoring the referenced papers. Deloitte stated that AI was selectively used to support some citation work and that it is revising the report.
Domain classification, causal taxonomy, severity scores, and national security assessments were LLM-classified and may contain errors.
AI systems that inadvertently generate or spread incorrect or deceptive information, which can lead to inaccurate beliefs in users and undermine their autonomy. Humans that make decisions based on false beliefs can experience physical, emotional or material harms
Also classified as
The AI system failed to perform reliably by hallucinating non-existent academic papers and citations.
The AI system generated false and fabricated academic citations, which were then published in official government policy reports, spreading misleading information.
AI system
Due to a decision or action made by an AI system
Unintentional
Due to an unexpected outcome from pursuing a goal
Post-deployment
Occurring after the AI model has been trained and deployed
The fabricated citations were an unintentional outcome of using the AI system to support research, occurring after the model was deployed.
Added categories peak at 3: Substantial (Epistemic Harm, Inferred)
Deloitte used Azure OpenAI to support drafting public policy reports for Canadian and Australian government bodies, resulting in multiple fabricated academic citations. While the incidents highlight growing risks of AI hallucinations in public sector decision-making, the national security impact is minor, representing localized financial loss and minor policy-drafting integrity issues rather than a hostile threat.
The AI system was used to support human consultants in drafting reports and generating citations, acting as an assistant rather than taking autonomous actions.
Limited Risk: The system used was Azure OpenAI, a generative AI language system used to generate text and citations, which falls under the category of AI-generated content requiring transparency.
The AI system was used as a writing assistant to support the generation of research citations and text for consulting reports.
The reports provide clear, consistent details about the fabricated citations, the cost of the reports, and Deloitte's admission of selective AI use in both Canada and Australia.
None
Technology
Generative AI Hallucinations
Azure OpenAI system generated nonexistent academic papers and fabricated quotes.
Unreliable Citation Tooling
Selective use of GenAI to support citations introduced fabricated references.
Data Inputs
Lack of Source Verification
References cited were not cross-checked against actual academic databases.
Unvalidated Evidence Base
The evidence base informing the policy reports was not properly validated.
Human Factors
Overreliance on AI Outputs
Consultants accepted AI-generated research citations without manual verification.
Deficit in AI Literacy
Staff lacked adequate understanding of generative AI hallucination risks.
Process and Methods
Inadequate Review Processes
Fact-checking processes failed to detect fabricated academic citations.
Lack of Disclosure Protocols
No process to disclose the use of generative AI in commissioned reports.
Management
Weak Internal Governance
Deloitte failed to embed effective guardrails for responsible AI deployment.
Prioritizing Speed Over Quality
Management failed to ensure rigorous validation of high-cost public reports.
Regulatory Environment
Lack of Government AI Policies
No provincial policies governing the use of AI in third-party reports.
Insufficient Public Oversight
No regulatory mechanisms to audit AI-assisted government-commissioned work.
AI system involved
Identified by automated extraction; can differ from the alleged developers above.
