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KPMG Australia identified 28 instances of personnel, including a partner, using AI tools to cheat on internal training exams. The firm discovered the activity through its own monitoring systems and imposed financial penalties on the involved staff. The incident has prompted calls for stricter regulatory reporting requirements regarding professional misconduct in the accounting sector.
In Australia, a KPMG Australia partner and registered company auditor reportedly uploaded a reference document from an internal AI training course into an AI tool to answer an exam question, in violation of firm policy. KPMG reportedly detected the activity in August 2025 and imposed a penalty of more than A$10,000 of future income after an internal investigation. The partner also reportedly self-reported the matter to Chartered Accountants ANZ, which is investigating the case.
Domain classification, causal taxonomy, severity scores, and national security assessments were LLM-classified and may contain errors.
Using AI systems to gain a personal advantage over others such as through cheating, fraud, scams, blackmail or targeted manipulation of beliefs or behavior. Examples include AI-facilitated plagiarism for research or education, impersonating a trusted or fake individual for illegitimate financial benefit, or creating humiliating or sexual imagery.
KPMG employees used AI tools to cheat on internal training exams to gain an unfair personal advantage, which fits under AI-facilitated cheating and plagiarism.
Human
Due to a decision or action made by humans
Intentional
Due to an expected outcome from pursuing a goal
Post-deployment
Occurring after the AI model has been trained and deployed
The incident was caused by human employees intentionally using AI tools to cheat on internal exams after the AI tools were deployed.
The incident involves 28 KPMG Australia personnel using AI tools to cheat on internal training exams, leading to internal disciplinary actions and political discussions regarding corporate self-regulation. It represents a negligible national security threat, categorized primarily as a corporate compliance and professional ethics issue rather than a threat to state security.
The report describes employees uploading reference documents into an AI tool to answer exam questions, using the technology to perform a specific function of generating answers based on direct inputs.
Limited Risk: The report describes the use of general-purpose AI tools to answer exam questions, which falls under the category of chatbots or general AI-generated content.
The AI tool was used to answer exam questions by processing uploaded reference documents.
The reports provide clear and consistent details about the number of cheating cases (28), the specific actions taken (uploading reference materials to AI tools), and the resulting disciplinary actions (a partner fined $10,000). There is little ambiguity about the events.
None
Technology
Easy Access to AI Tools
Rapid societal adoption of AI tools made them easily accessible for cheating.
Lack of AI Blocking Tools
Initial lack of technical blocks allowed access to AI tools during exams.
Data Inputs
Uploadable Reference Manuals
Course materials were downloadable, enabling users to upload them into AI.
Human Factors
Unethical Behavior by Staff
Personnel, including a partner, chose to violate policy to pass exams.
Pressure to Use AI
Mandates to use AI at work created confusion over acceptable boundaries.
Process and Methods
Outdated Training Design
Testing methods did not adapt to the existence of AI capabilities.
Open-Book Testing Vulnerability
Open-book format allowed easy copy-pasting or uploading of text to AI.
Management
Slow Safeguard Implementation
Management fell behind rapid AI adoption before introducing monitoring.
Push for AI Adoption
Prioritizing AI integration without setting clear operational boundaries.
Regulatory Environment
Weak Reporting Requirements
Firms are not obligated to report exam misconduct to ASIC immediately.
Reliance on Self-Reporting
The regulatory regime relies on individuals self-reporting ethical breaches.
AI system involved
Identified by automated extraction; can differ from the alleged developers above.
