Generative AI is a powerful tool, most of all in the hands of people who know how to use it. Like all new technologies, things can also go awry when you let neophytes play around with it unsupervised. Particularly when you let the newbies play around with it unsupervised and then they take what the AI generated to a parliamentary inquiry and present it as fact.
That’s what happened last week when a group of academics presented AI-generated case studies on Big 4 malfeasance before Australian parliament. The academic who claimed responsibility for the submission — Macquarie University Professor of Accounting and Corporate Governance James Guthrie — had only started using Google Bard that same week and did not fact check Bard’s work. A+ trolling by Bard there.
Maybe this warning needs to be larger.
The original submission falsely accused KPMG of being complicit in a “KPMG 7-Eleven wage theft scandal” that led to the resignation of several partners. It also accused KPMG of auditing the Commonwealth Bank during a financial planning scandal. KPMG never audited the Commonwealth Bank.
Deloitte’s general counsel, Tala Bennett, also expressed concern about the submission wrongly accusing her firm of being sued by the liquidators of the collapsed building company Probuild for allegedly failing to properly audit its accounts. Deloitte never audited Probuild.
The submission raised concerns about a “Deloitte NAB financial planning scandal” and wrongly accused the firm of advising the bank on a scheme that defrauded customers of millions of dollars. Deloitte told the Senate there was no such scandal.
It also accused Deloitte of falsifying the accounts of a company called Patisserie Valerie. Deloitte had never audited the company.
Patisserie Valerie was audited by Grant Thornton (incompetently) and Deloitte is well within its rights to be outraged by this mix-up because even the dumbest of AIs shouldn’t have gotten that one wrong. Worse, the accounting professor who received that information from Bard should have known better. If the burnouts here at Going Concern can remember which firm screwed up which audit you’d expect esteemed academics to do at minimum the same if not better.
“Deloitte supports academic freedom and constructive discourse in relation to those matters currently before the committee, however, it considers that it is important to have factually incorrect information corrected,” said Deloitte’s annoyed lawyer. “It is disappointing that this has occurred, and we look forward to understanding the committee’s approach to correcting this information.”
KPMG, too, was pissed and wrote a strongly worded letter to the academics’ employers to complain. There was a 7-Eleven wage theft scandal (“widespread systematic underpayment of workers by franchisees“) though it appears the only connection it has to KPMG is former Partner in Charge of KPMG Australia’s People Advisory Practice Dharmendra Chandran joining the 7-Eleven board post-scandal.
Having taken responsibility for the egregious mistake, Professor Guthrie proceeded to drive the bus over himself in a letter to the Senate. Some quotes from the letter as shared by Guardian and Americanized for our audience (as in we switched the S for a Z in “realize”):
“Given that the use of AI has largely led to these inaccuracies, the entire authorship team sincerely apologizes to the committee and the named Big Four partnerships in those parts of the two submissions that used and referenced the Google Bard Large Language model generator,” Guthrie said in the letter.
“Given we are also accounting academics, we are deeply invested in the public interest and ensuring accountability and transparency in the sector – which is why we unreservedly offer our apologies and deep regret.”
“I now realize that AI can generate authoritative-sounding output that can be incorrect, incomplete or biased,” Guthrie said.
With the apology out of the way, Guthrie stands by the overall sentiment that Big 4 firms are scandalous and might be in need of breaking up. “Our substantive arguments and our recommendations for reform remain important to ensure a sustainable sector built on shared community values,” he said in the letter. For further reading, see this Australian Financial Review opinion piece: “PwC scandal makes a case for breaking up the big four.”
Because the false statements were covered by parliamentary privilege, the firms can’t sue for defamation. So the lesson here is if you’re going to accuse Big 4 firms of things they didn’t actually do and don’t want to get sued for it, do it at a parliamentary inquiry.