Accounting watchdog to investigate Deloitte over fake citations in $1.6M healthcare report

A professional accounting watchdog has launched an investigation into Deloitte’s production of a $1.6-million healthcare report to the Government of Newfoundland and Labrador which contained AI-generated errors.

After reviewing a complaint from a resident of the province, Chartered Professional Accountants Newfoundland and Labrador (CPANL) has decided to investigate Deloitte’s use of artificial intelligence in the Health Human Resources Plan the global accounting and consulting firm created for the province as part of the government’s efforts to address the crisis in healthcare staffing.

Provincial legislation gives CPANL the authority to investigate allegations against individuals or corporations which sell accounting services and determine whether the accused party is culpable of professional misconduct or professional incompetence, among other things. Part of the organization’s stated mission is to ensure its more than 2,000 members “uphold the highest professional and ethics standards.”

Confirmation of the investigation was sent to Codroy Valley resident Chris Bruce, who filed the complaint last November after The Independent reported the Deloitte report contained errors likely generated by AI. CPANL Complaints Authorization Committee Chair Trevor McCormick says in his letter to Bruce that his committee “met to discuss and review” the complaint, and that it has “decided to conduct an investigation.”

If the committee decides there are “reasonable grounds” to believe Deloitte “has engaged in conduct deserving of sanction,” according to the province’s Chartered Professional Accountants and Public Accountants Act, it can “suspend or restrict either or both” of Deloitte’s licence or certificate, refer the complaint to its disciplinary panel, or simply “counsel or caution” the firm.

In his complaint, Bruce said he has “substantial concerns” with Deloitte’s use of fabricated sources in the healthcare report, noting the firm had recently been caught in a similar scandal in Australia, in which Deloitte refunded a portion of public money it was paid to produce a report for the federal government.

Days after The Independent first reported the fake citations in Deloitte’s Health Human Resources Plan, an anonymous spokesperson for the firm admitted in an emailed statement that Deloitte used AI “to support a small number of research citations” in the report and said the firm was “revising the report to make a small number of citation corrections, which do not impact the report findings.” Deloitte “firmly stands behind the recommendations put forward,” the statement said.

Responding to the scandal, Premier Tony Wakeham instructed Government Services Minister Mike Goosney to develop guidelines “to stop this from happening in the future.” The government did not respond to The Independent’s request for an update on the matter by the time of publication.

Bruce’s concerns go beyond Deloitte’s alleged minimal use of AI for the research citations. The fact AI was used for citations, in and of itself, is “ a very backwards way to do research,” he says. “That’s not how you’re supposed to research. You’re supposed to begin with a robust review of literature and then draw conclusions based on that.”

That’s not how you’re supposed to research. You’re supposed to begin with a robust review of literature and then draw conclusions based on that.

Bruce says Deloitte appears to have used AI “in bad faith,” saying the firm was “not trying to find the best path forward” for the province’s healthcare staffing crisis. “They were trying to sell a particular path.”

He wants Deloitte and CPANL to “be clear that fabricated sources are not acceptable,” Bruce writes in his complaint, and he wants this done “soon and loudly to restore public confidence.” Bruce also notes the province “shouldn’t be expected to pay anywhere near the full price,” which came in at $1.6 million for the 526-page report. “Further, every hour of additional government staff effort could and perhaps should be seen as damages,” he says in the complaint. “This is work the government shouldn’t need to do, and is a waste of valuable and scarce public resources.

“The most important and immediate concern,” he says, “is the need for an admission that selling false sources is fraudulent business activity, and not acceptable from anyone, let alone Deloitte.”

Deloitte Canada did not respond to The Independent’s request for comment.