KPMG pulls report on AI usage due to apparent hallucinations

A KPMG report released in October 2025 claimed that major global organizations had deployed AI in ways that were both sophisticated and transformative. However, the claims were soon found to be false, raising urgent questions about the role of AI in professional services and the risks of over-reliance on generative tools. The report, titled Redefining excellence in the age of agentic AI, was quietly removed from KPMG's website after scrutiny revealed it had inaccurately attributed AI integration efforts to institutions like UBS, the UK’s National Health Service, Swiss Federal Railways, and Transport for London. What followed was not just a retraction, but a stark reminder of the challenges in verifying AI-generated content.

The Fallout from AI Hallucinations

The controversy highlights a growing issue within the professional services sector: the increasing use of AI tools to draft reports, analyze data, and even generate case studies. While AI can enhance productivity and speed, it also carries the risk of producing hallucinations—false or misleading information that appears plausible. In this case, the AI used by KPMG reportedly fabricated details about client AI deployments, leading to a credibility crisis.

  • KPMG's report falsely attributed AI usage to UBS and the NHS
  • AI tools are being used more frequently in the creation of corporate reports
  • No standardized protocols exist to prevent AI-generated inaccuracies
  • The removal of the report has sparked calls for stricter AI governance in the industry

A Pattern of AI Missteps

This is not the first time a major consulting firm has faced scrutiny over AI-generated content. Earlier this year, EY withdrew a report on loyalty rewards programs after it was discovered that the document included fake footnotes and AI hallucinations. These incidents suggest that AI tools, while powerful, are not yet reliable enough to be used without human oversight and source verification. The lack of standardized practices for using AI in professional reporting has left firms exposed to reputational damage and legal risks.

The KPMG incident underscores a broader issue: the need for clear AI governance frameworks within professional services. While the firm has stated that it expects its employees to follow guidelines on the responsible use of AI, the incident raises questions about how such policies are enforced in practice. The report's claims were not only false but also potentially misleading to stakeholders relying on KPMG's expertise for strategic decision-making.

As AI tools continue to evolve, firms like KPMG are under pressure to balance innovation with accountability. The professional services industry has long prided itself on delivering accurate, actionable insights. The use of AI without rigorous validation risks undermining that trust. For now, KPMG is conducting an internal investigation, but the broader conversation about AI's role in corporate reporting is far from over.

Looking Ahead: A Need for Caution

The removal of the KPMG report is a cautionary tale for any organization integrating AI into its content creation and analysis processes. As generative AI tools become more prevalent, the line between human and machine-generated content blurs. Firms must invest in training, oversight, and verification processes to avoid similar missteps.

The incident also serves as a wake-up call for the industry: AI is a powerful tool, but it is not a substitute for human judgment. Until robust verification systems are in place, the risks of hallucinations and misinformation will remain a significant concern. As the KPMG case shows, the consequences of AI misuse can be severe—both for the firms involved and for the clients who depend on their expertise.