Internal monitoring uncovered 28 cases this financial year
A partner at KPMG Australia will forfeit more than $10,000 in future income after using artificial intelligence to answer a question in an internal training exam about artificial intelligence (AI), in a case that has drawn scrutiny from regulators and politicians.
The incident forms part of 28 cases of AI-related misconduct identified by the firm this financial year after it introduced new monitoring tools in 2024. More than two dozen personnel have breached policy by using AI during internal tests since July, according to reporting by Australian Financial Review.
The partner, a registered company auditor, completed mandatory AI training in July. Training materials recommended downloading a reference manual as part of the course. The individual breached firm rules by uploading the document into an AI tool to generate an answer to an exam question.
KPMG’s internal systems detected the activity in August. An investigation determined the partner should be fined. The partner also self-reported to Chartered Accountants Australia and New Zealand, which has launched its own investigation. The remaining cases involve staff at or below manager level.
Addressing breaches of internal rules
KPMG Australia employs about 10,000 people and oversees more than 20,000 internal tests each year. The firm said its knowledge checks are open-book following internal training courses, allowing personnel to download materials but prohibiting the uploading of those materials into AI tools during testing.
Chief executive Andrew Yates said the firm had moved quickly to address the issue once monitoring was introduced.
“Like most organisations, we have been grappling with the role and use of AI as it relates to internal training and testing. It’s a very hard thing to get on top of given how quickly society has embraced it,” Yates told The Australian Financial Review.
“As soon as we introduced monitoring for AI in internal testing in 2024, we found instances of people using AI outside our policy. We followed with a significant firm-wide education campaign and have continued to introduce new technologies to block access to AI during testing.”
KPMG said it would separately disclose AI-related cheating cases in its annual results and strengthen processes to ensure personnel meet their obligation to self-report misconduct to relevant professional bodies.
Deloitte government report errors
In 2025, Deloitte Australia agreed to refund part of its payment from the Australian government after a $440,000 report it produced was found to contain multiple errors linked to AI use. The firm acknowledged that generative AI had been used in preparing the report for the Department of Employment and Workplace Relations, but the document included fabricated quote from a federal court judgment and references to non-existent academic research papers, AP News reported.
Deloitte corrected and reissued the report after the errors came to light and refunded a portion of the fee. A partner responsible for the botched Deloitte report is also reported to be leaving the firm amid disciplinary actions.
At Senate estimates, Australian Securities and Investments Commission (ASIC) commissioner Kate O’Rourke acknowledged that ASIC’s capacity to oversee and regulate audit firms, particularly in relation to the Big Four’s non‑audit services and partnership structures, is partial and limited under the existing regulatory framework, noting gaps in the reach of its oversight powers.
Greens senator Barbara Pocock has criticised the current arrangements governing consulting firms and audit quality, arguing for stronger regulatory mechanisms and increased transparency around industry practices, including concerns about conflicts of interest and the adequacy of self‑regulation.
