A recent report published by global accounting and consulting firm KPMG has come under scrutiny after it was discovered to contain fabricated case studies about artificial intelligence adoption, apparently generated through AI hallucinations—instances where AI systems produce false or misleading information presented as fact.

The report, titled “Redefining excellence in the age of agentic AI” and released in October, featured multiple inaccurate claims about how major organizations are implementing artificial intelligence technologies. Among the entities falsely cited were Swiss banking giant UBS, the United Kingdom’s National Health Service, Swiss Federal Railways, and Transport for London, the public transit authority for the British capital.

The revelation raises serious questions about quality control and verification processes at one of the world’s leading professional services firms. KPMG is among the “Big Four” accounting firms, alongside Deloitte, PwC, and EY, and serves as a trusted advisor to corporations and governments worldwide. The firm’s reports and analyses are widely read by business leaders and policymakers seeking insights into emerging technologies and industry trends.

The incident highlights a growing concern in the professional services sector as firms increasingly incorporate AI tools into their research and content creation processes. While artificial intelligence can enhance productivity and data analysis capabilities, the technology is prone to generating false information when not properly supervised or fact-checked by human experts.

AI hallucinations occur when large language models and other AI systems generate content that appears plausible but is entirely fabricated. These systems can create convincing-sounding case studies, statistics, and scenarios that have no basis in reality. The phenomenon has become a significant challenge for organizations adopting AI tools, particularly in fields where accuracy and credibility are paramount.

The false claims in the KPMG report are particularly concerning given the subject matter. As businesses worldwide evaluate whether and how to implement AI technologies, they rely on authoritative sources like KPMG for accurate information about real-world applications and success stories. Fabricated case studies could mislead executives into making costly investment decisions based on fictional implementations.

The banking sector, healthcare systems, and public transportation networks mentioned in the report represent critical infrastructure and services where AI adoption carries significant implications for efficiency, security, and public welfare. UBS, one of Europe’s largest banks, handles trillions in assets and serves millions of customers globally. The NHS is one of the world’s largest publicly funded healthcare systems, serving the entire UK population. Swiss Federal Railways and Transport for London manage complex transportation networks that millions of people depend on daily.

This incident comes at a time when professional services firms are racing to position themselves as leaders in AI consulting and implementation. The market for AI-related services is projected to grow exponentially in coming years, with businesses across all sectors seeking guidance on how to leverage the technology effectively. Firms like KPMG have been investing heavily in AI capabilities and marketing their expertise to capture this lucrative market.

However, the discovery of fabricated content in a flagship report could damage KPMG’s reputation and raise doubts about the firm’s internal quality assurance mechanisms. It also serves as a cautionary tale for other organizations rushing to publish AI-related content without adequate verification processes.

The incident underscores the importance of maintaining rigorous editorial standards even when using advanced technologies to assist with research and content creation. While AI tools can help identify trends and draft initial content, human oversight remains essential to verify facts, confirm sources, and ensure accuracy.

As of now, the extent of KPMG’s response to the revelations remains unclear, including whether the firm has withdrawn the report or issued corrections. The incident is likely to prompt broader discussions within the professional services industry about best practices for using AI tools while maintaining the accuracy and reliability that clients expect from trusted advisors.