Artificial intelligence is supposed to help businesses work faster and smarter. But what happens when AI starts inventing facts — and those facts end up in reports published by some of the world's biggest consulting firms?
That question is at the centre of an embarrassing controversy involving KPMG, one of the world's largest professional services firms, after it was forced to withdraw a major global report that contained several false claims and fabricated case studies about how leading organisations were supposedly using AI.
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The episode has reignited concerns about AI "hallucinations" and whether companies are moving too quickly to embrace the technology without proper fact-checking.
According to a report by the Financial Times, the withdrawn publication included examples of AI adoption that several organisations later said were inaccurate, misleading or entirely false.
The controversy centres around a report titled "Redefining Excellence in the Age of Agentic AI", which highlighted how companies were supposedly using advanced AI systems to transform their operations.
However, according to the report, several of the case studies cited by KPMG never actually happened. The examples appeared to be the result of AI-generated hallucinations — a term used when artificial intelligence systems confidently generate information that sounds convincing but is not true.
The issues were first flagged by AI detection and research firm...
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