KPMG withdraws AI report after research group finds the document itself contained AI hallucinations—false claims about how major organizations actually use AI.

What happened: KPMG pulled a report titled "Redefining excellence in the age of agentic AI" published in October 2025 after research group GPTZero identified inaccuracies stemming from AI hallucinations. Organizations including UBS, the UK's National Health Service, Swiss Federal Railways, and Transport for London told the Financial Times that the report's claims about their AI usage were untrue or misleading. A KPMG spokesperson said the firm is conducting its own investigation.

Why it matters: A major professional services firm used AI to help write a report about AI, but did not catch that the AI had fabricated facts about real companies' practices. This raises questions about KPMG's internal controls for AI-generated content, especially given the firm's own stated expectation that "all our people" follow guidelines requiring "human oversight to validate content and verify independent sources."

What to watch: This follows a similar incident last month in which EY withdrew a report on loyalty rewards programs that appeared to include fake footnotes and AI hallucinations, suggesting quality-control gaps may be wider across the professional services industry.