Mumbai, February 17: A senior partner at KPMG Australia has been fined AUD 10,000 (approximately USD 7,000) for using generative artificial intelligence to cheat on a mandatory internal exam specifically designed to teach the ethical use of AI. The incident, which has triggered an intense debate over corporate integrity, was confirmed by the Big Four firm following a Senate inquiry into the governance of the consulting industry.

The unnamed partner, who serves as a registered company auditor, reportedly uploaded training materials into an AI platform to generate answers for the assessment. The breach was detected in August 2024 through the firm's new internal monitoring systems, leading to a financial penalty that will be docked from the partner’s future income and a requirement to retake the examination. AI Impact Summit India 2026: Rana Daggubati Says Artificial Intelligence ‘Will Replace All of Us Quite Quickly’ (Watch Video).

Widespread Misconduct Identified Among Staff

KPMG Australia disclosed that the partner is not an isolated case. Since July 2025, the firm’s monitoring tools have identified 28 personnel—primarily at or below the manager level—who used AI tools to bypass internal testing procedures. The disclosure comes as the firm continues to market its "Trusted AI" framework to global clients as a gold standard for responsible technology adoption.

Andrew Yates, Chief Executive of KPMG Australia, stated that the firm is "grappling with the role and use of AI" in an environment where society has embraced the technology more rapidly than regulatory safeguards can adapt. To combat the issue, the firm has introduced stricter technological blocks and a firm-wide education campaign to define the boundaries of acceptable AI use.

Senate Critics Label Regulatory System "Toothless"

The incident has drawn sharp criticism from Australian lawmakers, particularly during a parliamentary committee hearing last week. Greens Senator Barbara Pocock described the AUD 10,000 fine as "extremely disappointing," arguing that the current self-reporting regime for major audit firms is insufficient for holding senior leadership accountable for ethical lapses.

Under existing rules, audit firms are not mandated to report such internal misconduct to the Australian Securities and Investments Commission (ASIC) unless a professional body makes a formal disciplinary finding. ASIC has confirmed it is monitoring the situation but will defer further action until the Chartered Accountants Australia and New Zealand (CA ANZ) trade body completes its independent investigation.

Historical Context of Exam Integrity Failures

This latest controversy adds to a series of integrity challenges for KPMG’s Australian arm. In 2021, the firm was fined USD 450,000 (AUD 615,000) by the US audit regulator for a massive answer-sharing scandal where more than 1,100 staff members were found to have shared solutions to mandatory independence and auditing tests between 2016 and 2020. Layoffs Due to AI: Artificial Intelligence Impacting Global Labour Market ‘Like a Tsunami’ Amid Mounting Job Loss Fears in Employees in 2026

As a corrective measure, KPMG has committed to a new level of transparency. The firm announced it will now include specific data on AI-related cheating and policy breaches in its official annual results. This move aims to restore trust even as rival firms, such as Deloitte Australia, face their own AI setbacks, including a recent refund to the federal government for an AI-generated report found to contain fabricated references

(The above story first appeared on LatestLY on Feb 17, 2026 09:28 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).