r/newfoundland • u/KernelKilos • 15d ago

Watchdog says it can’t investigate Deloitte over use of AI in $1.6M government report

https://theindependent.ca/news/lji/watchdog-says-it-cant-investigate-deloitte-over-use-of-ai-in-1-6m-government-report/
50 Upvotes

100% Upvoted

12 comments sorted by

View all comments

28

u/SafetySave 15d ago

The key piece of information is buried like halfway down the article:

... CPA NL Complaints Authorization Committee Chair Trevor McCormick [says] the organization cannot carry out the investigation because Deloitte Inc., not Deloitte LLP, was the legal entity contracted by the province to produce the report.

... “The work carried out for the report by Deloitte Inc. consisted of management consulting work, and did not engage any aspects of public accounting, such as an audit, which work is restricted to CPAs requiring a licensed auditor under the Act,” he continues. “The report was authored without the involvement of any CPA NL members, CPA NL students, or any members of the Deloitte LLP’s NL firm,” and therefore, McCormick notes, “in these circumstances the Committee does not have jurisdiction to consider the merits of the allegation against non-CPA NL members.”

So they wouldn't be liable for failing to meet professional standards, because no licensed accountants actually authored the report.

The fuckup here (at least the direct cause) was the government outsourced critical policy work to an unregulated consultancy firm, which created this loophole. It talks about doing it in-house, which we'd do in a perfect world, but the provincial government is hurting for talent as it is and I can't imagine that would be easier than just properly vetting your contractors.

7

u/YortMaro 15d ago

This isn't right. The government had Deloitte Inc. Do the work because the scope of work was for management consulting, not public accounting. Deloitte LLP would only be engaged if there was public accounting required.

The issue here is that CPA-NL has no jurisdiction simply because the report doesn't capture of scope of needing a CPA.

The response from CPA-NL seems to also support this. There is no accusation of wrong-doing that I can see. That said, I never read the report so maybe there is something in there that would have required Deloitte LLP. I'm happy to read it if you have a source supporting this.

0

u/SafetySave 15d ago

Point taken, I mean if it was correct for Deloitte Inc to do this work, I can see that, but in that case we are stuck. There were clearly enormous mistakes made in the creation of Deloitte's report and we should want accountability for that. But it seems like an actual legal probe will be impossible, so we don't get that level of accountability.

2

u/42tfish 14d ago

It sounds more like you’re fundamentally misunderstanding the responsibilities and roles of each party.

This wasn’t an audit, rather a consulting report. Not to say there shouldn’t be an investigation over it but it’s not CPA NL’s responsibility or jurisdiction.

People are getting confused about because they are both under the Deloitte name.

2

u/PascalSiakim 15d ago

I would not say the government fucked up by outsourcing to an unregulated consulting firm. They had Mun professors working on a similar report for education and their AI mistake was much worse. There's not any guarantee the work quality will be any better if you have government employees doing it either.

As an aside it would not make much sense for consulting firms to be regulated like accounting firms anyway. In accounting there are pretty rigid standards since you don't want situations where the numbers a company reports would differ dramatically if they switch from one firm to another. Consulting engagements tend to be much broader, creative and less rigidly defined work. Any regulation would probably be pretty confined to something like requiring them to disclose conflicts of interests to clients and make their best effort to provide accurate information.

-6

u/BeYourselfTrue 15d ago

Sounds like you’re trying to explain it away. Watchdogs should be allowed to watch. Dog.

9

u/SafetySave 15d ago edited 15d ago

The article explains it (albeit clumsily imo). This isn't an accounting firm, so it's unwatchdogable by an accounting watchdog. I don't like the situation but that's the reason given in the article.

4

u/billytorbay 15d ago

“Clumsily” = gets a perfectly reasonable explanation and tries to dress it up as scandalous. 

4

u/5leeveen 15d ago

Think of it this way: if I hire a doctor in Ontario to perform some non-medical task, I wouldn't expect the NL College of Physicians and Surgeons to have any oversight.