When AI Makes Things Up: The Hallucination Problem in Financial Reporting
When AI Makes Things Up: The Hallucination Problem in Financial Reporting
Large language models are being handed the keys to some of the most legally sensitive documents we produce. Before we let them in, we need to understand — and honestly reckon with — how often they lie.
Not long ago, I watched a demonstration of a generative AI system producing a polished quarterly earnings narrative — complete
with revenue figures, margin commentary, and a confident citation to an SEC disclosure. The room was impressed. Then someone quietly crosschecked the numbers. Two figures were wrong. The cited disclosure didn't say what the system claimed. The regulatory threshold it
referenced had been updated two years earlier. Nobody in the room had caught it at first glance, because everything looked so authoritative.
That experience crystallized for me a problem I've been studying closely: hallucination in large language models (LLMs) when they are...
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