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The ‘agentic’ AI system was built using a colossal 100-page prompt, marking a significant leap in the firm’s adoption of artificial intelligence.

Speaking at a technology summit, KPMG Australia’s chief digital officer, John Munnelly, described the firm’s turbulent journey with AI. The debut of ChatGPT in late 2022 was a “life-changing” moment, but initial internal experiments yielded “really scary” results, including the discovery of a server document containing thousands of employee credit card numbers. “That absolutely scared the pants off me,” Mr Munnelly admitted, prompting the firm to block ChatGPT while it assessed the risks.

The temporary ban backfired when a graduate staffer posted a screenshot of the block on social media, leading to a critical story in a prominent business newspaper about the firm’s stance on innovation, The Register reports.

However, KPMG was already negotiating new software licences with Microsoft, which provided secure access to OpenAI’s tools. This spurred the creation of a private, global AI platform called “KPMG Workbench”. To avoid vendor lock-in, Workbench integrates large language models from multiple providers, including OpenAI, Microsoft, Google, Anthropic, and Meta.

The TaxBot agent was a key project in 2024. To build it, the firm collated years of expert tax advice that Mr Munnelly said was “stored all over the place”, often on individual partners’ laptops. This internal knowledge was combined with Australia’s tax code and fed into a retrieval-augmented generation (RAG) system.

The result is an agent that can produce a 25-page first draft of tax advice for a client. “That speed is important,” Mr Munnelly explained. “If we have a client who is about to do a merger… getting that knowledge in a day is much more important than getting it in two weeks’ time.”

The agent requires four or five initial inputs and needs human direction before generating its final output. Its use is restricted to tax professionals who can interpret its complex advice.

The AI push has had a profound impact on the firm. Employee satisfaction has reportedly risen as AI agents are deployed to handle “frustrating and time-consuming work”, freeing up staff to tackle more challenging “chewy problems”.

In an unexpected development, the tools have also created a new source of income. “We have additional revenue streams that we didn’t expect,” Mr Munnelly said, as clients began asking to buy the agents themselves.

While the overall benefits are still hard to measure, KPMG has seen clear improvements in time, quality, and revenue, and plans to explore AI’s potential enthusiastically.