What is a hallucination?
Hallucination
A hallucination is an incorrect, misleading, or fabricated output generated by an AI system. Hallucinations can occur when an AI produces information that sounds plausible but is not supported by reliable source data.
In accounting, hallucinations can create significant risks because inaccurate financial information may lead to incorrect decisions or reporting errors.
Example: An AI assistant incorrectly states that revenue increased by 20% even though the underlying financial records show no such increase.
Related terms: Grounding, Embedded Verification, Human in the Loop, Trust Layer, AI Accounting
