The Accounting Podcast

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Blake Oliver: [00:00:04] Well, that's interesting what you said, David, about like the incentive to allow fake accounts on your platform is actually really high for an app like Cash App because you want to show user growth. So it doesn't matter like if you're unethical, it doesn't matter if that is legit or fraud. You just want to see money moving through your system and also you make money on every transaction. So this kind of reminds me of like Twitter's problems with fake users and a lot of social media platforms, problems with fake users because it looks good for the investors, but it's not real and it's a negative, very negative experience for your actual users.

David Leary: [00:00:43] Coming to you weekly from the OnPay Recording Studio. This is the Cloud Accounting Podcast.

Blake Oliver: [00:00:52] Hello and welcome to the Cloud Accounting podcast. I'm Blake Oliver.

David Leary: [00:00:56] And I'm David Leary.

Blake Oliver: [00:00:57] We're going to talk about an accounting fraud indicator that may signal coming economic trouble. We've got tax news. What do you got on your list?

David Leary: [00:01:08] Everybody's adding AI you know, last week, Intuit added two TurboTax. This week they had two MailChimp. Other apps are adding it. And I actually had a tweet out there that like maybe a year from now. That's just table stakes. Having AI in your app is just table stakes. And I think you sent me an email today about grammarly. And lastly, it's at what point is this not even a story? Like, that's where my brain is at on the AI stuff. And then I did see something about AI people that it could lead to more accountants, but I actually found an example. Maybe it won't lead to more accountants, which puts us in the same. Maybe AI is not going to be the hero we all thought it was once. So those type of stories.

Blake Oliver: [00:01:46] Yeah. No, I agree with you that AI is just going to be table stakes, that just improving all the texts we write like I'm already doing that. I saw it rolled out in Grammarly. There's a Jasper plugin for Chrome where I can write an email and then ask it to improve my writing. And that's that's available now. Today. You can buy that or you can just drop stuff into Chatgpt and have it improve your writing. I think we're all going to be using it. If you're not using it, you are wasting your time because like, why write emails anymore? You could just write a list of bullet points and say, compose the email.

David Leary: [00:02:21] Well, I think it's the first draft, right? Like, because that's sometimes when you're like, I want to write a blog post and getting those first 2 or 3 paragraphs out of your through your fingers into the keyboard, into the screen, it's just really hard. But you could type eight words in Chatgpt will give you enough of a. A rough draft that, you know you can massage from there, right? Edit and massage and clean up and you're from A. It really cuts down your creative process.

Blake Oliver: [00:02:50] It's either the first draft or it's the final draft. I use it for both. So final draft, right? Then it's the clean this up so that it's ready to go check for grammar, make it sound more professional, that sort of thing. But it does a great.

David Leary: [00:03:02] Job at the level where it can fact check you, right?

Blake Oliver: [00:03:05] Like if that's what you have to do, that's what I have to do. Yeah. Yeah. So I was using it to compose my latest LinkedIn newsletter and it got the year wrong, right? And so I had to really know the facts of the story that I was talking about in order to know that it wasn't 2022, it was 2023. Stuff like that. Yeah.

David Leary: [00:03:24] I mean, I mean, you know, the accuracy thing. Accuracy probably means something in our industry.

Blake Oliver: [00:03:29] We got a few folks who have joined us on the live stream today. Michael Trinity, great to see you. It's a it's a light attendance on the live stream. I am not surprised as we are recording on Thursday, April 13th. So everyone's trying to get those last few returns in, get those clients taken care of. Let's get to it, shall we, David?

David Leary: [00:03:50] Yeah, think so.

Blake Oliver: [00:03:51] My top story this week is from the Wall Street Journal. Accounting Fraud Indicator Signals Coming Economic Trouble A tool to identify corporate earnings manipulation finds the most risk in over 40 years. So if you are on team recession is coming, this is your data point that you can use the next time you're at the barbecue or at the happy hour to warn everybody that it's about to happen.

David Leary: [00:04:18] And this tool, just to rewind for a second, is this a tool that's existed the last 40 years or it's a new tool that they applied against 40 years of data?

Blake Oliver: [00:04:25] Well, so the scary part is this is a tool that was used to predict Enron.

David Leary: [00:04:30] So it's been around.

Blake Oliver: [00:04:31] Yes. And it's been tested. It's called the M score. Do you want to guess what M stands for, David?

David Leary: [00:04:38] No, it has to do with fraud. But I can't think of any M words for that. Is it money? Is it the money score?

Blake Oliver: [00:04:44] No, it is manipulation. Manipulation score. It's the manipulation score. It's so much.

David Leary: [00:04:51] Like friendlier with just the M score. It sounds like a candy bar.

Blake Oliver: [00:04:56] Trinity says Morality. Morality. Well, so let me tell you about the M score since the 1990s. According to The Wall Street Journal, the metric has been used to identify red flags at individual companies. Now, a professor named Mecidi Benesch, he's a professor of accounting at Indiana University who developed this m score. He and several coauthors have calculated an aggregate score for nearly 2000 companies, and the pattern in the historical data is disturbing. The probability of manipulation in financial statements usually rises rapidly in the quarters before the economy tips into recession. So the way this score works is and there's a chart on the screen for you folks who are watching us live is it's calculated from eight ratios on a company's balance sheet, all numbers that public companies report quarterly and compares ratios to earnings statements from a year earlier. And basically what happens is that some of these metrics involve actually all of these metrics involve accruals and deferrals, and one of them is receivables. So if a company wants to inflate its earnings, it might be aggressively pushing forward income into the current period revenue. And what happens when they do that? Well, accounts receivable goes up. Another flag is if a company reports higher values of assets that can't be sold and that clearly aren't clearly identified as plant property or equipment. A third metric would be changes in accruals, such as when expenses have been incurred but not yet paid. And then another is related to depreciation. So you take these eight metrics, you weight them all and you put them into this M score and you chart out the metric over time. And what you find is these peaks and valleys in the M score and the M score tends to go up right before a recession.

David Leary: [00:06:52] And the recessions are for the obviously in the live stream. It might be hard to sell a contrast wise, but those gray bars are the recession years.

Blake Oliver: [00:06:59] Yes. So the 1 in 2008. Right. The Great Recession, the M score started in the second quarter of 2002 at 0.29% and rose over the next few years until it reached its peak, actually during the recession, the second quarter of 2008. And it was 0.5%. So it basically doubled, well, not quite doubled, but it went from like 0.3 to 0.5. And you see this trend in in this chart. Which makes sense, right? Because what happens before a recession is companies are trying and trying to make their earnings, like you say, David, they're trying to beat the street. And they can't. Yeah, right. They can't. So what do they do? They resort to earnings manipulation. And that means stretching the envelope everywhere they can when it comes to accounting. So according to this indicator, we're in for another recession.

David Leary: [00:07:56] And so. When is the word stretching the envelope and when is the word fraud? Like can you you is stretching the envelope. Just. Hey, this is legally what we're allowed to do and play these games and book revenue over here and move this to here versus straight up fraud. Well.

Blake Oliver: [00:08:15] Yeah, and that's the that's the question that is at the heart of the Silicon Valley Bank collapse is what Silicon Valley Bank did. Legit? Is it a failure on the part of the auditors not to see it coming? Was it fraud by management? It's hardly ever fraud. It's so easy to get away with this stuff, right? Like, remember back in the Great Recession, how not a single executive ever was criminally prosecuted for anything that happened. Yeah, right.

David Leary: [00:08:43] Like Martha Stewart. They got Martha.

Blake Oliver: [00:08:45] They get Martha Stewart and they get the celebrities on the on the crypto, right? Yeah. It's kind of wild. And here's a related story from accounting today. Banks may be using accounting maneuvers to avoid reporting losses. And this has to do with Silicon Valley Bank because let's distill what happened at Silicon Valley Bank into a very explain it like I'm five kind of situation, right? So Silicon Valley Bank got a bunch of deposits from tech companies because all the tech companies banked with Silicon Valley Bank. And when money was cheap, when interest rates were near zero, it was like free money for all these VCs, basically. So they poured it into tech companies. And what of those tech companies do? They turned around and they put it in Silicon Valley Bank as deposits. Svb didn't know what to do with all this money. Normally banks make loans to other businesses, but SVB didn't really have the infrastructure to do that, so they just went and took the money and bought Treasury bonds safe place to park the money. Well, it's only safe if you think that interest rates are going to stay at zero forever. And when interest rates started rising, you know what?

David Leary: [00:09:51] A seven month period. Yeah, they doubled. Tripled. You know, you didn't see that coming.

Blake Oliver: [00:09:57] Yeah. So interest rates go from like close to 0% up to. What is it now like? We're approaching 5% here. And that was like in the course of a year. And so all of a sudden SVB investment in those Treasury bonds and all those bonds that are tied to the Fed rate, they start to lose money. But here's the trick. Banks can classify bonds that they intend to hold until maturity as held to maturity. And you can carry those bonds on your balance sheet at cost. You don't have to recognize losses or gains or anything on those bonds. You hold them at cost. Right. And so the question is, right, are banks doing that improperly? Are they holding all these bonds at cost, saying, we're going to we're never going to sell these, we're just going to wait until maturity so they don't have to recognize the losses. And that's what happened to SVB is is they said, oh, we can hold these to maturity. Kpmg is the auditor. Kpmg signs off on that and says that's fine, but they couldn't. And so then right after KPMG says, okay, on the audit signs off, then SVB has to go and sell some of those bonds in order to meet depositor withdrawals because the tech industry is in a recession and they don't have as many deposits anymore. And that is what sparked the bank run. They announced a $1.8 billion loss. Everyone was like, Oh crap, SVB is actually upside down because they lost so much money on the bonds. They'd lost $15 billion on the bonds because you.

David Leary: [00:11:26] Have to if the government is paying a higher percentage now for bonds and you have bonds, the lower percentage you have to sell, if you want them off your balance sheet, you have to sell them at a discount. 70, 60. 70% maybe.

Blake Oliver: [00:11:37] Exactly. Exactly. So SVB had all these unrealized losses. They suddenly realized them and then everybody freaked out and there was a bank run.

David Leary: [00:11:46] So is this an accounting standards issue? Because if I'm understanding remembering correctly, in some previous episodes, like with crypto like these, like startups, if you you buy crypto inside your balance sheet and now the crypto is actually worth less like it's on your balance sheet at the value. In theory, it was. Well well so.

Blake Oliver: [00:12:04] Yeah. Crypto. I don't know if this has changed but right until in the past it was, it was you had to write it down. If it lost value and you couldn't write it back up, I mean.

David Leary: [00:12:12] It was the opposite. Okay. Yeah, yeah, yeah.

Blake Oliver: [00:12:14] It was more conservative. Okay. More conservative than this. And so the question is, you know, with KPMG as the auditors, because they signed off at 1231, 20, 22 and the bank was not yet underwater, as we've talked about on the show yet they were they had almost wiped out all their equity with these unrealized losses, but not quite. So. Kpmg was like, we're talking like the water is about to come over into the boat. Right. And the question is those those held to maturity bonds in order to do that, in order to hold them or in order to classify those as ATM, you have to have the ability and the intent to hold them until maturity. So the question is, well, did SVB actually have the ability and intent to hold them to maturity? And if they didn't, then KPMG could face lawsuits or be at risk in a lawsuit by the investors. And then the other question that the Wall Street Journal brought up this week is should KPMG have issued a critical audit matter? And critical audit matters were invented in 2017 by the PCAOB but haven't really been used. And this seems like it would be a perfect time to issue a critical audit matter. It's a complex question. What's exactly the definition of a cam? Let me look it up.

David Leary: [00:13:34] But bank runs arguably are psychological. So if they issued some sort of warning, the bank run price still would have happened. Maybe it would have happened a couple weeks sooner or maybe the when they did the December 31st financials. Well, what good is this warning? Yes, It doesn't actually stop the behavior, the action that occurred.

Blake Oliver: [00:13:53] Well, I think there's two things. Right. One is, first of all, if there wasn't this concept of securities and simply everything that's marketable was just marked to market on a bank balance sheet, which I think personally they should be right. Like if there's a market for an investment, wouldn't you want banks to mark those to market in order to know whether the assets and liabilities are real? The whole idea behind a bank is assets should be greater than liabilities.

David Leary: [00:14:20] Otherwise the bank for some assets where. So maybe the market's somewhat opaque, predictable and stable is not the right word. But like when it comes to the bonds. Yes, maybe. Yeah. Like if they have other assets that are really variable. I don't know if that's the best route either. Right?

Blake Oliver: [00:14:35] But if there's a clear market for it and there's a market price, like why not? So that's one thing is if that had been the case, then SBS losses would have started in like Q one, Q two, Q three throughout the year and people would have seen that coming. So that's one thing. And the other thing I forgot, but I wanted to tell you what a critical audit matter is. So a cam critical audit matter is defined as any matter arising from the audit of the financial statements that was communicated or recorded. Wire to be communicated to the audit committee that relates to accounts or disclosures that are material to the financial statements. So it needs to be something that's material and involved, especially challenging, subjective or complex auditor judgment. So does the treatment of the bonds involve especially challenging subjective or complex auditor judgment? Because we know that they are material and that's going to be the question in any lawsuit, I think. And this is a real test of whether or not the whole idea of a cam even is going to work. And it's obviously not improved audits because auditors aren't issuing cams. The Wall Street Journal also looked into nine other banks that have high bond exposure, and none of the auditors at those banks issued a cam, even though those banks are also exposed. They did issue cams for possible loan losses, which is the thing that happened in 2008 that created the economy. So they're looking backwards, not forwards. Yeah, but the whole point of a cam is to help investors look forward, right? That's the idea. So anyway, that is my audit beat for this week.

David Leary: [00:16:13] Oh, yes, before that, because I kind of have some stories that are tied to fraud and or audit a little bit, but this really ties in well, because the lawsuits. So you said KPMG's was named in the lawsuit.

Blake Oliver: [00:16:24] Now, I think there has been they have now been named in a lawsuit. Right.

David Leary: [00:16:27] And I saw some takes on that saying like, oh, this is why the big firms are going to split the audit from everything else, because like a lot of the other partners don't want to deal with the headache of a lawsuit like this. There's a whole part of KPMG that doesn't want to be exposed to this. But then I think this week as well, apparently if you saw is going to roll back, they're not going to split now.

Blake Oliver: [00:16:51] Yeah.

David Leary: [00:16:53] That was so. So I'm seeing like this. There's like, here's why people are going to split and then the same week UI is not going to split.

Blake Oliver: [00:17:00] Yeah. And that's been like big news. And it's like, I guess if you work at UI or at a big four firm, you care. But I don't know why anyone else gives a crap about any of that, right? Like, who cares? Who cares? It's not like anything would really change at EY if they split up. The audits would be done the same way. The consulting would be done the same way. And this has happened before. And all that happens is the two firms separate and then one of them grows back. The audit practice.

David Leary: [00:17:30] Just grows to the same.

Blake Oliver: [00:17:31] Size. Yeah, it's like a tumor that keeps growing back, right? That's how it works. So it's funny, though, like the you know, what torpedoed the split was the partnership model because the US partners had a revolt and apparently it was a bunch of retired partners who pressured current partners on the board to bail on the deal. And I think it's because they were worried that their retirements would be impacted. So this is exactly the same problem that small accounting firms face, which is you have these retired partners who are getting paid out by a system that they are no longer contributing to, but they still can control. Yeah, they have.

David Leary: [00:18:10] It's the control. Yeah. Yeah.

Blake Oliver: [00:18:12] So another win for the partnership model, but a potential loss for the accounting profession, I suppose.

David Leary: [00:18:20] So there's one fraud, if that was interesting. That's not so much tied to accounting fraud per se. And then definitely there's some quote unquote fraud with blocks. You want to talk about Blocker Jp morgan Chase.

Blake Oliver: [00:18:32] Before we do that, why don't we hear from one of our sponsors? All right, David, what do you got?

David Leary: [00:18:39] Well, let's talk about the Jp morgan Chase thing first here. So I don't know if you saw this story, but this is another fraud committed by a startup CEO. Oh, I'm so.

Blake Oliver: [00:18:48] Glad you brought this one, David. I love this one. And I've been watching.

David Leary: [00:18:50] For a couple of weeks. And essentially, Charlie Jarvis had a startup that was like targeting students. And I think it helped them refinance their student loan information. And it was in that space. And of course, somebody like Jp morgan Chase would be interested in that. Like, oh, I could reach all these new banking customers while they're still in college. So she was able to get Jp morgan Chase to write her a check for $175 million. But then it turns out.

Blake Oliver: [00:19:22] Hold on, $175 million.

David Leary: [00:19:24] Yes. So they acquired her company for $175 million because they thought they were buying email addresses. Right. Like students, they could possibly market other banking services, too. Totally turns out she had a platform. She said she had 4.25 million users, but apparently she paid a data scientist and basically purchased some real data and then made up the other. So basically, you know, instead of using Chatgpt to, say, create a bunch of student email addresses, first names and last names, she paid a data scientist to do this. And so Jp morgan Chase later on has now figured this out. I don't know if they passed these leads on to their salespeople and people started to realize these are all bad and fake. So she's gone. She's now been arrested in charge of fraud. Right. So it was a full circle. She's been arrested. But my big question and I know this is not an accounting auditing story, but I'm like, isn't it somebody's job? Like just to make sure before you before you hit, you hit send on $175 million. Yeah. Like, are we are we buying a real thing and maybe who bought all the fake nickels or the the last week?

Blake Oliver: [00:20:35] Well, yeah. So Jp morgan bought a bunch of bags of stone, but it was only like $1 million of, of stone that was supposed to be nickel. This is this is $175 million to buy a startup.

David Leary: [00:20:47] But but for Jp morgan Chase, this is nothing either, right? Like maybe this is the the issue.

Blake Oliver: [00:20:52] So yeah, I think you have a legit question like who did the due diligence, if any, on this? So how many people did she say was using this app?

David Leary: [00:21:01] 4.25 million users is what she she reported out.

Blake Oliver: [00:21:05] And it turned out that it was like none. Right? It was totally a fraud.

David Leary: [00:21:08] The vast majority were made up. Fake email addresses, basically. Yeah.

Blake Oliver: [00:21:12] That's incredible. Wow. Good job. Jp morgan Chase. I'm sure somebody lost their job on that one.

David Leary: [00:21:19] Well, it's good that, like, you know, she did get arrested. She get caught. But it also sounds like it's another one of like like this tech founder. Like I think a lot of these tech founding CEOs that are committing frauds, I think just like the guy, I think they know what people want to hear and they just tell them and people just buy right in. Yeah. And he did it. Theranoss did it. Elizabeth Holmes. Right. With the little blood drop thing, like the the market's just ripe or people are very easily influenced. If somebody says the right things to them. But really, that's the ultimate old grift of selling snake oil. There's nothing different about the grift. It's just different. Now what they're selling, it's just tech.

Blake Oliver: [00:22:01] It's tech now instead of essential oils. Yeah. Well, hey, here's. Here's a fraud that Tino sent in on the live stream that, you know, brings it a little more close to home. It's a CPA in Bakersfield who stole 355,000 from investors. A Bakersfield certified public accountant has pleaded guilty to wire fraud after stealing 355,000 from investors over a four year period and using the money for personal expenses, according to federal authorities. Jeffrey Todd Stewart, 57, got more than 2 million from investors between 2014 and 2018 for expenses he said were needed for an overseas business deal, according to a release from the US Department of Justice Eastern District of California. He told investors they'd see a significant return and he just used the money for personal expenses, including mortgage payments, trips to Las Vegas and gambling. He faces up to 20 years in prison and a $250,000 fine. At his August 21st sentencing. So it's not just JPMorgan Chase that's getting scammed. It's just regular, probably clients, I'm guessing. Right? You're just go to your clients and say, oh, hey, I've got this great investment scheme, give me your money. And people don't do their due diligence.

David Leary: [00:23:15] And I think this next story we're talking about. Block Right. So. Block Which was was square, right? So when I say BLOCK it's we're talking about Square, not.

Blake Oliver: [00:23:25] H&r Block.

David Leary: [00:23:26] Not H&R Block Square cash out. This combines both parts of this. You have over here, on one hand lots of fraud happening on their platform and then be squares and block are very interested in hitting their numbers. So Hindenburg research, remember, you talked about Hindenburg two, three weeks ago. They wrote up about that Indian company. And then who was the one before that? Well, weren't.

Blake Oliver: [00:23:47] They on Wirecard? Didn't Hindenburg? I think Hindenburg caught Wirecard and that was a huge deal. Yeah. So you're saying Hindenburg wrote a report about block.

David Leary: [00:23:55] Square block. Yeah. Block Square now. And lots of interesting things. And we've talked about this before. A lot of the direct deposit fraud that happened in PPP even years ago, when people would steal people's Social Security numbers and then file fake tax returns through A TurboTax they just quickly spin up a cash app account. You have bank numbers, move the money, get the money out, right? And the basically the block is embraced traditionally the underbanked segment of the population. And because of this, they've kind of have a Wild West approach to their compliance, which has made it very easy for criminals to spin up hundreds and thousands of fake accounts. So they're saying their numbers are misstated. So this goes back to the your your graph in the beginning of of the of the episode. Right. Where they're trying to keep their numbers looking good for their growth and how many users they have. But the reality is is many are overstated. And then on top of it, it just goes on to where almost all human sex trafficking is done. Using cash app like this goes on and on and on and on about how these accusations out now obviously just came back and revised their numbers and said that's not true and things like that. But there's like insiders now saying coming out. So this will be interesting to watch over the next 4 to 6 months as more news comes out about this. But I mean, we all know with the PPP stuff like people were using Cash app is one of these apps to move the money through these fraudulent PPP loans. So there's no there's no denying that it did not happen. It's just how bad is it and what are the real numbers? Is the open question still?

Blake Oliver: [00:25:28] Well, that's interesting what you said, David, about like the incentive to allow. Fake accounts on your platform is actually really high for an app like Cash App because you want to show user growth. So it doesn't matter if you're unethical, it doesn't matter if that is legit or fraud. You just want to see money moving through your system and also you make money on every transaction. So this kind of reminds me of like Twitter's problems with fake users and a lot of social media platforms, problems with fake users because it looks good for the investors, but it's not real and it's a negative, very negative experience for your actual users.

David Leary: [00:26:07] And it's funny that you brought up Twitter because it's the same founder.

Blake Oliver: [00:26:09] Oh, really?

David Leary: [00:26:10] It's so.

Blake Oliver: [00:26:12] Jack Dorsey. Jack Dorsey.

David Leary: [00:26:14] Jack Dorsey. He started Twitter, but he started Square.

Blake Oliver: [00:26:16] But they were both good. And then he like, left and they got crappy or is he still running square? And I think he's very.

David Leary: [00:26:23] Heavily in square, but he's also doing this some new social startup stuff on the side and he's he's he he's in the bitcoins and all the other transactional type stuff as well.

Blake Oliver: [00:26:32] Well you know, I got I saw something about square. They are changing their refund policy. I got an email about this because I, I guess I've had a square reader in the past and they are no longer going to refund processing fees. Which I thought was like a real dick move. And it's one of those things that makes me think like whenever a company starts doing this kind of stuff like nickel and diming its customers, it makes me think they're either in trouble or they've reached this point of scale where they're going to start getting crappy. Every company goes through this life cycle, this.

David Leary: [00:27:05] I'm a listener to The Cloud Accounting Podcast. I buy A The Cloud Accounting Podcast t shirt from you, Blake. I swiped you swiped my credit card. Square gets a piece of the action. I come back to you be like Blake. The shirt doesn't fit. I want to return it. You return my money, you swipe my credit card to return the money. Square keeps the money or they charge another processing fee.

Blake Oliver: [00:27:26] They are going to. Well, they used to refund the original processing fee. Okay. Now they don't.

David Leary: [00:27:31] Know. This is going to get your next quarter's numbers because now they're going to have more revenue. Next quarter.

Blake Oliver: [00:27:36] So that would seem to indicate they're in trouble, right? Yeah. All right. Let's go on more. We're in the app news phase, so shall we keep going? Yeah, I saw that Intuit QuickBooks has launched a Rest of World App Store. This is news today on CPA Practice Advisor. Do you have any insight into this, David?

David Leary: [00:27:58] Not really, other than I actually made a note to myself. I'm like, what's the I don't really understand this. And then I read the article a little bit. I don't have the article up, but I'm trying to remember my comment. Essentially, from what it looks like before, QuickBooks had a US app store and then they'd had an app store for the UK, Canada, Australia and I think India. And if you were an app developer, you'd have to submit your app individually to all four of those other global regions. And if I read this correctly, it sounds like they got they're getting rid of all four of those. And so you basically you list your app in the US App Store or list it in the rest of the World App Store, which in theory makes it simpler as a developer and it looks like now other places are going to have access to that. But there was always like an other for the longest time, so maybe they've just pulled back. And then I do feel like there's a lot of redo happening at Intuit right now because they also don't know if you saw Intuit Developer announced that they have a new developer growth program for app developers.

Blake Oliver: [00:28:59] I did not see.

David Leary: [00:29:00] That, did not see that. And they've added three apps to this program. And this reminds me of what we did seven years ago at Intuit, where you'd help apps that we did this with Tsheets, we did this with Bill.com. Like we we incubated apps to help them become successful. So they're going to do this with Builder Trend, which is construction, which I kind of help them do this already years ago. So so builder trends included again, an app called Katana, which is like for manufacturing type work. Now Katana is actually the third app we launched in the QuickBooks App Store that was in this original program when it was called Mavenlink. So they got purchased by another company rebranded and they're right back in the same program they were ten years ago, which is kind of funny. And what's this program do? It's Mavenlink was it's evolved more into a manufacturing app now.

Blake Oliver: [00:29:51] Oh, no. I mean, what is this developer program do like?

David Leary: [00:29:53] Oh, so they nurture the apps and help them on their marketing. They're going to help them make sure their integrations with QuickBooks are good. They're going to get them exposure in the marketplace with accountants, get them feedback from accountants. It's it's kind of a success program. And now the third app they're using this time is Uncat, which obviously that wasn't in any of this eight years ago because Uncat didn't exist eight years ago, but Ncats also now part of the program. So it does feel like the it's funny because I feel like the last 3 or 4 years, a lot of developers were saying nobody at the Intuit developer team is around. Like they're not responsive. I can't get support tickets. It was in these pendulum swing right to where developers are important, developers are not important, and now it's swinging back towards developers are important. It feels like at Intuit and the same way that's happened in the past with accountants, accountants are important and they kind of neglecting accountants off. Then the pendulum swings back, back to accountants again. So it feels like the pendulum for developers is swinging back to, Hey, let's do stuff we used to do that works, so we need to think about that.

Blake Oliver: [00:30:51] So remember how we were talking, I think, last week about the security risk of AI and voice cloning? Well, it's happening and it happened in my town in Scottsdale. Here's a story from our local paper. The phone number that appeared on the screen was unfamiliar. Jennifer DeStefano almost let it go to voicemail, but her 15 year old was out of town skiing. Maybe there had been an accident. I pick up the phone and I hear my daughter's voice and it says Mom, and she's sobbing, DeStefano recalled. I said, What happened? And she said, Mom, I messed up. And she's sobbing and crying, unquote. In a split second, Destefano's confusion turned to terror. Then I hear a man's voice say, Put your head back, lie down. And I'm like, Wait, what is going on? Destefano said. This man gets on the phone and he's like, Listen here, I've got your daughter. This is how it's going to go down. You call the police, you call anybody. I'm going to pop her so full of drugs, I'm going to have my way with her and I'm going to drop her off in Mexico. And at that moment, I just started shaking in the background. She's going, Help me, Mom, please help me, help me. And bawling. So it was a scammer that had cloned her daughter's voice and had used that recording to try and get this mom to send ransom money. Now, she was able to figure it out with relatives and with the police that her daughter was not in danger, that her daughter was at home and was fine. But can you imagine getting that call as a parent?

David Leary: [00:32:13] I think I've seen this like done to grandparents, like, oh, so-and-so at college. Now the real question is like, where are they getting her voice from? Like, is this a social media?

Blake Oliver: [00:32:22] Social media. Social media. Right. If your voice is on videos, on social media, it can be cloned. And I don't know. Have you seen have you seen the the I. Joe Rogan experience? David, have you watched that? No, but.

David Leary: [00:32:34] I've seen lots of these AI generated things like this.

Blake Oliver: [00:32:37] Though. Hector Garcia sent us both a recording of this, one of the episodes where it's an AI. Joe Rogan and an AI. Donald Trump having a conversation that was generated with Chatgpt and the script sounds real and the voices sound pretty darn close and it's just going to get better and better. So what does this have to do with accounting and finance? People are going to be cloning voices to commit fraud to try and get you to send international wire transfers. So all of these procedures that we've put in place around voice authentication are going to have to get redone because it's going to be too easy for the CEO to call you up or somebody pretending to be the CEO to call you up and sound like the CEO and authorize a transfer. So I was you're.

David Leary: [00:33:22] Almost going to have to have two forms of authentication, like, great, send me a like send me an email or three, maybe send me an email. We'll do a phone call, man. We'll do a Zoom like for any amounts over a certain amount or changing bank account numbers. There's just going to have to be that because I mean, if it's not voice fraud, it's just other ways. People are tricking people to change bank accounts and wire money out.

Blake Oliver: [00:33:43] I was thinking that I told my wife, it's like we need we need a family. Safe word, too, like like some word that only we know in our family that we can use to authenticate.

David Leary: [00:33:55] No, that's.

Blake Oliver: [00:33:57] Yeah, I mean, you could do that in your company, too, right? In your firm is have a word that only people in your firm know and that's how you can verify this kind of thing. I it's just this is going to I'm calling this now. This is my prediction. This is going to be we're going to hear about big frauds being committed with the voice technology like this. It's not already happening if it's not already happening. And it's you know, we just haven't heard about it. It's going to happen. So be careful. Be on the lookout. Protect your family. Tell them about this kind of technology. Tell your firm about it, Tell your clients about it so they don't become a victim. It's just like when we all started getting phishing emails years ago. You got to educate them.

David Leary: [00:34:37] Let's see what other avenues makes sense or comes up next. That makes a lot of sense.

Blake Oliver: [00:34:42] I have a video about Microsoft Loop.

David Leary: [00:34:45] Is that their notion product?

Blake Oliver: [00:34:47] Yeah, it's their notion clone. You want to watch it? I haven't actually seen it yet. We could we could watch it together.

David Leary: [00:34:53] So so it's their notion clone which notion really was a clone of Microsoft. What was their SharePoint? Onenote SharePoint was the original.

Blake Oliver: [00:35:02] Yeah. So OneNote notion is an improvement on OneNote. And then instead of improving OneNote like they should have, Microsoft decides to simply create Microsoft Loop. Let's let's let's learn about Microsoft Loop.

David Leary: [00:35:15] Can you add to the stream? Perfect.

Speaker3: [00:35:21] Say goodbye to the frustration of jumping between apps and losing track of documents and ideas. Microsoft Loop transforms the way you work so you can think, plan, and create together like never before. Loop is made up of workspaces. Pages. And components. Let's break it down. Create together with shared workspaces for each of your projects on the Loop home page, you can access all your existing workspaces and create new ones in a loop workspace. You can bring everything you need for your project together in one place. To kick off a workspace loop can even do the searching for you, making it easy to add existing project related information and organize it into pages. Continue adding to your workspace as your project evolves and organize it the way you want. Loop pages are flexible canvases where you can react, comment and build on each other's ideas. Notifications help you track the things you care about and focus on what matters all while staying in the flow of your work. Copilot in loop helps you ideate and co-create Get inspired with AI powered contextual suggestions to transform the way you create together to. Don't let app barriers slow your project down. Easily Share information with people outside your workspace with loop components. Components are portable pieces of content that stay in sync across all the places they have been shared, no matter where they are updated. You can share components and create new ones like lists.

[00:37:00] Tables, paragraphs and more.

Speaker3: [00:37:04] Across your favorite Microsoft 365 apps. You're always in control because it's easy to see where components were shared and who has access. However you work wherever you work, Loop enables teams to think, plan and create together like never before.

Blake Oliver: [00:37:26] So I think what I what I liked about that that notion doesn't have is this ability to embed different apps into loop. So like if you're on the Microsoft stack embedding a spreadsheet right there, right? That is awesome. Whereas Notion could just link out to them generally, like you can't like edit them, right? In a in a notion most of the time. That's pretty cool.

David Leary: [00:37:50] It looks a lot like notion. And my gut instinct is if you're a microsoft, like you're really into the Microsoft stuff and that's your skill set and you like, did you just say Microsoft?

Blake Oliver: [00:38:01] Well, I.

David Leary: [00:38:01] Think those are the people that used to work there. But let's say you're a fan. You're you're a microsoft fan person, right? You're you love on the Microsoft, which I think the majority of our audience probably does. They love Excel. They use Microsoft 365 stack. Right. I just don't like that thing. Looks not enough like a microsoft Office product that I just don't see people using it. Yeah. Like they made they're trying too hard to make it look like and taste like notion that people may not want to use it.

Blake Oliver: [00:38:29] We'll see. So I felt that way about teams at first. But have you seen the chart on like teams user adoption?

David Leary: [00:38:36] Well that's because if you if you roll it out to all the Microsoft people, if they get 1% of the Microsoft office people using any of these things, they win the category. It doesn't take much to move the needle. Yeah. But I think the vast majority I don't know. It's fine. It looks okay. You know, you can click it around again. If you want to roll this out in your firm, you're probably just going to get this for free. Now, you don't have to go out and buy different software and you don't have to go, you know, make sure notion's secure. Make sure notion you can use it for your client data. You already have your Microsoft Office 365 stack vetted out and approved. You just start using it. And that's going to be the advantage, I think, for firms.

Blake Oliver: [00:39:13] All right. It's time for another word from another sponsor. All right. I think it's time for listener mail.

David Leary: [00:39:21] So you have listener mail.

Blake Oliver: [00:39:22] I have listener mail. We have lots of listener mail. It has piled up, so let's churn through it. Nicholas said. Blake, love The Cloud Accounting Podcast and love what you are doing with Earmark. Just wanted to ask if you knew any good resources slash people slash podcast episodes that talk about the CPAs that want to start their own firm but keep it small. It seems like everything I've read so far talks about starting a firm and growing it and scaling it, how to market it, how to pick a niche, how to get an SBA loan to buy a book of business. Et cetera. I don't really think I'm interested in that. I think for the time being I would be really happy doing my own thing on the side. I feel like I'm in the minority on that. Just seeing if you could point me in the right direction on this. Thanks. So, David, I gave him some recommendations, but I wanted to hear from you first, if you had any. I mean.

David Leary: [00:40:10] I don't think recommendations were at the top of my head, but but. Basically you can build a lifestyle accounting firm. People have done it. I mean, I think Amanda Aguilar is a great example of this. There's a time and place in her life where she had young children. She didn't want to have the big grind of a job, and she built an accounting firm that gave her the lifestyle she wanted. It didn't have to be a gigantic accounting firm. It had to be enough. Yeah. To to make ends meet, if you want to think that way. Now, she's now that her kids are all grown and now she's a COO of Paget. Right? So you can you can build a business that's right for you. It doesn't have to be build a bookkeeping firm or an accounting firm that just keeps scaling forever and just keeps growing and growing and growing. Right.

Blake Oliver: [00:40:49] Well, the question is, how did she learn how to do that? I mean, she taught herself a lot of stuff, just like I did, just like a lot of people did at that time when they weren't. She wrote the book on zero. Yeah, maybe.

David Leary: [00:41:00] Maybe get the book.

Blake Oliver: [00:41:01] Literally wrote the book on it. I've got it on my shelf there. So the question is, you know, how do you get those skills without having to learn it all from scratch? I did want to point our listeners to two podcast episodes that I recorded on the earmark Accounting podcast. One is episode 36 with Michael Aleman of Alaman Business Group. He talks about how he built a bookkeeping practice from scratch and does it for very reasonable rates. It's called profitable profitable bookkeeping for under $200 per month with Michael Allen. And then the episode right after that is with Sandra York How to build a six figure Firm on Instagram with Sandra York. That's episode 37. So if you want to listen to those, go to podcast, earmark, cpcomm. Hopefully that gives you a little bit of insight. I think Instagram, depending on your client base, could be a really great way to build a firm, lots of social media options, lots of ways to build a niche firm these days. You know, Michael did realtors and Sandra did personal fitness coaches and that sort of thing on Instagram.

David Leary: [00:42:08] I also think, yeah, their customers are well defined. I think both of them do either fixed rate subscription pricing, that's another you have an episode, you just did an interview with Ron Baker on the subscription economy, but just have a stat I saw this was an article about Mind, body and my fitness pal, which if you blind any gyms, you went towards theory you used mind body you know so but it's not about them as much but there was a quote in this article from a Harvard Business School study and this is companies that increase retention by as little as 5% grow profitability by 45 to 95%. So if you build your small firm and you just concentrate on servicing your clients and you keep them, you retain your clients, you're not trying to grow, you're going to have 45 to 95% more profitability than if you lose 5% of your clients every single year. So so you can have a smaller firm concentrate and keep your clients and you'll be profitable. Very profitable.

Blake Oliver: [00:43:07] I would also say check out Hector Garcia's Build a focused, firm series that we just did. We just completed that. Hector and I, You can get the playlist on our earmark YouTube channel, go look for Earmark on YouTube, and then scroll down to the Build a Focus firm playlist. I'll put this into the chat and into the show notes for everybody who wants to check this out. It's it's eight episodes all about how to build a small firm that you love that doesn't stress you out and I highly recommend it. It's completely free and you can earn free continuing education credits on earmark for listening. So it's over eight hours at this point. I also think there's groups like Bookkeeping Side Hustle, which are great. You know, even if you're not a bookkeeper, I think you can get a lot out of that. On how to build a firm.

David Leary: [00:44:02] Bookkeepers.com and Robinson's groups I've heard David.

Blake Oliver: [00:44:06] That Nerd enterprises.com he teaches people how to have a small practice so not not all of these coaches are about high growth although a lot of them are right. Which makes sense because who's willing to spend the money on those kind of courses is people who want to build a, you know, $10 million firm someday. Right? So I think there's a lot more out there for those folks, but maybe this is an opportunity for content for us to create with earmark media. David More of that kind of stuff. So continuing on with listener mail, this is from Michael. Michael said, Hi, Blake and David, I recently discovered your podcast and I've been thoroughly impressed with how relevant it is. I am eight years into my accounting career in community banking for picking what I thought was a stable industry. Boy, has it been a ride. I'm currently going through my third merger experience and catching waves from the SVB closure. Discussions on the barriers to become a CPA have also struck home, and I thought you might appreciate an anecdotal piece of evidence. I am currently an accounting supervisor and a CPA is typically needed to apply for a comptroller role. I currently have my bachelor's and finding the time and money to take additional classes has not been an option so far. As someone who does not excel in traditional classrooms, it is not an idea I relish. Also, living in Boston as a young professional, out isn't cheap.

Blake Oliver: [00:45:21] The time and monetary costs of studying materials and the exam itself doesn't help either. For this reason I'm considering either a A despite it being less recognizable and less flexible or steering away from accounting into data and reporting. Thanks for the podcast and appreciate you questioning the 150 hour rule. You've inspired me to reach out to Massachusetts's Board of Public Accountants, and that's from Michael. Thank you, Michael, for writing in. If you want to send an email to us, we are cloudaccountingpodcast.com at G-Accon. That's Cloudaccountingpodcast.com at earmark cpe.com. I got more. I can just keep going until the end here. This is good. Let's see here. Here's another message. This is from Corey over at the Minnesota CPA Society. Hey Blake, thanks for the podcast. Last week. It was a good listen, I wanted to let you know that we've launched a page on our website, npr.org, slash CPA Pathways, that discusses the drive behind the legislation. The page also includes any coverage of the discussion related specifically to Minnesota articles and opinion, as well as resources. Both the podcast and your piece in Accounting Today are listed. Thanks again for your discussion of this topic. So David, the Cloud Accounting podcast is on the Minnesota CPA Society website and the page is broadening pathways to CPA Licensure. So if you're interested in this topic, go check it out.

David Leary: [00:46:48] And it's turning out to be a portal for all pieces of this. Not specific to Minnesota. It's really turning out to be they need to fix the URL so it's easier to get to or maybe we spin up a domain for them that points people there because it's really becoming the the hub for the 150 hour discussion or evolution of 150 hour discussion. So speaking of the pipeline then, Blake, I just put in the private chat for you if you can share it. It's a short article. Essentially. It's a letter to the editor, but the premise is that I will attract more students to accounting. And the argument is that if you because it's younger generations are going to be more interested in accounting because this is technology and innovation. And I'd say maybe yes, if we were in a bubble where the only industry getting AI in technical innovation was accounting, yes, we would probably attract people, but I'm assuming all industries are going to get it probably equally. So that's kind of the equalizer. But the real thing I have is I send you a screenshot because it's from a private Facebook group and I wanted to crop everybody out and you couldn't share the link, but do you have that screenshot I sent you in the Google chat?

Blake Oliver: [00:48:01] Oh no, I don't have it in front of me.

David Leary: [00:48:03] I don't have it in front of me. So I'll summarize this, this other chat, which is probably good. So there was a Facebook chat from somebody who's spinning up their bookkeeping business and they watched a webinar. They were watching a webinar, I'm assuming based on the Viber post about AI in accounting. And this is a single mom of three about to spin up a bookkeeping business and she's like, I might just say, forget it because I can't learn it as fast as I is currently learning it. So she's thinking of giving up on her dream of trying to spin up a bookkeeping business of her own because of AI. So not only arguably AI is probably not going to attract more students, but it might actually turn people off because accounting already is starting to become the job that will be replaced by AI. Right? Accounting, bookkeeping. We keep making the top of these lists. So are we going to actually have even more of a talent shortage? So so for all the benefits we get from AI, it's going to scare even more humans away?

Blake Oliver: [00:48:56] Yeah, it's hard. I mean, historically, advances in technology have always led to more jobs. Oh, and I have something perfect for that. I have a chart. It's basically a chart that shows what happened when spreadsheets were invented. Yeah, the spreadsheet Apocalypse Revisited. Oh, this is so good. I'm glad you brought this up, David. Okay, so this is John Nosta or Nosta at John Nosta on Twitter. He said. Gpt lessons, bookkeeping, jobs fell with the introduction of spreadsheets, but managers and financial analysts jumped four fold. And he has a chart from the Wall Street Journal.

David Leary: [00:49:37] Manager managers jumped. Great.

Blake Oliver: [00:49:40] Yeah, So? So it shows basically. In 1979, Visicalc, the original spreadsheet app was released, and at that point, bookkeepers, accounting and auditing clerks were still on the rise. It peaked between the release of Lotus one, two, three and the release of Microsoft Excel and then started to decline. So bookkeepers, accounting and auditing clerks reached 2 million jobs and since the mid 80 seconds has been declining and is closer to a million. So we've lost almost half of those jobs over these years, and that's thanks to automation. Clearly, you don't need people to enter transactions anymore manually. Well, until recently, I guess you did. You didn't need people to put spreadsheets. Right. Or to calculate them manually, literally on paper. That's what a lot of people were doing. So at the same time, you have this rise in accountants and auditors. It's happening the whole time. Accountants and auditors were not impacted at all. It just kept on going up. It was, you know, about a million accountants and auditors for 2 million bookkeepers and clerks. And as the bookkeepers trended down to a million, the accountants and auditors went up to like, it looks like 1.7, 1.8 million. So continuing to grow a lot. We're adding hundreds of thousands of jobs through these years, even though spreadsheets exist. And then the job that didn't exist was management analysts and financial managers, which kicked off with the release of spreadsheet technology and have just skyrocketed. And now we have more of those people than even the accountants. We've we went from half a million right away to over 2 million now. So here's my question. Yeah.

David Leary: [00:51:33] So if you stack this up, the total job growth. The number of jobs is much bigger Post-It cell than it was pre Excel.

Blake Oliver: [00:51:43] Yeah. Yeah. And so my question though, is, you know that accountants and auditors line it's it's gone up but it's slowed down. And my question is has it reached its peak and is it going to start declining the way that the bookkeepers accounting and auditing clerks line decreased? Right. That that hit its peak in the mid 80 seconds and has been on the decline ever since? Is that going to happen with accountants and auditors? And will there be some new job that didn't even exist before that now gets invented as a result of all this technology? The problem with traditional education is that they're not teaching us any of the stuff that we need to be successful as accountants in the world of AI. We're still memorizing generally accepted accounting principles and tax rules when you can just ask the AI for the information. And yeah, it's not accurate right now because it hasn't been specifically trained on tax code, but people are already working on training these AIS specifically for tax because it's a lot of money to be made.

David Leary: [00:52:46] I think I was listening to the Accounting Twins podcast and Becky, one of the accounting twins, she's the one who went into private accounting, right? So she has her first job and she part of the episode, she talks about how why did we have to memorize all this stuff in college? She's like every formula I need somebody already typed into an Excel. It's just already there. Like like I don't have to come up with anything on my own. It just exists in Excel already. Yeah. Yeah.

Blake Oliver: [00:53:08] So. It's a I think it's a good question. I think that accounting as we know it today is going to go away. A lot of it is just going to be gone. Just like bookkeeping, a lot of bookkeeping went away, But there's always going to be a need for. Well, Chad is doing a really good job of the human element, too, right? If people can just chat like text and I and get their taxes done and get their accounting done, we've always said that the human element is something you can't replace with automation. But is that going to be true forever? People are willing to use TurboTax and to chat with those people that are theoretically behind the scenes at TurboTax, you know, the enrolled agents and the CPAs that are working on the live thing, they just replace them with an AI. I mean, it's going to be like, I guess the analog is what's going to happen when we finally have driverless car technology. Are people going to stop using Uber? No, they're going to use it even more, right? So they just need to get where they're going in a lot of cases. But I mean, in the meantime, like for the next decade, there's still a humongous opportunity to utilize these tools and to build a practice and to help all these people that can't do it themselves and the tools can't do it themselves. And people haven't done the done the work to create these fully automated solutions. I mean, like, yeah, every business still needs an accountant, right? You can't replace the accountant or the bookkeeper with the AI. And it's just like these actually driverless car technologies, right? They're having trouble with like, they still haven't figured out how to replace the human for that, you know, 10% of the time when you actually need the human judgment.

David Leary: [00:54:43] Well, yeah. And it's not that you're going to you listener are not going to be replaced. What it means is you're probably not going to be able to ever hire people in the future to do this work. So you need to use some tools to for your productivity. Yeah, that's the reality. You're going to be doing the work of four more accountants and bookkeepers than you do today. And that's that's the ramp you're on. It's not you're not going to be replaced. You're just going to do forex to work. Yeah. You're.

Blake Oliver: [00:55:08] You're expected. Yeah. You're going to be that much more effective and.

David Leary: [00:55:11] Going back and this is this is why billable hour. What are you going to bill Oh this is going to be people for 24 hours a day.

Blake Oliver: [00:55:18] Is going to be the death of the timesheet because it's going to make us so much more productive that it will make no sense to bill by the hour. Your hourly rate will have to go from you know, if it's $100, they'll have to go to $1,000 and nobody's going to pay $1,000. So that's going to be the end of it. So you wrote.

David Leary: [00:55:34] An article and you give us before we close out the 32nd preview or why people should go read it. But the title of the article is Our Obsession with Hours is Destroying the accounting Profession. What's the synopsis of that? So people can go read that?

Blake Oliver: [00:55:46] Yeah. So I coauthored this with Chris Vanover of Audit Club on CPA Practice Advisor, and the gist of it is just that, like the accounting profession is obsessed with tracking time and billing for time and evaluating everything we do based on the time we spend on it. And that leads to bad outcomes. When it comes to education, this obsession about the 150 semester hours, like the fact that people think that adding 30 semester hours of education is going to make you a better CPA. Is is it laughable when there's nothing tied to it in terms of performance? And same thing with, you know, the billable hour argument, you know, like the amount of time you spend on a project does not equal the quality. It's the same thing with the education, right? Hours in the classroom don't indicate don't equal learning necessarily. And hours spent on a project for a client. Don't necessarily equal positive outcomes or they're just not tied. We're measuring the wrong thing. So the hours.

David Leary: [00:56:44] Makes sense in some professions. For example, pilot training.

Blake Oliver: [00:56:49] Yeah. Or prostitution to, you know, you have.

David Leary: [00:56:51] Right. But I'm saying like pilots, right? Because the proof that you can fly is that you you stayed alive flying 5000 hours in the cockpit. Right. You know what You know what? Because it if you don't have the skill, you've crashed the plane already way before you hit the number of hours.

Blake Oliver: [00:57:07] Yeah, but but again, too, like if you're just flying on autopilot the whole time, then that's meaningless. That's true. Right. So actually, I think pilots are that's that's the job that's going to get automated because what's going to happen is we're going to create autopilots that can the planes already can take off and land themselves pretty much. And the question is, when are people going to be comfortable with there not being a pilot on the plane? The AI is going to get to be just as reliable as a human.

David Leary: [00:57:37] There used to be a guy that pressed those elevator buttons for you because people were afraid to do that than their own exact skill set, right? Yeah.

Blake Oliver: [00:57:43] So I know it's a brave world. You know, the problem is the universities aren't teaching kids what they need to know because they need to ask questions. They don't need to regurgitate answers. So if accounting programs are just teaching you to memorize the rules and regurgitate answers, that's not going to produce people that can survive. But if you can ask questions, then you can get everything you need. I tell people that. My entire career has been built on Google searches. I was a music major in college. I learned everything that I know by searching Google when I didn't know how to do something. When I started out in bookkeeping, I didn't have any formal training at all. I taught myself, I read the QuickBooks manual and then I, you know, searched Google for how to do stuff. And then, yeah, I took basic accounting courses and I learned my debits and credits, and I think that's important. But most of the stuff, the advanced stuff wasn't taught in school, like all the tech stuff, Like I had to learn how to do that myself. Yeah.

David Leary: [00:58:39] So excel. Yeah. These tools you actually use in your job are not taught in the information system.

Blake Oliver: [00:58:45] Just replace Google with Chatgpt. And people who don't know how to Google. And there are still people that like somehow don't know how to Google things and ask questions. And just like that's I know somebody's not going to work out as an employee when they can't Google something before they ask me a question. Right. And it's going to be the same thing with Chatgpt. It's just going to make the All Stars ten times more effective. I mean, I'm already doing it myself. Like I wrote two blog posts and a bunch of ad copy yesterday and like an hour with Chatgpt. It would have taken me all day before. So I think the reason accountants don't see it yet is because the specific knowledge body of knowledge has not yet been ingested and and treated right. The AI has not been trained on the tax code specifically yet, so the answers are not right, but they will be. And same thing with, you know, GAAP and all that stuff like actually I might end up writing all the footnotes to the financial statements. That's something I could probably do really well and then it just be some human reads them and signs off on them. That might free up a lot of our time. I don't know.

David Leary: [00:59:50] I like like, just like Intuit, but they're using it with TurboTax more for consumer side. But it's only a matter of time till these tax tax pro tools that people are using with all this database of tax information and the next six months they're going to get a chat interface slapped on the front of them. So you're going to be using this, you're going to start playing around with it now because it's going to be in every app you use for sure if you're on the Microsoft stack, right? Absolutely. Talked about that.

Blake Oliver: [01:00:14] Well, David, I've already taken this way over time. Where can people find you online?

David Leary: [01:00:18] I'm just on all the socials @DavidLeary.

Blake Oliver: [01:00:21] I am @BlakeTOliver. Send us emails. Send us your voice memos. We are Cloud Accounting podcast at Earmark Cpcomm We love hearing from you and we read all the messages. If we haven't yet gotten to yours, I apologize. We're going to catch up in future episodes. Aaron says Footnotes idea is fantastic. Yes, I mean, somebody could make a lot of money just making a chatgpt plugin that just writes footnotes to financial statements, right? It like goes in and knows GAAP and knows what needs to be written. It looks at the prior.

David Leary: [01:00:54] I don't there's enough computing power for that. I mean the size of these footnotes.

Blake Oliver: [01:00:58] Are the 181 pages of footnotes that you need to do.

David Leary: [01:01:02] Yeah, I mean it's still going to be cheaper to, to have junior staffers do that.

Blake Oliver: [01:01:07] Well, the salaries are going up, David. You know, it won't be cheap for long. All right. I'll see you next week, David.

David Leary: [01:01:14] Bye. Hi, everyone.