The Accounting Podcast

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Blake Oliver: [00:00:04] Hunter Biden, you wanted to know where did this income come from? What was the source of it? Let's see. In 2017, he made 2.3 million. 1 million came from a company he formed with the chief executive officer of a Chinese conglomerate, 664,000, from a Chinese infrastructure investment firm, 500,000 from a Ukrainian energy company. 70 business man, 70,000 from a Romanian business, 48,000 from an international law firm and 666,000 from domestic business interests.

David Leary: [00:00:36] Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:43] Hello and welcome to the show. I'm Blake Oliver.

David Leary: [00:00:47] And I'm David Leary. Like I saw last night, you were at your the Meet the Teachers night. I kind of did the same thing. Like, are we finally done with kids at home?

Blake Oliver: [00:00:56] Actually, I skipped Meet the teacher night. I got to be honest. I went to see Oppenheimer in Imax 70 millimeter over in downtown Tempe.

David Leary: [00:01:07] Sounds like a better choice. I actually went and I had to do like, I had to go to seven different classrooms and five minute breaks because, you know, Jameson's now youngest, is a freshman. But what was interesting about that tie back to the show is teachers are now there's these apps and these websites, when they turn in papers, they have to push it through some website. I don't know, making up the domain, but it's like turn it in or something. And then that scans for I usage in their papers. Like that's a big concern this year is using AI in school.

Blake Oliver: [00:01:34] Every paper they turn in they have to submit on a portal that will scan it for. Did they use some classes.

David Leary: [00:01:41] Some classes? There's concerns about.

Blake Oliver: [00:01:43] This. I thought there were questions as to whether these scanning tools are accurate. Like do they really detect AI? Can they all the time?

David Leary: [00:01:52] I think these have existed in the past, right? Like when you and I were in college, like people could not maybe you you're younger. Were they from plagiarism or plagiarism?

Blake Oliver: [00:01:59] Exactly right. So when I was in college, we all the professors had a plagiarism detector and they would run all the papers through that and it would look for, you know, has this paper been previously submitted, Is it online, all that stuff. But this is saying it can detect even if the paper is new, whether there's AI in it or has been used to generate it.

David Leary: [00:02:19] Yeah, I think it's. I don't know how these would work, but I guess if I'm a professor or a teacher. You probably could smell it. Like if all 30 students all used to write a paper on the topic you assign them. I bet you there's a lot of very similar phrases popping up, and that's probably the way you could figure it out. But I think on a one off, it probably can't. That's my guess because. The. It just. It just rambles, right? You don't know if it's really like that ChatGPT day.

Blake Oliver: [00:02:49] My feeling is that we should be encouraging these students to use AI to write their papers because that's what they're going to be doing in the real world very soon. I mean, I'm doing it right now. I'm already writing articles, I'm writing social media posts, I'm writing emails with AI it. We use it. I use it. Yeah. So these students should be learning to use it. It's just like that story you brought up about the calculators in 1983 and how teachers were math. Teachers were saying that students shouldn't be able to use calculators and look where we're at, right? So, you know, it's interesting you brought that up because I saw a story in on Reuters about how Arizona State. Is now allowing prospective students at the law school to use generative artificial intelligence to draft their applications, but they have to certify their use of generative AI and the truthfulness of the information submitted.

David Leary: [00:03:44] So instead of you filling out, this is the application to apply for law school.

Blake Oliver: [00:03:48] So because we know people are going to do this right, when you write your essay for for law school or for whatever you're going to use, I and you know, they can say, oh, you can't use it, but people are going to use it.

David Leary: [00:04:02] So so basically what they're doing is they're making people say, what I'm turning in is correct. And so it makes sense from an application process because if you have ChatGPT write up something, you don't check it before you turn it in, you're an idiot and they probably shouldn't let you come in, right? Exactly. Like if you're not reviewing the work before you turn that in, especially something that in theory, like an application like that is somewhat important, right? Having it write a description for a podcast episode is a little less, you know, less important. But I think when you're. Yeah.

Blake Oliver: [00:04:33] So I got more news. David there was a story in accounting today, and the headline is Leaders are split on whether AI will reduce or expand headcount. This is a KPMG survey of 200 business decision makers, and they found that opinions are divided on the impact of AI models on overall headcount. Just over half, 53%, believe that generative AI will increase headcount, while 40% believe it will reduce headcount. The most common new roles expected to be created by generative AI are specialists in generative AI data scientists, new senior management, tech workers, specialists in safety and ethics and business development and marketing professionals. On the other hand, those who expect a reduction in headcount anticipate a decrease in process and task oriented administrative workers. Lack of skilled talent is seen as a major barrier to implementation. But despite all these concerns that they have, four out of five leaders believe that generative AI will have a more positive than negative impact on workers. And so 80% of them anticipate an increase in investment in generative AI.

David Leary: [00:05:41] So for example, you said this is KPMG.

Blake Oliver: [00:05:44] Kpmg did this survey of 200 business decision makers.

David Leary: [00:05:48] All right. So they're basically saying is going to create a bunch of new jobs over here, but take away a lot. And so I'm trying to relate this back. I think has a building down here in downtown Tucson, and I think it's full of admins for partners all over the world. Maybe, possibly. I have no idea. And so in theory, those jobs would all go away, but probably the headcount would probably be the same if they're going to have to hire over here.

Blake Oliver: [00:06:10] Yeah, I don't think jobs are going to go away at all like net due to AI. It's going to be like when the spreadsheet was invented and we're going to have more accounting jobs, more finance jobs as a result of it. Because remember.

David Leary: [00:06:24] Quickbooks was going to get rid of all these accounts.

Blake Oliver: [00:06:27] Planet Money did this great story on the history of the spreadsheet this summer. And basically when when the electronic spreadsheet was invented, all these people whose jobs was to foot and calculate and update manual spreadsheets, those jobs went away. But then the cost of doing financial analysis dropped and it plummeted. And what happens when prices drop? People buy more. That's economics. So the price of accounting, the price of audits should drop, which is interesting because I just saw a story about how the price of audits has more than doubled over the last 20 years, in fact. Well, if you don't account for inflation, they've tripled. But then if you adjust for inflation, they've doubled. Doubled. Yeah. So get this. The average audit fees paid by SEC registrants have more than tripled over the past 20 years from 2003 to 2022. Average audit fees rose from 681,000 to 200. Sorry, not 200. 2,243,000. Yeah. So that's interesting because the number of reporting companies, public companies that need to get audited decreased from about 10,000 to 7000 during the same time. Big four accounting firms accounted for 92% of all audit fees paid in 2020 to 92%. The big four, 92% of all audit fees. With PwC leading in both total and average audit fees. Total audit fees paid by US companies in 2022 rose to $12 billion.

David Leary: [00:08:07] So there there's less total audits. They're charging more for them. They're using arguably less labor right now. If anything, the labor what you're paying for your labor to do these audits is nowhere close to what it used to Like. That hasn't increased at all.

Blake Oliver: [00:08:21] That's the question is like we've we've seen audit fees. When you adjust for inflation, audit fees have doubled or more, but starting salaries have been stagnant for 20 years.

David Leary: [00:08:29] We've talked about that. We've seen those graphs. They don't move at all.

Blake Oliver: [00:08:31] Yeah, so so now let's think about this. Audit fees have gone up due to complexity. Starting salaries have not really increased, I guess. I guess they've just added, you know, the question is how have they done this? Have they added more people? Are they just working them harder? Or is quality dropping? Like why? We talked last week about how audit quality has dropped. The PCAOB says 40% of audits are deficient. So do we really have a situation where audit fees have more than doubled? Audit quality is dropping and starting salaries have stayed the same. And if that's the case, that kind of makes sense, doesn't it?

David Leary: [00:09:10] Yeah. And I guess like it's like one of those usually if somebody has lower quality. Over time, the price goes down. It's I feel like we have a you know, like behavioral economists. Economists will talk about like these things. I don't know what it would be called, but we. For lack of a better word, it's a dilemma, right? This doesn't it's unexplainable.

Blake Oliver: [00:09:34] Yeah. I don't understand.

David Leary: [00:09:35] All market forces, if.

Blake Oliver: [00:09:36] You're listening and you know why this is happening, I really want to know. Prices go up and quality goes down, and the salaries of the workers stay the same. Like, what's the relationship here?

David Leary: [00:09:47] Yeah. I seriously doubt Ford could pump out automobiles. With a 40% failure rate and somehow increase the revenue through the roof. It just. It can't happen.

Blake Oliver: [00:09:59] Unless maybe if nobody was driving the cars. And in the case of audits, nobody's reading the audit opinions, right? So it doesn't matter.

David Leary: [00:10:07] The cars are paid for. They're just sitting there broken, not working, and nobody actually cares because nobody actually uses the cars.

Blake Oliver: [00:10:11] And here's an industry that made $12 billion in the US in. Uh, last year and only paid $10 million in fines. $12 billion in fees. $10 million in fines. And the pcob, while they shame the firms for having this deficiency rate, all the firms have a pretty high deficiency rate. And like you said, they don't they don't expose which clients got bad audits. So there's no penalty in terms of reputation or in terms of like anything really money, reputation that's going to improve the situation.

David Leary: [00:10:47] Do the clients themselves even know if they got a bad audit? Are they even informed?

Blake Oliver: [00:10:52] The clients? I don't know. It's all. It's all secret. Pcb doesn't release the results of the individual audit inspections.

David Leary: [00:11:00] You said the average fee is now what? $2 million.

Blake Oliver: [00:11:03] What did it say? Yeah, it was like 2 million over $2 million.

David Leary: [00:11:08] I can imagine.

Blake Oliver: [00:11:09] Like a public company.

David Leary: [00:11:10] Audit, a public company, some CEO somewhere somebody's going to be like, wait a minute, I paid two, $2.5 million for them to not do a decent audit or they screwed it up. Or maybe nobody cares because stock prices just keep going up. I don't know.

Blake Oliver: [00:11:24] It's yeah, I don't know.

David Leary: [00:11:25] It's just it's it's completely upside down and broken in a weird the numbers and ratios don't make sense.

Blake Oliver: [00:11:32] It really does feel like a broken system when you look at the numbers like this. But again, you know, like we're outsiders looking in. I would love to hear from those in the big four. I mean, I know you can't. Reveal your identities, but you could contact us anonymously. We are. What's our new email address? I think it's the accounting podcast at earmarked me the accounting podcast that earmarked me. Send us your Intel. Let us know what you think. Hey, maybe you're a retired partner who has no stake anymore and you can finally tell the truth. Let's hear about it. And maybe we're wrong. Maybe everything's fine.

David Leary: [00:12:15] I just can't. I don't know. It feels like. It just. It's the opposite of all market forces. Anybody, maybe? I don't know. Airlines kind of get away with that, though. They somehow have the worst customer service ratings and they somehow always manage to keep increasing revenue. Oh, but there's market forces model we don't understand. We don't understand this market.

Blake Oliver: [00:12:32] Yeah, maybe not. I understand very little. All right. What do you got, David?

David Leary: [00:12:37] So, I don't know. Do you want to kind of stay in the. Well, We could talk. We could talk. I think there's a work article. I think there's article about hiring staff, and that kind of ties to both. So. Okay.

Blake Oliver: [00:12:48] We haven't talked about remote work in a while. Let's do that.

David Leary: [00:12:50] So the headlines. So I heard it on the first place. I heard it was an NPR podcast. They talked about remote work. And then there's another article that was on Forbes, and the headlines are very grabbing. Working from home leads to decreased productivity, research reveals. And so there was this paper conducted by it's a working paper conducted by Stanford Institute for Economic Policy and Research, and it really pulls together lots of different studies and pulls this data together. But I still feel like it's very it's hit and miss, I guess, and it's all depending on who you're looking at and when.

Blake Oliver: [00:13:28] So, so, so I saw these headlines, right? Basically, the summary is like remote work may not be as productive as we thought. Correct. And what so there was one study that I saw that was like an Indian call center workers. Is that the same one? So there was for all these headlines, there was two.

David Leary: [00:13:44] It looks like there was two studies. But yes, the one was the main one was this call center study. And they figured out that the fully working remote appears to lower average productivity by 10 to 20%. And so they had data from a Fortune 500 firm that had both in-person and remote call centers. Right. And when they shifted to full remote, then they saw these decreases in productivity. Now, I can go back to my call center days like and I yeah, you do, especially if it's a tech support call center customer service thing. You would do whatever you could to not take the phone calls. Like if there was a company meeting, you were like, Yes, Now the sales teams, those guys are different because they're like every second they're not on the phones, they're missing commissions and sales, Right? But so I could definitely see if you were at home, if you'd maximize any chance not to stay logged in and getting the active call. I could or I could or taking a little longer to do your documentation. I could. I see how that could happen. And then but they also stayed it from there was an IT company in India and they said what happened with that is employees were had the same productivity, but they were working more hours, hence they essentially that means they're 18% less productive. So it's mixed, right? Because to some extent, like why are they working these more hours if they could get away with slacking if you're a remote. Right. Right.

Blake Oliver: [00:15:11] Because we know that's true. Right. Nobody's disputing that. Remote workers, people who work from home work more hours because they don't have the commute. And so you just get your coffee and you instead of driving at eight and starting work at nine, you start work at eight at your desk, right? Yeah. Yeah. So that has been shown. And I don't I haven't seen any evidence to the contrary. I'm curious about these studies of the call center workers and the IT workers, because I feel like it's got to be different for different types of work. Like Brian said here in the live chat, it depends how you look at it, what industry and what the employee is doing. It really depends what you're doing as to whether or not you're going to be more productive. And for call center workers, I feel like the camaraderie of being in the call center together and taking those calls and then having somebody to turn to if a call goes bad is really important and doing that at home.

David Leary: [00:16:05] But you imagine a call center if you worked in a call center like, Well.

Blake Oliver: [00:16:09] No, I haven't worked in a well. Okay. No, at Floqast I the marketing team was sort of like in between customer support and sales. And we had a boiler room.

David Leary: [00:16:19] Where we had it's more like a boiler room or sweatshop. It's definitely and this is why it's so predictive. It's like you're under the Yeah, don't take six minutes to walk to the bathroom like that. Kind of. Right.

Blake Oliver: [00:16:28] But if you had to be in that sales pod by yourself at home doing sales calls like I couldn't do that. I'd need like the people around me also doing it. It's sort of like the reason people run in a in a group or they bike in a peloton is because everyone else inspires you to keep going and to not stop. And if you do it yourself, you're going to stop. So I feel like certain jobs, you can't you can't extrapolate to all jobs. And to bring it to accounting. One of the reasons I think remote work has been so great for accounting is that so much of what we do is focus work that is really hurt by distractions in the office. Yeah, If you're working on that spreadsheet or that return, you really need to focus. And if people are walking in your office all day long asking you questions. Really hard to focus.

David Leary: [00:17:12] And that's data they have. So those people on that sweet spot that are 30 and 40 years old, like you don't need that career mentoring that you used to have. Right. And for you, if nobody's interrupting you because they have questions, you're going to be more productive. So so 30, 40 year olds working from home who have now avoided mentoring their younger counterparts are super are way more productive. Right? Like, that's kind of it. They're ignoring the rest of the team, if you want to call it that. Yeah. And so what they're really seeing is people that value it, those early age. So the 20 somethings, they want the socialization, they want to be learning, they want the learning, they want the mentoring. And then and plus, it's very difficult for many of them to work at home. They have six roommates and like you can't work, so they they want to go to the office. Then you have the 50 and six year olds that like they just want to break their old habits. They've gone to the office their whole life. Like, why do they want to work at home now? And then also the 30 and 40 year olds, you know, they at that age, you tend to have families and you need that flexibility in schedule. Right?

Blake Oliver: [00:18:13] And David school starting and I'm the pick up from school so my work has to be done at 3 p.m. every day because I'm going to go get my kid from school. I'm going to help him with his homework. I'm going to make sure he's successful and becomes a productive member of society. Right? I couldn't do that if I went to an office or I'd have to have a very flexible I'd have to leave early.

David Leary: [00:18:33] See that you're leaving early. Yeah.

Blake Oliver: [00:18:34] And then I wouldn't get the promotion. Right.

David Leary: [00:18:36] So. And then they're tying this back to education. So like employees with a high school degree or less, they only spend 18% of their days working at home. But those with a graduate degree do so for 37% of their days, more than double the amount. So it's really tied to that. And the reason why is most college graduate degree holders tend to have computer heavy based jobs, right? You can work with computers.

Blake Oliver: [00:18:59] In the chat said 30 to 40s here, I need to go to the office so I can close a door and ignore my family at home. Lol. Yeah I feel.

David Leary: [00:19:06] I feel my week was this week. The last.

Blake Oliver: [00:19:10] Week. I feel you on that one. Yeah. So. So it's highly contextual, right? It depends on what is your living situation, what is your family situation? What is your job function. Probably you personally how you work you know are you more productive when you're around other people or not? And so like it's impossible to generalize and say remote work is is better or worse. It has to be on a case by case basis.

David Leary: [00:19:33] And that's why.

Blake Oliver: [00:19:34] It pisses me off when like you got Jamie Dimon from Chase Bank saying like, we need to get everyone back in the office because you can't collaborate. Remotely. And I'm like, This is a guy who, like, never figured out how to use Zoom properly, you know?

David Leary: [00:19:46] Yeah. This last step might piss you off. And this will kind of transition maybe to talking about the the hiring crisis, right? So what they're saying is if people that work from home, they value it. So high wage earners value this and they think about the ability to work at home 2 or 3 days a week is like an 8% pay increase. Yeah, right. And so the high earners really value about that. But people that are below $50,000 a year, they don't think that way at all. Like this is not like, oh, this is in lieu of some some earnings. But what I hate about this is this is the type of data that was skewed by accounting firms as an excuse to pay people less while you're working at home. So I get to pay you 8% less. Yeah, big mistake. That's the next step to this. When I think I think you probably talk about the articles. I read some of it. You know they there's all this reasons to increase the wages right because nobody can hire and I'll kind of hand off to you on that because that's all I really have on the productivity research stuff.

Blake Oliver: [00:20:47] Also saw an article in Fortune on this topic. A survey from, I guess a series of reports. It's summarizing a series of reports from Green House, the Federal Reserve and Unispace and Unispace found that 42% of companies with return to office mandates, 42%, experienced higher than expected employee attrition and 29% struggled with recruitment. So there is a cost. There is a very real cost in terms of recruiting and retention. If you do not allow people to work from home, at least some of the time. 76%. Okay. We're talking three out of four employees would leave. They would consider leaving if flexible work schedules were eliminated and underrepresented groups are 22% more likely to leave. So your diversity will also be hurt. And they had similar information about the pay cut. If you make people go back to the office, it's equivalent to, they said, equivalent to a 2 to 3% pay cut. So and that's not like I mean, that's not a lot, but that's meaningful, Like and you think about it. So if I perceive you making me go back to work, David, as a 2 to 3% pay cut, that's like I didn't get my salary increase this year. Now I'm going to go look for another job. You know, it's that kind of feeling. Yeah.

David Leary: [00:22:04] You can in a way, going into the office costs you a little more. You know, there's a lunch with a coworker. You're spending gasoline money. Yeah, you have some real costs doing that.

Blake Oliver: [00:22:14] And I think it's unfair for, you know, firm owners and CEOs to say you all need to come back to the office, you all need to bear these costs that I'm not going to pay you for. I'm not going to pay you more to come to the office and you're going to bear all of these, you know, external costs like and how many of these CEOs and partners have to actually be the primary caretaker for their children or have young children or can't afford to live close to the office? So I feel like that's why guys like Jamie Dimon just see remote work as a negative, because it is for him, it's a negative. Right? He wants to have all his people there so you can just walk over to them and tap them on the shoulder and tell them what he wants them to do. But that person might have spent an hour and a half to get to the headquarters in New York City. Yeah. From the house they could actually afford.

David Leary: [00:23:06] Yeah, it's a I think we're really going to figure out differently. And I think the hybrid approach is the way to go. Or team building activities with, Hey, we all agree on Fridays, nobody's going to get on a Zoom call with each other and we're going to be heads down and work. But that's hard because if you're the younger person that doesn't, that still needs that support. And one concept I think that's not in here that I always find interesting is peer to peer. Like it's in the engineering world. There's like peer to peer programing. So you and I would get on a call like this and we'd be working together. Maybe I'd be typing out the code, but you'd be watching me. And then we're interacting and it's like hyper productivity when two engineers work together like that and dual programing together. And you and I have sessions like that where we'll get on a call sometimes just do something together because sometimes it's hard for it to ever get done. But at the same time, it's also hard to do. Like if you have a whole team of employees, like I can't be on a Zoom call doing that. That type of clip with everybody. So I don't.

Blake Oliver: [00:23:58] Know. Well, and we're feeling the pain I am anyway this week because we hired a new marketer at Earmark and I'm working to onboard her and if she was in the office, it would be so easy for me. Just when I have a break, go over and get her on the next thing. But I'm not. We're not in the office. We're totally virtual, Right. So for me to keep this ball moving is a lot harder than it would be if I was in the office.

David Leary: [00:24:24] But it's nice when somebody next to you and they're like, How is this looking? They just turn the monitor at you and you can give them two seconds of feedback and then get back to working again. And that's that's more of a 15, 20 minute process when you're remote and that's where it starts to add up, right? Is this that new employee stuff? Yeah.

Blake Oliver: [00:24:41] Luke is interested in how the metaverse will affect work from home. That could be a game changer, actually. You know, despite how much I like to make fun of Zuckerberg and the metaverse and all that crap, I do think that long term, once we figure out the tech, it will be because you could have that side by side sort of feel if it's done right while you're at your home office with those VR goggles that Apple's building all that. But I feel like. It's far away. It, you know, a lot farther away than generative AI is anyway.

David Leary: [00:25:12] So I don't know. But what's the point of life if, like, I mean, because really and this is maybe another way to think about this study and then we can like last night, I went to Kids Open House, I think I told you that and actually saw people. And I feel like this is the first year we're kind of out of Covid now. And it felt like there was a sense of community. You're seeing parents and you're people are saying hi to each other in the hallways. And and I feel like that was there when my kids were in K through five or K through six. But then I feel like this whole junior high and first couple of years of high school, it got lost. And because everybody's remote and nobody's really interacting. And so there could be long term effects of this that we don't even know about that could affect companies if you never actually see each other and go in.

Blake Oliver: [00:25:54] Yeah. Jamie Dimon, you know, I mentioned that he was talking about this a couple of weeks ago and I found the quote he said, quote, I don't know how you can be a leader and not be completely accessible to your people. That was his criticism of managers at Chase who don't want to come into the office. And I think it comes from that old mindset where in order to be accessible, you've got to have the door open in your office. But there's ways to be accessible to people on chat, on zoom on teams.

David Leary: [00:26:25] Give them your cell phone. You can still take phone calls at the golf course.

Blake Oliver: [00:26:30] I'm on Google Chat a lot because I don't want the team waiting on me for answers, so I'm pretty much like available on it. 12 hours a day. I'm not working. 12 hours a day, though, right? Because I'm just checking in, like. And I'll do it from the gym, too. Like, I see a question pop up, and for me, it's worth it, too. Like, some people wouldn't want that. They want to just turn off when they leave the office. But for me, having a global team that's all over the world, which we do with 12 hour time differences, I need to be accessible 12 hours a day. So I would say that. Jamie Dimon Excuse me, Mr. President, of Chase or big shot bank CEO, you can be accessible. And be virtual.

David Leary: [00:27:16] And I love a geek in the chat actually said it really well. It just takes more planning and intention. Yes, that's the way to kind of go about this.

Blake Oliver: [00:27:24] I agree. And the good news is remote work is sticking, right? It's not going away. Most of us can work hybrid now, like in the knowledge worker space in accounting firms. I'm hearing that, you know, plenty of firms may be having people come back to the office, but a lot are letting it stick. So it's exciting. David, you mentioned that you had more I stories.

David Leary: [00:27:49] One study story, but Well.

Blake Oliver: [00:27:51] And you mentioned that 1% article I want to talk about that.

David Leary: [00:27:55] That I think is next. That's kind of a big deal.

Blake Oliver: [00:27:58] This headline caught my attention. We're always talking about the talent crisis here on the accounting podcast. So we love a headline like this. Less than 1% of accounting firms can find enough staff. This is on accounting today. This is a survey of 250 top CPA firm leaders in the US. Less than 1% of respondents are able to find the staff they need domestically, leading to strategies such as hiring workers abroad, raising starting salaries, offering fully remote jobs and hiring staff without college degrees. The survey also revealed that 27% of CPA firm leaders reported that former staff moved to other industries for higher pay.

David Leary: [00:28:38] That was the number that I pulled out and highlighted as well.

Blake Oliver: [00:28:42] So less than 1%. You know, actually, that reminds me of the movie I saw last night. I saw Oppenheimer. And there's a. There's a famous scene in the movie where Oppenheimer, am I going to am I going to get in trouble for another spoiler on this episode?

David Leary: [00:28:59] I mean, that's a 3.5 hour movie. Okay. Going to give us a you're barely giving us any of it, right?

Blake Oliver: [00:29:05] So this is a famous story about Oppenheimer, right? Okay. So so I'm not ruining I can't ruin anything because this is a historical event, historical fact. But if you don't want to know a historical fact that's going to be in a fictional movie about a historical time, then stop listening for the next minute. So there's, you know, this anecdote. Oppenheimer and his team, you know, they they were doing the math on like what? What would happen in like with an atomic bomb if you set off an atomic bomb. And they were worried that like, there could be this uncontrolled. Chain reaction that would if it happened, it was uncontrolled and never stopped. It would ignite the atmosphere and destroy the world. So they finally did the math and they figured out that there was a close to zero chance of that happening. But they couldn't they couldn't say it was zero. So going back to this story, there's a close to zero chance that there is some accounting firm owner out there. Cpa firm leader that was able to staff. Guess that means there's like 1 or 2 out of the 250.

David Leary: [00:30:12] I think one thing to keep in mind with this survey, though, the survey was done by Alliant Talent who and you said that word domestically. So. So it was about hiring in the US. Right. And Alliant talent is really their their stick is helping you spin up an office in India. That's that's kind of their business model. So just keep that keep track of who's doing the survey or why they're doing the survey a little bit. But the other quotes were amazing. So the CEO, Jim Brady, so he CEO.

Blake Oliver: [00:30:41] Of.

David Leary: [00:30:41] Of Alliant Talent. So and he's been around. He was he was at Deloitte. He was at Grant Thornton, actually. If you bring up his LinkedIn page, it's really crazy. So he Chief executive officer at Alliant Talent, Chief Operating officer at Grant Thornton, partner at Deloitte. Right. So he's so he is arguably in the know, I would say maybe right. Or or part of the establishment if maybe that's the way to think about him. Right. But he goes on to say in that article that he blames rules like the 150 hour requirement for CPA licensure is one factor that might need to change to attract more young people to join the profession. Like he's a leader of a firm in these words are coming out of his mouth and it doesn't surprise me. Leader. Yeah.

Blake Oliver: [00:31:25] Like I say, I wish AICPA would do a survey because they have the best database, but they won't. They haven't done a survey on this, but I wish they would. I believe that 80% of the profession opposes the 150 hour rule.

David Leary: [00:31:39] Yeah, and it sounds like he listens to our show. I'll read the rest of his quote. In many states, the extra 30 hours is not even mandatory to be in accounting, auditing or tax, says Brady. It's a little bit of a barrier to pay an extra 50,000, 60,000, 70,000 to get that fifth year, especially if it's not even deep accounting or auditing professional curriculum. 150 hour rule is not great for enhancing the profession and increasing the numbers. Yep. Like it's not just us saying this. This is this. This is an established guy. And then going back to the whole like, talent, his expert, he actually spun up some early stuff in India, like he was one of the first people to spin up any offices in India. So.

Blake Oliver: [00:32:20] Well, he had extensive Big Four experience. So let's talk about the Big Four E.y. A staff person in Australia. Eddie died in the Sydney office last year. Do you remember that? We talked about that on the show. Yeah, it was overwork. Well, Oceania. Oceania. Oceania commissioned an independent review of its workplace culture following the death of that staff member. The review found that a majority of employees feel safe and respected in the workplace, but a significant minority reported experiencing exclusion, bullying, sexual harassment and racism. Long working hours and overwork were identified as critical issues negatively impacting employee wellbeing, team cohesion and retention. Nearly half of the respondents reported that their health had been negatively affected. Nearly half and 40% continued Considered quitting. 40% considered quitting as a result. While there is confidence in addressing issues of harassment and discrimination, only 31% of employees believe the firm can address the culture of long work hours. So the staff don't think that the work hours can change.

David Leary: [00:33:35] Because they're in the weeds of it, which goes back to.

Blake Oliver: [00:33:38] So. So I got to dig into this, right? There's a minority at Australia. Or Oceania that feel that. Like there's a problem with bullying and stuff like that, right? So 74% said they rarely feel excluded in the workplace, but that means that 26% like feel excluded on a regular basis. Like more than rarely.

David Leary: [00:34:04] What are the other buckets? Do people just opt out? Not to answer the question? It's kind of a.

Blake Oliver: [00:34:08] So in the last five years, 15% have experienced bullying. 10% indicated they had experienced sexual harassment and 8% experienced racism. Like that's not that's.

David Leary: [00:34:24] 20, 23, folks.

Blake Oliver: [00:34:25] That's a lot. Those are big numbers, right? Like. That's a lot of people. In the long hours. That's the thing that everybody has experienced with 46 saying that their health has been negatively affected and I think personally. Having gone like myself from. Working long hours and not taking care of my health. When I have my own firm and when I worked at the big firm to having a flexible schedule where I could work less, where I could work out every day. It has made my life so much better. My health is so much better when I do not work more than eight hours a day. And when I take care of myself and I see my family. And I think that's the best argument to reduce overwork in our profession is that it's actually has a significant health consequence. And it's not short term. It has a long term effect on you, especially after years and years. You get into the habit of it and then you sort of like lose this ability to live a healthy life because you become addicted to the work. Yeah.

David Leary: [00:35:28] Or you can't fit in an exercise or whatever. Yeah, I get it. I mean, I.

Blake Oliver: [00:35:32] Think like some people say, Oh, this is just the way accounting is, this is the nature of the job. And I would say like, well, saying that is like saying that if you're a dock worker, the nature of the job is that you're going to get crushed by a shipping container. You know, like, that's not acceptable, right? We have to do something to make it safe. Yeah. Or it's like, yeah, it sort of just like accepting this unacceptable situation. And if you want to increase retention, recruitment. Right, you've got to make healthy workplaces.

David Leary: [00:36:06] Yeah, it goes I mean, that goes back to, like you said, start badging firms for giving good working conditions. Right. Or committing to less hours.

Blake Oliver: [00:36:16] Yeah. Or just have overtime pay everyone overtime. Right. Why are staff accountants exempt from overtime? Just because you sit behind a desk doesn't mean that working 10 or 12 hours a day isn't bad for you. We have overtime protections for factory workers, but we don't have overtime protections for staff accountants.

David Leary: [00:36:35] And they could frame it as a raise like, Hey, I'm going to let you work less hours. That's like getting a raise.

Blake Oliver: [00:36:40] Or or when you work more hours, you actually get paid for those hours. More hours, right? It's not free labor for the firms. Maybe that's why accounting firms have been able to double their fees but keep staff salaries the same. Because you can work people over 40 hours. You don't have to pay them any more. Megan says your part time controller pays over time. That's true. They pay overtime and they are one of the fastest growing accounting firms in the country. They rocketed from 99 to 75 on the top 100 accounting firms list. People want to work there. I wonder why. Maybe it's because they have good working hours and you can work 20 hours. You can work 30 hours. You can work 40 hours and you get paid for overtime if you want to work more than that. Mm hm. It's like, so mind blowing, you know? How hard is it to create a good culture in your firm? Maybe just set up the incentives properly.

David Leary: [00:37:34] We talked about how I saw a headline. Actually, I'll go with the headline first and then work backwards from there. So the headline, this was In the Verge and it said, IRS will finally let most Americans file taxes online next year. Yes. And I was like, what is this? And no, it has nothing to do with like real online filing. Okay. So it's the real article is a different article. Like this is again, they got the headline from the IRS in weird ways.

Blake Oliver: [00:37:58] They got they got the headline wrong. The real story is IRS is going paperless.

David Leary: [00:38:01] Exactly. It's going paperless. And so and they have a real it sounds like a real deal plan with real deadlines now, like end of 2024, end of 20, 25, end of 2026, like where things are going to be. The only thing that worries me is like looking at a lot of these numbers. The IRS is estimating that 94% of individual taxpayers will no longer need to send mail, except for it, says, However, taxpayers who wish to submit paper returns and correspondence continue to do so. Hence, we live in a country where there's still billions and trillions of dollars running around on paper checks. You have the option to not use them and people use them all the time. Like like that's going to be the shame here, I think.

Blake Oliver: [00:38:43] I do like that they're keeping the option of letting people file on paper. And the reason is that Americans hate to be forced to do anything. Okay? This is the culture. So you have to understand that. And this is what this is why, you know, Covid mandates and mask mandates and vaccines failed because nobody in America wants to be told what to do. Okay? So you got to give people the option and encourage them to do it and make it easier and better. And so, like I think I think Yellen's doing great with that because this was Treasury Secretary Janet Yellen who said this. Right. And they're going to go paperless by 2025. That's the goal, the 2025 tax season. So in 2026, you should be able to do everything paperless. That's going to be great because there's still so many forms you have to file on paper. And that's the problem for tax shops and firms is like, you got to have an office because you've got to be able to like send out this paper mail and get it back and all that. You might be able to truly go paperless.

David Leary: [00:39:43] I've had a file resurgence paper because I missed the electronic filing deadline, which is silly. They just turn the computer off and then I had to print it and mail it. That doesn't make any sense. But she has a nice quote, though. She says, By filing season 2025, the IRS is committing to digitally process 100% of tax information in returns that are submitted by by paper, as well as half of all paper correspondence. Non-tax forms and notices will also be digitized.

Blake Oliver: [00:40:07] So does this mean. The iris is still going to mail correspondence or are they going to somehow do that digitally to. Will it all be through a portal? Because that would be amazing.

David Leary: [00:40:19] So so they talk about by filing season 2026, everything's be processed digitally. Up to 1 billion historical documents will be digitized, giving taxpayers access to their data and saving the agency about $40 Million in storage cost a year.

Blake Oliver: [00:40:33] That's amazing. $40 million to store paper every year.

David Leary: [00:40:36] Paper every year.

Blake Oliver: [00:40:37] So like I'm curious, like, does this mean like correspondence will be online because. Right. If they're going to go paperless, they have to do that. All those notices that get mailed out to people, they got to have a way to send those on a portal. Or via secure email or something.

David Leary: [00:40:54] Or an app. So we were at the NEA conference this week, right? And the IRS was there. Well, now we call it the IRS, like an innovation team of the IRS. And they had this little mobile app. And the way this mobile app would work is it's kind of like a souped up FAQ app. So I could take my 1040, I could take a photo of it, and then it scans whatever dock I'm looking at and it provides help files on every line of that form so I can click on it. And in theory it's going to bring me up. Now, it doesn't do chat, it doesn't pull up my record yet, but like, they're building a beautiful, easy way to interact with the IRS. It's kind of the way I could summarize that it's not ready for beta testers. They wouldn't let me take a photo of it or film it or anything like that. I asked. Trust me. I was like, I would love to find out more about it to see this. But So the IRS is on the march, right? They're on the march, which is good to see.

Blake Oliver: [00:41:45] This is good. They're getting rid of the paper because there was also a story on Accounting Today about how the IRS is losing track of tax info during shipments between processing centers so that the Treasury Inspector General for Tax Administration found the IRS is not adequately safeguarding sensitive tax information during shipping. The report highlighted that the IRS is not adhering to its own guidelines when sending large volumes of taxpayer information through private delivery carriers. Inspections found that a significant number of packages did not include the required tracking documents, and the IRS is not completing the necessary audits of the acknowledgment process for these shipments. And Tigta made recommendations as they like to do. They always make lots of recommendations.

David Leary: [00:42:26] Did you see the form? They're supposed to fill out? It's very clear You need to fill out form 3210. And so I Googled it and found that form. And it reminds me of, well, were you old enough or young enough or old, I guess. Were you old enough, Blake? Where there was a thing called interoffice mail kind of before email.

Blake Oliver: [00:42:43] So I. I joined. Well, you know, I'm a career changer, right? So maybe this was like when I was out of college, but I was a musician at that time. So I. I've seen the old like. Folders, but I've never used it.

David Leary: [00:42:57] And you cross off the line and then it's going to the next person. The form kind of looks like that. I don't know. I was like, Why is it so hard to fill this out? It's not that difficult. I just think people aren't using it. I don't know.

Blake Oliver: [00:43:13] Let's see what else is new. Hunter Biden. The plea deal. The plea agreement was made public after a judge ordered it unsealed. It details Biden's earnings in 2017 and 2018, during which he failed to pay income tax. And the reason I'm bringing this up, David, is because you asked questions about this. You wanted to know where did this income come from? What was the source of it? Was it W-2 income? Was it not? Well, it was not. It was let's see, in 2017, he made 2.3 million. 1 million came from a company he formed with the chief executive officer of a Chinese conglomerate, 664,000 from a Chinese infrastructure investment firm, 500,000 from a Ukrainian energy company.

David Leary: [00:43:59] 70 business man.

Blake Oliver: [00:44:00] 70,000 from a Romanian business, 48,000 from an international law firm, and 666,000 from domestic business interests. So it was all non W-2 income there.

David Leary: [00:44:14] Jeez.

Blake Oliver: [00:44:15] He made more than 2.1 million in 2018. It doesn't say in the article where that money came from, but I'm going to guess probably like the same sources, right? Why would it change? Yeah. And and this is interesting, too. So he owed, you know, $1 million or he owed. How much did he owe in tax? Like $1 million. Right. A year. But. Oh, yes. Here. Here's how he solved it. Hollywood entertainment lawyer Kevin Morris lent more than $2 million to Biden to help resolve his tax issues. So he got a loan and paid off the IRS.

David Leary: [00:44:49] We're getting better friends.

Blake Oliver: [00:44:50] That's like. I know.

David Leary: [00:44:51] Right? That's kind of amazing.

Blake Oliver: [00:44:53] Yeah. His tax liabilities for each year were almost $1 million per year. And it said paid for by an unidentified third party. But I guess The New York Times has identified that third party as this lawyer, Kevin Morris.

David Leary: [00:45:06] So I think if you want to talk about some quick numbers and criminal type activities, this caught my eye first. The man was charged with cheating Home Depots out of $300,000 and a door return scam. And essentially all he's doing is he's going taking a cart, going to the back, putting doors on the cart, bringing it up to the returns counter and getting money. I'm like, how does a Fortune 500 company not have like any controls? I thought that was a little crazy and I thought it was like.

Blake Oliver: [00:45:30] There's a movie, there's a movie, there's a movie where the characters do this. They they go into a hardware store and just take something off the shelf, something expensive, and take it to the customer service and return it because the store doesn't have a you have to have a receipt policy.

David Leary: [00:45:44] Yeah, I guess Home Depot apparently doesn't. Yeah. And just but how to get it up to $300,000 like that's a lot of inventory which is how.

Blake Oliver: [00:45:54] Much is a door like a couple grand right.

David Leary: [00:45:57] It depends on which doors. But at a minimum, $100 a piece easily to 150.

Blake Oliver: [00:46:02] I mean, he must have been doing the expensive doors is what I'm guessing, right? Like the really expensive ones. So what he had to do this, like, a thousand times to get caught?

David Leary: [00:46:10] Yeah, exactly. And then but then I was like, oh, that's nothing. Because did you see the article about the New Jersey tax preparer? No tax preparer arrested for seeking over 124 million in phony tax credits.

Blake Oliver: [00:46:24] 124 million?

David Leary: [00:46:26] Yeah. So the Department of Justice announced the arrest of Leon Haynes of Teaneck, New Jersey. According to court documents, beginning around November 2020, he prepared and filed 941, claiming pandemic related clients clients. Crtc type fraud. Yeah. More than a half dozen of the clients have confirmed to the government that he just wrote the numbers and wages down. They didn't even look at it. Basically, they didn't provide any of the information to him. So in the end, so he filed 1300 false claims totaling $124 Million. His own company, he got he got a check for a million for his own company, which was fraud. And then about 31 million was actually sent out to other to his clients. So, okay.

Blake Oliver: [00:47:09] So this is.

David Leary: [00:47:09] Like over the top.

Blake Oliver: [00:47:10] Ridiculous example. But we know that fraud and pandemic relief fraud is like prevalent, right? There's a lot of it. And I keep seeing stories about how the IRS is going to crack down on this. Aicpa is making recommendations, but how are they actually going to do it? The whole program relies on self certification. So all you have to do is fill out these forms and say that you had this situation right and they can't possibly audit all of these. So, yeah, a guy is going to get caught for 124 million. But what about the guy who just did 2.4 million? Probably never going to get caught, Right. I mean, I don't see how you how they plug the gap in this. It's just going to be a mess.

David Leary: [00:47:50] Down the the.

Blake Oliver: [00:47:51] Ladder. Yeah. Massive hole of money that's just going to keep you know, money's going to keep going into this fraud hole.

David Leary: [00:47:57] All right. Maybe this is just a big PR play, right, by the IRS commissioner. Right.

Blake Oliver: [00:48:02] Uh. Okay. We're talking about fraud. Here's a story I've been saving for you. The South China Morning Post. Reported an accountant in China stole the equivalent of. 677,000 USD from. Her company, her employer, to pay for religious rites in attempt to keep her boyfriend.

David Leary: [00:48:28] So that was the motivation of the fraud triangle. Like what she how she she do this?

Blake Oliver: [00:48:33] She embezzled the $677,000, the equivalent of that, and used them to use the money to pay for Thai black magic religious rites gurus to help her problematic love life.

David Leary: [00:48:47] She should use the money to connect with a clairvoyant that would have helped her avoid getting caught. I don't know.

Blake Oliver: [00:48:54] Wang began. The bookkeepers last name is Wang. She began to divert the company's money in March of 2018. It doesn't. Say how I wish they would say how I always want to know how. Probably something stupid, right? Like the company was allowing her to print checks without a signature or something. Right. It's always something stupid like that. I got a good one to close us out, David. All right. Well, we got some listener mail, so we'll get to that, too. But I wanted to highlight this. So this story popped up. It's from the Dispatch.com. Walter Fulp, the third, a native of Lexington, North Carolina, was recently inducted into the North Carolina Waterski Hall of Fame. Fulp developed a love for water skiing during his high school years and continued to pursue the sport throughout college and beyond. He became an accomplished skier and judge, holding various positions in water skiing competitions. Phillips highlight in the sport was placing sixth in the World Water Ski Championship in 2016, but his competition days were cut short due to a back injury in 2017, but remains very involved in the sport. So there are accountants, David, with hobbies. You know, we need to be we need to be promoting these stories more to get people into the profession. If you can be a world champion water skier and be an accountant, that means you've got work life balance, right?

David Leary: [00:50:21] Well in water skiing school Fonzie did the water ski the whole jump? The shark. Fonzie really did the stunt in those days. He really jumped the shark because he actually water skied. So it's so so arguably, it's the coolest account in that exists. He's like Fonzie. So you want to do a do a voice mails.

Blake Oliver: [00:50:39] Got some listener mail. So these were on social. William messaged me on LinkedIn and said regarding the 150 hour rule. Have you heard of modern states, dawg? This is a way that he cut a whole year from college. With clip credits. He's maxing out the amount of clip credits his university will accept. He says, I don't know of a better way to save time and money and get the 150 credit requirement than Clep exams. And if the exam and the exam proctor fee is free, it might be worth sharing with your. If your podcast listeners or students. So if you are a student and you're looking to get the 150 without spending a lot of money, go check out modern states.org.

David Leary: [00:51:25] And so this is a way to test out of classes and get credit, I'm not sure. Can you explain exactly what this acronym is or what this means? Yeah.

Blake Oliver: [00:51:33] So it was created. With the goal of making college more accessible and affordable for high school students. By reducing the number of credits you need to get a bachelor's degree. But it also works for the 150 because the extra 30 hours of college semester hours can be in anything. So basically, you you test out of college courses by taking exams there. The Clep exams, it stands for College Level Examination program, and they're administered by the College Board and accepted for credit by more than 2900 colleges and universities. So, yeah, you can test out. There's 32 courses available. No prerequisites required. So if you're a good test taker. I mean, this could be a great way to get your 30 hours, assuming that your college that you go to accepts these for credit.

David Leary: [00:52:29] Or assuming in theory your argument, which is I have five years of work experience and that proves I should be able to take these tests. I mean, not not that real world experience ever means anything to a college class test, but in theory, in theory.

Blake Oliver: [00:52:46] I'm looking at the course catalog. They've got American government, literature, biology, calculus, chemistry, composition, college algebra, financial accounting is in there. French, English, German history of the United States humanities, all sorts of classes. You could take Western civilization to 1648 to the present and get your credits you need for your 150. This is great.

David Leary: [00:53:12] This week I had a phone call with the founder of CPA credits.com or CPA credits dotcom. And essentially they figured out their it's self study or self-paced classes. It's like they have 12 semesters. So they do a new semester, new class each month and it's like, so you can knock your thing out faster for a fraction of the cost to get your the extra classes you need. So you're right between there's alternative ways to get to that to that finish line.

Blake Oliver: [00:53:37] We got one more listener message. This is from Eddie on Instagram. Eddie said, Hello, I've been listening to your great content on YouTube. I have a question I'm hoping you can answer. I've been in industry accounting for the last ten years. I've been pondering about the CPA license lately. But with being 36, is it worth it? At my age? I would greatly appreciate your thoughts on this. I've thoroughly enjoyed your podcast. Thanks. And I replied and I said, Could you tell me more about your career goals? Because that will really determine whether or not getting the CPA is worth it for you. And Eddie said, I aspire to become a corporate controller and eventually a CFO someday. I've been an accounting supervisor and I'm currently a senior accountant. So I said. You don't need the CPR to be a CFO. Most CFOs don't have a CPA these days. But I said, if you want to be a corporate controller, CPA is a mandatory requirement in a lot of roles, especially the bigger the company. And so if you want to move up from senior accountant to controller, it would definitely be something to consider.

David Leary: [00:54:46] And I mean, just look at the way right now I'm staring at you and we are side by side heads here with our names on it. And you have the comma CPA. It just looks better. Like, visually, it just looks better. Like. Yeah, you want it, right? It's a badge.

Blake Oliver: [00:54:59] Yeah. And it means something. It really does. So I would say if you want to go to CFO through the accounting path, then that's it is important to do it. But you can get the CFO other ways. So don't feel like you have to go be a controller and then be a CFO. In fact, you could be, you know, to be honest, better served doing data analytics or doing operations, you know, figuring out how to use your love of numbers in a more operational way. Because a lot of a lot of controllership ends up being, you know, compliance related. And CEOs who are hiring CFOs want people who are going to be their right hand and be able to operate and run the business and not just do financial reporting a lot of the time. Now, that's I'm saying that's broad strokes. There's a lot of different types of businesses, a lot of companies. So it's really going to be. Unique to your situation, what you decide to do. Another way to do it, to skip the would be to go work at startups because they don't care. You could do a controller role there and then become a CFO, right? Like like the CFO of Crumbl cookies. He just worked his way up at a startup and became the CFO of Crumbl. Cookies. Doesn't have a CPA as far as I know. Yeah. All right.

David Leary: [00:56:18] David started as an external bookkeeper. Yeah, Yeah, It's a great journey.

Blake Oliver: [00:56:21] I got a hard stop, so I got to go. If people want to find you online, where can they track you down?

David Leary: [00:56:26] I'm on all the socials, just @DavidLeary.

Blake Oliver: [00:56:29] And I am @BlakeTOliver. Subscribe to us on YouTube and you'll get notified when we go live. You can join us and chat and let us know your thoughts. You can heckle us. It's a lot of fun doing these recordings with everybody here. So thank you, Megan. Luke Thank you, Brian. Aaron Everyone who showed up. Ryan everyone who showed up and especially who commented. David I'll see you next week. Beautiful. Bye bye.