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] The root of the problem is that people aren't charging enough for the work they're doing. And if you charge enough for the work you're doing, the value you're creating, then the cost of the software ends up being very small compared to what you're charging for your services. I just think there's a lot of people out there that are like still billing effectively $20 an hour, which is maybe what they got as an employee. But they're a freelancer now and they haven't figured out that. You've got to multiply that by like two and a half times and be billing at least 50 or more an hour.

David Leary: [00:00:38] Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:44] Hello and welcome to the show. I'm Blake Oliver.

David Leary: [00:00:47] And I'm David Leary.

Blake Oliver: [00:00:48] I love the title of this episode, David.

David Leary: [00:00:53] It's the beginning of the pipeline. It's very applicable.

Blake Oliver: [00:00:56] Yeah, we got we got some listener mail and I just got to kick off with this message that we got from Dave Olson. Dave says, Hey, Blake and David, I have to tell you about an experience my daughter had today on her first day of high school senior year. She's taking her first accounting class. I'm not going to read the rest of the message because we actually got on the phone with Dave's daughter, who was taking her first accounting class and had a really unique experience.

David Leary: [00:01:24] So hopefully it's unique and it's not.

Blake Oliver: [00:01:28] Maybe.

David Leary: [00:01:28] Experience.

Blake Oliver: [00:01:29] Maybe that's the wrong word. It's not it's not unique anyway. Let's hear from Jennica. Hi, Jennica. Thanks for talking to me today. Hi.

Jennica: [00:01:38] Of course I'm excited.

Blake Oliver: [00:01:40] So I understand that you just started accounting.

Jennica: [00:01:44] Yes, a couple of days ago.

Blake Oliver: [00:01:45] Tell me about yourself.

Jennica: [00:01:47] So my name is Jessica and I'm a senior at in high school. I have been doing computer programing since seventh grade, and that's something that I'm really interested in. So I want to go into information systems when I go to college, and I understand that that includes accounting. And that's just also something that's kind of interested me. Ever since my dad has kind of taught me a little bit about his accounting business. So that's kind of why I took the accounting class.

Blake Oliver: [00:02:14] So how did it go? You you had your first day. Walk me through it.

Jennica: [00:02:18] Yeah. So, you know, I'm just like, I got to my class and I was kind of excited to jump into it. And obviously the first day is kind of going over rules and going over the course and what you're going to learn and what you're going to do. I was definitely excited to get into it because of everything I've heard about it and it's just always been something interesting to me. But my teacher started talking about accounting in a very negative way that wasn't I was expecting. And the first thing she kind of says is the fact that accounting is boring. I remember her saying, like, who thinks accounting is boring? Who actually even wants to be here? That kind of made me like giggle a little because my dad is an accountant and she said that, Oh, we'll learn about why accountants hate their lives. I was like, okay. It was just like really weird as she's like talking about how terrible accounting is and how hard the semester is going to be and how much harder it is than a lot of classes, and that you're not going to want to go into accounting. And we're going to try to make it fun, even though it's not. She said that she wouldn't want to be an accountant and she doesn't like accounting, but she appreciates it and thinks that it is a good skill.

Jennica: [00:03:29] But she talked about how boring it was, how hard it was, and she even made some jokes about people dropping the class. And it kind of just like hit me because I was like really excited for the class. And suddenly she's talking negatively about accounting and it's kind of really upset me. I've been kind of looking forward to this class and again, hearing about my dad and the things that he does all the time. I got excited because, you know, maybe this will be maybe one day I'll take over my dad's business and this will be the class that kind of leads me into that. So I think that this being my first accounting class, it just kind of really took me down because all of a sudden there's this like negative energy in there. She's talking about how terrible it is, and even on the second day, she's still kind of went on about how hard accounting was and how boring it was and how accountants have boring personalities. And I don't know, it just was very upsetting. And like, I don't know, it just definitely isn't getting me excited for the class anymore.

Blake Oliver: [00:04:25] Well, tell you what, let's set the record straight. As the daughter of a firm owner, as a future firm owner yourself, what would you tell somebody who's thinking about taking an accounting class or, you know, majoring in it in college?

Jennica: [00:04:40] I think that nothing should stop you if you're interested in it, because obviously there are people out there who enjoy accounting and that's why they went into it. And I think that even though there is a negative stigma around, it doesn't mean that it is hard or it is boring. And obviously, I do believe that accounting isn't for everyone. But I also wouldn't want there to be so many people kind of hating on it for no reason, even though they've never tried it. I think that it's always worth the try, especially if it interests you. And I think that you should never give up just because you think that's it's going to be boring or that you're not going to like it. And even though that there is some hate on it in my class and just kind of in the world that I shouldn't have to worry about that and I should just kind of keep being excited about it because it interests me. So I guess just, yeah, keep it going and keep working hard towards it. Because if it interests you, that's all that matters.

Blake Oliver: [00:05:38] What is your view of accounting as the daughter of an accountant?

Jennica: [00:05:44] I think especially when I was younger, I didn't necessarily understand it. And even like growing up and like just hearing about accounting, I feel like there's a stigma around it that it's boring and not something fun to be into. But as I got older and I got thinking about my own career and as I'm like watching my dad with his business, it got me really interested and he's been teaching me a few things and it just gets me excited because I think accounting from what I've heard and learned about is a very useful skill, especially because I'm interested in starting my own business. And I think that learning accounting will either help me guide what I want to do in my business, but also just starting a business in general. I think it's very important to have that ability to know kind of how to do accounting, and it's just, I don't know. It's been super cool for me to watch my dad with all of his skills and the things that he's learned throughout the years. And I don't have a very strong knowledge on accounting, which is why I'm taking the class. But I think just from like watching it just got me really interested in it and maybe even going into it when I'm older.

Jennica: [00:06:48] Those kind of jokes around being an accountant or doing accounting that you may have like a boring personality or that the job itself is really boring. I love talking to my dad and he's outgoing and exciting. So I just think the fact that accountants are boring or that the job is boring just kind of like upsets me a bit that people think that. Another thing that my dad was telling me is that there's already kind of not enough people in the industry and that we could use so much more accountants and that it is a very useful job and a very useful skill. And I think that this being my first accounting class is already getting 2025 people not interested in it when there is a need for accountants. And I think that it's really important. And he also told me that the first accounting class that you take will make or break like your interest for it. And I think that if there are accounting teachers or you know, teachers for any subject, I think that they should be getting students excited about it and ready for it because, you know, who knows who's interested in there and what it could lead to and what career it could lead to.

Blake Oliver: [00:07:58] So I think that's great advice. Jenica And I really appreciate you taking the time to talk to me and share your story.

Jennica: [00:08:06] Yeah, of course.

Blake Oliver: [00:08:08] So there you have it. That was Jennica Senior in high school, just started her first accounting class in high school, and unfortunately, the teacher was not very what's even the word was not promoting the accounting profession as a career was repeating a lot of those negative stereotype.

David Leary: [00:08:28] Word is trope the right word.

Blake Oliver: [00:08:30] For that? I would say stereotype trope, right? Stereotypes, Yeah.

David Leary: [00:08:33] Meme memes. Yeah.

Blake Oliver: [00:08:35] So, you know, this this goes to the whole pipeline problem we've been talking about. How do we get more students interested in accounting if this is what they're hearing from their teachers.

David Leary: [00:08:45] And she recognized that like she she's she's a high school senior by 17 years old and she recognized like, hey, if that's the message you deliver to 25 people with their first experience of accounting, they're not going to go into accounting like it's right.

Blake Oliver: [00:08:59] So somebody somebody needs to talk to that teacher. We've got I hope it's.

David Leary: [00:09:06] A unique experience. I hope other people that are fortunate enough to take an accounting class in high school are getting somebody excited about accounting.

Blake Oliver: [00:09:14] Well, luckily, Jennica knows an accountant. Her father is an accountant. And so she knows that these stereotypes are not necessarily true, but not all those other kids do. That's the problem. So we got to do something about it. I don't know what the answer is, but maybe our listeners have some ideas. If you have ideas for how we can dispel the myths about accounting, how we can get rid of these negative stereotypes, counter them. At least I know that those listening to this show most likely are happy in their jobs. They like accounting, right? We enjoy being firm owners or working at modern firms. And you know, it's not the green eyeshades and and techies anymore.

David Leary: [00:10:00] It's accountants, accounting partners at firms sitting on like the hood of their Porsche or their Lamborghini and Ferrari. That's the way to do it. And we just have a YouTube channel of those over and over again.

Blake Oliver: [00:10:11] Or, you know, showing the fact that you can go on vacation, that you don't have to work 60 to 70 hours a week all the time that you get time off and you get to go enjoy your life? I don't know. So, David, we're talking about Pipeline, the news from South Carolina. Is also pipeline news this week. Let's talk about what's going on in South Carolina.

David Leary: [00:10:32] Mean another state, right? Proposing legislation to change the definition or the lack of better terms, The 150 hour rule. That's the easiest way to summarize it. But they want alternative pathways to get to become a CPA.

Blake Oliver: [00:10:48] And make it more streamlined, make it less costly, less burdensome. Started with Minnesota. And we have seen now South Carolina proposed legislation and that was the news this week. There's a press release on the CPA Org website. You can find the link to that in our show notes about the changes they're proposing. And we spoke very recently, a couple days ago with David Noble, who is the chair of the South Carolina Association of CPAs, and he explained why they're doing what they're doing. So let's take a listen.

David Leary: [00:11:24] Before you hit play on that. Blake. So I think the summary of what this is, is they feel that the 30 hours was intentionally not defined or black and white on purpose to give future flexibility to the profession. And based on that, he went through and reinterpreted the whole Uniform Accounting Act. And their conclusion is they have this freedom to let the 30 hours be defined for what it needs to be appropriate. Doesn't have to be on on a transcript. Right?

Blake Oliver: [00:11:54] A really good point, David. So South Carolina is taking a different approach than Minnesota. Minnesota is simply creating an alternative pathway that is 120 plus two years of experience. South Carolina is saying we're still going to have 150, but we're going to reinterpret what the extra 30 hours means because based on their interpretation of the Uniform Accountancy Act and the way that it has been implemented in different states, it doesn't have to be hours on a transcript, which is really brilliant because if you keep 150, how can anyone argue against the change? And South Carolina believes, and David Noble believe that they therefore would keep their substantial equivalency and mobility would not be impacted.

David Leary: [00:12:45] And then the other argument is that all the states already have all these oddball, weird laws anyways. Like, wait, right? There's nothing's 100% right.

Blake Oliver: [00:12:54] There's differences in education and differences in experience requirements already. So you can't you can't really argue logically that any change, like the change that they are making, should take away their substantial equivalency. That's what they've proposed. I'm going to play a clip from our interview with David Noble. This is also available on the podcast Feed as a bonus episode. So go back into the feed if you didn't see it and look for the bonus interview with David Noble for the full 45 minutes with him. This is just a little piece of that conversation. So here it is, a clip of our interview with David Noble, chair of the SCA CPA, talking about the changes they're going to make or that they are proposing to make in South Carolina. Understand that South Carolina is considering some changes to the Accountancy Act there. What are you working on?

Speaker4: [00:13:52] We started this process almost a year ago and sent a law, a proposed law out to Nasba and the AICPA to review. And we got comments back from them as we went through that process. We rethought what we were going to do and how we were going to do it. South Carolina is not being radical. We spent a lot of time researching it to make sure what we were doing was something that made sense and had been done in other places. We're not changing our initial licensure process at all, and so our substantial equivalency has to remain because we didn't change our process. But we're making it clear that they can come up with different things to change or to make equivalent. We're changing mobility consistent with other state laws so that we're protecting the public for folks that might might come in that aren't substantially equivalent. We're getting folks into the profession that might not otherwise be here. If we can do low cost certificate programs, we're getting folks into the profession that might not otherwise be here. We're not making it easier. We're making it less costly. And we're actually improving the 30 hour education and taking away the concept of doing anything you want and instead guiding them to more business skills to make them a better, well rounded professional.

Speaker4: [00:15:00] So with this this law that we have now proposed and we've sent it to Nasba again, we've sent it to the AICPA. We've actually just sent it on the last day or two to our Board of Accountancy, and we've asked to be on their agenda for an October meeting. We always talk with our board, get feedback from them. We found over time that there are some folks in there that have practiced accounting much longer than we have and have good, insightful thoughts. There's a person in South Carolina that was very instrumental at Nasba as a chair during this process of becoming substantially equivalent. He's a good friend of mine and I always run things by him to get his perspective. He's got a perspective on both sides. He's been chair of our board, chair of the Board of Accountancy and chair of Nasba. So we solicit comments and we want to hear what people think. We just believe that this time we really hit it, that it's not radical. And so this is the right thing to do for everybody, including the nation.

Blake Oliver: [00:15:53] So there you have it. David Noble, chair of the South Carolina Association of CPAs, talking about what they're doing to change and reduce the cost and complexity of licensing requirements and get more people into the CPA pipeline that otherwise wouldn't go.

David Leary: [00:16:09] And they're also proposing extending the the testing time. We did reach out to the CPA and we did get a response. We appreciate that many organizations are trying to address our pipeline challenges. At the same time, we believe the best solution is one we can pursue together as a unified profession. That's why we've convened the National Pipeline Advisory Group, a multi-stakeholder body charged with developing solutions to address talent issues within the profession. The advisory group is already hard at work, with a draft strategy due at the CPA's Spring Council meeting this coming May, the advisory group will examine substantial equivalency the three E's of education, examination and experience to better understand if there are additional pathways to licensure that also preserve CPA mobility. As we've consistently said, the AICPA views mobility as essential. The proposed South Carolina legislation is subject to an assessment by the National Association of State Boards of Accountancy, Nasba and the state's own Board of Accountancy. We look forward to seeing the outcome of those reviews and that is a comment from the AICPA Nasba. I do not have a comment from Nasba and the main reason why, if any, from anybody from Nasba is listening. Nasba Fix your email. I cannot send you an email from earmark cpcomm earmark.com @DavidLeary dot com or my gmail account. They all get blocked. You cannot email nasba So.

Blake Oliver: [00:17:35] They're on tight lock down there. It seems like I've had the same issue. I feel like it's an IT configuration.

David Leary: [00:17:39] I went to my personal domains. I was like, this shouldn't be blocked either. So it just there's something else going on. But yes, Nasba, please, please let us through.

Blake Oliver: [00:17:46] Well, so did you say that the draft, they're going to have some sort of draft plan in May? The CPA.

David Leary: [00:17:54] Has something coming out in.

Blake Oliver: [00:17:55] May. So this is the problem with the committee approach, is that they're not going to have anything until May. And what month is it?

David Leary: [00:18:04] Oh, yes, that's a half a year. Right?

Blake Oliver: [00:18:05] Right. So by the time anything, you know, these committees just go so slow. And I think that's why the states are making their move, because if one state can do it and not lose substantial equivalency, then it becomes a model for all the other states to follow. And then you don't have to wait for national leadership. I think that's that's the struggle here, is that this is a problem that's happening right now. And we need solutions now, not in years from now.

David Leary: [00:18:31] And in the interviews, really good to listen to. There's some mind blowing stuff in there. I think the main the biggest mind blowing thing. Did you know, in the state of New York? If you just have how many years of experience? Is it.

Blake Oliver: [00:18:41] Ten? So, yeah. So New York apparently still has a statute, a law on the books that says that if you have 15 years of experience, you can sit for the CPA exam and become a CPA if you pass the exam without a college degree. There's no education requirement if you have 15 years of experience and New York is still substantially equivalent. So you could I mean, we don't know how many people have actually done this, but you could potentially be a CPA without a bachelor's degree in New York and then go get licensed in another state through reciprocity. So this whole concept of like mobility, David Noble in the interview said something like it's already broken because of these differences. So go listen to the interview. It's not so.

David Leary: [00:19:26] Much it's broken, but the two because the argument is you're going to break it. But it's it's not It's working just fine with the differences. Really? Yeah.

Blake Oliver: [00:19:35] Well, he's saying that. Yeah, exactly. There's already these differences. So if we make a few more differences, what's it matter? That's kind of my take. He didn't say that. Yeah. All right. Where do we go from here, David? You want to talk more about pipeline issues? Do you want to talk about technology? I've got a story about air traffic controllers.

David Leary: [00:19:53] I could. There's just another article in Going Concern from Sharon Lasser, PhD, CPA. She's currently the director of the School of Accountancy at the University of Denver, but she was previously the chair of the Colorado Society of CPAs. And she basically writes about how the 150 hours is actually a barrier. Right. And she points out and criticized an AICPA study where it was done by the Illinois Society of CPAs. And I think we've talked about this one on the show before, where they only talk to accounting students and accounting graduates. Right? Yeah.

Blake Oliver: [00:20:27] Yeah. So you brought this up in the interview with Noble. Yeah. This study. So AICPA and Nasba have pointed to that study that Illinois did, saying that the 150 hours is not a barrier. And and the author of this article, did you say Sharon?

David Leary: [00:20:44] Sharon Yep. La, la la la.

Blake Oliver: [00:20:47] The article is called 150 Hours is a barrier, Really? And she's saying that the study in Illinois can't make that argument based on that because it only surveyed people who are already bought in to the CPA pathway. So, of course, for them, 150 is not going to be considered that much of a barrier because they've already chosen to absorb that cost. Right? Yeah. You need to survey the people who decided not to do it to find out.

David Leary: [00:21:14] And then she she quotes the Center for Audit Quality, which we covered a couple of weeks back, where it was called out. 150 is an issue and then goes back to I think you've talked about this in the past, the Dr. John Barrios survey that was done.

Blake Oliver: [00:21:28] He did a study. A peer reviewed study. Yeah.

David Leary: [00:21:31] And but so really, when you get down to the bottom of it, it's her her conclusion paragraph. And the reason I feel like this ties back in because it goes back to you said the states the states are taking action. Right. And she was a former chair. Right. And she's, you know, probably still involved in influencing these people that are involved. So she said based on the research, I suggest states reduce the barrier to becoming a CPA and recognize the value of graduate education by requiring two years of experience for bachelorette degree holders and one year experience for graduate degree holders. And she says, notice I did not say 150 or 120 hours. The education requirement should be based on earning degree, not random hours.

Blake Oliver: [00:22:09] So this is not the CPA. This is regarding the my next story. But I think it's relevant because we've seen these declines in the number of accountants across all of the professional licenses and certifications. I got an email from the Arizona State Society of Enrolled Agents inviting me to a meeting, a town hall at which a major change will be considered. They are considering or it sounds like that the National Association of Enrolled Agents is encouraging the state associations to dissolve and become chapters of the national organization. And one of the reasons is that their membership has dropped 23% from 2018 to 2023. In February of 2018, there were about 10,000 regular members of the NAR. In May of 2023. So five years later, the number was 7700. That's a drop of about 23%. Now, we don't know. Aicpa membership numbers or state society membership numbers. Those aren't often published, at least I'm not aware of them being published. But if it's similar, that means that we're talking drops of 20 to 30%, 20% or more. And that's a serious issue for these state societies. This is also why they are interested in getting more CPAs, because a drop of your membership to 20% is also a drop of your membership dues of 20%. Right. It starts to become a survival issue. And I wonder if at the national level they're not seeing that issue as much. And that's why it's not as much of a burning issue for them. I'm not sure I'd be curious to know. I would love to know how it's trending at the national level.

David Leary: [00:24:06] Well, there's just so many off ramps, right? You have people burning out the burn out people that after two years in at a big four firm bail out, you have an aging population that's retiring. There are some set of people that are just dying off. Right. And so the percentages start to add up to where, yeah, you could have 10% a year, year after year after year for 3 or 4 years in a row, and all of a sudden that's 20%.

Blake Oliver: [00:24:28] Yeah. I've got a story here that is. Not accounting, but there is an accounting tie in. Okay. It's in The New York Times and it's called Airline. Close calls happen far more often than previously known. At times, investigation has revealed a concerning pattern of safety lapses and near misses in the skies and on runways In the US, there have been at least 46 close calls this year. Close calls meaning that planes nearly collided. Actually, that was last month alone. There's hundreds happening every year. So. Example, would be a plane is taking off on a runway and another plane starts to land too soon and they almost collide. And the pilot has to pull up or there's a plane with a nose sticking out on the runway and a plane landing almost collides into it, sometimes within hundreds of feet, anywhere from a few miles to hundreds of feet. So the cause of this rise in these close calls is attributed to shortage of air traffic controllers. And you know what made me think about this and drew me back to this for this show is we were just talking to Jerry McGinnis for a bonus interview that is going to come out soon.

Blake Oliver: [00:25:50] Jerry was the office managing partner of KPMG Philadelphia auditor for many, many years, and we were talking to him about audit quality issues, and he used the analogy of airlines and flight disasters that we don't often we don't hear about the crashes. That didn't happen. And then of course, this article comes out and I wonder if the same thing is happening in financial reporting and auditing, where there's a lot of close calls that we aren't hearing about and that they may have risen, but because of the way that we measure audit quality and the it's not visible to the public. Right. A lot of we don't get to see the work papers. The Pcob keeps the companies anonymous like it's all very obscured. Similar to how the FAA has kept this under wraps for a while. The risk could be increasing, but we're not aware of it. So this is a problem across all professions air traffic control, medical accounting. We just don't have enough people. And quality is going to become a real problem. You know, how do we how do we. Yeah.

David Leary: [00:27:02] The I mean, it's is this the whole levers people are pulling to make the economy crash because that's going to make people have to go back to work. I think there's still that extra stimmy money floating around out there. Right. And it's just we got to get people to go to work.

Blake Oliver: [00:27:17] Well, the problem with air traffic controllers is that it takes years to become one.

David Leary: [00:27:21] Yeah, a.

Blake Oliver: [00:27:21] Lot of them have aged out. It takes a certain personality. Not everyone is cut out for this either. You got to have a college degree to do it. And so a lot of these towers are understaffed sometimes by like an incredible amount. Um, there's some stats here in the story. As of May, only three of the 313 air traffic facilities nationwide had enough controllers to meet targets set by the FAA and the union representing controllers. Many controllers are required to work six day weeks in a schedule so fatiguing that multiple federal agencies have warned that it can impede controllers abilities to do their jobs properly.

David Leary: [00:27:58] So. So I'm pretty sure I heard that correct. You said only 3 or 3%.

Blake Oliver: [00:28:03] Three of 313. So 1%. So 1%.

David Leary: [00:28:06] So it's the same number as accountants. Remember the survey from accountants 2 or 3 weeks ago, the only 1% of firms saying they can hire enough people? Yeah, it's the same statistic.

Blake Oliver: [00:28:14] It's the same statistic. So I guess the upside on a.

David Leary: [00:28:18] Bigger level.

Blake Oliver: [00:28:19] Yeah, this is scary because like I'm flying a lot this year and one of these close calls was in Phenix. Uh, one of the closest of calls was here in Phenix, where two planes almost collided. Yeah. The rate of so-called runway incursions, such as when planes get too close to one another at airports, was nearly 25% higher now than a decade ago. Here's a quote from an air traffic controller who spoke to The Times on condition of anonymity. The staffing shortage is beyond unsustainable. It has now moved into a phase of just plain dangerous. Controllers are making mistakes left and right. Fatigue is extreme. The margin for safety has eroded tenfold. Morale is rock bottom. I catch myself taking risks and shortcuts I normally would never take. It's only a matter of time before something catastrophic happens.

David Leary: [00:29:09] It sounds very similar. I mean, I think when we the the Southwest Airlines problems and we were talking about we were basically we played that game where I read the sentences, the paragraph, and I swapped out pilots or flight attendants for accountants. And it was the exact same problems in the industry. And it's yeah, I don't know. It kind of makes you scared about everything you use in your, your life, not just accountants a little bit.

Blake Oliver: [00:29:37] David, I hope you have some positive news. I guess the upside in accounting is that nobody generally, nobody's lives are at stake in accounting.

David Leary: [00:29:45] This I think this is positive news. So we've talked about how, you know, remember, remember Bitcoin and blockchain and crypto, all that stuff.

Blake Oliver: [00:29:55] I heard that crypto is poised for another rise.

David Leary: [00:29:58] And one of the big problems we saw over and over again was there would be the attestation reports, right? And then the fake audits would say like we were audited and they were exploiting accounting firms. Well, one of the industry blog sites or news sites called blockworks.com, they published an article this week from AEI's global blockchain leader Paul Brody. And the title of the article is Stop Calling Them Audits. There's no magical guarantee that comes with the word audit. Let's start calling things what they really are. And it's a beautiful article article. He actually it ties back to some book he wrote, but he talks about when the station report is what agreed upon procedures oops are what a SOC systems and organized controls reports are what smart contract audits which he says unfortunately despite the name audit, there's no audits and should not be treated as such. Proof of reserves. Also not an audit. And then trust but verify. He's like, Yeah, you're supposed to be able to trust the math, but because there's humans and people involved like you can't write, it's just it's led to nowhere. This trust, the math policy. And so it's just really good to see a crypto magazine, for lack of better words or blog site or crypto crypto press, crypto media. Actually finally it came out. Yeah, that like nobody's getting audited. Like, there's no such thing. Stop, Stop using the word audit. Yeah. Yeah.

Blake Oliver: [00:31:31] Yeah, that's got to happen. We got to put an end to that. It's the whole attestation report thing. If that comes back, man, I'll be really disappointed. It's not. It doesn't provide assurance, you know? What do they. What are they attesting to? We dug into it on previous episodes and we found that they're not attesting to really anything at all. It doesn't if all you're doing is telling a assets and you don't check the liabilities, it doesn't mean anything. What matters is the net position of these crypto exchanges. So yeah, smoke and mirrors.

David Leary: [00:32:03] And did you see just on a side note, did you see the FTC bankruptcy? Apparently they're burning through $50 million a month in legal fees.

Blake Oliver: [00:32:11] Oh, boy. What a sweet gig for the lawyers there.

David Leary: [00:32:14] And I tried to check like there's no I can't find any firms that are involved in the bankruptcy stuff like like a firm an accounting firm should be taking a piece of that pie, too. It's just sitting there like everybody's getting their hands in it. It's crazy.

Blake Oliver: [00:32:28] I got another email from a listener. I'm a non profit bookkeeper and I input everything into QB and QB manually. I'm so slow, but when I've tried to import or automate, I make a mess and give up. I think I need coaching. I'm not great at just reading stuff and then implementing it. I miss key things and I can't figure them out and I get frustrated. Can you recommend a course or even better, a place to find a coach? If I can get over this hump, I can do my work in less time. Importing PayPal donations, stripe donations and payroll journal entries, making the bank feed work with me instead of against me. Integrating Dynamic Excel budgets in QBO, for example, and finding a way to edit cloud based PDFs so I can add notations without downloading, editing and re uploading to the cloud. Please share your recommendations. So I posted that on LinkedIn and asked everyone to put in their recommendations and notably missing. Was anyone recommending that this person go to college and study accounting to learn these things?

David Leary: [00:33:28] That's funny. So what are a couple of top ones?

Blake Oliver: [00:33:32] So let's see. I'm going to sort by most relevant. David Fibig said. Blake, thanks for sharing this question. I believe the situation is significantly more common than most of your followers slash listeners, slash admirers, slash contemporaries understand the need to automate processes, services, workflows. Et cetera is broadly understood by most professionals smart or engaged enough to follow you and listen to your valuable insights. However, when it comes to actually implementing all the recommendations, ideas, software and apps, a small business owner or a small accounting company simply doesn't understand the right path or true potential of your main point. You're one of the vanguards of the online accounting industry because of your early adoption of cloud technology integration and so forth. We are in a different realm now, at least as far as my recent dedicated research tells me. No code Low code SaaS zero slash QBO app Zapier Bubble Caspio build fire, blah blah blah. Who knows? And how many firms or businesses can dedicate their time to research or money to hire someone to guide their path? What is the right step here? Or is this where the most innovative firms rise above to capture their well-deserved market share? And the firm that was the genesis of this post loses their clients slowly. So I guess basically his point is that it's just overwhelming. And he agrees. Like there's there's not a lot of places to learn this stuff. And when I started, I had to learn it myself. Yeah, there are coaches that can help. Yeah, there are coaches. There's individuals out there who will coach you and help you find apps.

David Leary: [00:34:59] There's a lot of profit QuickBooks groups on Facebook you can jump into. It's really getting into the community. And believe it or not, something like a conference like QuickBooks Connect could help you around. You can kind of gravitate to some of the nonprofit sessions, and then from there you start meeting other people that are in the same boat and that a community is probably the best village right to to help you learn this stuff.

Blake Oliver: [00:35:20] It can be. But the problem is that even in that community, how many people have actually tried a particular workflow with a particular type of client? There's often not a like anybody who has something that they're really happy with, right? They might have something that works, but is that really the best way forward in the end? You still end up experimenting a lot. There's a lot of recommendations in LinkedIn for specific solutions, but I don't have an answer. I don't think there's one place where somebody can listen to this or can figure this out. Katie recommended Katie Peterson, recommended Greg Bosson, and QuickBooks made Easy Bill.com.

David Leary: [00:36:02] He does a lot of nonprofit training. Yeah.

Blake Oliver: [00:36:04] Let's see if there's anything else in here. Megan Tano or Cheryl Martin was recommended by Megan Justice. Megan Tanos Facebook group for for nonprofits is amazing. Is that the one you were thinking of?

David Leary: [00:36:16] David I think yeah, that's what I'm saying. I mean, so many I don't know which ones, but I know there's 4 or 5 nonprofit ones and jump into those.

Blake Oliver: [00:36:25] Mahoney CPAs and advisor Christine Nelson recommended Mahoney CPAs and advisors and their QuickBooks Pro advisors. So I think, yeah, the Facebook groups could be good YouTube. Honestly, you can learn a lot from YouTube. Now people are putting up all sorts of content. I mean, like just Hector Garcia's QuickBooks Channel hours and hours, hours and hours of content. I would I would search YouTube for this, but like, yeah, there is no there aren't a lot of courses and that's because it changes so quickly. As soon as somebody puts up a course, then there's new apps, new technology, it changes. So I think I don't know, the best thing is actually just to set up a bunch of like demo accounts or test accounts and try different things.

David Leary: [00:37:08] And don't and don't test on your own books because then you'll never get your taxes done because you're always having you have a mess all the time in your own bookkeeping.

Blake Oliver: [00:37:16] Or have two sets of books, right? Have your test test set of books.

David Leary: [00:37:19] The practice.

Blake Oliver: [00:37:19] Set. Yeah.

David Leary: [00:37:20] So, so, so this whole like multiple apps in these types of things, it complicates things in a firm right along with one of the solutions you've said is start paying people more right? So prices are going to your your cost to provide the services are going to go up. But I've also noticed the last 3 or 4 weeks, you're starting to see apps start to raise prices across the board. Even myself and I have 5 or 6 apps I'm using that I've had to go in and change and relay. I had to bump up the limit on the credit cards because the apps, instead of being $10 and now $12 or $40 or now $45, everything's kind of inched up. Well, I saw the last couple weeks Dext had a major pricing change, right? They at one time people bought like a Lifetime Unlimited subscription to Dext for as many clients as they wanted. And they pulled that back now. And so some people's prices for dext is going up 100%. They had.

Blake Oliver: [00:38:09] A lifetime discount and they took.

David Leary: [00:38:11] It away. I think they had some. Yeah, if you bought in at a certain time in the past, you know, startups get crazy when they start up money.

Blake Oliver: [00:38:19] Yeah. See, I never trust those lifetime discounts because they can. There's always something in the fine print that lets them take it away from.

David Leary: [00:38:26] So, so, so that huge jump in price ramp, who is one of the, you know, expense card type companies. So Ramp had they're going to opt everybody into this new platform called Ramp Plus which apparently is the paid version of the platform. You can opt out, but they're going to migrate you there first, then you can you have to back out. So that's going to move some percentage of people on paid QuickBooks desktop. I think we talked about that. They've raised a bunch of prices, but it goes back to this like a bigger article accounting web wrote, which is great, which is like, how do you the article is called The Accountants face Up to the Cost of Cloud app Stacks. And essentially what they're doing is there's five ways to handle this and I'd love to get your points of view. Blake is kind of going through these because ultimately if you have 30, 40 apps in your firm, maybe each a client using 10 or 15 and if all those apps raise up in price now what? Right? Or now if you start paying your staff more because wait, hopefully wages are going up, right? So here's five ways you can how you can pass this on to clients. So one of them is you don't five.

Blake Oliver: [00:39:28] Ways you can pass fees on to clients.

David Leary: [00:39:31] Yeah. So one is you don't do it at all. You just absorb the price of the software as an operational cost of doing business, right? Well, that's not.

Blake Oliver: [00:39:39] Passing it on to clients.

David Leary: [00:39:41] Not at all. Right. That's not. Well, hopefully you've priced it in a different way. Okay. Right, right. You've priced it enough to where this is never an issue. Right? Right. I think there's that factor, the cost in the client pricing. But don't pass price the price rises on. Right. Which is kind of like the same a little bit. It's just you're kind of figuring it out. When you give somebody a quote like I'm assuming it's going to raise. Right? Kind of like that, factor it into the client pricing and pass the price rises whenever the clients package is reviewed. So, so annually you're like, hey, these things cost more. Now we're going to have to charge more for these factored in instantly. So you just already have in your contract, as soon as it changes, you change their pricing instantly and then the other one is just to punt the whole thing and tell the client to go subscribe to all these apps on their own. Yeah, which is another possible option.

Blake Oliver: [00:40:34] It's there's trade offs. I think my three favorite are one is simply absorb it, which is what I did with most of the apps that we recommended for our clients. Like I didn't charge, I didn't add a fee for Xero or QuickBooks, but sometimes we did add a fee for high volume clients that paid a lot of bills when we had to pay a per bill price. I mean, that could really add up. So. I've done it both ways. The problem with only doing it annually is that if the price increase happens eight months before the review, you might absorb eight months of price increases. That eats at your margin before you actually get around to it. So I feel like it should either be an all or nothing sort of thing. You either need to pass through all of these charges or you need to have the client pay for them all themselves, or you need to just. Absorb it?

David Leary: [00:41:34] Well, yeah. And I think the first step here is stop being surprised by this. Like this has been a trend now for the last 4 or 5 years. And you could see it every time QuickBooks raises it $5. The bulletin boards go crazy, right? So, like, figure out how to fit this into your model more long term. Yeah, right. Where? Hey, we just automatically every year, we just raise our prices 15, 10% every year, right? We just do it.

Blake Oliver: [00:41:58] Yeah. If you as a firm are always raising your prices and you're raising them at least as much as SaaS businesses do, then you'll be okay. And then you can just roll it all in together. And I think the big problem, really the root of the problem is that people aren't charging enough for the work they're doing. And if you charge enough for the work you're doing, the value you're creating, then the cost of the software ends up being. In a very small compared to what you're charging for your services. I just think there's a lot of people out there that are like still billing effectively $20 an hour, which is maybe what they got as an employee. But they're a freelancer now and they haven't figured out that. You've got to multiply that by like two and a half times and be billing at least 50 or more an hour. Right. If that's what you're doing, because there's all these costs, you've got to cover all this overhead. We need to do more education in the accounting profession about setting rates because people just aren't charging enough. Last episode we were talking about that ATP price survey, which I still need to dig into, and the average tax return is like $200 or something. It's just so low.

David Leary: [00:43:10] You've talked about low legalzoom. Legalzoom just launched LegalZoom Books, which is like their accounting software. So you can it's for solopreneurs a simple automated accounting offering complete with the ability to send custom branded proposals. Invoices receive payments linked bank accounts, automate income and expense categorization, and month to month cash flow trends. $10 a month. Blake ten. How long a month? They've launched this.

Blake Oliver: [00:43:33] How long is that going to last? David That's that's to get you in the door. And then once they've built up a user base, they jack up the price.

David Leary: [00:43:41] But I think what it is, this is a door to get people into. Remember, they launched their legal tax services, so they have their own TurboTax Live, kind of live bookkeeping, live tax service. And I think this is a way to push people in there because one of the features they say is it's seamless integration, easily share financial and transactional information with tax. And our tax experts like it's kind of a push to that. But even $10 is like that's a it's crazy. It's it's you might as well just make it free. Like why? Like it's too much work to account for the $10.

Blake Oliver: [00:44:15] Well, you've taken us into tech news, so I'm going to share this tweet from Jacob Schroeder on Twitter. He said on an CPA town hall, that's Ohio society on an CPA town hall. And the poll responses in question around ChatGPT and makes me realize how far behind the majority of the accounting industry is and how much of a bubble the tax Twitter community is. So then he said in a follow up tweet that the poll was about how many attendees have used ChatGPT Would you like to take a guess, David? How many Ohio State CPAs Society town hall attendees have actually used ChatGPT at all?

David Leary: [00:44:53] This is not on Twitter. This is actually at the event. Yeah, an in-person event, right?

Blake Oliver: [00:44:56] Not Twitter people.

David Leary: [00:44:57] Oh, and he did not participate in the poll. Jacob.

Blake Oliver: [00:45:02] Let's assume that it was a big enough group where it doesn't matter if he participated.

David Leary: [00:45:06] Oh, it's two people.

Blake Oliver: [00:45:08] Well, I mean, what percentage of the attendees. 100%. 0%.

David Leary: [00:45:13] 50%. Under. Under one. Under 1%. Maybe. Maybe a half a percent.

Blake Oliver: [00:45:17] Oh, so it's a little more than that. 14%. 14% of the attendees had tried it. 86% of the attendees have not used ChatGPT at all, like not even gone to the website and just used the free one to see what it's about.

David Leary: [00:45:31] Just to Fitz around with it.

Blake Oliver: [00:45:32] No curiosity whatsoever. That's the state of the accounting profession. I mean, how can you not be a little bit curious about this thing that has the potential to change everything?

David Leary: [00:45:46] Well, especially the way I had a bunch of articles this week and I didn't bring any of them because I got mad and I just tweeted about it instead. But the amount of articles written about how AI is going to change accounting, bookkeeping and tax that are written by AI as blog posts are just astronomical now. And it's just it's all fluff. It's just SEO, blog post fluff and it's a shame how many. But, but what I'm saying with that, they're being exposed to this. So yeah, you're right. It's surprising they didn't go and just test it around and just play with it for once just to see.

Blake Oliver: [00:46:16] I want to do like a webinar where we just do like everybody together opens up ChatGPT at the same time and we just play with it like, okay, we're all going to try the same prompts and just like get I mean, maybe, maybe you really have to walk people through it, right? You can't just say Go use ChatGPT because people don't even know where to find it on Google. Maybe they don't know how to Google. I mean, we have to maybe we have to start from the basics.

David Leary: [00:46:41] It would have to be a big a keynote. So you're doing thousands of people at the same time. So that really that's the only way to create great exposure or experience.

Blake Oliver: [00:46:49] I think the problem is that all these people read that Accounting Today article that said that ChatGPT can't pass the CPA exam and they just assume that it's a toy, you know? Thanks a lot. Accounting today.

David Leary: [00:47:02] Yeah, you saw that.

Blake Oliver: [00:47:05] We talked about that. We don't have to we don't have to rail on them for that anymore.

David Leary: [00:47:08] I saw it in one of these articles today to Intuit had their conference call. They released their year end earnings.

Blake Oliver: [00:47:14] And I'm assuming that some.

David Leary: [00:47:17] Highlights. So so I'm sorry they.

Blake Oliver: [00:47:19] Crushed it again.

David Leary: [00:47:20] Yeah. Not not like Nvidia you see Nvidia they had 100% year over year growth.

Blake Oliver: [00:47:25] So Nvidia has just they've been so lucky. They had the crypto craze so all their chips are selling for crypto mining. And then when that fell off I picked up. They can't lose. Yeah. I really wish I'd bought Nvidia stock like ten years ago.

David Leary: [00:47:41] Geez, crazy. So into it they gave guidance for 2024, which is basically let's just say a $16 billion now into it is a $16 billion company. Wait is it.

Blake Oliver: [00:47:55] And then $16 billion of what?

David Leary: [00:47:58] Revenue company revenue. Wow.

Blake Oliver: [00:48:00] And that's what they're projecting.

David Leary: [00:48:03] Yes. Wow. With a base that's a growth of 11 to 12%. And then the conference call goes on. And this is not a good look for Intuit. So maybe for Intuit listening, this is not a good look. Keep in mind, you now have $16 billion in revenue and you owe 700 million in taxes. But because California was one of those relief states, they're just making they just noted like, by the way, we will be paying this, you know, in Q1 of fiscal 24, but it's just not a good look, right? Oh, to have not paid $700 million. Just pay it. Just go pay it over there. Um, a couple other interesting things. So credit Karma, which is like the personal finance kind of credit reporting app, they're the number of people that they took from Credit Karma and turned them into TurboTax customers was up five X this year. Wow. So which is a pretty, pretty major move was a.

Blake Oliver: [00:48:54] Big reason that they bought Credit Karma was to make that happen.

David Leary: [00:48:57] So yeah, to at.

Blake Oliver: [00:48:58] Least move.

David Leary: [00:48:59] My customers to.

Blake Oliver: [00:48:59] Tax. Yeah.

David Leary: [00:49:01] And then let's talk about the also there's a question about business tax. So like we did we use TurboTax business to do our taxes. So here's the here's what was in the conference call. We we launched and learned to get the product market fit in business tax that is now going to be available both across our QuickBooks Live platform and directly going to market with TurboTax. And we have hundreds of thousands, if not millions of people that come to TurboTax looking for business tax. We've never had an offering. So the Tam on this, like they're just like we've had millions and millions of businesses coming to us looking for a product. So now they're going to have an offering there, right? And then the other really cool thing that they had in their conference call is they're just talking about the TurboTax Live in general. And and I bet you they're using QuickBooks Proadvisors in this as well. But essentially, they have tax experts and business experts now ten miles from every single house in the United States. So wherever you're at in the whole country, somebody within ten miles has some tax or QuickBooks expertise, basically.

Blake Oliver: [00:50:04] But you can't see them in person. You have to see them in a little square on your screen. So it's a fun data point.

David Leary: [00:50:11] But yeah, another not irrelevant. I don't think there is anything else. I scroll down, I highlight everything yellow, but there was not many other things coming out of there.

Blake Oliver: [00:50:20] I got some news from Xerocon. Sydney Since you mentioned Intuit, it's only fair that we talk about their product roadmap. They announced some new stuff, some new stuff. Of course, you can't do a conference now without announcing either I that you've built into your product or that you plan on building into it, right? It's the new blockchain. Short term cash flow in Xero Analytics plus now includes predictions for recurring invoice and bill payments, giving small businesses a clearer picture of their potential future cash flow. So this is the cash flow tool that is available inside of zero in the analytics tab. Actually, I forget exactly what it's called. Don't quote me on that. But anyway, there is this cash flow tool, so they're using AI to help improve that, which I think is great because nobody in any of the small business deals has figured out how to do good cash flow forecasting like automated. I mean, even manually, it's bad. Everyone's still using spreadsheets for that. So I think that's really cool. They're moving in that direction now. Here's what's coming. They said that in coming months they're going to use AI in the bank reconciliation, which is music to my ears. It will populate new contacts that aren't already in your clients contacts list. And that's one of the most time consuming things in Xero that you have to do when you're coding is you have to create a contact because Xero doesn't automatically create contacts and they're going to use AI to help do that, which I think is is good. I mean, it depends on the implementation, right? If it's just creating a bunch of contacts and now you have duplicate contacts, that would be very bad. But if it's using AI to intelligently create contacts that you don't have yet, that would be great.

David Leary: [00:51:57] Yeah, like I don't need Starbucks 23 Starbucks to 54 Starbucks. They just put them all as one Starbucks just.

Blake Oliver: [00:52:04] Yeah, yeah, exactly. Yeah. Every restaurant location is its own contact. Yeah, you don't need that. And they are also experimenting with AI in Hubdoc zero expenses. Xero go. Zero Central is powered now by an AI tool that serves up relevant content to your search queries. So when you're looking for help articles, they already use some AI. They're going to start using a large language model to surface better answers from across all the content in Zero Central. So that'll help you get to the answer that you need sooner. And that's a great use case for generative AI.

David Leary: [00:52:40] Lms is or just the. Caller or the voice mail or the email you got. Wondering how to get help, right? You know, if the apps themselves had better search, it would be a nice way to get help. Yeah.

Blake Oliver: [00:52:54] Well, and so the problem with search right now is that you have to match the terms exactly or very closely to what's in the Help article. So if you're not using the same words, you're not going to find it. But LMS let you use something approximate. It understands the meaning of what you're trying to search for and finds you similar meaning in those articles so you don't have to use the exact search terms. So it improves the the power of search by many, many times. So. That's a great example of it being used. So kudos to zero on that. Those developments, I can't wait to see the cash flow tool. I'm going to I'm going to really be playing with it because that's something I always wanted as an advisor that I could never really get the way I wanted it.

David Leary: [00:53:37] There's other Breaking Zero news. So when you were, you know, pulling all the dials to get the pod to get us recording this morning. Zero Con announced the zero announced that they were going to do zero con back in the United States again in Nashville. Yes. August 14th and 15th. Nashville is one of my favorite food cities. I'm so.

Blake Oliver: [00:53:53] Excited. Yeah. Oh, and music. I mean, it's the mean.

David Leary: [00:53:56] Yes. This music.

Blake Oliver: [00:53:57] Yes, yes, yes. I mean, for me, it's it's. I love the food but don't like the reason I go to Nashville is for the music. You cannot get better live music.

David Leary: [00:54:05] But think it's an underrated food city. Maybe that's the way to think about it. Nobody puts it on their map of like, food cities, but I would say so. August 14th and 15th, 2024, and they're nicknamed Coachella for accountants.

Blake Oliver: [00:54:17] That's going to be like my birthday right around my birthday. So I'll have to go.

David Leary: [00:54:22] Perfect. Yeah. Now. Now it's on and then. I don't know. Do I have any more small app news?

Blake Oliver: [00:54:28] Relay now has $2.5 million in FDIC insurance, up from the usual 250,000. They've done this via thread bank where now if you have a balance, over $250,000 in relay, they will automatically sweep it into different deposit accounts and obscure all of that for you. You don't have to worry about it at all. And so that way you've got $2.5 million in FDIC insurance. So if we have a situation like SVB Bank runs again, you are protected up to that amount.

David Leary: [00:55:01] And you don't have to think about that. They will.

Blake Oliver: [00:55:05] That's the best part. It's just automatic.

David Leary: [00:55:07] You just get it.

Blake Oliver: [00:55:07] And I believe it's just included now in all of the relay accounts. Like you, this is now a feature which is very compelling because other banks charge a fee for this service or don't even offer it. So really nifty.

David Leary: [00:55:23] And this is probably my last article. I think for me this week, Stripe unveiled a platform. They call it tax for platforms to streamline tax compliance for small business. And it's a little confusing when you read it, but don't remember a few years back. Stripe bought Taxjar. I don't know if you remember that they were kind of a smaller private competitor and they gobbled them up and they've been offering sales tax calculations for Stripe customers, right? But now what they've done is they built it as a platform, which really now they're really an avalara competitor. So then what other companies or other apps. So for example, Mindbody, right, which is like a lot of software gyms you use, Orangetheory uses ET cetera. Mindbody doesn't even have to use Stripe for payments, but they don't. Though who knows how mind bodies calculating sales tax right now. But what they can do now is they could use Stripe's sales tax platform and they don't have to get avalara. So this is like a direct real competition for somebody like Avalara, where if I'm building an app, I would probably lease technology from Avalara. But now Stripe's getting into that game, which this is an interesting one to watch. I mean, it's probably not going to affect accounts of bookkeepers as much directly, but that's a pretty big movement in this space I think.

Blake Oliver: [00:56:39] Think that's a wrap. Thanks, everyone, who joined us live today. You can follow us on YouTube, subscribe to our channel, get notified when we go live, and you can chat with us. Everyone who has chatted really appreciate you joining. Shoaib Hamza, HK, Edgar. Natalie, John, Trevor, Trevor, Mitch. Really great having you on the chat with us and everyone watching live. I am Blake t Oliver on the social media. What about you, David?

David Leary: [00:57:06] I'm David leary everywhere.

Blake Oliver: [00:57:08] And send us an email. We are the accounting podcast at earmarked me. Let us know if you have a friend or relative who is taking accounting for the first time. Let us know what's going on with your firm. If you've got news to share in accounting that we haven't covered, we want to hear it. We love hearing from our listeners and do us a favor and rate and review us on Apple Podcasts. It really helps us get more listeners. Our show numbers are up massively this year, and it's because of you, our listeners, for putting in those reviews. You've you've helped bring us to a whole new group of accountants and we really appreciate you. So thanks a lot. Oh, and says, Hey, guys, please schedule your live feeds again on YouTube. Yes, that is something we want to figure out how to do. Unfortunately, we are not quite organized enough to start on time every single week, but we're working on it. We're going to get there someday. All right, David, I'll see you here next week. Beautiful.

David Leary: [00:58:13] I'll see you Monday. We'll be in Chicago.

Blake Oliver: [00:58:15] Oh, yeah. See you in Chicago. Bye, everyone.