The Accounting Podcast

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Blake Oliver: [00:00:04] Right now, the CPA societies, they're hemorrhaging members. So you think they would be trying to come up with ways to get more people in the door to raise the stature of the profession and protect the public? But like, nothing we're doing is protecting the public. That's the problem with the extra 30 hours. It doesn't protect the public.

David Leary: [00:00:22] Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:28] Hello, and welcome back to the show. I'm Blake Oliver.

David Leary: [00:00:31] I'm David Leary.

Blake Oliver: [00:00:32] And we are back.

David Leary: [00:00:33] From literally back. Yes, back.

Blake Oliver: [00:00:35] We are back from Suite World in Las Vegas. I want to hear your takeaways from Suite World, David, because we got to chat with Evan Goldberg, EVP, founder of Net suite. As usual, listeners should go listen to that episode. We put it out as a bonus episode available now, and Net suite announced all these really cool features, and I was actually excited about these features. It wasn't just PR now they're not there yet. They still are coming to the product. But like this is real generative AI inside of. Net suite.

David Leary: [00:01:08] At a high level, right? The whole goal of NetSuite is to run everything in the suite. And they have all this data. The more you use NetSuite and the more you use the entire suite, the more efficient you are, the faster you're growing. Et cetera. Et cetera. And you know, everybody does it. You're at a conference, but everybody has companies that are still running, and you're doing a little side work on your laptop, or you're paying attention and doing your stuff. And I'm I'm just sitting there and I'm jumping from practice or ignition back to QuickBooks to Airtable, copying something over here, pasting over here. And I got like 15 apps open and I'm like, man, maybe we should switch to NetSuite Blake and have it all in one app. That's what I was going through my brain at that time, because I even had our CRM open and I'm like, I'm starting to understand the appeal of everything in one spot. Yeah, everything in one single spot. Yeah.

Blake Oliver: [00:01:58] And we've got an interview coming out with a CFO who has used NetSuite. To basically automate the entire accounting and finance function for a marketing agency, digital ads. And he's a developer who did this. And so he's been able to keep his accounting and finance team to two people himself in a controller because of NetSuite. So it sounded incredibly complicated. What he's done, not everybody could do it, but it's totally possible with something that advanced. I want to dig into the specific features that are coming this year in the next few months, apparently. The first one is the what do they call it? Text. Text. Enhance.

David Leary: [00:02:38] Well, I think before we talk about this feature, how they got there. So just how Microsoft, all these big huge tech companies kind of I wouldn't say they missed the boat on AI, they just weren't developing it in house. And so they're been partnering right. Obviously Microsoft put billions into OpenAI.

Blake Oliver: [00:02:57] Amazon made a multi-billion dollar investment in anthropic anthropic.

David Leary: [00:03:02] And Oracle is now partnering there. They're tapping into cohere. They're partnering with cohere. Cohere. And so cohere like you've used it. They power notion they power Jasper AI. So so so we're using cohere already in some of our other things. So so that's how they're they're enabling AI in their products is through this partnership with cohere.

Blake Oliver: [00:03:23] And cohere is running on Oracle's cloud infrastructure. So if you use NetSuite and you're using the AI then it's actually running on Oracle servers. So security right. It's all in the same. It's all in the same data servers. Yes. Yeah. Okay.

David Leary: [00:03:40] So so they they've added generative AI throughout the product. And what's interesting and I for me is it doesn't have a name. They want it to be so just seamless in the suite it's not called anything. And so it was hard to communicate about it because I think you know obviously Microsoft it's called Copilot. And what's, what's it called for Google. Bard. Right. Bard.

Blake Oliver: [00:04:02] Yeah. Everyone gives it a name.

David Leary: [00:04:03] But they've chose consciously not to give it a name. So so I'm going to stumble when we reference it in these conversations. But the way to think about it is it's across all their modules. And the best easy way is like description fields on an inventory item.

Blake Oliver: [00:04:20] Any text field they've said is going to have this feature. So yeah, like description on a sales invoice or inventory item and.

David Leary: [00:04:29] Collections.

Blake Oliver: [00:04:30] Letter. And the demo that we saw was just type in four bullet points of what you want that sales description to be. And then you press a button next to that text field, a little magic wand button, and it generates a text description based on your bullet points, which is.

David Leary: [00:04:51] Convenient, right?

Blake Oliver: [00:04:52] Oh yeah.

David Leary: [00:04:52] Staff like your staff can just click that and just get the description. But we've all used AI. What's the one problem with this. It's not consistent right? Right. So what they've done is that the administrator level Blake. So you're the you're the AI. You always want control right. So you go into your administrative console. They have something called I'm going to mess up the name. So this they gave a name. It's called Prompt Studio. And in this prompt studio Blake you can create your prompt that all your employees will use on that field. And you can have that prompt tell it go use the size field here. The the unit quantity here. Grab this data here. This piece of data here. Almost like the best way to describe it is like a mail merge. We've all used mail merge. Imagine in your prompt if you put in fields and then kind of give it a secondary prompt of how you want the output to kind of look, and you get very consistent results. And now your employees don't have to know anything about prompting. They just hit the button and they get a good enough description.

Blake Oliver: [00:05:54] No more copy and pasting from your from. Net suite into other systems. Yeah it's it's it's really I think well thought out. So that's coming in the next few months. Yep. The next thing that was announced that I got really excited about that we saw was generative AI used to create plain English summaries on customer records. So this is something I didn't know. The number one type of user in NetSuite is the sales user. The sales person. Because NetSuite, when it's implemented properly, it's a full stack solution. So it's your CRM, it's your order management, it's your inventory, it's your finances. It's the whole cycle, your supply chain.

David Leary: [00:06:41] You know what's coming.

Blake Oliver: [00:06:42] Yes. So you've got sales people in there looking at customer records. Well, how can they use AI to help those sales people? And so now in I think it's called customer 360. In this customer profile, not only will there be all the fields that you always had that show their past orders and the status of this and that, and the other thing at the top, you'll have a headline, and the headline will indicate to the sales person if there is an opportunity, it'll surface opportunities across your CRM and put them, put it right there in the biggest, boldest text and then have a description of the status of that customer. This is a really realistic and helpful use case for AI. They can do right now. It's not it's not this, you know, pie in the sky future thing. Like, I could actually do this if I took a customer record and copied and pasted all the fields into ChatGPT or Claude. It could do this. So we know this works. It's a really neat use case. And the last. And it sounds like you have something to say on that.

David Leary: [00:07:45] You can say in along with that, that customer there CRM customer 360. Like if you have to, you have a backlog of products or different type of product offering. It can suggest, based on all the accounting data, who you might want to contact to sell that new product to and produce the customer list and the email list for you. But that's the benefit of the whole suite, right? And they constantly refer to that. And you really see it when you're there. You're like, oh yeah, because I wish our stuff was connected a little bit better.

Blake Oliver: [00:08:10] And the best part about all this is that they are adding all this in at no extra charge, which I think is brilliant. I got really annoyed when Google told me that in order to continue accessing the features in Google Workspace, I'm going to have to pay an extra $36 a month per user, basically doubling my subscription fee. Now I understand why they would do that. They're going to try to make money. And also there's costs to run to run the AI. Right. But I think NetSuite is making the right move. Oracle is making the right move by making it free and not charging extra for it, because it's going to increase adoption of the suite. It's going to make the suite overall more competitive and help them beat the competition, which ultimately is what you want. You want more people using it. You want more businesses to be successful on it. You don't want to charge them for this. I think Evan described it as like it's just embedded in the suite. It's all the suite is AI powered now, so I think it's a really smart move.

Blake Oliver: [00:09:05] And I just was really impressed with that. A whole lot more announcements at Suite World we don't need to go into. But those were the big ones. I have another story. This was from a listener. We had a listener write in and send a video. I thought this was such a cool use of drones. Autonomous drones and AI in audit. I'm going to go ahead and play the video, and then we'll talk about it. And I'll describe the the video for our listeners who aren't on YouTube. By the way, if you want to see our faces, if you want to see the videos we play, subscribe on YouTube. The accounting podcast is on YouTube. We've we're adding hundreds of subscribers every week. It seems like people really want to join us. And you can join us live. And thanks everyone. By the way, who joined us live today. Great to see you in the chat. Hello Michael and hazardous. Great to see you all. So so here's an example of a drone using AI to count cattle on a field for farmers.

Speaker3: [00:10:10] Two one. Start ignition.

Blake Oliver: [00:10:16] The drone is flying over automated cattle counting using machine learning. We're looking at a field from above and we are seeing cattle detected nine. The AI is is seeing the cattle on the ground and counting them. As if any of.

David Leary: [00:10:32] You have ever played command and conquer. That's what's happening here. Like.

Blake Oliver: [00:10:36] Oh, yeah, now it's counting another 40. Now we're up to 45 cattle, 110 hectares, covered in 18 minutes, counting 185 cattle. So if you're that poor auditor that gets sent out to the outback to count herds.

Blake Oliver: [00:10:56] Now you can do it and it calculates the value. Pretty neat. So that is a company called Trigger Tech a division of trigger. And one of our listeners sent that in. I thought that was so cool. What a great use of AI to do audit and imagine drones flying around warehouses doing this sort of thing someday. Definitely possible.

David Leary: [00:11:20] Or I just getting correct bank statements from banks for that too.

Blake Oliver: [00:11:25] And actually, one of our listeners said, can I help get PBKs from my clients on time? And while I haven't seen any practice management solutions build this, I think that is a huge opportunity. Is creating the PBC list and then following up with clients to make sure they actually submit those items one by one. So rather than sending a giant list of documents like I got from my tax preparer, the I could follow up say via a text or email and ask for each one that I haven't submitted yet and help me get to completion on that. Because for me, seeing I don't know, that giant list of 20 things is a little overwhelming. I got another listener mail. This was in response to our story about Don Jr. Donald Trump Jr, and when he was asked to describe what gap is in a deposition. Well, apparently now in a deposition. Allen Weisselberg, Trump's former CFO, was asked to define gap. So we get to hear from him now, what is gap? Allen West.

David Leary: [00:12:31] Every person they put on the stand.

Blake Oliver: [00:12:32] I guess. So now it's now it's a running. Now it's a meme. So this is from MSNBC.

MSNBC Clip: [00:12:41] Now, remember, Weisselberg has already been convicted of tax fraud. And we learned through his newly released deposition video that he actually never took the certified Public Accountant exam. If I said the phrase GAAP GAAP, are you familiar.With that acronym?

MSNBC Clip: [00:12:59] I've heard of that, yes. Okay.

MSNBC Clip: [00:13:00] Tell me everything you know about GAAP. What is GAAP?

MSNBC Clip: [00:13:04] Generally accepted accounting principles. I don't know what's in GAAP. I never took the CPA exam and never studied for it. So I don't know all the various components of what GAAP is.

MSNBC Clip: [00:13:15] Are there any components you know about what GAAP is?

MSNBC Clip: [00:13:20] Not really.

David Leary: [00:13:21] So she should have asked why. And his response should have been I didn't want to do the extra 30 hours.

Blake Oliver: [00:13:29] So they all know that it's generally accepted accounting principles, but they don't know anything about it. I think that's pretty funny.

David Leary: [00:13:35] Now you're saying this is a legal strategy.

Blake Oliver: [00:13:37] Well, claiming ignorance is always a good legal strategy, right? If you don't want to answer more questions.

David Leary: [00:13:46] I can pivot off of that to two small follow ups from one related or crypto related, and then one's the Canadian CPA standoff.

Blake Oliver: [00:13:54] Yeah, go for it. Let's just jump.

David Leary: [00:13:55] Around. We can jump around. So I mean their follow up, you did a follow up I'll do some follow ups. Last week we had the article that was talking about how a lot of the crypto industry wants this trial to go away because it's embarrassing. Well, the real reason why is because they're all tied to it. So Thursday, New York's attorney general filed a lawsuit against three digital asset firms that were actually tied into this collapse. You had Gemini Trust, Genesis Global Capital and Digital Currency Group, the parent company of Genesis. And you know, the reason they're going after them, because it affected 29,000 Yorkers, were among the 230,000 investors. But you probably got this. I know I got a phone call or LinkedIn about this when they were basically guaranteeing you returns on your money. 1516 yeah, 8% like guaranteed returns. And so they were the Winklevosses or the Winklevosses, right. Those are the twins that claim they started Facebook and it was stolen. Like they're always in lawsuits about stuff all the time. Well, this is their company. And they had a company, a lending service. And this lending service basically owed more than $900 million to customers that are using their Earn program. So people were like, sure, take my money, give me my guaranteed return. And the way they were doing this is they were buying and trading crypto with Alameda Research. They were all tied in together. So this is not a FTX was a criminal. And that's all that everybody's money, they were helping each other. And so there's another article that came out is apparently so this was in the testimony. But FTX was using their customer funds to buy back their Binance stake. So Binance invested into FTX, then took customer funds to rebuy their stake out. Like all the they're all in bed like all of them.

Blake Oliver: [00:15:48] Yeah, yeah. So you have these whales who are transacting back and forth creating this artificial activity, right? Yeah, exactly. And it's not real US dollars. It's done with these stablecoins that can be simply manufactured. So it seems like there's a lot of value that seems like values are going up. Right. Because they push the values up with this. But it's it's not your average investors. And then people see this happening. Your typical average American investor sees this happening. And they decide, I'm going to put, you know, $1,000 into crypto or something like that. And then the market crashes. Who gets hurt? It's your typical investor. It's not these winklevosses who are making millions or billions of dollars. It's it's such a scam and it's happening in plain sight. And finally, finally, somebody is exposing this whole proof of reserves myth that we've been talking about for at least a year. Those fake audits, fake audits. They're not. Yeah, they're not audits, but they're attestation reports. And companies go out, crypto exchanges go out and get them from typically a regional firm, not the big four. And they'll claim this as an audit. They'll hold it out like it's an audit.

David Leary: [00:17:06] They exploit the logo. Yeah, yeah. On the website.

Blake Oliver: [00:17:09] So finally I saw an article this month on accounting. Today, an opinion piece by Matthew de la Fuente and Joe David. And the headline is The Proof of Reserves Myth in Crypto Accountancy. And they basically talk about what we're talking about, how the proof of reserves. Doesn't actually protect investors, because the only thing that it's verifying is the assets at a snapshot in time. And the auditors typically aren't digging into the assets. They're just looking at like, I mean, it sounds like they could be just looking at a screenshot and there's no verification of the liabilities. On or off chain, or the governance of the organization, which is how you ended up with having a proof of reserves report that they held out as an audit and then completely collapsing because there was no auditor looking at the code or making sure that Alameda didn't have a -$10 million balance.

David Leary: [00:18:06] So it's funny because even accountants are falling for this. I saw an editorial priest, it looks like out of the UK talking about how Ft is the biggest audit failure ever. And I was like, wait a minute, they weren't really audit, it was Armanino issued a statement, but there was never an audit. So how was it even an audit failure? Yeah.

Blake Oliver: [00:18:22] I mean to me, to me these here's my what my gut says these proof of reserves reports are about as good as if I invited you, David, to like, screen share with me. And I showed you a screenshot of my balance at Bank of America. And then you issued a report saying, oh, Blake has X dollars. Like, that's about how good these reports are. You know, basically useless. And, you know, we've allowed this to happen as a profession. Like like nobody's standing up and saying like, this is not acceptable. You know Alan Anderson. Are you familiar with him, David? He's. He's been around for a long time in audit as a consultant. And he has started writing some. Really? Great articles on trend lines. He just wrote a piece called Is Audit in Crisis because of Definitions? And he calls out this statistic that I like to talk about from the book The End of Accounting by Baruch Lev and Feng Gou. And he points out that the relevance of audited financials has dropped. So back in the 1950s, the market value of public companies directly attributable to earnings and book value reported in their financials was 90%. So 90% of the value of a company was attributable to earnings and book value in the financials. So back then financial statements were very important. If 90%.

David Leary: [00:20:01] The whole point of GAAP. Right. So you could look at the two financials and be like this company is worth investing in or more valuable, right.

Blake Oliver: [00:20:09] In 2010, it was 50%. So Alan Anderson wrote this article basically calling this out, that because of the decline in usefulness of GAAP, audited financials have become less useful. There is a perceived disconnect between the value of audited financials and stakeholder interests, with auditors often struggling to explain the purpose and the value of an audit. And the question is, would companies get audits if they weren't required to do it? And I think that actually a lot of companies would not. And I think a lot of investors wouldn't care because they aren't actually using the financial statements to make investments. When was the last time any of us looked at the audited financial statements of a company, like, downloaded them from the SEC to make an investment decision?

David Leary: [00:20:57] Well. I mean, us being consumer investors, the retail investors, probably not. But I'm assuming people that like big institutions that are making 400, $500 million investments into something, maybe.

Blake Oliver: [00:21:10] I don't think they are either. I think there's a whole emperor has no clothes kind of thing going on here where because GAAP hasn't changed since the industrial era that people aren't using them. And I could go on about this for like a whole hour, I feel like, so I won't. But the big issue is that GAAP doesn't describe intangible assets. It doesn't handle intangible assets. Well, in most of the businesses out there these days that are generating value, that are growing, are based on intangible assets. Look at OpenAI. What is that company based on? It's based on artificial intelligence. There's no tangible asset whatsoever in that company. It's worth billions and billions of billions of dollars. And I bet if you looked at its financial statements, it would show like no assets, like barely any assets. Because we don't capitalize internally generated intangible assets very often in GAAP. So it's this weird situation where accounting, which, you know, does a great job of describing manufacturing and railroads and that sort of thing doesn't handle these technology companies. And that's why Amazon looked like crap for all these years. Netflix subscription companies, they don't they don't look good on GAAP because GAAP doesn't know how to handle the intangible asset of a customer subscription. And I think people are finally starting to pay attention to this. Finally. And this all ties back to the talent crisis, okay. Because whenever I talk about the 150 hour rule, the the most intelligent counterargument is, well, it's not really the extra education that's the problem. It's the low salaries. We just got to fix the low salaries. And I agree with this. I agree that the low salaries are the root problem, but what is causing the low salaries we have to ask? It's the fact that gap is not that useful. So companies and investors aren't really willing to pay for financial statements the way that they should.

David Leary: [00:23:08] So I'm a company. I'm going to keep picking whoever the cheapest auditor is every single time.

Blake Oliver: [00:23:13] Yeah, because they don't really care. They just have to get it done because they're required to do it. So maybe a way we can test this is we could actually say, like, not every company has to get audited every year. Maybe say 10% of company just randomly don't have to get audited and see what happens. Does anything change? Would it make a difference? Yeah.

Speaker6: [00:23:31] Or the other.

David Leary: [00:23:32] That's actually the more of a surprise. The other direction.

Speaker6: [00:23:34] Yeah. Right.

Blake Oliver: [00:23:35] Right. And, you know, one of the one of the things you hear from AICPA is like audit is important. Accounting is important because we are the defenders of the they don't say it this way. But, you know, we we support the capital markets. Right. Without us they wouldn't function. Well. I wonder if that's actually like can we test that? I wonder if that's true. How do we test that? Because I think actually if we didn't have audits, a lot of companies wouldn't get audited and a lot of investors wouldn't care because of this problem we have with audits being this like bar, you have to pass, it's like pass fail, which like guarantees like mediocrity and all this other stuff. With the financial statements not being relevant.

David Leary: [00:24:14] To to reinforce your financial statements not being relevant. There's a an opinion piece. This is from a British website. It's called city a m and apparently there's some legislation possibly coming down the pipe about reporting requirements. So even it would go down to maybe you only make $50,000 a year business. You might have to still meet these reporting requirements. And where it's coming from on this is kind of how ridiculous they are. For example, in 1997, the Royal Dutch Shell companies financials were only 68 pages, and now they're 399 pages.

Blake Oliver: [00:24:50] Yeah. Who's reading 399 pages of financial statements? I don't think any of the analysts are doing it.

David Leary: [00:24:56] And worse than that, the one part you might want is on one page way deep in there. Right. So he's talking about a report that had six pages on people and culture, 12 pages on task force and climate related disclosures. And then on page 256, there's a one page summary of the ten year financial records like. Like they could just leave that page out and nobody even notice. Yeah, the financial part.

Blake Oliver: [00:25:20] David, part of our headline in this episode is that QuickBooks is launching a bill pay, and the consequence of that is that Melio and Bill are out there getting kicked out of QuickBooks. What is happening?

David Leary: [00:25:34] So we kind of got a. The writing was on the wall when we were at QuickBooks connect last year. We even kind of filmed the new bill pay. They were building for QuickBooks online. And so this has been on March. They've been on for years because, I mean, I think Bill was built into QuickBooks 20 1516 times. So it's been there, you know, a good 6 to 8 years. And then you have Melio, which was been built in the last almost full three years now that's been built in, but it's also been kind of two disconnected things. Right? So Melio is kind of in the normal QuickBooks online kind of for the smaller businesses. You got. Bill, who is still in QuickBooks advanced right for the enterprise customers. And then slowly they've been rolling out their own thing in the middle here. And it's had ripple effects. Bill.com is pretty much this is a quote from Renee Lessert. He and this is in their last earnings call. He says Intuit has decided to compete on payments rather than partner. Right. And as a result, they are going to they're expecting churn. And they're looking at Intuit as a competitor now. Right. And so Bill just launched a whole set of rebranded products. So they're calling it Bill Financial Operations Platform. And that's going to have bill accounts payable, bill accounts receivable, bill spend and expense. And now they they announced it. But now they've actually rolled it out this week the bill accountant console. So they're building a whole there's no GL but they're building a financial stack for you to put your clients on outside of QuickBooks. You can see the writing on the wall on that. It's coming. And they did announce. So now they finally released a pricing page. So let me share my screen.

Blake Oliver: [00:27:20] Payments and banking QuickBooks Bill pay plans.

David Leary: [00:27:24] So it is one place to streamline bill pay. So this is new new website. It's spun up and they have plans at the bottom here.

Blake Oliver: [00:27:31] This is on the QuickBooks website website.

David Leary: [00:27:35] And the basic is free. You can do five ACH payments a month for 100% free and also includes automated bill creation. And then it'll automatically match the transactions, obviously in the bank feed after it's done. The automated bill creation is interesting because, I mean, I've uploaded stuff bills and they haven't been great, so I wonder if that's only going to be the ones that are part of their network. If it's somebody sends an invoice from their QuickBooks to me and it becomes a bill into my my QuickBooks, possibly. The second plan is premium, which is $7.50 a month. And then the top plan is the elite and the the those two paid plans, they come with 1099 filing. So instead of you having to buy the 1099 service separately, you'd pay your bills, your vendors through this service, and then you get your 1099 filing for free. And the big one at the highest level at $45 a month. They're going to add in roles and permissions and bill approval workflows. So it feels like they're building. A stack of what people need. I do think that for the average QuickBooks user, 45 bucks a month is pretty expensive for paying bills because so many people just subscribe to stuff on credit cards now, right?

Blake Oliver: [00:28:48] Yeah, 45 a month. Well, I mean. It is interesting. I wonder why. I mean, I know why Intuit did this because the strategy for making money on QuickBooks has always been you get people in on the basic subscription and then you upsell them on payroll. And what was the other? Payments. Payroll and payments was always it. And that's how they get to 200 $300 a month in payroll.

Speaker6: [00:29:15] Yeah yeah.

Blake Oliver: [00:29:16] Yeah. So I can see why they're doing this. And then they're going to get a piece of every single transaction that happens because they're charging. They're charging for that too right.

Speaker6: [00:29:25] Yeah.

David Leary: [00:29:26] And on the other side, it's funny if we think about what one of the things Oracle or NetSuite announced is their unbundling bill scanning and paying bills, because last year they launched bill pay. So scan bills and pay the bills. They're separating that out. So yes. So people can have freedom how they want to pay the bills but they still want the advantages of bill scanning or vice versa kind of stacking it differently.

Blake Oliver: [00:29:48] We have a comment here that Proadvisors are going to have discounted pricing that they can pass on to clients. Any word on that?

David Leary: [00:29:54] I did not see anything noted or that caught my eye.

Speaker6: [00:30:00] Okay.

David Leary: [00:30:00] They are offering 50% off the first three months if you sign up for the two paid plans.

Blake Oliver: [00:30:05] But the ones that we were looking at, that's for direct customers, not the Proadvisors, not.

David Leary: [00:30:11] The ProAdvisor price.

David Leary: [00:30:12] Okay, correct.

Blake Oliver: [00:30:13] So we'll have to get back on the discounted pricing, find out what that is going to be. We got more listener mail. I guess I'm just going to go ahead and read through some of this. This is from Keith. Keith said, I love your articles about the required 150 credit hours. I called the result of this however many years ago when this requirement was instituted. Requiring essentially a master's degree was an outrageous requirement from day one. Accountants initiating this were obviously not economists, nor in touch with the real world at the time to require an extra 30 hours in Impressionism, art studies, gender studies, or whatever the in topic of the day is does nothing at all for the profession. As you have noted, the Institute's powers that be that came up with this requirement were just institutional elites. There's nothing about our profession that requires more than a bachelor's degree. We are not brain surgeons or rocket scientists. We are accountants that pass a test on our ability to retain certain knowledge. The fact that the debits equal the credits does not change whether we have 120 hours or 150 hours. It is the experiences we have in performing our work when we hire new accountants, which are harder and harder to find, I always tell them that whatever they learned in school, they will need about 10% of that knowledge to make it. In the accounting profession, it is the work experience that will make or break them, not those extra 30 credit hours which you paid or borrowed thousands of dollars for. I won't see the reversion to the 120 hours and two years experience in my lifetime, but keep up the good fight. As the 150 credit hour requirement has destroyed our profession. Thanks, Keith. That is from Keith Thompson. Thank you, Keith, for your, uh, for your take. And if you want to send us a message, you can email us at the accounting podcast at earmarked me. Find that in the show notes.

David Leary: [00:32:03] I have another suggestion for Keith. He can respond to an opinion piece that was in accounting today. That called out you, Mr. Blake Oliver and your your post about the 150 hour rule.

Blake Oliver: [00:32:16] Oh, yeah.

David Leary: [00:32:17] So there's an article written. This was written. His name is Rick David. He currently manages a his own company. It's a Dan Solutions. They they're a C-suite consulting practice. You know help helps professional service firms, accounting firms, etcetera. But prior to that, he was a he graduated 1978 from the University of Michigan. From what I can tell, he got an accounting degree, but I can't tell that he's ever been a CPA looking at his history. But he did serve. He was a in the mid 2000 there. He was a member of the CPAs Professional Ethics Executive Committee. He was on Naspa's board member for Michigan State Board. He was a committee member for NASB, NASB so everything says he was a CPA, but it's nowhere on his title and LinkedIn. It's not you know, he has no comment, no letters behind his name, etcetera. But he calls you out because he specifically thinks that your argument of removing the education requirement is going to lower the bar.

Blake Oliver: [00:33:21] I hate that.

Blake Oliver: [00:33:22] Phrase. Lower the bar.

David Leary: [00:33:24] Lower the bar.

David Leary: [00:33:25] And his his slippery slope argument here is, well, if we use that logic, Blake, because you're using data. Blake. If we're using data, the data says if somebody takes the CPA exam and fails, they won't take it a second time. So using your logic, we should make the test easier. So he took he took the reduction of the 150 hour rule and said that based on the logic and arguments of that argument, we should make the test the CPA exam, easier. But he obviously doesn't want easier. He's trying to illustrate a point, but I think he's missing the entire point because the CPA exam is the bar, right? That's the bar.

Blake Oliver: [00:34:02] It's the test of knowledge.

David Leary: [00:34:03] The 30 hours is a barrier to proving your knowledge on the bar. So and then like you said, his record, I think when I see these articles and I look with people and I'm assuming the CPA, he was at KPMG for 30 years, right. Like straight out of college, I'm assuming he was a CPA, but just not very clear. But if the extra 30 hours were so important, there's no there's no record of him getting an MBA or a masters or like if it's so important, how come all these old people aren't going back and getting the 30 hours anymore in their career?

Blake Oliver: [00:34:35] I think everybody who argues in favor of the extra 30 hours should go get it themselves, right? You shouldn't. They should.

Speaker6: [00:34:44] Start proposing.

David Leary: [00:34:45] That if states propose that anybody who doesn't have to has to go get it. Yeah. So feel free to reply to that. That piece on Accounting Today or on his LinkedIn post.

Blake Oliver: [00:34:56] I think you put it really well. I'm gonna start using that. David. The 30 hours is a barrier to sit for the CPA exam, which is the bar. And that's why you see states getting rid of this barrier to sit for the exam. Now. Now you can in some states sit for the exam with only 120. So why if we're going to let people sit for the exam at 120, why do we make them then go get 30 more after they've proven their knowledge on the CPA exam? It makes no sense. It makes even less sense when you do that. So I just think we have to get past this idea that sitting in a classroom makes you a better CPA. Now it might classes.

David Leary: [00:35:36] That have nothing to do with accounting.

Blake Oliver: [00:35:38] Right? It might.

Speaker6: [00:35:39] If.

Blake Oliver: [00:35:39] You take the right classes. But most people aren't right. They're just doing anything to get it. And so it's not making us better. And all the evidence says it's not making us better CPAs, and it's just adding costs and time. So it's not lowering the bar. In fact, I would say it's increasing the bar to go back to two years of work experience, because right now we're letting people get licensed as CPAs with a single year of work experience, when we all agree that a year of work experience is more valuable than a year of additional education. So by swapping that year of education for a year of work experience, we are increasing the bar. I mean, hey, I'd be in favor of making it three years of work experience and allowing anyone with a bachelor's degree to sit for the exam. And maybe you even have three pathways if that's necessary. But don't don't require people to go sit in a classroom and take these specific classes if they can get the knowledge elsewhere. Why do we care that they paid money to a college or a university if they can get it? In the real world, that's just as good, if not better in many cases.

David Leary: [00:36:51] Well, the vast majority of the industry does not have the extra 30 hours and the industry is not collapsing.

Speaker6: [00:36:57] Exactly.

David Leary: [00:36:58] So obviously it's not that important.

Blake Oliver: [00:37:00] Yeah. And the real reason it was put in place that people say, I don't know, I wasn't around when they put this place was like to, you know, increase the barrier to like reduce the supply of CPAs.

Speaker6: [00:37:11] But actually that's a.

David Leary: [00:37:13] Good way to phrase it. Right? It was purposely put in as a hoop to jump over and a barrier. It was a wall that was built on purpose.

Blake Oliver: [00:37:19] And it made sense when we had too many people going into accounting. Right. But nobody was looking forward into the future, looking at demographic trends.

David Leary: [00:37:26] And what did Ronald Reagan say to to Russia, like tear down this wall?

Speaker6: [00:37:31] Yeah, exactly. We need to tear.

Blake Oliver: [00:37:33] Down this wall. Yeah.

David Leary: [00:37:34] We'll have our editors stick that quote in. You'll find it and stick it in right here.

President Ronald Reagan: [00:37:38] Mr. Gorbachev, tear down this wall.

Speaker6: [00:37:44] Um.

Blake Oliver: [00:37:45] Here's another one from Sean. Sean said. Good morning Blake. Picking up this thread again after hearing you and David talk on it during the podcast, I'm a few weeks behind. David made an interesting point about specializations. Why not have a CPA for audit, a CPA for tax, and other specialized certifications that could even potentially justify the 150 hour rule, at least for those niches? To your point about integrity, objectivity, and professionalism, it's a fair one to sell haircuts professionally. Someone needs to get licensed and have a certain minimum training, but to work as a bookkeeper or even more advanced roles, the law requires none of that. I'll notice a bad haircut pretty quickly and not return low risk, low consequences. Bad bookkeeping can go undetected for years with very expensive consequences. High risk, high consequences. I'm not sure that the answer is that everyone in accounting should be a CPA, but why isn't there at least some minimum certification, testing and ethics training at all levels of the profession, so at least we can get parity with barber colleges, for Pete's sake. These folks wouldn't necessarily be full CPAs. They get some other sort of letters after their names, but for those operating with professionalism, it would provide validation for consumers. It would provide some sort of objective way of confirming someone's skill and integrity. Et cetera. Your thoughts? Thanks. And keep up the good work, Sean. So I agree that we would be better off spending our time getting states to protect the accounting role for CPAs more. Right now, the only thing you need it to do is audit, right? But we do way more than that as a profession. So like it doesn't it doesn't make sense the way we put in this education requirement. For what? For what purpose. So I'm not sure how I feel about like splitting it up into multiple. I think it could get really complicated very quickly.

Speaker6: [00:39:40] But it's.

David Leary: [00:39:41] The easiest with just a plus. If you've done the extra 30, you get a plus.

Blake Oliver: [00:39:45] I think it would make sense to have a CPA and then something that's more like a paralegal for the accounting profession and, you know, actually license bookkeepers who do that kind of work and have some minimum bar. I mean.

Speaker6: [00:40:00] Wouldn't that be.

David Leary: [00:40:01] Profitable for the CPA? You could have this like junior lower tier membership and get another million members paying money.

Blake Oliver: [00:40:09] I know. Right.

Speaker6: [00:40:10] It would be great you'd.

David Leary: [00:40:11] Want that, right?

Blake Oliver: [00:40:12] Right now the CPA societies, the the boards, the other hemorrhaging members. So you think they would be trying to come up with ways to get more people in the door to raise the stature of the profession and protect the public? But like, nothing we're doing is protecting the public. That's the problem with the extra 30 hours. It doesn't protect the public.

David Leary: [00:40:31] So, so to two professors or three, I guess, from the University of Florida, University of Oregon, who figured out how to solve the pipeline problem.

Speaker6: [00:40:41] How.

David Leary: [00:40:42] This is actually, the more I read this and think about it and read it and think about it, it's really making my mind explode a little bit. Because you've talked about this two years ago, three years ago on the podcast, how like the lack of accountants is going to cause audits, failures and fraud. So much fraud, so much fraud, so much fraud.

Speaker6: [00:40:58] Yeah.

David Leary: [00:40:58] And you would think like, oh, this is bad publicity for all of us. If there are these frauds, keep happening and they're happening, right, etcetera. But what they've done is they found data that, you know, obviously frauds cause negative problems to the entire market, financial crimes. Right. But they found data that's actually great for all of us. And to summarize the data here, if you're in high school, Blake, and there's lots of frauds being covered, financial frauds on your local media, like every day there's stuff about the FTX fraud, right. On the media. During your formative years of high school, you are more likely to become an accountant. Really? They found this in the data. Yes. And not only that, they were looking at historical, educational and labor market data of more than a half a million accounting graduates. You're actually if you're exposed to this fraud exposure in high school, you're more likely to work in accounting job, go into public accounting, work for the big four basically, and become a certified CPA. So in a weird way, the market, it's all supply and demand, right? All these frauds that were currently in might encourage a lot more accounts.

Blake Oliver: [00:42:11] It's silver linings.

David Leary: [00:42:15] But but this also goes to like stepping back where sometimes like people are so set in their beliefs. Yeah. Like like nobody would have predicted. Like who would have had this hunch that maybe a bunch of fraud is going to get us more accountants.

Blake Oliver: [00:42:29] Well, if we don't get more accountants, we're going to have to use AI to augment accountants to replace a bunch of staff work. So let's talk about the latest stuff. We're going to come full circle here. So latest developments for ChatGPT. This is not new news but we haven't talked about it yet on the show. So I feel like I should mention that ChatGPT can now surf the internet again. It used to be able to do that. Then they turned it off because they found it was bypassing paywalls on news sites. Then they fixed it.

Speaker6: [00:43:01] This would be so.

David Leary: [00:43:02] Efficient for the show. My my production would be so much faster if that was a feature.

Blake Oliver: [00:43:07] So they've given it access again. So if you have GPT ChatGPT plus, you can now turn on the Bing search, which is very helpful for doing research. I love that ChatGPT can also now see, hear and speak. Now this is rolling out to people slowly, and I haven't mentioned it because it wasn't available in my app yet, but now it is. So now I have the ability to create a chat and I'm not sharing yet.

David Leary: [00:43:35] If you're going to share.

Blake Oliver: [00:43:36] Oh well, I'm not going to share.

Speaker6: [00:43:38] Oh, you're on your phone because I'm on my phone.

Blake Oliver: [00:43:39] Okay. But like I actually have the ability to there's a little like headphone icon. And I have the ability to like press that headphone icon and we can talk to it. So like David, do you want to talk to ChatGPT like it's a person.

Speaker6: [00:43:54] You can tell ChatGPT what is gap?

Blake Oliver: [00:43:58] All right, I'm going to do this. Hi, ChatGPT. What is gap?

Speaker9: [00:44:04] Gaap stands for Generally Accepted Accounting Principles. It's a set of standardized guidelines and procedures used in the field of accounting to prepare and present financial statements. These principles ensure consistency and transparency in financial reporting, making it easier for businesses and investors to understand and compare financial information. Is there anything specific you'd like to know about GAAP?

Blake Oliver: [00:44:30] Can you tell me when accountant salaries will increase? I'm doing a live podcast right now, and one of our listeners on YouTube named Frank is really curious when accounting salaries will increase.

Speaker9: [00:44:45] Accountant salaries can vary depending on factors such as location, experience and the specific industry. However, I can provide some general insights that might be helpful for your live podcast. One. Economic conditions. Accounting salaries often correlate with the overall economic conditions in periods of economic growth and increased business activity. There may be a greater demand for accountants, which can lead to higher salaries to demand for specializations. Salaries can also vary based on the demand for specific accounting specializations. For example, accountants with expertise in areas like tax planning or forensic accounting may see higher salary growth if there's a strong demand for those skills.

Blake Oliver: [00:45:30] Oh, that's what you were just talking about, David.

Speaker9: [00:45:32] Experience and qualifications. Accountants with more experience. Advanced degrees or professional certifications like the CPA Certified Public Accountant tend to earn higher salaries. Continuous learning and skill development. All right.

Speaker6: [00:45:46] All right. I'm not going to make a prediction in comparison.

David Leary: [00:45:48] You got your Alexa on the shelf behind you.

Speaker6: [00:45:51] Yeah.

David Leary: [00:45:51] Ask your Alexa. What is what's a gap? I just want to see what happens.

Speaker6: [00:45:55] Oh I think.

Blake Oliver: [00:45:56] It's it's muted right now but it's not going to be good. We I mean it might give a definition.

Speaker6: [00:46:01] Yeah it might give a definition.

Blake Oliver: [00:46:02] About as good as Allen Weisselberg.

David Leary: [00:46:04] So did this just replace you using Siri now.

Speaker6: [00:46:07] Well I have to actually.

Blake Oliver: [00:46:08] You have to actually open up the app and do it. But so I haven't really been using it much, but it's it's kind of a fun way just to do research or ask questions. But imagine what Siri is going to be able to do.

David Leary: [00:46:21] Yeah, that's right. That's what was going through my head. Oh my gosh. When this gets added to that, can I read a quote about AI and let you interpret it for me?

Speaker6: [00:46:31] Yeah, go for it.

David Leary: [00:46:32] So there's an announcement OpenAI is now in a partnership with PwC.

Speaker6: [00:46:38] Oh yeah.

David Leary: [00:46:39] I'm glad you.

Speaker6: [00:46:39] Brought this up.

David Leary: [00:46:40] And here's the quote. Right. This is not. There's a quote in here. So it's like it's like a quote within kind of the quote. So I'm going to read it like this. Pwc's new AI system is already, quote, behaving like a 25 year, ten year partner. End quote. Vivek Sharma, Chief Operating Officer for tax, legal and people at PwC UK, said in an interview Monday.

Blake Oliver: [00:47:02] Behaving like.

Speaker6: [00:47:02] A what?

David Leary: [00:47:03] A 25 year, ten year partner. What does that mean?

Blake Oliver: [00:47:07] A 25 year tenured partner?

Speaker6: [00:47:10] I mean, I've.

Blake Oliver: [00:47:11] Heard of people saying that AI is acting like a staff accountant or an intern, but.

Speaker6: [00:47:15] Is.

David Leary: [00:47:16] Making people work 80 hours. Like, what is AI doing now? Are the partners.

Speaker6: [00:47:20] At.

Blake Oliver: [00:47:20] Pwc that useless, that it's that easy to automate them? I mean, are they just signing off on audit opinions without even looking at stuff? I mean, if so, I guess, yeah, you could you could use AI to automate their jobs. Are they just yelling at people to bill more hours? That's easy for AI to do.

Speaker6: [00:47:36] And if you're.

David Leary: [00:47:36] Looking to pick a fight with the existing partners because like aren't people are going to be like, f you.

Speaker6: [00:47:41] Yeah, right. That's amazing. Okay, well that's funny.

Blake Oliver: [00:47:45] That's funny. Did Frank says, did I get a new yacht? Yeah. I don't know if PwC partners make enough to get yachts. Honestly, like I don't, but. Or they work too hard. They just, they they just sit in the dry dock all the time. They never get to actually go out on them because, you know, it's hard to get good internet on a yacht. So what are they actually doing with the AI they made a deal with with OpenAI? Do we have any details on what they are actually going to use it for?

David Leary: [00:48:13] It's going to you can use it to consult on complex matters and tax, legal and human resources due diligence, identify compliance issues, recommending whether to authorize business deals. So it feels like it's going to be kind of the the back end wiki knowledge base thing. Yeah. Well, similar to what they just talked about last week for Grant Thornton. Like, again, any listeners, if you're getting access to these things in your firms, we'd love to hear how it's working. Yeah. Like they're rolling it out to all of you right now. I want to hear somebody talk about them using it.

Blake Oliver: [00:48:46] Melanie says, I've been using AI for brainstorming, and the problem is that once you get started, it's hard to get it to shut up. I love it for brainstorming. If you have an idea and you just want to, like, bounce it off somebody, it's a great, great tool for that. What am I missing? What did I not think about right when I made this plan or this email? How could I improve it?

David Leary: [00:49:06] Because you're not using up my time. You don't have to contact me. It's actually it increases productivity for two people.

Blake Oliver: [00:49:13] So. So it's not very clear from the article exactly what WC is using this for. But my guess is they're taking all this internal knowledge, like all these papers they've written, all this research they've done, they're dumping it into the language large language model. And now people can query it, which is way better than doing a keyword search and having to dig through a PDF very much faster. It's like what we saw the Department of Defense doing with all of their documentation and.

David Leary: [00:49:40] I think this is not this is not to solve for their own internal companies. I think this is to build half assed ones that are good enough ish, and they're going to sell it in their consulting divisions to companies everywhere. And it's never going to be great, but they're going to sell the piss out of this. That's what this article is. Because if I'm a CEO of some other company now, I'd be like, wow, I could buy this from PwC and implement something like this here. They'll help me implement this and it'll be like 25 year experienced employees.

Speaker6: [00:50:06] Like if you.

Blake Oliver: [00:50:07] Think about it this way, like let's, let's let's talk about corporate tax. So you are a CFO at a company and you've got like a corporate tax question. Normally you email a partner at PwC. They read the email, they reply to you and they charge you $500 for it. Right. And now you can ask that question of PwC's chat bot, which is powered by OpenAI. And that bot is going to go through all the previous responses. Of those tax partners to you and is going to give an answer.

David Leary: [00:50:42] But that's too efficient. You can't bill for that.

Speaker6: [00:50:45] Well, that's that's the thing I wonder is sell.

David Leary: [00:50:46] You our system. We're we're going to consult you on how to roll this out of your own version and your own company. That's why they're all doing it. This article talks about KPMG and then Ernst and Young partner with IBM. Deloitte using Google Cloud now is using OpenAI. They're all doing you know, they're all building $1 billion consulting division each just rolling out GPT type stuff and companies. That's where the real money.

Speaker6: [00:51:15] Is, and I think.

Blake Oliver: [00:51:16] They will. As Frank said in the chat, I think they will replace a lot of consultants or the consultants will just more like the consultants will be able to do more. But we know I.

David Leary: [00:51:25] Think the consultants are going to consult on how to rule this crap out.

Speaker6: [00:51:28] I know you think, right, but they're also going.

Blake Oliver: [00:51:29] To use it internally. Like think about all the all the copy paste that consultants do constantly. Yeah. You know I can do that. And it's not just for big businesses we are going to see we're seeing I search roll out in zero zero announced that they are now using AI on their support and learning site to power their searches for queries to provide immediate answers, more accurate content and articles for people. I think that every app is going to do this for search, and maybe finally we'll have good global search across QuickBooks and across Xero and across all of these apps where I'm constantly amazed at how bad search is trying to find something. And I just want to be able to type like vendor name, amount and description and get a list of those transactions that's like relevant. And you still can't do that in a lot of these systems.

Speaker6: [00:52:21] But to clarify.

David Leary: [00:52:22] This is search for on their help site.

Blake Oliver: [00:52:25] Yes, on their help site. Not yet in their GL, but they should do it in the GL too.

David Leary: [00:52:30] But is their help site. If I'm looking at it, it looks and smells that it might be actually what you get from Salesforce. It's the hills Salesforce. So so maybe did Salesforce roll out some sort of search?

Speaker6: [00:52:43] I'm not sure.

Blake Oliver: [00:52:45] We have a comment from a live stream viewer, Saints says. I feel as though financial fraud will now become more difficult to catch. I think once the fraudsters figure out how to use AI to generate fake invoices and fake emails, I mean, they're already doing it. The voice cloning technology, it is going to get harder, but then that's going to inspire a whole generation of accountants. Like you were saying, David, to go out and catch the fraudsters, make it more interesting, perhaps, and I don't know if I can generate fake data. It can probably analyze fake data and figure out how to find it.

Speaker6: [00:53:19] Um.

Blake Oliver: [00:53:21] All right, David, I think that's it for us this week.

Speaker6: [00:53:24] Did we catch.

David Leary: [00:53:25] All the headlines?

Blake Oliver: [00:53:25] We got all the headlines that we teased. So I think we're done. I'm a little out of it. Apologies to our listeners if this sounded kind of random bouncing around everywhere. I'm still recovering. Uh, David, if people want to get in touch with you online, where can they do that?

David Leary: [00:53:43] I'm on all the socials, just @DavidLeary.

Blake Oliver: [00:53:46] If you want to argue with me about the 150 hour rule, you can find me. I'm at @BlakeTOliver on ECS. I'm on LinkedIn. Follow me on LinkedIn. You can subscribe to my personal newsletter at Blake@blakeoliver.com. And you can send me and David an email by emailing the accounting podcast at Earmarked me. That's the accounting podcast at earmarked me. And don't forget, if you made it to the end of this episode, you can earn CPE credit for it. Download the earmark app for iOS or Android. Take a quick quiz and get your CPE certificate. The course for this episode will be available the week after it airs. See you here next week, David. Bye everyone. Thanks for joining us.