The Accounting Podcast

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Blake Oliver: [00:00:04] I think these accounting professors are really missing a big point, which is that they are measuring education in terms of hours. It's the same problem the accounting profession has with our business model. As long as you measure people in terms of their inputs, in terms of the hours that they work and not what they achieve, you are going to limit what is possible.

David Leary: [00:00:31] Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:37] Hello everyone, and welcome back to the show. I'm Blake Oliver.

David Leary: [00:00:41] And I'm David Leary and Blake. I know you just relocated. Well, I guess it's been almost two years now. Three years been relocated.

Blake Oliver: [00:00:51] It's been three years, which is the longest I have lived in any place since college.

David Leary: [00:00:57] That's amazing. Well, maybe you're. Maybe you're up for another change. How does this sound? Do you like Nashville?

Blake Oliver: [00:01:03] Oh, I love going to Nashville. The music there is fantastic.

David Leary: [00:01:08] So if you're willing to relocate to Nashville, and I know you're okay with some hybrid remote work, if you're willing to be in the office 2 or 3 days a week when not traveling. If sounds all right, if you'd be willing to travel domestically and internationally, I think I found a job you can apply for.

Blake Oliver: [00:01:25] What's that? David.

David Leary: [00:01:26] So Nasba just posted the job opening, like, literally in the last 3 or 4 hours that they're starting their search for their new CEO successor.

Blake Oliver: [00:01:35] Really? Oh, wow. So did what does what does it pay?

David Leary: [00:01:38] David it does not have the pay listed. It talks about all the committee people from various state boards that are going to conduct the interview process. Right, and do this search, and they are going to give consideration to its current staff, along with other qualified candidates. And then once it's it's down to a final list, they'll, they'll go in and select the new CEO of Nasba typical CEO responsibilities. I didn't see anything in there that was somewhat interesting enough to call out. It's what if you could imagine the list of requirements for a CEO that would be listed there with the little addition ones like consider and respond in the business risks that threaten the regulation of the profession and nasba meetings objectives, you know, so you have to be very objective driven for this. But these are the this is the thing that really caught my eye here. So cover letters and resumes can be emailed to everybody. Have their pen and paper around CEO applications@nasba.org. All right. Everybody should be submitting their credentials before January 5th. And this is the great part. They are not allowing faxed resumes.

Blake Oliver: [00:02:48] No faxed resumes, no faxed.

David Leary: [00:02:50] Resumes, and no phone calls. They will not be accepted, so do not. If you're like, have my resume ready to go in my fax machine and you have neighbor's phone number and your fax machine, you cannot apply for this position. You have to email your application in.

Blake Oliver: [00:03:05] Good to know.

David Leary: [00:03:06] And my warning is because experiences we've had is neighbor's firewall to send emails. You get blocked. So don't wait till January 4th to send these emails because you might get blocked. So start sending them early. And then you have to use a, you know, alternative email in case your email gets blocked.

Blake Oliver: [00:03:23] Well, that just might be us. I don't know about everybody else.

David Leary: [00:03:25] Yeah, but every email, every version of my email, my Gmail, it's like I try like it just everything comes up. Spam. I don't know why.

Blake Oliver: [00:03:33] Well, David, this week our headline is AICPA blames Boring Accounting professors for pipeline problem. That's what we decided to lead with. And it's based on a podcast episode that you listen to. Sue Coffey was on the Accounting Today podcast talking about the CPAs Pipeline Committee initiative and giving an update on that, and Lexi was on there as well. I forget her last name, Kessler. Okay. She's the committee chair. So they were on with Dan Hood talking about that. And you listen to that and I listened to that. So we'll talk about that. I also wanted to talk about a lawsuit that Disney is facing for Hollywood accounting tricks. I'm going to be going to Disney World this spring. So I'm paying attention to everything Disney, especially when it's accounting related. And I also noticed while I was at it that Berkshire Hathaway is being sued for accounting tricks as well, or alleged accounting tricks by the owner of pilot. The truck stops, the rest stops gas station.

David Leary: [00:04:39] I was excited, I thought it was going to be pilot. The accounting firm.

Blake Oliver: [00:04:42] The accounting.

David Leary: [00:04:42] Firm. That'd be really meta, meta.

Blake Oliver: [00:04:46] And of course, you know, we just got a lot, of lot of app news to catch up on. I want to talk about these new GPT custom GPT. You can build and chat GPT. We haven't touched on that much, if at all. And it's kind of neat. I built my own custom one for section 179 just to try it out, give it a document, see if it can become a specialist in in that in depreciation and all that. So yeah. What do you want to kick off with. You want to talk about AICPA and accounting education?

David Leary: [00:05:19] Yeah. Let's go into the pipeline. Let's jump right in. So you're right. Susan Coffee and Lexi Kessler were on the Accounting Today's podcast with Dan Hood to discuss kind of an update of the pipeline committee. Remember, they had the eight point slides. Eight slides, the eight point plan. And then it became a 12 point plan. But we haven't seen a lot of progress other than they were going to I think it's in May. Right. April. May a final.

Blake Oliver: [00:05:46] Do you know, do you remember the name of the committee? I don't want to get it wrong, but it's the it's a committee formed by the National.

David Leary: [00:05:52] Pipeline Advisory Group.

Blake Oliver: [00:05:54] Okay, so the National pipeline Advisory Group. National Pipeline Advisory Group and P&G and P&G met this fall and delivered some sort of presentation or report to council, but they are not done yet. Their actual final report is going to be delivered in the spring, in May, I believe, and I think April, May. That's what we're all looking forward to. That's the big reveal of the plan. That's going to save the accounting profession from our talent crisis that we have and continue. David.

David Leary: [00:06:31] So unfortunately, it was crammed into, you know, a 19 minute interview, which probably is not enough time to dedicate this, but it was long enough and Sue communicated some things. That gives you a little glimmer of hope, a little bit the way, the way they're thinking about stuff. One obviously it's the same lines as it always is. You know, less population means less students, which means less people in all professions. Like that's the that's still pointed out as one of the main, main root causes. But you really they really, I think, have gotten some clarity on the leaking pipeline with these leaks. And she she's kind of it starts pre college. These leaks like accounting students. Younger people aren't going into accounting. And then in college. This is a shocking stat because I feel like we've never talked about this stat or seen this before. She said. About 208,000 students a year declare accounting is the major. But on the other end of that funnel, only 50,000 graduate as accountants.

Blake Oliver: [00:07:27] That shocked me and I have never heard that before. And we just have to stop and think about that for a moment. 200,000, more than 200,000 accounting majors at the beginning of college, and only 25% of them make it through as an accounting major. So we're losing 75% in college.

David Leary: [00:07:50] And she calls out principles of accounting courses or introduction accounting courses that they tend to be very dry. They don't focus on good things about the profession per se, and they tend to be taught, I'll quote her, and those courses don't tend to be taught by the most engaging instructors. So she's calling out the established, which I was so shocked that the ASP is calling out the educational establishment as being a problem.

Blake Oliver: [00:08:18] Well, we've talked about on the show in the past how accounting 101 and 102, like the introduction to accounting courses, are used as like a weeder class in business schools, often where it's designed to get people to to leave. Sort of like how I know in what was it. Okay, okay. Yeah. Organic chemistry is used to as a weeder class for like medical students who want to go into medical become doctors. Right. So and I agree, that probably happens in a lot of business schools. But I mean, I feel like it's a little harsh to blame the educators, you know, like basically laying laying the blame on the educators for the reason that the students don't continue with their accounting major because the courses are dry, you know, like is is that data driven? Do they have data to actually support that? Because that's what Sue said on the interview, that they're being very data driven with all of this. So like how do you how do you know that for sure. Yeah, I mean, it could be a lot of other things, right? It could be the fact that, oh, once I become a sophomore and a junior, I realize I'm gonna have to do a fifth year of education. And then I decide I'm just going to go do something else so I can graduate in four years. Right? Couldn't that be it, too? Yeah.

David Leary: [00:09:35] And they're talking about getting people that finish line. So now they've they've became an accountant. They finished the college. People drop out of that pipeline. They don't finish. Right. So we're losing people in that pipeline. And they actually said 150 hour rule in this committee. Everything's on the table. Everything is being discussed, including modifying that. So that was said. And then the other issue of hey, once, once they make it through all those gantlets, then they there's another leak between the 1 to 5 years of your career because we overwork like she flat out said, we overwork our people. Starting salaries are too low. I was just shocked to hear these words come out of the CPA's mouth like I was. I was happy.

Blake Oliver: [00:10:16] To hear it. I was, I was happy, I was very happy to hear it because it's true. And we know this objectively, that these are the two points in the pipeline where we have the biggest leaks in college and then first few years in a firm. And it used to be that people would leave the big firm and they'd stay in accounting, they'd go into corporate or they'd go to a smaller firm, but now they're just leaving accounting entirely and going into a different field. So, so the fact that they're leaving once they've had 2 or 3 years of experience is not anything new. What's new is that they are not sticking with accounting. But but what I don't quite agree with or what I want more information on is the cause of this, because I feel like Sue and Lexie speculate on the cause of it, but I don't. I haven't heard data to suggest why this is happening, and this is one of the things that I've always been frustrated with when it comes to AICPA and Nasba, is that they have these massive databases of members that they could be surveying to get this data, and they haven't done it. As far as I know, they have not surveyed their membership to find.

David Leary: [00:11:20] Out an upcoming survey National survey is coming.

Blake Oliver: [00:11:24] Okay, good.

David Leary: [00:11:24] I would love to see like they are going to send out a national survey that will also touch on even people's opinions on 150 hour rule. They're even going to even survey that they said.

Blake Oliver: [00:11:34] Thanks everyone who has joined our live stream. You can subscribe to us on YouTube, search for the accounting podcast, subscribe and you'll get notified when we go live and you can join us in the chat. We've got Nick here, we've got David, we've got Huzaifa, and we've got JP. Welcome. Thanks for chatting with us. We had some comments here, David, on this. Nick says, hey guys, love the show. It would be great to get some more management accountant content on your channel. A big part of the pipeline crisis applies to industry as well. I agree it would be good to get more management accountant content on our channel. It feels like a lot of the news that we discuss comes from public accounting, because that's where all of the accounting publications are geared. There's not really enough for corporate people in corporate, but that's most of the profession. You know, it's like 7,080% of the profession is not in public accounting. And I feel like kind of their needs are ignored a lot of the time.

David Leary: [00:12:35] And there could be an opportunity there, because I do feel like a lot of those accountants, when you meet them, they're all on their own islands, right? Because they're just working at the company they work on, and they're not hanging around with accounting colleagues, per se. And so it's probably even more important for them to have a place to go and have a sense of community.

Blake Oliver: [00:12:51] Nick also says, I think there are lots of opportunities for CMAs to advance to higher levels of management within their organization. I think the IMA could help out a lot more with recruiting to the discipline. David Hall says university students at school talk about taking a year off of working to study for CPA exam, because work life balance is unattainable. Yeah, this is part of the problem is that the the traditional path that has been laid out is not that appealing because you've got to go to school for four years, then you've got to go to school for an extra year, and then you've got to take the CPA exam. And a lot of people don't have the money to just take time off to study for the CPA exam. So you're either doing it while you're in grad school or you're doing it while you're working. Both are difficult in terms of having work life balance, because anyone who's studied for the exam knows how all consuming that can be. And you wouldn't have guys like Peter Olinto telling you to tell your family and your girlfriend that you're not going to see them for six months because you're studying and you know, only 10% of CPA candidates pass all four on the first try.

Blake Oliver: [00:13:58] So it takes a really long time. I was able to pass all 4 in 1 go, so I got it all done. Like within, I don't know, eight months or something like that. I did it really quickly, but I also was working for myself as a freelancer so I could set my own schedule. And I prioritized studying over, you know, billable hours, which you can't do when you're working for a firm. Nick says. Everyone I know in public is overwhelmed and miserable. Hey, I just want to say, like, that's Nick there. That's not us. That's not that. Don't criticize me and David Leary for perpetuating stereotypes about the profession, because those stereotypes are often true. And that's the problem too, is is I feel like on that podcast episode, again, it was a lot of we need to change the messaging. And I keep saying, you can't. You can't just put lipstick on a pig. You cannot dress this up. You've got to solve the root underlying cause of the problem. Yeah.

David Leary: [00:15:00] When they're asked what success looks like, it's girl at the top of the funnel. Fix the narrative. Improve the image. Well, if you actually have to fix the stuff to the image, improve. But so yeah, that's kind of lipstick on the pig.

Blake Oliver: [00:15:13] And here's something that I feel was missing. And I think that the committee is completely missing. And I hope that if anyone on the committee is listening that you bring this up, which is that all of the discussion on that episode was about the traditional pipeline. It was about getting more high school and college students into the accounting pipeline. The pipeline that already exists. And in order to make up the deficit, I don't think people realize just how much things have to change. We are producing about 50,000 accounting grads every year. What does that number need to be? It needs to be 100,000. It has to double. Does anything that AICPA is proposing in their plan look like it's going to double the output?

David Leary: [00:15:59] Not the short term, not in the short term. If they can reach younger children and try to encourage them to eventually become accountants, it could but do this.

Blake Oliver: [00:16:09] But even then, like what? What would be what would be like obtainable, you know, 10%, 20%, 30? It's not going to double, right, with what their skills.

David Leary: [00:16:16] Retraining program or bringing in other blood that's not currently in the funnel.

Blake Oliver: [00:16:21] Yeah, exactly. David, I am a career changer. I got into accounting because I made the brilliant decision to major in music, and then realized that wasn't the best decision for my career. I didn't I didn't enjoy the starving part of starving musician. Right. And so for me, accounting has been a fantastic career. And I know that there are millions of Americans who made perhaps the wrong decision in college. Most people don't end up doing what they majored in, and they would love to get into accounting, but it's unobtainable because it would require going back to school and sitting for this exam. And once you're already working, once you have kids, going through that path is really freaking hard. I was able to do it because I had family supporting me. I knew that I could fall back on them if I had an economic problem, and I also had my wife pushing me, saying, Blake, if you drop another thing, I'm, you know, like you're a failure, right? Like I had that. Right. Because I tend to do that. Right. I tend to switch a lot. That's why I haven't lived in one place for more than three years. I'm doing my best to stick around here, but, like, there's no discussion. That I have heard about making accounting more accessible and open to career changers, and I think that's the only way we will solve this problem with the numbers we need. We need to actually have like retraining schools, boot camps, and we need to make exceptions for people who are changing careers to get them in.

Blake Oliver: [00:17:52] And I think it's possible to do that and maintain quality. There are really, really smart people who maybe they majored in English literature and they're brilliant, but they and they could pick up accounting if they did a boot camp kind of situation. But our current setup does not allow for that at all. It's like not compatible. You got to spend all this money and time to go sit in a classroom learning stuff you already know. And so I just feel like we got to we got to think more outside the box right now. It's just all very much about improving the existing system. And I agree with Sue Coffey that accounting education is just woefully inadequate in preparing students these days. Like it's so traditional and it's all about transmitting knowledge. And like the argument in favor of the fifth year is the number one argument is accounting standards have gotten more complex, tax has gotten more complex. Therefore we need another year in order to fit it all in. But what that fails to understand is the world has changed to where. Now I have information via AI via Google. I can just get it whenever I need it. I don't need to memorize it right? Like accounting education has not advanced beyond like it's still. It's still operating in a world in which we had to go to a physical library to get information.

David Leary: [00:19:10] Yeah. And along the way, I've been getting journal.com. I've been getting a lot of articles from them fed into my feed. And one of the articles came through, said rethinking the 150 hour requirement for CPA licensure. Can alternative pathways surmount the barriers to entry? And I was like, oh, this, this looks really interesting. And then it's one of those articles where you click on it and how many minutes it's going to take you to read, and it was like 37 minutes or something. I was like, oh boy. So I get into it. And so this is an article that's written by a PhD. It's three college professors, basically, and I start reading this article in the first, I'd say 90% of this entire article is nothing but citations of other articles of things like, we've been talking about that stuff. Actually, I think, Blake, you're cited in IT going concern cited it accounting today. And it's essentially summarizes what we've been talking about for 4 or 5 years. It's like these three professors just discovered there's this whole discussion around 150 hour rule.

Blake Oliver: [00:20:05] And I just want to say for the record, they like I'm pretty sure they're citing me like they cite me twice in this article. Right. But once you don't.

David Leary: [00:20:14] Use the right name the second time.

Blake Oliver: [00:20:15] Yeah. The second time they call me Ben Oliver. Yeah. So, so so, you know, come on, come on. Phds get your citations. Right. Isn't that, like, the number one job that you have to do when you're when you're writing your when you're writing your papers is get the citations right.

David Leary: [00:20:32] And so it had the great headline, but it didn't really have much in it. And their opinion I'll summarize it is this that? Cpa firms should help pay for the 30 hours basically, and the 30 hours should probably have some more ethics stuff because the one guy is like an ethics guy. There should be more ethics and ethics classes and like define that a little. But then the article those they weren't even focused on like elimination 150, they were more focused on, you know, like some states, you can sit for the exam at 120 hours and other ones, you you have to wait till your 150. They're more focused on that and how that affects the pipeline. And then I know and then if you can imagine a boring article and this reinforces the whole time I'm reading, I'm like, yeah, Susan's right. Susan's completely right. I was reading this article and then all they do is they propose other future research, and I'm reading the questions they propose. And I kid you not, I was like, oh, hey, I could make these questions. And then sort of just pasted the other whole article, but they're quite future research topics into ChatGPT and got the same thing right. Like are the extra units of education cost effective? What is the actual return on investment? Right. It's very it's not.

Blake Oliver: [00:21:42] Not not enough. All right. So we don't need to do research on this. We don't need to do research on this. Like it's it's kind of obvious already from the research that's been done.

David Leary: [00:21:51] So I saw this article and I almost was a little hopeless. I was like, oh my God. Like, these professors are so far away from even the the corner has turned. These professors are decades from this. And I was like, oh my God, we are in trouble. But unbelievable. There's another article that was in CPA Journal. And that one was called accounting education Disrupted transforming to face a challenging future. I get into this article. Start poking around. So this is done by four other professors, four.

Blake Oliver: [00:22:27] More PhDs.

David Leary: [00:22:27] Right? Phds, I don't know. I don't know what a DBA is. One's one person's retired, but they've all held like chairs and heads of chairs. They've gotten. I think that's.

Blake Oliver: [00:22:35] Like the doctorate version of an MBA, right? Yeah, yeah. Doctorate of business administration.

David Leary: [00:22:39] Maybe that's it.

Blake Oliver: [00:22:40] Yeah, I could be wrong. I'm just I'm just speculating. If you go their.

David Leary: [00:22:43] Linkedin pages, they got they're getting medals from King's College. All that kind of good stuff anyways. These geniuses. Solved the accounting pipeline. They have a plan. It's amazing. So I'm going to add this to the. Hopefully everybody's seeing this.

Blake Oliver: [00:22:59] I see it.

David Leary: [00:23:00] So they have come out with recommendations for increasing the pipeline. And frankly, I would it made me think like what is the EPA doing? They don't even need to do it. These guys already built the plan. It's all here. So they and they separate the plan out into. For those of you that can't see the slide, they separate it out into two sections. Things that they kind of it's under their purview as educators that they can have some influence and control over. And then things that are outside of higher education that should happen in the industry. And they can't like, for example, Stem, there should be a Stem designation, right, to help grow.

Blake Oliver: [00:23:38] See, I think that would be that would be that would be nice. But I don't think so. What does that do? What does that actually accomplish? It allows you to have an accounting course in high school okay. That's good. That's great. But it's not going to it's not going to double the number of accounting majors.

David Leary: [00:23:51] No, no that's true. They address the these are accounting professors calling out the two undergraduate introductory accounting courses that they need to better engage students. They need to emphasize more decision making, leverage research to improve the messaging about. Right. It's all the things Susan and them are talking about. They need to 100% eliminate 150 hour rule. They are recommending that. Right. They want to see colleges move to a three year degree program. So you can kind of get your 150 right.

Blake Oliver: [00:24:23] Three years. Wow.

David Leary: [00:24:24] They want to pump it out. They want more career paths. And this is what some of the commenters in our the viewers have put comments in. You know, the CMA, the FSA, internal audit, CIA, you know, information management system, CIA, Cisa, anti fraud, CFE. Right. So to expand all these other career paths beyond public accounting and then reaching out in the high schools and community colleges, right. They do specifically say, hey, there's an impact on the community colleges, but they flat out say get rid of the hundred and 50 hour requirement. Yeah, they say that they should work on if they're going to have a master's or the extra 30 credit hours. Right. Make it a program, like really come up with true model curriculum that people should do. They want to career paths beyond public accounting for accounting majors and then the brand. Right. So the like the has a committee doing this stuff and this they have a slide. It's done like they pretty much have the plan right here. And so it gave me a little bit of hope like full circle. Right. Because the other professors just ruined it for me.

Blake Oliver: [00:25:28] Well, but just like the AICPA is here's my take on this, just like the AICPA is. Not thinking outside the box enough when it comes to where we're going to get these accountants. They're focused on the traditional pathway and improving the existing traditional pathway. I think we need to go beyond the traditional pathway. I think these accounting professors are really missing a big point, which is that they are measuring. Education in terms of hours. It's the same problem the accounting profession has with our business model. As long as you measure people in terms of their inputs, in terms of the hours that they work and not what they achieve, you are going to limit what is possible. So why in today's world, are we still measuring education based on the number of hours that a student sits in a classroom? Because that's essentially what all this is. When they talk about semester hours, it's literally a translation of I sit in a classroom for X hours per week, for X weeks per semester, and that turns into credit hours. And that doesn't measure knowledge. It just measures how much time I sat in a classroom and how much money I paid to do such a thing.

Blake Oliver: [00:26:44] It doesn't mean that my professor successfully transmitted the knowledge to me, and I can go to one school and learn from and get a terrible education. I can go to another school and get a great education. They might both be accredited, right? So it doesn't prove anything. We have to, as a profession, stop measuring ourselves in time. Everything that we all the technology that we use now is totally disrupting all of that. I can go and obtain all the knowledge that I need in in minutes. I don't have to go sit in a classroom anymore. And the things that we need to be teaching people, it's not like I need to teach somebody in a classroom the intricacies of this particular accounting standard. What we need to teach them is how to how to think critically so that they can go and then read it and learn it themselves because there's just too much. It is not even possible in five years to teach somebody everything they need to know. In accounting, the field is just way too broad.

David Leary: [00:27:44] And then so much of it changes. Yeah, there's new tax laws depending on the administration. It doesn't even matter what you learn.

Blake Oliver: [00:27:52] It all changes. Right. That's the thing is, and that's why people got so frustrated is because you went to school, you learned all this tax law. And then it all changed like in the last ten years. So we had some comments going on in the chat that I want to address. Brian Strike said, are you talking about a boot camp to get CPA eligible or just to learn the basics I am talking about? A way to take somebody who went to college and got a degree and wants to become an accountant to get them the accounting knowledge and tax knowledge and audit knowledge that they need to, that they would get in a undergraduate accounting major, and that they could then sit for the CPA exam and pass the exam and become a CPA. And I think we need to make exceptions for career changers who have. Let's say you could create a work experience requirement that's like much more than somebody who just comes out of school with all that stuff, right? So you could say, okay, you got to work for, I don't know, what, 3 to 5 years. So and they probably have a lot of people have done this and they're still. Blocked from becoming CPAs because they don't have the specific courses they need. So make the work experience whatever it needs to be. And then basically say, if you have a bachelor's degree and you can pass the CPA exam, then you can become a CPA.

David Leary: [00:29:10] I think that's what like to become a teacher in Arizona. It used to be you had to have a teaching degree and then it's evolved to any degree. As long as you can pass the teaching certificate or the additional.

Blake Oliver: [00:29:21] Yeah. And this is the problem with getting career changers in, is that not only do you have to have the 150 hours, which means that many people have to go back for another year of education, that education has to be in very specific courses. And it's a lot of courses. It's like the entire undergraduate accounting major. So even if, like me, you had I actually had like five years of education because I changed majors after the first year. I went in as a liberal arts major, and then I became a music major. So I basically already had five years of credits, but I still couldn't sit for the CPA exam because I had to go and I had to take all the accounting courses that were required by California. I had to take the business law course. I had to take the, I don't know, whatever it was. There were a lot of courses I had to take, and I couldn't just study that stuff and pass the CPA exam. That didn't count. I had to go sit in a classroom or in a virtual classroom at an accredited community college university in order to get all those credits. And for me, somebody who learns very easily by reading on my own, it was a real hindrance, like it was not. Some of those classes were good, but a lot of them were just totally pointless. I could have learned it much faster on my own. And so if we really want to solve this problem and double the number of accounting majors, we got to look beyond the traditional pipeline, because, as Sue Coffey pointed out, that's declining already. There just aren't enough college grads coming in. And something like, depending on the state, something like half of the CPAs are over the age of 50. In Ohio, it's like 40% are over the age of 60, I think. So this is not something we have a lot of time to work on. Mean AICPA members. I think half of them are like approaching retirement age. What's the AICPA going to do when half their members retire and stop paying dues?

David Leary: [00:31:14] It's like three quarters or 70%. That's ridiculously high, isn't it?

Blake Oliver: [00:31:17] It's a lot, right? Yeah. So we got to think more outside the box on this stuff. Really outside the box and. I guess I feel like it's all related. This whole idea about ours, this whole. This is such a difficult concept.

David Leary: [00:31:34] This is the fundamental, like fraudulent.

Blake Oliver: [00:31:37] Yeah. Because the people who it's probably it's not actually the people. I sympathize actually with the AICPA leadership in many ways. I mean, I think they could have more courage in leading the profession. I feel like they're afraid to upset the council. Aicpa is really you know, the leadership reflects the council, which is the 200, 300, basically the Congress of the AICPA and who is on that council. It's mainly people who are at the very end or already retired in their careers, because all the people who are working are too busy to go be on AICPA Council. And these people, well-meaning as they are, have spent 20 or 30 years filling out time cards and time sheets and measuring themselves based on the hours that they bill. Yeah. And so this concept of changing from focusing on inputs to outputs is so fundamentally different. It's it's almost like I don't know if they can do it.

David Leary: [00:32:39] So that's when I, when I listen to that interview, that's one of the things that went off in my head. I was like, wow, this sounds like a little bit of change management coming as in, you know, because it's that whole move. The guy who moved my cheese. You know, when we have organizational structural change, you're going to lay off people, you're going to reorganize the corporation. You kind of pre message it and start putting some ideas in people's heads. And I kind of got that vibe a little bit of like they're going to make some changes. And this is just they're starting to they put the feelers out I guess maybe.

Blake Oliver: [00:33:13] Yeah I mean that's the I hope so. Well if or if it does.

David Leary: [00:33:19] My.

Blake Oliver: [00:33:19] My feeling is that what will happen is that I said this in the last episode. I think that there won't be some sort of miracle change. Right? We're not going to. What we really need to do is take the requirements down to a bachelor's degree. Can you pass the CPA exam and have a work experience requirement, which is what these other certifications that are in licenses or whatever you call them, whatever they are licenses, certifications are doing right and they're streamlining it. And you can, I believe with the right mix of requirements, you can maintain quality, you can actually improve quality, I think because you'll get smarter people who are who don't like red tape into the profession. So you streamline the requirements. You get more people in. But I don't think that like the establishment has the will to do it. It would take it would be a huge change. And I feel like, you know, there's just too many accounting professors who are worried that if we get rid of the fifth year requirement, their master's programs will implode, because, yeah, some of them will. The ones that aren't creating value, that are just living off of this requirement, right? Will will go out of business, those programs. But the good ones like BYU that we talked about in our last episode will do just great, right? So there's that kind of resistance. It's the like the mediocrity, right? The people, the mediocre middle is holding back the profession in that regard.

David Leary: [00:34:41] Well, yes, that goes to that. You know, the the job opening. Right. They have a committee and I don't know who these members of the committee. I'd have to go look them all up on their LinkedIn pages, etcetera. But I'm imagining these are very senior members of those state societies. Super experience, which is good because they have experience and they have judgment, but more so sometimes. What do communities do? You're going to pick a yes man, right? You're going to pick somebody that represents the committee.

Blake Oliver: [00:35:09] And sometimes experience is a liability when you're doing the same thing that hasn't been working for decades. Yeah. You know, and you really need a change. You know what's interesting about the, the, the job posting is that they list that you only need a bachelor's degree to apply for this job. A master's or a CPA is preferred. So you don't even have to be you don't even have to be a CPA to lead Nasba the National Association of State Boards of Accountancy. Don't you think that that should be a requirement? If we're going to be as strict about our leaders as we are about new people entering the profession? You don't even have to have a fifth year of education to be the leader of Nasba.

David Leary: [00:35:51] I mixed on that opinion because one of them means they're that means they're open to other people with other experience coming in. But at the same time, I'm like, it'd be nice if somebody did the job before they did that job. You know, if.

Blake Oliver: [00:36:05] They had actually, like gone through becoming a CPA before they lead the organization, the CPA profession, they.

David Leary: [00:36:12] They've never worked. They'd never worked.

Blake Oliver: [00:36:14] Well. And that's I think the problem with a lot of accounting education is that, you know, I understand this is how the system works. But most professors, most PhDs have not worked very long in public accounting, just the minimum. So. I think that is enough on this topic, don't you? David.

David Leary: [00:36:31] Solving world's top problems. But anyways, it's. If you haven't listened to the interview, go let's do it super short. Hopefully one day Susan Coffee will come on the accounting podcast and discuss all this with us. And we will not rush her. We'll give her as long as she needs. If it's two hours, we'll do 12 hours. If it needs to be to talk about all 12 points.

Blake Oliver: [00:36:50] I just want to emphasize that we have made multiple requests this year to get somebody from the AICPA on this show to talk about this stuff, and for anyone at the CPA listening, you know, we have strong opinions, we challenge authority. But we hope that, you know, like your executives are like, have enough courage to come on a show and answer tough questions and not just get softballs. Right. Which is what that Accounting Today interview was. It's just softball questions, no challenging questions at all. And I think the profession, you owe it to the profession. And we're not going to be jerks. You know, we're pretty nice people when you actually talk to us, but it's like they just don't want to engage with anyone that I feel like challenges the narrative or diverges from it in any way. And it's just old school thinking, you know, that's the problem.

David Leary: [00:37:39] And that's why that interview felt like it was change management type, like they wanted to get a message out there that was very specific about these things that are coming down the pipe. Yeah, it might be harder to do on our show. Yeah. That's true.

Blake Oliver: [00:37:51] Well, yeah, because we're not going to we're not going to follow that narrative. Right. And neither will our live stream viewers who are, you know, vocal about that too. So. Let's talk about. Let's talk about ChatGPT and AI in this new GPT maker thing that exists. I've been playing around with it. David and I kind of want to share it with you.

David Leary: [00:38:16] Is this something that's part of OpenAI? Like, who is it? This new? It is part of OpenAI. Okay.

Blake Oliver: [00:38:21] Yeah. So this is part of ChatGPT. If you are a ChatGPT Pro subscriber, you can now use this came out in the last few weeks. I'll share my screen and I'll just show you what I've been doing to play around with it. On the sidebar. Now you can see that we've got these options other than ChatGPT. We've got Dall-E. I've created some custom GPT. It's called tax bot. Tap bot for the accounting podcast. Bot for Blake and seek 179. That's the one I wanted to show you. So did we talk about custom prompts in the past for ChatGPT?

David Leary: [00:39:01] You could save them now or.

Blake Oliver: [00:39:03] Yeah, basically. So so like, for instance, what you could do in your profile is you could tell it something about yourself. Actually, let me let me go into my profile and see custom instructions. Yeah. So a little while ago, ChatGPT added this to your profile where you could say in a text field, it would ask you the question, what would you like ChatGPT to know about you, to provide better responses. And you could provide up to 1500 characters of text about yourself and what you do. And then every time you prompt ChatGPT, it has that so you don't have to keep telling it over and over again who you are, what you do, and what you want, right? And then you could tell it also how you want it to respond. Like, do you want it to be formal or casual, or do you want it to be long or short, that sort of thing? How do you want it to address you? But that was enabled for all new chats. So it's kind of limiting in the fact that you don't always want it to know the same things or do the same stuff, right? You want to because you're.

David Leary: [00:39:57] Using it for problem A you're using it for problem B, problem C, so you want to tie that to more of a profile. Not not your main login. Right. Right.

Blake Oliver: [00:40:05] So. To overcome that limitation, OpenAI released GPT s custom GPT s, and the way that works is that you can configure a particular chatbot. You can give it a name, you can give it a description, and you can give it custom instructions, and you can give it conversation starters, which are like little pre-written prompts that you can just click and use. And then this is the important part. You can upload knowledge so you can upload PDFs, text files that it will save in its database and be able to reference when you ask questions.

David Leary: [00:40:41] And when was this released?

Blake Oliver: [00:40:43] A couple of weeks ago, I think so this.

David Leary: [00:40:44] Solves my whole issue when I try to like trained it. All that great training to book all those airplane flights or not book them, but to create the calendar appointments and put on my calendar. And then a week later, it didn't know anything. Now I can tell it. Always use the airplane emoji, you know, and all that type of stuff. And it'll know that for next time.

Blake Oliver: [00:41:03] Yes. And what's really cool is when you go game.

David Leary: [00:41:06] Changing.

Blake Oliver: [00:41:07] When you go to create one of these bots, you can actually create it by just telling chatbot to what you want, and then it will actually write the instructions for you. So you can say, I want to create a bot where I can copy and paste in my reservations, and it will create a calendar file in this following format, and you give it all the specifications and it will remember that from now on. So I did that with a section of the tax code. And actually it was not a I didn't upload the actual section of the tax code. I went and found the publication from the IRS publication 946 on section 179, which is all about depreciation. And so the idea is that you can save this bot and you can use it to then ask questions about the document, and it will reference the IRS guidance and give you an answer.

David Leary: [00:41:59] Are you limited in how many docs you can add here? How many? Is there a size?

Blake Oliver: [00:42:04] There is limits with ChatGPT and I'm not totally sure what it is. I tried, I actually tried uploading the entire tax code, the entire IRC and it like totally timed out. And actually the IRC is insanely big. I discovered, you know, remember like in years ago when Republicans were trying to do tax simplification and they did that whole thing where they brought in the tax code printed out and put it on like stacked on a table in Congress. And it was like mounds of text. Hi. Yeah. So that's a really big file. And ChatGPT can't handle that. But you can take a PDF like this, you know, section or publication 946 and you can upload it and then you can query it. So the instructions here say this. Here's the instructions. The GPT will be a tax expert specifically knowledgeable in IRC section 179. Its primary role is to provide clear, accurate and up to date information on section 179, including its implications, benefits, and limitations for small businesses. It should guide users in understanding how section 179 can be applied in various business scenarios and answer queries related to tax deductions, eligibility criteria and investment limits. Under the section, the GPT should avoid giving personalized financial advice or legal interpretations, but focus on explaining the provisions of section one 79in a user friendly manner.

Blake Oliver: [00:43:21] And I'm going to add to this it should cite its sources whenever giving guidance. Okay. Now I can update. And what's neat about these jeeps is you can keep them private, or you can publish them so that people with a link can use them, or you can make them public like anyone could use them. So now I've got my GPT here and I just click it in the sidebar, and now I can ask a question. And so some of the pre-written questions are is software eligible for section 179 deductions. So I could put that in. And now the section 179 bot is going to go search its knowledge, which I assume includes that PDF that I uploaded. And it's going to go give me an answer. So, you know, think. Think about your firm and think about specialties you have. Right? Perhaps you could create specialist bots that you could share in your firm. All right. So what did it say? We got the answer. It said yes. Software is eligible for section 179 deductions. Specifically off the shelf computer software. This refers to software that is readily available for purchase by the general public, is subject to non-exclusive license, and has not been substantially modified.

Blake Oliver: [00:44:35] All right. Where can I find this specific guidance? Now I'm asking it to cite its source. Basically, it's saying that I can find it in publication 946. Okay, well, that makes sense because I gave it that. I can say, what's the page number? Yeah. Now, is this really faster than just doing a control F in the PDF? Not really, I think, but what could be interesting is if I actually gave it a specific question and I said, here is the case. And then asked it to interpret it. So it's telling me that the guidance can be found on pages ten and 16. So it's not like mind blowing. I've been playing around with this. I created a bot that can write like me. I trained it to like, use my tone and writing style, and I've been trying to use that. I created a bot that like searches episodes of the accounting podcast or can go out and find stories for us to talk about. Like suggest topics for the next podcast episode on our tap bot. I did that, and it can go and it can brainstorm topics for us to talk about. It can also go search the web because it's connected to the web.

David Leary: [00:45:50] So this is interesting because I could see that like at many firms and companies like you're the bottleneck, right? You're the you're the firm owner, you're the domain expert, and you become the bottleneck. And you can try to document everything you can do. But. It gets to a point where it's impossible to navigate. But if you can just paste in some docs here of knowledge of things for your. I'm thinking like, is this kind of like a super standard operating procedures?

Blake Oliver: [00:46:20] Actually, you could use it for that purpose is you could take your firm's standard operating procedures and upload them to a bot, provide that to all of your team, and then they can query the employee handbook or the operating procedures.

David Leary: [00:46:34] Instead of asking Blake about X. Yes. And hopefully because you're you're locking it into some finite set of information, it's giving accurate, accurate answers. Here's some should be less.

Blake Oliver: [00:46:46] And now here's something I haven't tried but which is possible if you can code is that you can connect your custom GPT to outside systems. So you can there's a there's a schema field. And you can add code here to go and call upon like an external database. Now, this could be really powerful if you have like a whole database of information in your firm, you could have it like connect to that and then people can just query the chat bot. So this is basically very similar to what the Department of Defense is reported to have done, where they took all of their documentation, which is a lot, and they put it into a chat bot. And now people can query Department of Defense procedures and regulations and rules. So I think there's a lot of potential here for any situation where you have to go query documents. And there's lots of them, like a big database. This could be really powerful. I mean, maybe you could even connect it to your firm's like CRM and go like find potential clients for a specific service or I don't know what have you. So they've got examples. You know, you can you can query like weather. So basically you can ask what's the weather in zip code. And it can connect to that website with the weather data and then pull that into the response.

David Leary: [00:48:10] Could have that. Yeah. Basically calendar appointment for my flight. Yeah. Yeah.

Blake Oliver: [00:48:14] So basically this is how you create those custom gpts. You know, I've played around with creating one that can do create self-study CPR courses based on Naspa rules, upload the Naspa standards. And I uploaded the fields of study document and then gave it a prompt said, like you're a self-study course writer, can you, you know, use these documents to help me write learning objectives and course descriptions and that sort of thing. So I think there's a lot of potential here like that firms could use. I mean, it's not it's not that far away from us being able to use these kind of chat bots on private data, not just data that we copy paste into these tools. So, David, I teased. I teased a story about how Disney was sued and Berkshire Hathaway was sued.

David Leary: [00:49:03] How long? How long of a story is this? Well.

Blake Oliver: [00:49:08] And sorry, my voice is really scratchy, so I'm going to do my best not to cough all over this microphone. So I just wanted to talk about it because I saw this and I've heard about Hollywood accounting and I've never heard about Disney getting caught up in it. I think there's a lesson here for anyone who does a deal. Anyone who does a deal where there's like a share of the profits. Because, you know, profit is one of those things that can be manipulated. If you have the right expenses, you can make profits disappear. Cost accounting. Yeah. So the headline here and this appeared in CFO Brew is Disney sued over accounting by film financiers. The subhead is Disney used nearly every Hollywood accounting trick to deprive a financial partner out of millions, according to a recent lawsuit. So this is a lawsuit filed by TSG entertainment, a film financing firm. They filed this lawsuit on October 15th in Los Angeles County Superior Court, and they said that Disney and its subsidiary, 20th Century Studios, formerly 20th Century Fox, deprive them via shady accounting of something like $40 Million of Profits. Tsg has been in a revenue participation agreement with 20th Century Studios, and they had an agreement that said that TSG would profit from selected films revenue in exchange for financing commitments, including production and marketing costs.

Blake Oliver: [00:50:34] They have put 3.3 billion into some of Fox's most successful beloved and awarding an award winning films, including blockbusters like avatar, The Way of Water, Bohemian Rhapsody and the Deadpool and X-Men franchises. Over time, though, the financier noticed that the return on its investments was decreasing dramatically, leading the firm to hire an independent auditing firm to conduct an audit of Fox's books and records to see whether or not the terms of the RPA were being upheld, and the independent audit found that Fox had underpaid TSG by at least 40,000,040 million, using a number of underhanded Hollywood accounting tricks, unquote. And so the question is, what are those accounting tricks? Well, Disney negotiated sweetheart deals, allegedly in which TSG backed films boosted Disney's subscriber numbers while minimizing the profit payments to stakeholders like TSG. So, in other words, they licensed the films to Disney Plus. At very favorable rates to Disney Plus, which got Disney Plus subscribers but TSG in the films, the films never saw any of those profits.

David Leary: [00:51:50] This is the same game Microsoft played with the corporation in Puerto Rico, selling windows back to Microsoft for a dollar, a copy or something stupid, right? It's kind of that same game.

Blake Oliver: [00:52:01] It's a it's a little bit like that. Yeah. Right. So so this is it's a good question. Right. So if, if Fox, which is a subsidiary of Disney, licenses a film to Disney+ and Disney+ gets a bunch of subscribers because Deadpool is on Disney Plus now, which is hard to trace, honestly. Right. How do you recognize revenue down to the film and so. I don't actually come down on a side in this because I feel like it's really difficult to value. You know, this is a valuation question. How do you value the rights to that film when the value of a subscription service like Disney+ is not just having one film on it, it's having a lot of films available or a lot of content available. It's the whole catalog that creates the value. They're not selling it one a la carte, you know, one film at a time on Disney+ anymore, like we used to in the early days of streaming. So I guess there's a lesson here. When? When you. Come up with like revenue sharing or profit sharing agreements. You have to really think through how could especially if you're the minority partner, right? How could the majority partner really screw me over by manipulating these numbers? There's lots of ways to do it, and I find it fascinating. So. That's that's my accounting. I don't know, lesson question. It's more of a question. It's like how do you how do you deal with that contracts. Right. And that's the problem too with like like film accounting. Right. Is is that. Yeah. If there isn't a direct sale. Then how do you how do you how do you allocate revenue? Allocating revenue is really hard.

David Leary: [00:53:52] Isn't this kind of the part of the strike that the actors just had was, yeah, things were going to streaming platforms and nobody could measure the revenue. So then people weren't making getting paid as much because there's no if there's no revenue number to make a calculation from. We don't have anything to pay you.

Blake Oliver: [00:54:08] Right. There's no there's no there's no direct allocation to a particular show. So then there's no profits to share.

Speaker3: [00:54:17] Uh.

David Leary: [00:54:18] Did you say, uh, Berkshire Hathaway got sued as well?

Blake Oliver: [00:54:22] Yeah. So Berkshire Hathaway got sued by the family that owns pilot. But I think we're running out of time, so. And my voice is running out. It's actually I can barely speak any more. So.

David Leary: [00:54:34] And you have a you have a in-person keynote this week, so you have to. Yes, doctor. Your voice a little bit.

Blake Oliver: [00:54:40] That's why we are recording on Tuesday. Because tomorrow I fly to Lexington, Kentucky to give a keynote on artificial intelligence for a conference hosted by Dean Dorton. And I'm so excited to be doing this because they are a very prominent accounting firm in Kentucky, and I have never been. And I'm really excited to go and to, you know, make it a work and personal. Trip I am. I'm a bourbon drinker, so, you know, like like, I can't believe it took me until 40 to get over to the Bourbon Trail. So I'm going to go check out at least one distillery while I'm there.

David Leary: [00:55:20] And then pop over to a visit in Nashville.

Blake Oliver: [00:55:24] I've been in Nashville enough.

David Leary: [00:55:25] Yeah.

Blake Oliver: [00:55:26] And I think I think there's something next year there we'll be going oh, zero con zero con is going to be in Nashville. So thank you everyone who joined us live. Great to have you with us. Don't forget, if you're listening on the podcast you can also subscribe to us on YouTube. You can catch us live chat with us. Let us know what you think about the future of the accounting profession, technology, any of the issues that we have discussed here. We also love your emails. Send us an email at. The accounting podcast earmarked me. That's the accounting podcast at earmarked me. Those go to me and David you will get our undivided attention. Well it is divided. I mean it goes to both of us. So I guess it is undivided. But you get you get both our attention. You get twice as much attention as if you just send it to one of us.

David Leary: [00:56:15] You can't measure it because it's going to everybody at once. Exactly.

Blake Oliver: [00:56:19] Send us your emails. Send us your voicemails. We love getting those. We will play voicemails on the air. I'm surprised that more people don't take advantage of that. And yeah, David, great to see you as always, and I'll see you again here next week. Bye.