The Accounting Podcast

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David Leary: [00:00:04] I'm shocked, but not shocked that the two new leaders at both the AICPA and Nasba are white men. For all the lip service these organizations give to diversity initiatives, etc., I'm actually like, you know what I mean? I'm shocked that in 2024 they still put white men in charge. But at the same time, I'm not shocked at all. Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:34] Hello and welcome back to the Accounting Podcast, the number one podcast for accountants in the world and your weekly news roundup. I'm Blake Oliver-

David Leary: [00:00:43] and I'm David Leary and Blake. I'm glad that we have this episode this week. Last week when we left everybody hanging at the end of the episode, you were about to go climb to the bottom of the Grand Canyon, but somehow. Did the helicopter out. Helicopter you out? How did you survive this?

Blake Oliver: [00:00:58] I made it, I survived, I was, yes, hiking rim to rim, the Grand Canyon with my friend, our friend Amanda Aguilar, CPA. So two CPAs hiking rim to rim from the North Rim to the South Rim of the Grand Canyon on the October 15th filing deadline. And I survived it. I'm very sore. I like it's now Monday, so we're almost a week after and I'm finally able to walk up and down stairs. Ouch. It was 10,000ft of elevation change. You go down almost a mile and then you go up about that much, 10,000ft, and it's 24 miles. So it's almost a marathon. And we did it in. Well, I did it in 12 hours. Amanda destroyed me and did it in like 11 hours. And that was after she took some detours and side trips to go see Ribbon Falls. And she she she has more.

David Leary: [00:01:58] She did more than you. She. Yeah.

Blake Oliver: [00:01:59] She did. Yeah, she probably did, like, 26 miles. And, um. She's great. I mean, she did, like a 50 K not long ago. So she's, she's she's like a beast. And, uh, it was great to spend some time with her and, uh. Yeah. Amanda, if you don't know, is the chief operating officer at Paget, which is like, under the leadership of her and Jeff Phillips has just, like, taken off, and they are adding franchisees like crazy. It's a it's an accounting firm, but they use a franchise model. So you have your own firm and you pay a franchise fee to Paget corporate. And it's very reasonable. It's like it's less than 10%. And um, and they provide you all the like branding, the tools, the technology.

David Leary: [00:02:44] Amanda brought systems and processes.

Blake Oliver: [00:02:46] All of her systems and processes that she built at her firm. She brought to Paget and rolls that out to all their hundreds and hundreds of offices, and they're adding lots of offices. Um, so it's a great, uh, great option.

David Leary: [00:02:59] Their ducks must be in order because they do a lot of tax work. Paget does a lot of tax work. Amanda, the COO, can go hiking the Grand Canyon on the tax deadline day. They must have their.

Blake Oliver: [00:03:11] Yeah, they have it together. Right. Like and and that's. I always remember Amanda when she had her firm. She was always very organized and very together with it. And so she's brought that expertise to Paget. And by the way, since we're speaking about Paget, we should mention their podcast, Federal Tax Updates with Annie Schwab and Roger Harris. That is an earmarked network podcast, and you should go listen to it if you want to earn CPE for tax topics. It often qualifies for IRS CE if you're an enrolled agent. So go to earmark Dot app and subscribe or we'll register for the courses. You can earmark the federal tax updates channel, and then you'll see them easily when you come back. So, um.

David Leary: [00:03:54] We should thank our sponsors before we get too involved in all the news. And then I actually want to plug something that I want to have my own, like Add if you want to call it that. So our sponsors this week we have Live Flow, Zoho, specifically their product Zoho Practice. And we have Practice Protect. So it's kind of connects Live Flow to Zoho to Zoho practice practice protect it kind of like how that connects together. But thank you for our sponsors. Everybody. Please support them. We will have the links in the show notes. The links will come up on the screen. Please support our sponsors and the commercial I want to do Blake is the elections in a couple days. And you you know you actually said why Trump will win. As you know I Friday did my training to work the election. So I worked the election every year or every two years or however whenever there's elections to be worked, I beg accountants need to be involved in this process. You'll like it. It's a lot of reconciliation. It's a lot of process. All the voting centers, the around the country, it's all locally driven and they need volunteers and it's a good use of your time. Like you'll really feel like you're contributing to society and sharing. You know, the voting process at your one little location runs smoothly.

Blake Oliver: [00:05:06] So you'll be working the polls on November.

David Leary: [00:05:10] On November 5th. Yes.

Blake Oliver: [00:05:11] Awesome. Well, I will be mailing in my ballot I and I'm. So I'm helping you out. David. You know, those of us who mail in the ballots, we don't need as many volunteers at the polls. Right? So that's true. But that's a great service that you do. Thank you for doing that. And yes, I do want to talk about the election. I don't want to talk about it too much because I know people get politics everywhere, but I think there is a numbers angle, an accounting angle to this. And yes, the headline, the title of this episode is Why Trump Will win and I mean he'll win in Arizona. It's looking like he's got like a 3% edge in Arizona which went for Biden last time. Right, David? Correct. So that doesn't bode well for the Harris camp. And I have a theory as to why this is happening. Um, you know, I know it's never one issue, but there's one in particular that I think is really driving this, and I've got some numbers to share with you. And then we want to talk also about Mark Koziol and the being the new president of the AICPA, after Barry Melanson's, like 30 or 40 years running the AICPA.

Blake Oliver: [00:06:17] He's retiring and the AICPA did a global search and picked Mark Koziol, who we both know and have a friendly relationship with. So maybe we can get him on the show. I want to talk about that decision. We've also got some Intuit news. It looks like they may have backed off from their attacks against tax pros, but we will see about that. I also have follow up on Berkshire trimming Bank of America stock. And actually we never talked about that before. But we did talk about banks and interest rate risk, and it's looking like the same problems that plagued Silicon Valley Bank are now plaguing one of our largest banks. And that may be the reason that Warren Buffett is dumping his B of A stock, and he had a huge position in it. Google is under attack from AI search. I've got a story about a guy on Reddit who automated his job using AI chatbots. He then deleted the post, which lets you know that it's a real story. Probably coworkers figured out who he was, and this is an accounting related job too. So you want to pay attention to that? Yeah. And that's oh, I've got news about earmark. We raised a seed round.

David Leary: [00:07:28] So congratulations.

Blake Oliver: [00:07:30] Yeah. Well, congratulations to you, David. Let's congratulate ourselves. Well done. Well done on that. But before I do any of that, I just want to show you some of these photos from the Grand Canyon. If you are on the if you're on the live stream here, you can see me and Amanda there looking over the South Rim.

David Leary: [00:07:46] Now, you wore your earmark shirt. I did the whole time. Now, is this whole all tax deductible now, this trip.

Blake Oliver: [00:07:51] You know, I'm gonna say it is I'm not a tax guy. But, you know, we'll see what my tax CPA says about that, right. Um, I mean, you know, I took pictures and I posted them on LinkedIn. Right? I'm like, I'm an influencer, right? David does that. That means I get to deduct all this stuff. There's me at the North Rim. Uh, there's a picture of the North Rim. What's crazy is that, like, you can see the canyon there, like the canyon goes down and then it gets smaller, and then it's like basically another 3000ft down from there. Here's us going down in the dark. It was actually a lot darker than this photo looks. The iPhone night vision. The night camera now is amazing on the iPhone 16. So it makes it look like daytime. There's me over the Colorado River on the suspension bridge. There's me looking sweaty, almost up. I think I'm like 3000ft from the top at that point, maybe 2000. There's Amanda looking very refreshed. This is where she left me and I crawled to the top and she basically sprinted. She was very nice though. She said, meet me in the pub, I'll have a beer waiting for you. And she did. And the beer was called bright Angel trail by, uh, Lumberyard Brewing Company. It's a hazy, and it's named after the trail that we just hiked, so that was cool. And there's me finally at the top of the trailhead, looking a lot happier than I feel at that moment with my hiking poles in hand.

Blake Oliver: [00:09:14] And there's a old Teddy Roosevelt grinning there. That's how I felt. So it took me 12 hours, which means I could have gotten at least 12 CP's with earmark if I'd been listening to podcasts. And I did listen to an episode of federal tax updates while I was while I was going up there. It's good. Yeah. So, um, yeah, if you're ever in my neck of the woods and you want to go check out the Grand Canyon, I highly recommend it. This was my first time there in all of my life, so it was pretty amazing. It's. You got to go see it. It's a wonder of the world. Um, you get to go back in time, like 300 million years, you know, or like, like a billion years. That thing is, the Grand Canyon has been the way it looks now for, like, hundreds of millions of years. Wow. Um. It's amazing. Okay. Earmark. Seed round. Earmark. The CPE app that lets you earn continuing education anytime, anywhere. We raised our seed round, and it was really more of a friends and family round because it's people that we know, uh, power users of the earmark app who have been using it from day one, and we raised half $1 million at a $5 million post-money valuation. So I feel pretty good about that, considering that we've been working on it for three years, and we got it to a $5 million valuation.

Blake Oliver: [00:10:34] And when I had my accounting firm, it took me five years to get to $1 million valuation. And that to me is proof of the value of the subscription model. Um, um, so what are we going to do with the money? Well, we are going to we're going to pour it into building awesome features for our current users and new users. And I want to do a survey, actually, of all of our current users and listeners of this podcast who use earmark to earn CPE and listen to other shows. Um, I'm going to send a survey out and ask you what we should build. And here's the great thing. It's not going to be some survey where you have to go and put in numbers and like, rank things. I just want you to right brain dump whatever you think we should, um, do. And you're going to just hit reply in an email and send it back to me. And I am going to use AI to synthesize every response into a roadmap directed by our users. And that will not necessarily become the actual roadmap, but it will be part of it. So we're going to dedicate specific amount of time and resources to building the features that you want to make your mark better. Um. Very exciting. So, you know, we have. How many members do we have now? On your mark.

David Leary: [00:11:53] 14,000.

Blake Oliver: [00:11:54] 14,000 people have signed up for earmark the app and then, um, like, 10% of them become paying individual subscribers. Like, the conversion rate is fantastic. I'm so proud of that. I'm so proud of our team and all the shows that we have on the app make that possible.

David Leary: [00:12:11] So I think we're going to be approaching 2000 courses soon.

Blake Oliver: [00:12:16] 2000 CPE is available on earmark. It's amazing. We're putting out like 100 up to 100 a month like this is this is CPE oozing out of your pores. You you cannot possibly take all this CPE. You've got so many choices. Right. And that's our goal is just to make everything that deserves to have CPE have CPE. And we want to bring new voices to the accounting profession that have been excluded from state society meetings and from national conferences. It's the same people all the time. It seems like, that have been doing these continuing education courses, and we want to make it affordable and easy for people to create their own CPE. So if you want to be an earmark instructor and you want to teach a webinar, or you want to turn a podcast into CPE, reach out to us. You can email me at Blake@blakeoliver.com and tell me about what you want to do. We are looking for technical, tax and audit experts to help us build out the technical side of earmark. We want more technical content on there so that we can offer everything anyone needs. And we also need state specific ethics courses so that we can fulfill all those requirements. Because I know there's many states that have specific ethics requirements. And then also I've just applied for us to do live CPE both both in In-person and webinar based live CPE. And that's important because there are many states that crazy enough restrict how much on demand CPE you can earn because somehow on demand CPE is less valuable than live CPE sitting in a classroom, which I just find ridiculous. But that's the way it is. So we're going to solve it.

David Leary: [00:14:00] So and and the other thing to add is we have a platform for you. So if you have knowledge you want to share, you just have to really worry about creating your slide deck and your presentation. We're going to handle everything else you don't have to think about, oh, do I have to get a webinar software or get this thing? Or we will help you do everything you just need to build the deck, the content.

Blake Oliver: [00:14:23] You just show up like it's a zoom call. We use a different platform, but it's the same idea. It's the one we use to record this show, and you just show up and you present and we do everything else and we've automated as much as we can. So we make it really as affordable as it can be. Um, and we are, you know? And while we need to make money to cover our production costs, our goal is to bring new voices in. So we we basically have like a scholarship program. So if you've never, you know, had the opportunity to, to offer CPE or you want to reach new audiences, you know, contact us, we can help you get on a webinar on a complimentary basis if you fit, you know, the profile for that. So please do reach out. Uh, and thank you to our livestream viewers. Rowan says why don't CPAs unionize, seeing there are so many awful problems that could be solved by unionizing? I've often wondered this myself, Rowan, and my theory is that, uh, the CPAs in public accounting, like, come and go so quickly that there's no opportunity to organize them. It's sort of built into the business model, and the partners definitely don't want the staff organizing. Right. So you take the best and your brightest and you, you pull them into the partner group, or you get them to drink the Kool-Aid and stick around.

Blake Oliver: [00:15:42] Right. And then everybody else leaves. And so there's really no union. The only union that we have is the AICPA. But the AICPA tends to represent the interests of the senior partners at firms who have the equity, like that's who the AICPA represents. You know, they pay the bills for the AICPA, right? They they're the ones who have representation at the AICPA. Uh, um, what do you call it? The Council, the governing body of the AICPA. Those are the ones on the board. It's the really high up people at these firms. And like, you never see any of the actual doers at the staff or the manager level represented. So that's why they don't advocate for these problems. Heather says the earmarked CPA webinar delivery platform is the best in the world. Thank you. Thank you so much. Shawn Smith says unions can be as much of an issue as they fix. Yeah, sure. I mean, you can have good unions, you can have bad unions, right? But I think what's important is that we have some organization advocating for average CPAs. And tell me what organization that is right now. Can you think of one? I can't. Other than our podcast perhaps.

David Leary: [00:16:53] But the CPA finally is saying wages should be higher. They released a report with the National Association of State Auditors, Comptrollers and Treasurers, now known as Act. And the report is basically saying that governments, state and local governments should be fostering internships and mentorships and financial incentives for CPAs. What does that mean? Government roles?

Blake Oliver: [00:17:18] What does that mean? Financial incentives for CPAs like paying firms to hire more CPAs more?

David Leary: [00:17:23] Well, they. Well, the government's so. So the government should be paying CPAs more to employ them. They are pushing on the legislative bodies to increase wages for these positions and In municipal rolls.

Blake Oliver: [00:17:37] But like government, wages are always lower than private company wages. If you want to raise wages for accountants, the way to do it is it accounting firms, right. Get the accounting firms to pay people more. But they're not saying for accounting firms to pay people more are they.

David Leary: [00:17:53] Well this is specific to just governmental accounting topics.

Blake Oliver: [00:17:57] Sorry. Who issued this? Who? What is this? This is.

David Leary: [00:18:00] The AICPA. Right. And the National Association of State Auditors. Comptrollers and treasurers.

Blake Oliver: [00:18:06] Okay, great. So the AICPA has no problem telling local governments to pay accountants more. But like, when was the last time they ever told public accounting firms to pay accountants?

David Leary: [00:18:16] Okay, true. I just thought this was an example of like I had this news story, like they're making the effort. It's the first time we've seen them say it at all, right?

Blake Oliver: [00:18:24] But it's just totally the wrong approach. Like, it's not going to accomplish anything, in my opinion. So why don't we talk about, uh, well, do we talk about why Trump will win? Or do we talk about Marco's will? First, I feel like why Trump will win is a little more interesting.

David Leary: [00:18:39] Yeah, jump on that. All right. I'm wondering this theory. You have not discussed it with me.

Blake Oliver: [00:18:43] So, David, we've discussed this on the in the past. How would you say that? You lean politically.

David Leary: [00:18:49] I'm a registered independent. Okay. So I'm I'm. I flip flop between the two. There's some. So how have you voted? How have.

Blake Oliver: [00:18:57] You voted? How have you voted in recent elections? Like, you know, are you voting Democrat all the time for president? Do you ever vote for a Republican?

David Leary: [00:19:04] I, I haven't voted for Republican. Yes. Um, who is that? I've also, uh, voted for Ralph Nader once in the Gore Bush. I voted.

Blake Oliver: [00:19:13] For Nader. Oh, crap, I don't know.

David Leary: [00:19:16] Find out. My vote did not count. I got an official letter.

Blake Oliver: [00:19:20] What Republican did you vote for? President. Oh, you gotta remember. You're pausing for a really long time, David. Like this shouldn't be so hard.

David Leary: [00:19:35] No, but I tend to I tend to usually choose a third party candidate in most cases, so. Okay. But I'm trying to think like who.

Blake Oliver: [00:19:46] I.

David Leary: [00:19:46] Feel. Okay. So all.

Blake Oliver: [00:19:49] Right, I'm going to.

David Leary: [00:19:50] Catch me off guard. I should have wrote. All right, well.

Blake Oliver: [00:19:51] Tell you what, you can think about it while we thank our first sponsor, uh, of the episode.

David Leary: [00:19:57] And it's live flow.

Blake Oliver: [00:20:00] It's live flow. All right. Thank you so much. Live flow for sponsoring this episode. Let's see if I can log in so that I can read this ad. Here we go. Are you a QuickBooks fan or do you prefer Xero? Well, I've got some exciting news for you. Live flow now syncs QuickBooks and Xero to Google Sheets and Excel. You might already know that Live Flow has been a game changer for thousands of accountants and their clients, automating financial reporting from QuickBooks Online to Google Sheets. But if you are an Excel user or on Xero, you were kind of left out Doubt until now. Now you can use Live Flow to connect Google Sheets to QuickBooks online link, Microsoft Excel to QuickBooks online sync, Google Sheets with Xero, and even connect Microsoft Excel to zero. And here's something that'll blow your mind. You can create consolidated reports for clients who have only, who have one entity on QuickBooks online and another on Xero Live flow can speak to both at the same time, and your reports and custom dashboards automatically sync in real time. So whether your team, Google Sheets, Excel, QuickBooks or Xero or any combination, and you're ready to take your financial reporting to the next level and to get 25% off your first three months, that's 25% off your first three months. Head over to The Accounting Podcast dot promo forward slash live flow. That is The Accounting Podcast dot promo forward slash l I v e f l o w. Did you remember David?

David Leary: [00:21:26] I just went and looked at all the results. I don't think I voted for a Republican president.

Blake Oliver: [00:21:34] Okay, so you're an independent, but you lean left. That's what I wanted to know. Is that fair, David? Yeah.

David Leary: [00:21:42] I can't agree with Republicans because of social issues, but at the same time, I can't be Democrat because I don't think they can run things very well. Yeah, that's where I fall, you know.

Blake Oliver: [00:21:51] And that tends to be my feeling as well. Right? It's the old like, you know, socially liberal, conservative economically. Right. And we're kind of screwed as a group when it comes to the political parties, because we have to make these tough choices. Um, and so I voted. I did not vote for Trump in the last election. I was a I was a Never Trumper Republican, and I'm a registered Republican. Um, but, you know, it's like I, I did vote for for Bush back in the day. Right. And I have this choice now, right? What am I going to do? Am I going to vote for Trump or am I going to vote for Harris? And I'm in Arizona. So I actually kind of maybe make a difference, although it's starting to look like it's not going to. But, you know, like, let's just pretend. Right. And so I've started actually tuning in. Now, like most Americans, I don't pay attention that much to what's going on politically until maybe like a month before. I'm a procrastinator, right. And and so now I have to make a choice. And I've been listening to JD Vance and some of his podcast interviews, and I find him fascinating. I listen to him on the New York Times podcast. And first of all, he's like an amazing speaker. Um, so eloquent. And maybe that's one of the problems I have with Trump is that, like, I can't actually listen to him speak because so much just doesn't make sense. It doesn't come out right. Maybe he knows what he's saying in his head, but like when he says it, it doesn't come out right. And but JD Vance is the opposite. Like what he says is just so, uh, smart. He's obviously very intelligent. And so it's actually made me kind of pay attention to the policies that he's talking about on these shows. And one issue in particular that he talked about at length on the New York Times podcast is immigration. And would you agree that immigration, David, is like the number one issue on the Republican side this year? Is there a bigger issue?

David Leary: [00:23:56] It's the biggest issue, I think they're arguing this year for the Republicans.

Blake Oliver: [00:24:00] So it's the issue, and it's probably the Democrats and the Biden administration. And Harris's biggest weakness is immigration because they don't have a good answer for it. Right. And the numbers are really shocking. And that's why I wanted to talk about this today, because we are a show about accounting, and accounting is about numbers. And so much of the political discussion just ignores any actual numbers. And so the solutions end up being like stuff that will just not work, practically speaking. Um, but, you know, Vance talks about these numbers with immigration. And then I went and I did my own research and to fact check it. Right. And, um, it's really actually kind of crazy what has happened with this country when it comes to immigration. And I think perhaps the reason that Arizona has shifted so much is because of that, because we're a border state. So it affects us the most, along with states like Texas. Right. So the the numbers paint a picture that is not good for the Democrats, because what have we seen happen over the last few years is that the Democrats keep losing, uh, working class, non-college educated voters. They are breaking big for Trump and even more for Trump this time. Why is that, David? Well, it's because based on my research, they are the people who are most affected economically by unmitigated immigration, by an effectively open border policy, which is what we have in this country. You can walk across the border and you can claim amnesty, and the Border Patrol has to let you in, and you get a court date at some unspecified future date years in the future. Right. So effectively, anyone can walk into the country and it's created a situation where, um, a significant percentage what I would say is a material percentage of non-college aged workers, non-college educated workers in this country are unauthorized to be here or illegal. And it's like, uh, as much as 8%. Do you follow me?

David Leary: [00:26:26] I'm following you. I'm following you. I'm trying to see where you're going. Yeah.

Blake Oliver: [00:26:28] So, um, a lot of the a lot of the coverage of Trump and Vance and the campaign and their immigration policy in the mainstream media focuses a lot on what I would what I would, uh, what I don't think is actually the main issue. And even when they talk about this, they don't talk about the economics of this. Right. It's all about like the gangs taking over the apartment building, or it's like the, you know, the the immigrants who killed somebody, right? The violent crime and all this stuff. But when you actually dig into those numbers, right. It's it's not like widespread, right? But what is widespread is the economic impact of this immigration on working class, non-college educated Americans. So, um, about 3 to 4% of the population here in the US is unauthorized immigrants. It's estimated between 11 and 12 million. Now, some people on the right will say it's like twice as much as that, but I couldn't find any data to support that. So let's say it's like 10 to 11 million. Okay. And that's in a country of 300. And what are we at 334 million right now? So 3 to 4%. But and that doesn't seem like that much. Right. But if you look at if you break that down further, you know, and you look at what percentage that is of workers, it ends up being like 8% of non-college educated workers. And what happens when you have a 8% sized group of millions of unauthorized workers who are taking jobs that would otherwise go to Americans? What's the economic impact of that?

David Leary: [00:28:19] Well, the argument is that it's lowering wages, right? People don't have jobs.

Blake Oliver: [00:28:26] Yes.

David Leary: [00:28:27] I don't believe that's true. So I'm letting you continue. Well, so.

Blake Oliver: [00:28:30] I did the research on this, David. And a 1% increase in immigrant composition in an occupation reduces native workers wages by about 0.5%, with a stronger 0.8% effect in low skilled occupations. And so the direct impact is that for about 25 million Americans who don't have college degrees and who are working, the presence of these unauthorized workers reduces their wages by 12% or almost $2,000 a year. And that's a lot of money for somebody who is making, you know, 20 to $30,000 a year.

David Leary: [00:29:11] But there's a real.

Blake Oliver: [00:29:13] A real.

David Leary: [00:29:13] Impact. So and they have data. And it's a really great thing on NPR's Planet Money about this. So when the Cuban refugees came and they just got dumped on South Florida, dumped into Miami, they basically went back and restudied this and they cannot detect any evidence that it affected wages, numbers of jobs, etc.. And the reason why is there's not a fixed number of jobs in an economy, right.

Blake Oliver: [00:29:40] But the Cuban refugees were legalized, right? They were authorized to be here. We let them in.

David Leary: [00:29:49] We are letting people in as well. But we're not getting asylum. It's the same thing they were. They were asylum seekers.

Blake Oliver: [00:29:55] Yeah, but they're not. They're not authorized to work here. And they're working illegally. Most, most of the people in this list are working illegally. And so they are working for below the table wages. Right? They are not getting the labor protections that American citizens get. And so they will take less.

David Leary: [00:30:13] Money waiting on paperwork, administrative paperwork right there waiting.

Blake Oliver: [00:30:17] Because they're illegal, right? They're unauthorized to work. And so they are driving down the wages of Americans. And in certain states, in certain areas, it's raising rents because you have immigrants who are willing to live like four families in a in an apartment who are willing to take that rent. And it drives up the price of rent for Native Americans. So this is an economic issue, and maybe this is just because I became politically conscious during the Bill Clinton ascendancy. And I have this drilled into my head, this phrase, it's the economy, stupid. Do you remember that, David? Yes. And I do believe that ultimately everything comes down to economics and that there's a lot in the political landscape that is there for theater, but in the end, people vote with their wallets. That's human nature.

David Leary: [00:31:25] And arguably, you could say that Biden and the Biden administration and some of this is a rollover from even Trump before, with zero interest rates or almost, almost zero interest rates. Right. And all that money coming in from the pandemic spending caused all that inflation. So the table has been set right. It's very you don't have to explain it. You just ask people how much are eggs, how much is gasoline now? And you know, how much is your rent. And then you could tie it to all these other social issues. But fundamentally the table's been set. And it's a very easy to make an argument like, those guys mess this up, right? It's easy to market against. And that's the struggle I think the Harris side is having. It's very hard to point at look what we did. It's just hard. Even if they're not the root cause of it it's just. Well no they hard but that's the.

Blake Oliver: [00:32:13] Thing David, is they are The Biden administration has opened. They have allowed the situation to develop at the southern border, where millions of people are coming across. And I think it comes from a place of compassion, because, you know, you want those people who are fleeing gangs in, I don't know where Ecuador is it in Venezuela, you want people who who have no other place to go to come to the US. And that's something that, you know, has always been a democratic platform is compassion. Right. But but in order to do that, because we don't have judges at the border to make these decisions, we are just letting anyone in. So this has been a conscious choice, a conscious policy choice by the Biden administration, and I think it will cause them to lose the election.

David Leary: [00:33:10] Oh, from a. Yeah. Regardless of my opinion on it or your opinion on it. Yes, they are from a PR standpoint and that's what politics is. Yes. Ultimately, yeah, they are ultimately the right way. Right.

Blake Oliver: [00:33:21] So like this is going to be why if Trump wins, which it's looking like he will this is going to be why. And um, you know, you go back to and it's funny this hasn't been always the party's position. Like Obama deported like a million people a year or something crazy. And like for some reason, that was okay. Um, I just don't get it. Like, they really have done it to themselves. You know, the incumbent president has a huge advantage. It's like the, you know, having the up you have the high ground in a battle. Anybody who's trying to take a presidency from you has to fight an uphill battle. So it's yours to lose. And if if Biden and Harris, if Harris loses, it's basically because of Biden policies and her inability to distinguish herself from him, which is pretty hard to do when you only have been in the race for, what, a few months? So a couple of weeks.

David Leary: [00:34:19] Yeah.

Blake Oliver: [00:34:19] Yeah. So, um. Yeah. And this is the problem too, is like, look, I'm not I'm not placing all the blame at the Democrat's feet because it's, you know, Trump has killed any legislation in Congress that would solve this problem, like any compromise, because the Trump campaign knows this is a winning political issue for them. So they are forcing Biden and Harris to decide to close the border or to keep it open, because they know if it stays open, that every single month that more people come in and working Americans see their communities changing and see it getting harder to get jobs and seeing their wages stay stagnant and lower and inflation goes up, they're going to win. And so Biden made a big mistake. If I was Biden, and my only option really would be to close the border, lock it down. And that sucks because all these people who really, legitimately do have asylum claims, you're not you're just going to have to turn them away and make them stay in Mexico or something. But like, I don't understand, like sometimes you have to make tough choices as a politician. So I think that's why he's going to lose. And that's why Trump will win, and probably why J.D. Vance will be our next, next president.

David Leary: [00:35:48] I don't know, because I feel like as a citizens and I look at our country and we go these waves like, all right, we'll let these guys give it a chance. And then they kind of mess up like, all right, let's try these guys. And we just keep, you know let's put the Republicans back in again. All right. Let's put the Democrats back in. It just constantly goes like this. So in the pendulum swings because neither side actually accomplishes anything. Well. And so Americans are like, yeah, let's let's give these guys a chance again. And that's how you think about the pattern we've seen over the last 40 years. And this goes back to that deep state stuff. Right. Who's really running everything? It's the people that have been had the same position for 40 years in government positions.

Blake Oliver: [00:36:25] Yeah, it's the bureaucrats.

David Leary: [00:36:26] Regardless, regardless of who the president is. Ultimately it doesn't really matter.

Blake Oliver: [00:36:30] And here's why I'm starting to sympathize right with the Trump campaign is that what do we deal with constantly, David, in our role as CPE sponsors, bureaucracy, unaccountable bureaucrats, the deep state, right. It's it's nasba, it's the AICPA, it's these career people running associations and running Nasba is an association, too, right? Running state, like all these people at the national level, are so disconnected from reality on the ground that they make incredibly bad policy decisions. So the way that AICPA and Nasba have resisted the change of the 150 hour rule, I think that's equivalent to the Democrats at the national level failing to understand what is happening at the southern border because they are not there and they have not gone there. Right. Wasn't there that whole talking point about how the the borders are never went to the border?

David Leary: [00:37:36] I think so, yeah. So you know what's real or not real? There's so many commercials. Here's what I do know. I'm 40 minutes from the border. Blake, we. I could go drive there and show, like, before you were done recording this episode. Live stream. What's happening at the border? I also think there's a lot of sensationalism happening. Yes. Are there immigrants coming? Yes, but there's just a lot of sensationalism happening about it.

Blake Oliver: [00:38:00] Well, but see, that's because you are insulated from it. You don't have like. But the thing is, David, you grew up doing a job that is now, you know, like that would like if you were still in construction. Yeah, right. Your dad worked construction.

David Leary: [00:38:16] Construction? You worked construction in Phoenix. Yeah.

Blake Oliver: [00:38:19] Right. So, like, imagine now if you were in construction and you're dealing, you're trying to make a career for yourself in that. Let's say you didn't go to work for Intuit at the call center in Tucson. And, you know, you're competing for work with unauthorized workers who are driving down your wages. How would you feel.

David Leary: [00:38:39] About being in the 80s? This has been happening forever. Like there was illegal aliens taking construction jobs in the city of Phoenix in the 80s.

Blake Oliver: [00:38:48] That doesn't make it okay.

David Leary: [00:38:49] I'm not saying it's okay, but it doesn't have the impact that this. Oh my God, they're going to take my wages. I'm gonna have lower wages. It's not as drastic as everybody thinks because there's not a finite number of jobs and wages.

Blake Oliver: [00:39:02] But they do. Like if I don't buy that argument, David, because there are I mean, jobs can grow, the economy can grow, that's for sure. But right now there's a finite number of jobs today. So if there are, you know, 10 million people here that are working that are unauthorized to do so, that's 10 million jobs for Americans. If they were.

David Leary: [00:39:33] Not here, there's not enough Americans to fill all the open jobs. Everybody's hiring every accounting firm. Well, and that's something that companies there's not enough bodies to do the work.

Blake Oliver: [00:39:41] Well, that's but that see, that's not true because there actually is a big population of millions of Americans at the lower end of the wage spectrum who have dropped out of the workforce entirely. So J.D. Vance's argument is that if we reduce the number of unauthorized workers here, that we would get those people back to work, and those people are not in the unemployment numbers because the unemployment number only counts people who are actively looking. If you've dropped out of the workforce, you are not included. And he's like, there's 7 million people that have dropped out of the workforce. But why? Because they cannot because they cannot make enough money with their educational attainment, not having gone to college to make it worth their while. And so he's saying, if you got rid of the unauthorized workers that are driving down wages, those people would go back to work and they would go back to work because employers would have to recruit them. They would have no other choice. Right now, employers have choices. They can go hire unauthorized workers. And they can. They can. They don't have to go get the Americans.

David Leary: [00:40:53] We'll see. So I don't know. I don't.

Blake Oliver: [00:40:56] Know. Well, and this is why you're voting Democrat, David, is because to you, this isn't a real issue, but to like 70% of its. Something like 70% of non-college educated Americans are going.

David Leary: [00:41:09] You heard that last week, that graph, right? Yeah.

Blake Oliver: [00:41:11] It's huge. So that's why. And whether or not it's it doesn't really matter if it's true. If people believe it in politics.

David Leary: [00:41:20] Yes.

Blake Oliver: [00:41:21] But what I'm saying is I did the research and there is a significant element of truth to this story. And that's what makes it a strong political argument, is because there is truth to it. Now, not all of it, but the root of it is economic, is my theory.

David Leary: [00:41:43] Well, I think you combine it with, hey, you're not getting paid enough because of immigrants, and eggs are too expensive, and you know they won't drill the oil to get lower gas prices. It all adds up, right? It all adds up. All that messaging and marketing is much better than the other marketing that's happening, right?

Blake Oliver: [00:42:02] I think the other mistake that the Democrats have made is they have assumed for a long time that people of color will simply support the Democratic Party, because that's what's happened in the past. And that, like people who are legal immigrants here, will support the Democratic Party. But what we're seeing is that many legal immigrants are supporting Trump this time. And I think that's because they're here legally, and they don't want more unauthorized workers coming and competing. It's not a racial thing. It's an economic thing. And the Democrats totally missed that sitting in Washington. They don't get it. You know, as America becomes more of a melting pot and people have like, biracial identities and very complex identities, it doesn't boil down to like, you know, I'm black, I'm going to vote Democrat or I'm, you know, and I've been losing the Hispanic vote big time. How does that make any sense? Right. If it's not an economic thing.

David Leary: [00:43:09] Well, then I still insist. The reason Trump lost this, his second term was the economy. It was the tax, uh, the Trump Tax and Jobs Act because he took away that on the coast. He tried to punish those coastal cities that hate him. Right. With the high wages and very expensive property values. And he changed the economics of owning a house. Like, once your house is over so much, you don't get that tax deduction. People did not like that. Did not like that. I didn't like that. That those people moved those. They moved to Colorado and Georgia and Phoenix. That was one of me. Yeah. I mean, the election, it turned the election, and it was because of economics. And yes, it's like it goes back to like you said, we were young and very influential. It's the economy, stupid. And it's happening again. Yeah.

Blake Oliver: [00:43:58] Um, so I have a tie in here on this to accounting, but I want to read our second ad before we do that.

David Leary: [00:44:06] So pulling that up right now.

Blake Oliver: [00:44:09] Thank you to Zoho Practice for sponsoring. David, do you want to read this one?

David Leary: [00:44:12] Yeah. Do you want to put up the banner? I will do that. Yeah. Introducing Zoho Practice, the all in one practice management platform built to streamline accounting firm operations. Zoho Practice saves you time chasing clients by automating reminders and requests. You get the documents you need and the clarifications you need when you need them. Staff and clients stay connected through a centralized communication hub to resolve accounting queries faster. Seamless timesheets and billing trends. Seamless timesheets and billing translate billable hours into invoices with just a few clicks and a robust document, management means no more digging through piles of paper to find what you need beyond workflow efficiency. Zoho practice also enables real time financial visibility across clients thanks to seamless integrations with Zoho Accounting Tools, allowing you to gain actionable insights to identify and resolve reporting inconsistencies quickly. Whether ensuring tax compliance, monitoring cash flow health, or simplifying collaboration. Zoho practice is the unified solution to manage all aspects of accounting practice. To explore how Zoho Practice can save time, enhanced oversight, and help your firm work smarter. For free up to five users, head to The Accounting Podcast Dot promo slash Zoho. That is The Accounting Podcast dot promo forward slash Zoho.

Blake Oliver: [00:45:40] Thank you Zoho. Heather in the chat, says Blake, do you do you think you would feel? Do you think you would think differently about the election if, like David, you had a daughter, would other issues matter to you more? Heather is obviously talking about the abortion issue, which is a big one on the Democrat side. And, um, I don't think that men should be making decisions about women's bodies. I would if it was up to me, I would say, let all the women in the country vote on it. Um, but it's not. And I'm not a single issue voter. And so I don't know what I'm going to do. Heather. Like, I don't, but I know that this issue is what's going to probably swing the election. Sean says immigration isn't just an issue for the border either. I have a friend who had an Irish husband who couldn't get arrangements made to be here either. Andrew, tell me what I'm wrong about. Andrew says. Wow. Completely wrong. I want to hear. Um. So that's why Trump will win. Now what the heck does this have to do with accounting? And what does it have to do about the AICPA and Mark Koziel, the new AICPA president? Because we've been talking about two potential two presidents, President Trump, three presidents, President Trump, President Biden and President Koziol. Well, what is suppressing wages in the accounting profession, David?

David Leary: [00:47:25] You could argue jobs going overseas. Possibly. You could make that argument. Cpas getting hired in India and the Philippines.

Blake Oliver: [00:47:36] Um, and I would agree with you, offshoring the number one thing that is suppressing US wages for CPAs and accountants is offshoring to other countries. Um, the big four are doing it big time, and it's basically the accounting equivalent of unrestricted borders, because you can offshore an American job to India or to the Philippines, and nobody's going to stop you from doing that. So basically in accounting, we have an open borders policy, and you can see what happens with the wages of average CPAs. The CPA salary the average CPA salary has not changed meaningfully when adjusted for inflation in like 20 or 30 years. And it has even declined. And that is because any increase in wages is offset by the offshoring of jobs. So, David, it's the same thing that's happening. It's the same thing economically. Is that like the unfiltered immigration or unrestricted immigration or unrestricted offshoring is the release valve. Whenever wages go up offshore, some jobs they come down. Do you buy that argument?

David Leary: [00:49:01] Arguably, that is the not just in accounting, but moving jobs to other countries and moving jobs overseas across the board. Manufacturing in this country is really the reason wages are down and the jobs don't exist. It's not because people are coming here taking them. It's the jobs have been moved in many cases, which Trump's argument about the, you know, tariffs. He wants to punish companies for doing this now. Yeah.

Blake Oliver: [00:49:24] So let's talk about the politics at the AICPA and Mark Koziel, the new incoming AICPA president. So the AICPA actively supports the offshoring of American jobs overseas. I was at a presentation by Barry Melanson, the president, current president, who is retiring soon, and he put a slide up on the screen and it showed the triangle of a CPA firm, the pyramid of a CPA firm with the staff at the bottom and the partners at the top. And then he showed the corners, cut off the the triangle. And there were two words offshoring and technology. And the CPA teaches firms how to offshore and how to implement technology in order to avoid hiring staff. So what I want to know is how does this fit with the AICPA stated mission of what is their stated mission? It has something to do, I think, with promoting CPAs. Right. You would think that it would. Right. Isn't the mission of the AICPA?

David Leary: [00:50:38] I'm going to dig it up here. You can you.

Blake Oliver: [00:50:40] Tell me what it is exactly? But I'm going to guarantee you there's something in there about promoting CPAs. But, you know, your average CPA salary hovers around $100,000. Depends who you look at. It can go as the average might be as low as 91,000, or as high as $120,000 a year. That's for us CPAs. Um, and it hasn't really budged. And that salary is very, very difficult to raise a family on in what really ought to be. You would think you would want CPAs to be living like an upper middle class lifestyle, wouldn't you? They're professionals. They deserve to be in that class with doctors and lawyers. And in fact, the AICPA has said for years and years, the whole reason that we have the 150 hour rule is to elevate the profession, to have similar educational requirements as the medical and legal fields. But CPAs don't make nearly as much money as doctors and lawyers. Far less. And so my question to Mark Koziel is, what are you going to do as the new president of the AICPA? To raise wages of average CPAs. What concrete actions are you going to take to do this? Given that firms just seem to be offshoring the jobs in order to avoid having to do this, to raise wages? If we want to attract, go for it. What did you say?

David Leary: [00:52:10] And this could explain about the outsourcing. The Aicpa's mission is powering the success of global businesses. Comma. Cpas. Comma. Commas and specialty credentials. By providing the most relevant knowledge, resources and advocacy. Protecting the evolving public interest. So they're about growing global businesses. Right. That's the first.

Blake Oliver: [00:52:35] Thing.

David Leary: [00:52:36] That's number one thing. Global.

Blake Oliver: [00:52:38] And you know who that is. The global businesses. It's the giant consulting firms that are the big four. That's what that is. It's interesting that CPAs aren't first on that list. I think it's very telling, actually. So I want to know, you know, from Mark and I say this as a friend, Mark, I mean, we don't know each other that well, but we've met and we've been friendly. And I would love to have you on the show, Mark. And let's talk about what the AICPA is going to do in concrete terms to advocate for average CPAs, not the managing partners at these firms that pay the AICPA dues, but the CPAs who are your members? The hundreds of thousands of CPAs who are your members? And I think actually, a lot more people would become members if they felt like the AICPA was advocating for them. So, David, do you want to tell us a little bit about Mark Koziel? Do you know anything?

David Leary: [00:53:44] Um, I know Mark is from Buffalo and he's a bills fan, so I'm really hoping at the end of every webinar interview, um, video, you know, the AICPA Town Hall, it gives little go bills and a thumbs up would be beautiful. It would be kind of his calling card on on each of those. But he currently is the president and CEO of well not anymore. I guess he was the president and CEO of is it all lineal lineal lineal. Lineal. Global global. Um, the second largest accounting association. So he has experience doing this. And I think part of that he was already at the AICPA, I think prior to that for years. Um, he's, you know, top ten of accounting, today's most 100 influential people. He's also been named to the International accountants Accounting Bulletins global accounting power list. He started at an accounting firm in Buffalo, New York. But outside of that, it you know, he's somebody that's been in the profession. Right. And that's leading, you know, other accountants. Um, as far as I know, he's well liked. People respect him. Um, he's a little younger. I think he helped drive some of the early, uh, social. And, um, so the influencer stuff early on with the ispa.

Blake Oliver: [00:54:56] So in short, Mark Koziel is an AICPA insider. He left for a few years to go run a lineal, but he was at AICPA for how long?

David Leary: [00:55:06] Uh, I'll go to LinkedIn.

Blake Oliver: [00:55:07] It's like 17 years, I think. Right. So he spent his whole career at the AICPA. So the AICPA had an opportunity to find somebody new with a new perspective, and they really just brought in Barry Melanson's, number two, who, Mark, I've heard from folks who know about this, that he only left because he was supposed to be, you know, the he was the heir apparent and Barry wouldn't retire. So then he left and went to millennial. So basically, you know, it's like a promotion from.

David Leary: [00:55:37] Yeah, he was there 14 years before that. Okay.

Blake Oliver: [00:55:39] So basically a promotion from within. So I don't know, I hope I have. I guess I'm not that hopeful that things will change, given that it's basically the same old, same old.

David Leary: [00:55:53] I have a note here. I wrote to myself, I I'm shocked but not shocked that the two new leaders at both the AICPA and Nasba are white men. Like for all the lip service these organizations give to diversity initiatives, etc., I'm actually like, you know what I mean? I'm shocked that in 2024 they still put white men in charge. But at the same time, I'm not shocked at all, right?

Blake Oliver: [00:56:17] And so I really want to get a photo of this, David, because I think this would like sort of paint the picture for everyone. If you go to Aicpa's headquarters in New York. Yes. There's a wall of portraits of all of the past AICPA presidents for like 100 years.

David Leary: [00:56:35] And it's all painted. They're all paintings, some of them the old ones.

Blake Oliver: [00:56:38] And it's all dudes that look exactly like Barry Melanson and Mark Koziol. Yeah, they had a real opportunity here that they missed to do that. Um, maybe it just changed the picture a little bit. So I was curious what, like Mark's positions are on any of this stuff in the profession that we've talked about. And he was on a podcast recently. Uh. He was on CPA trendlines podcast, Gear Up for growth, hosted by Gene Carriger. I apologize if I got that name wrong. Um, and I want to talk about what he thinks based on that. But before that, David, let's do our final ad.

David Leary: [00:57:26] If you wanted to display the banner, I'll go ahead and pull it up to read. Okay.

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Blake Oliver: [00:59:30] You could just buy Max. But if you can't do that, you just practice protect, protect. Uh, we've got quite a bit of chatter in the chat. Uh, Andrew H doesn't like my opinion about letting women decide the abortion issue. He said, uh, what was it? He said it's not her body. It's the baby's body. I don't want to get into that. But like, we've done.

David Leary: [00:59:54] An episode about this.

Blake Oliver: [00:59:55] We did a whole. Well, we did an episode on the. It's called abortion by the numbers. It got us audited by Nasba, by the way. Uh, they decided, like, somebody complained and they audited that course, and we actually passed through that audit. Thank God. Uh, but it was worth it anyway. Uh, and, yeah, we talk about the numbers. You can go listen to that episode and Andrew and decide, you know, it's in this feed, right? The accounting podcast feed. Yes, yes. Yeah. So it was with Laurel and Wilson. Um, you can go listen to that episode and decide what you think. But my view is that, you know, regardless, like, regardless of whether or not you think it's, uh, like, the baby, you know, is a conscience. Like, it's that it's like a human, a person in the legal sense. It's still like involves a woman's body as well. And so that's why I think women should decide this issue, not like people. How about this? People with uteruses should decide this issue. Like, that's just my personal feeling. Okay, man. So like, relax. And you ask Andrew, are you all lefties? I mean, I think I don't know when you tuned in or if you've been paying attention, but I like I told David very clearly, I have been a lifelong Republican. I've never been registered as anything else. I, I started the Young Republicans club at my high school just to piss off the Jesuit professors or teachers.

Blake Oliver: [01:01:13] They did not like that. My Catholic high school, they're very liberal Jesuits. Um, so, you know. Yeah. And I was also like, actually, one of the things about JD Vance that I find fascinating is, you know, he was a he grew up poor in West Virginia. He that made him he he survived. He got out of there and joined the Marines to go fight in the Iraq war. And he was he believed he was a believer like I was, except I was going to college and I was watching the protests happening, and I was like, these idiots, you know, I supported the war. And he went and fought in it. And then he came back and later was like, oh, that was a big mistake. We should not have done that. Like a lot of people. And I feel the same way. Right. Uh, so, you know, like your views can change, even if I guess if your party affiliation doesn't, I would not call myself a lefty. Um. Hagar says I want to meet the American construction worker who chooses to not work because of illegal competition, but actually needs to work and would join the workforce if the border was closed. I don't think it's as simple as that. I think that due to wage suppression, especially in like very poor areas, you might find a lot of people who like, just give up and just, like, sit around and do nothing all day because they feel like there's no good jobs for them.

Blake Oliver: [01:02:40] And maybe you should go to some of those places and meet some of those people, because I guarantee you they exist because they're in the data. And Baja Immigrant says an argument against offshoring of CPAs might be the quality and professionalism lost by going abroad. Yeah, actually, that's my biggest concern with the offshoring is that, like, nobody seems to think the quality is better. And what do we have is like a big problem with audit quality in this profession. And we're sending all the audit jobs overseas to people who are disconnected from the companies they're auditing. Like, I don't think that's a recipe for good audits. Yeah. Good point there. And Andrew says in quick do you see tariffs helping the economy. No I do not. Based on my knowledge of economics tariffs are a horrible economic policy and both parties have supported them and continued. Them. So it's not a Democrat or Republican thing like Biden has continued the Trump. Tariffs. And Harris said she would too. And they're just really dumb because it's a tax on the consumer. It's like we pay it in the form of higher prices at the store. It doesn't China doesn't pay those tariffs. It's the importer who pays the tariffs. So like people who think that tariffs are good for the economy are really dumb. And like it's just they're wrong on that. Yeah.

David Leary: [01:04:02] And that's one of the reasons things are more expensive at Walmart because of that. Yeah.

Blake Oliver: [01:04:06] It's more expensive.

David Leary: [01:04:07] Or smaller or tinier.

Blake Oliver: [01:04:08] It's the last thing you want to do in an inflationary environment is put in tariffs because it just causes massive inflation of consumer goods. Um, and I have no problem fighting anyone on that. I'll prove you wrong all day long. Okay. So what was I going to say about the AICPA? Oh, this is funny. This is something to take us out. So. Oh, I was going to talk about what Mark is like his biggest position.

David Leary: [01:04:36] So he should also cover the Intuit backpedaling because. Oh, yeah, that story is going to be after this week's probably not going to be a story anymore.

Blake Oliver: [01:04:42] But okay, we'll we'll get to that. Okay. So, um, here's what I wanted. My takeaway from Marco's interview on the CPA trendlines podcast is basically his biggest position seems to be that the traditional partnership model is dying. There's no longer effective. And this is what he was saying at millennial, is that these firms have to transition away from the partnership model to a corporate model of governance, and that's really the main thing that he talks about. But my question is, how does this impact your average CPA? The ones who are not partners, the ones who are working in the firms, is this going to be good for them? Is this going to be bad for them? He talks about the value of Esops employee stock ownership plans. I would advocate for making more CPAs, owners and firms like getting rid of this idea of having separate equity class people and giving everyone equity in the firm. That would be definitely more egalitarian. Right.

David Leary: [01:05:39] So it's very communist of you, Blake.

Blake Oliver: [01:05:42] Well, employee like giving. No, it's called it's called incentive compensation. David. It's been used extremely effectively in the United States. Like it's one of the things that we do that they don't do elsewhere in the world. And that's why our economy is crushing it. I want to talk about this on the next episode, but The Economist just did a great series that my dad pointed me to about the US economy. We are blowing everyone out of the water. It's insane. American worker productivity since the 1990s has gone up 70%. And in like other countries like Great Britain, Canada and Japan, it's like half that.

David Leary: [01:06:20] It's been like that forever. Like, we've just. We outproduced everybody else.

Blake Oliver: [01:06:24] Well, honestly, only for like 100 years. That's the crazy part about it. It's been a really short amount of time since World War Two, you know? So, um. Okay, that's that's what I got. David, do you want to talk about Intuit?

David Leary: [01:06:37] Yeah. So Intuit. Um, I have two stories. They're all PR related, ultimately. Right.

Blake Oliver: [01:06:42] Okay, so first, I want to catch everyone up to speed. Yes. If you haven't heard this, go listen to our last few episodes. Intuit released an ad, a TurboTax ad telling consumers taxpayers to break up with their tax pro and taxpayers. I mean, tax pros were not happy about it. And the National Association of Tax Professionals, uh, came out against it and broke up with Intuit, said, we're not going to take Intuit's money anymore. And the National Association of Enrolled Agents came out and said they weren't happy about it. Uh, and so, like the question is, will Intuit keep airing these ads?

David Leary: [01:07:19] Yeah. And so on Tuesday, Intuit said it would evolve away from the cheeky campaign And, uh, you know, so basically they're they're going to move away from it. They've acknowledged it. The the balls are in motion, though. Those ads are everywhere. Right. And I think even a listener emailed us and I think I've seen it, there's like online ads as well, like banner ads. Like that's the problem with an ad campaign. Like somebody's taken to it. You're sticking this everywhere. And now you got to reel it back in, which is very, very hard. But the result of this was the letters from, uh, ntap and E and finally, which is silly. So Tuesday, Intuit said they would move away from this on Thursday. Two days later, the AICPA finally jumped on the bandwagon and themselves criticized the campaign. Oh they did.

Blake Oliver: [01:08:07] They finally did. Like after after there was no risk associated with it. Right?

David Leary: [01:08:11] Yes, that's after that. Um, so apparently on October 15th, Intuit did meet with the tax organizations and several other groups. Um, and then agree that the campaign would be phased out, but it would take some time. Right. So that's happening. But in the meantime, the s'more as of this morning, another Intuit PR mistake happened. Blake, if you're ready for this one, go for it. Intuit's chief communications officer asked the podcast to delete a part of an interview. So what.

Blake Oliver: [01:08:41] Podcast?

David Leary: [01:08:42] This is the decoder podcast from The Verge. It's a pretty popular podcast. I'm guessing it probably gets 300,000 downloads an episode. It's fairly decently big. Um, Intuit's CEO, Suzanne Goodarzi would joined that podcast. And the host and the, uh, it's Neeli Patel pushed some of Suzanne's buttons on, you know, the typical stories big tax prep, Intuit lobbying money, the US government just sending out a tax return automatically, the typical Intuit TurboTax discussions that that are out there. Well, the chief communications uh, communications officer at Intuit sent an email to the host saying the line of questioning and the host's tone was inappropriate. Uh. This is the problem of being alive. I can't agree. I say egregious. Egregious. Geez. It's hard. Like you see the words and it just won't come out. Disappointing. And demanded that they delete the entire section of that recording.

Blake Oliver: [01:09:43] Sorry I missed this. What was the what was the part that was so offensive to them?

David Leary: [01:09:47] The discussion back and forth about big tax prep. You know, the typical accusations of Intuit, their lobbying money.

Blake Oliver: [01:09:54] Who were the who was interviewed.

David Leary: [01:09:56] From Intuit CEO Suzanne.

Blake Oliver: [01:09:58] Oh, Suzanne. So they.

David Leary: [01:09:59] The verge.

Blake Oliver: [01:09:59] The verge had Suzanne on their podcast and challenged him about, uh, TurboTax.

David Leary: [01:10:05] The TurboTax the typical TurboTax accusations, you know, the lobbying, the shadow marketing and all the other stuff, the typical stuff. Yeah, but that's not the real story, right? The real story is the PR comes back and wants this part to lead it, and I listened to it. It really wasn't noteworthy, but because Intuit's PR or communications chief went to to ask for it to be deleted, it opened the door and now that becomes the news. So of course, instead of the episode being a title like the other verge episodes, like how Suzanne Goodarzi is turning into into a $20 billion revenue company. The title of the episode that got released this morning is. Intuit asked us to delete part of this decoder episode, and of course, it's on, um, a Reddit thread this morning as well now. And they took the part they wanted removed, and edited it to the front of the episode and framed up how they were asked to delete it. So Intuit again. Intuit turned a non-story into a PR mess again. And this is just this. This hasn't even gotten full legs yet. Like, how does this keep happening under Suzanne's leadership? He like, he needs to have all the comms people and PR people at Intuit go read the Cluetrain manifesto. You don't even have to read the whole book. I mean, just read it.

Blake Oliver: [01:11:24] I mean, you're blaming the PR team, but maybe this was Sussanne's mistake. Like, maybe he didn't like the interview and he told his person to go tell them to take it down.

David Leary: [01:11:31] That's true. The buck has to stop somewhere, right? But these keep happening. These these PR blunders continue to happen under Suzanne's leadership over and over again. At some point, a board shareholders are not going to be happy about this. It's getting old, actually.

Blake Oliver: [01:11:47] I have been fact checked by Erica. Thank you, Erica, for correcting me. Jd Vance is from Kentucky, not West Virginia. My apologies to the states of Kentucky and West Virginia. And JD Vance. I guess my point was he's from an area that was very economically disadvantaged. He had a very difficult upbringing. Appalachia, right. Yeah. Appalachia. And I guess both of those states are part of it. Um, that's my really bad West Coast geography. Geography.

David Leary: [01:12:18] And and I know we've ran long, but there was one more story I think you had you wanted to touch on. Oh, I.

Blake Oliver: [01:12:22] Mean, I've got like, so many. David.

David Leary: [01:12:26] But one of them, you teased. One of them.

Blake Oliver: [01:12:27] You teased which one was it? Another AICPA one. Was it Berkshire? Was it Berkshire?

David Leary: [01:12:31] That's the one. The Bank of.

Blake Oliver: [01:12:32] America. Okay. So this is actually pretty simple, uh, hopefully brief. So we've been talking about I mean, we, we we did big coverage of the Silicon Valley bank collapse. Like that was a big deal. It affected a lot of accountants, a lot of accountants doing CAS, doing outsourced accounting for startups like it was a huge disaster. And that all boiled down to this concept of interest rate risk. Silicon Valley bank loaded up on tons of really cheap government bonds when money was free, right? Like, the interest rates were really low. They bought all these bonds, interest rates really low. But then interest rates are going up. And what happens if you own a bond that pays like 2% and interest rates go up to 5 or 6%? Percent. Nobody wants that 2% bond anymore, right? So it loses a ton of value. And Silicon Valley Bank created a bank run by like, release. Well, it actually it wasn't they didn't create the bank run. The venture capitalist did. But basically what happened is Silicon Valley Bank had all these unrealized losses on their balance sheet, and they decided to finally realize them. And they did it in a really bad PR way, which then caused some venture capitalists to go out and say, uh oh, Silicon Valley Bank is undercapitalized. Go sell, get out of Silicon Valley Bank. And that created a run on the bank because everybody knew everybody, and they all started doing it. And then the FDIC had to come in and save the bank. And there was that question as to whether or not depositors would actually get more than $250,000. So, like, there was a chance if you had millions there, you could lose all of it, right? Or almost all of it. Um, wait, I'm getting corrected again. Vance is not from Kentucky. His grandparents were. He's from Ohio. Okay, I don't know what is true anymore. I don't. This is the.

David Leary: [01:14:16] Problem of the election. This is this this this chat thread summarizes what is happening in this country. And yeah.

Blake Oliver: [01:14:24] He's from Middletown, Ohio. All right. Great. Get your facts straight, Blake. Um, and his parents are from Appalachia. Yeah. All right, well, you know, I didn't listen like that wasn't really a big part of the podcast I listened to. So. Beth says there's nothing Kentucky about that dude. Except he used to spend summers there. Okay, there you go. Uh, so, back to bank balance sheets. Um, Warren Buffett made news because he has been dumping his Bank of America stock that Berkshire holds. Berkshire bought a bunch of it and sold down below 10%. So now it doesn't have to be reported as to how much they own and b of A to counter the decline in their stock price. Did a stock buyback which pushed Berkshire back up above 10% and then Berkshire sold again. So like Warren Buffett is not a fan of Bank of America right now, which is obvious because his whole investment philosophy is if you like the business, you hold and you hold and you hold and you hold and you hold forever like a crypto bro. Right. Yeah. And so what is going on with Bank of America? Why is Berkshire selling? Why is Warren Buffett no longer in love with B of A? And it all comes down to really the same issues, it sounds like, as at Silicon Valley Bank. Um, the Wall Street Journal covered this, but they didn't really offer a lot of insight into why. But there was this one guy on X who did a great thread that kind of gave me a lot of insight into this Porter Stansberry. He is the founder of Marketwise and. I'm going to open up this tweet here. So I should also share my screen for you so you can see the picture. Do you see this?

David Leary: [01:16:37] You have not shared yet but okay.

Blake Oliver: [01:16:40] Can you put it on the screen for me?

David Leary: [01:16:41] It's on.

Blake Oliver: [01:16:42] Okay. So you see, we've got Berkshire and his Charlie Munger. We got Berkshire, we got Warren Buffett and Charlie Munger at their annual meeting of shareholders. And on the table in front of them are two signs. One says available for sale and one says held to maturity. And this photo basically indicates why Warren Buffett is dumping his entire Bank of America stake, or we think he is anyway. Um, and Porter Stansberry goes through and basically explains how bonds are represented from an account. He talks in detail about the accounting treatment of bonds on bank balance sheets. So we have two ways of accounting for assets. Right. Um, investments. You have investments that are quote available for sale, unquote. And then you have investments that are quote, held to maturity, unquote. And banks can manipulate their earnings based on what investments they deem as held to maturity and available for sale. Because an available for sale bonds, you have to recognize the losses as they are incurred. If the market value of the bond decreases, you have to recognize that in your earnings. But if you say, actually these aren't available for sale, I'm going to put them over here in this other category called Held to Maturity. And I don't intend to ever sell these until, you know, I'm just going to let them mature. I'm going to hold these for however many years I have to. Then guess what? For some magical unexplicable reason, in accounting theory and in accounting regulations, you don't have to recognize those losses.

Blake Oliver: [01:18:22] They become unrealized losses. And this is a problem because it makes Bank of America look like it's doing a lot better than it is. Uh, and he gets into the numbers of this, right? Bank of America had bought tons and tons of these government bonds at very low interest rates. It was $2 trillion worth total in the entire, uh, entire banking system. The banks bought $2 trillion of these now much less valuable bonds. And B of A was the biggest buyer by far. It purchased $700 billion of long term bonds, roughly a third of the total amount in the entire banking system purchases during 2020. So they bought these assets, these $70 billion of assets, and then they declined in price. And the losses on the bonds are probably around $100 billion today. But they haven't had to recognize that loss. Right. It's unrealized because they're saying these bonds are held to maturity. Well, Bank of America only has 200 billion in tangible equity. That is when you take their assets and you subtract their liabilities, you get their equity. They only have 200 billion. And they're required to maintain that 200 billion by the banking regulators. Banks have to have something like like a bank, like a Bank of America has to keep 10% of equity to pay out depositors. Right. And if you're not sure how banks work, this is a great way to get educated on it.

Blake Oliver: [01:20:06] You know, like banks when you deposit cash, the banks don't keep it in a vault. They loan it out to businesses and they only keep a small amount, a small percentage, 10% or so, in order to pay you back when you need your money. So if everyone goes and asks for their money all at the same time. What's that? It's a run on the bank. The bank can't pay everyone out. Bank collapses. That's why we have federal insurance to prevent this from happening. Well, so B of A has $200 billion in tangible equity right now on their balance sheet. But that's not necessarily true. It is true according to accounting to GAAP because they've said these bonds are held to maturity. But what if for some reason B of A couldn't hold them to maturity and had to sell them. Well, then they'd only have $100 billion in equity, and that would put them below the threshold for capitalization that we require. And it would be a big problem because B of A is humongous. And and that knowledge could spark a run on a big bank. And that is something that would be very difficult for the federal government to rescue like that would cost a lot of money. Silicon Valley Bank was tiny compared to B of A. So anyway, it's all related.

Blake Oliver: [01:21:19] And the thing that worries me is that the banking system is so fragile, and it's based on these accounting rules that are not transparent. And so the markets, you know, in the in the major mainstream coverage of this whole sale of Berkshire's stake, nobody else said this. It was only on X that I saw this. So the the mainstream media is missing this stuff. Why? Because it's really complex. It's hidden. It's in the footnotes of the financial statements. Same thing with Silicon Valley Bank, right. And all of a sudden people see it, they freak out, and then there's a run. And that's how you get a recession. And I've said it on the show before a few times. I said, if there is another recession, the next one is going to be most likely because of a banking crisis caused by the accounting treatment on bank balance sheets. And yeah, so as Beth says, B of A is quote unquote broke according to uh, like proper what I would consider proper accounting theory. They're broke. Like why why should you be allowed to just deem a security in your like computer system as held to maturity or available for sale? Like, that's a completely arbitrary decision that management can just switch back and forth. I mean, they can't you can't switch back and forth willy nilly, but like, it's it makes it possible to manipulate your earnings in this way.

David Leary: [01:22:46] And it's a little bit the hypocrisy. Right. So they can do it on their books. But they're also for the real estate loans and the real estate notes that they're holding. They push on those, uh, um, debt, uh, the people that owe them the money. The real estate developers. Yeah, right. To constantly readjust and then pay off more of the loan back. It's kind of interesting that what applies what they apply to their customers, they don't apply to themselves. Yeah. Right.

Blake Oliver: [01:23:18] Um, so it's not necessarily they're broke best. It's it's like they're undercapitalized, probably by $100 billion. And that's something that the FDIC or the regulator, I don't know who regulates them should address. But they didn't do it with Silicon Valley Bank. And I don't know if they're going to do it with B of A if they don't do it with B of A and this gets worse, we will have a problem. So if I were Warren Buffett, yeah, I'd be dumping my B of a stock. Because what's going to have to happen is that the feds are going to intervene eventually. Like I pray to God they do and they're going to make B of a raise capital and that'll dilute the current shareholders. So Buffett is smart to sell. Now he sees what's coming.

David Leary: [01:24:04] He sees the writing. Yeah.

Blake Oliver: [01:24:08] Um. Yellen said they would not bail out banks other than four key banks. Yeah. Well, when there's an actual, like, financial crisis coming, I think all those promises go away.

David Leary: [01:24:18] But but they are one of the four key banks like Bank of America is one of the four.

Blake Oliver: [01:24:23] Well it's.

David Leary: [01:24:24] Chase.

Blake Oliver: [01:24:24] Wells Fargo. Citigroup is B of A in the top group. Well, we can figure that out. And we're kind of over on our time here. Yeah. Um. Hey, David, I got one more thing for you before we go. You know, you said that Intuit is backing off of this campaign. Did you say that?

David Leary: [01:24:44] Yeah.

Blake Oliver: [01:24:45] Yeah.

David Leary: [01:24:45] I don't think that's backing off.

Blake Oliver: [01:24:46] I don't think that's true. Not at least maybe they stopped airing the ad, but, like, that's a very convenient because it's already past the October 15th deadline. Uh, but one of our listeners Shared this email with me. Our listener said, this is from Lee. Look what appeared at 8 a.m. so they did not suspend their campaign, but doubled down and doubled down on it. And then it's an email that says Intuit TurboTax Full Service. Whatever you paid your tax pro last year will beat it. Don't overpay your tax pro. Let TurboTax full service experts do your taxes and save money.

David Leary: [01:25:28] I saw that ad as well. Oh, I just don't know what website it was on, but I imagine it's because I went to the other website. It's probably one of those. I went to the breakup tax website and I've been cookied. And then when I go to their websites, they show me that ad. But yeah, it's not going away because you think you could just turn off these online ads.

Blake Oliver: [01:25:48] So one thing I want to say before we go out is like, how would I address this problem with banking, these unrealized losses and this interest rate risk and all this stuff is I would simply change accounting standards to create more transparency and allow for less manipulation of earnings. Manipulation of earnings is the biggest problem we have with accounting it. The pressure from management on accountants and auditors to change things so that they can hit their quarterly targets is a problem for our profession, and we could get rid of that by reducing the reliance on estimates and simply disclosing numbers that are hard to manipulate, so that we know that the fed has some sort of tool for monitoring the liquidity of banks and the capitalization of banks. They have a dashboard. Make that public. Let everybody see it. Why hide it? The problem is that you hide it, the regulators don't act, and then the public finds out eventually. And that's what creates bank runs. That's my solution for you. Thanks to everyone who joined us live and sticking with us through this almost hour and a half episode this week. Uh, we're turning into, like, uh, you know, talk radio. David, I might have to do this for, like, three hours a day. Oh, boy. You know, I did a, um. I did, like, a, uh, speaking. I spoke to a, um, student group at the University of Northern, uh, wait, northeastern. Northeastern Illinois. They invited me to speak, and, like, I didn't have anything to say, like, prepared. And I looked at my watch after I started talking with them, and it was like an hour and 20 minutes later. I'm getting good at this.

David Leary: [01:27:45] There's just a lot. There's just so much to talk about.

Speaker3: [01:27:47] Yeah.

Blake Oliver: [01:27:48] So go get your free CPE credit. If you listen to us for this long, you can get a free CPE with the earmark app, go to earmarked app. Create your free account. You get one a week for free, and if you want to support us in our mission of making continuing education easy, good. Something you can do anytime, anywhere, subscribe for $150 a year, you get 2000 hours of CPE that you can do on your phone, and support our work to bring awareness of the problems of the accounting profession to the people who are leading it. It works. We are making a difference. State society leaders listen to this show. People on boards of accountancy have emailed me saying they listen to this show. And I know that people at Nasba and the AICPA listen to this show, even if they're afraid to say it, there's many of them who do. So we are making a difference. And thank you to all our live stream viewers who join us on YouTube. You can follow us on YouTube and tell us what you think. Live! It's so much fun. Like ever since we did this, I like look forward to this every week, even more than I did before. Not that I don't love you, David, and love talking with you, but it's it's fun when our listeners chime in as well.

David Leary: [01:29:02] And by the time this episode goes out, we will probably not talk to each other as far as like you, the audience, until after Intuit connect. So if you're at Intuit Connect, we're going to be there next week already.

Blake Oliver: [01:29:16] Oh yeah, I'm really looking forward to that. That's going to be so much fun. So, David, are you going to ask Suzanne the hard questions that causes Intuit to tell us to delete our episode?

David Leary: [01:29:26] Well, I do expect to go into the weeds more and come out with a nice understanding of the Intuit Enterprise suite. Yeah, that's what I did attend a webinar last week, and let's just say I'm not super impressed, but we'll hold off my opinions till I see even more.

Blake Oliver: [01:29:40] All right. Looking forward to that. And I'll see you, uh, next week. David in person. See everyone at Intuit connect. Bye, y'all.