The Accounting Podcast

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David Leary: [00:00:04] Deloitte in this article predicts AI enabled fraud losses could hit $40 billion by 2027. That's only like a couple months away. In the grand scheme-

Blake Oliver: [00:00:15] What was that amount?

David Leary: [00:00:16] $40 billion by 2027. Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:26] Hello, everyone, and welcome back to The Accounting Podcast, your weekly roundup of news in the accounting profession. I'm Blake Oliver.

David Leary: [00:00:34] And I'm David Leary.

Blake Oliver: [00:00:36] David. Firms using I make more money. It's that simple.

David Leary: [00:00:42] And it makes sense and I feel like it. We've lived this history from technology change.

Blake Oliver: [00:00:48] We did the cloud computing revolution. This show started as the Cloud Accounting podcast. That's all we talked about was accounting tech.

David Leary: [00:01:00] And that was arguably the cloud. Almost a decade after cloud accounting was kind of around at least eight years after it was around before you even started the podcast. That's right. You you had a cloud accounting firm. I did at first.

Blake Oliver: [00:01:15] And we made a lot more money. We made a lot more in terms of margins. We were actually charging less money for bookkeeping and accounting and payroll and all that, but we were making more money in the end in terms of our gross margin. And I think we're going to see exactly the same thing happening. I have that data point from a REIT work survey. We've also got a manifesto blog post of sorts, from a venture capitalist who believes that AI generative AI will lead to the great legacy extinction, the replacement of $20 trillion of professional services with AI enabled firms that will also increase margins to 70 or 80%. I think there's some truth in that, some possibility. I've got nine tips to protect against voice AI scams, which have become very real to me since. David, you have led the initiative at Airmark in cloning our voices. You cloned your own voice.

David Leary: [00:02:18] Cloned my own voice?

Blake Oliver: [00:02:19] You could call me and use the cloned voice, and I would not be able to tell the difference. And I actually don't know on shows now, when it's a clone voice or when it's a real voice, in certain circumstances, we have to replace the voice after the fact in post-production, and I can't tell anymore. At first I could tell.

David Leary: [00:02:35] If I put any music or anything under the background. You can't tell. Actually, it's the opposite. We've done this and we've gotten compliments on things. I've done it for an ad in the. The host of the show got a compliment for how well that post read the ad. Even that's amazing. Didn't actually read the ad.

Blake Oliver: [00:02:56] I've got evidence about how I the efficiency gains of AI are being offset by new work, which is good news for those who are worried about AI replacing you. I think it's going to result in a lot more work for those who use it. Here's some information about the jobs I will take. First, there's some updates from Claude that are really exciting. Claude has enabled this MCP, which is this protocol that allows it to talk to basically any other app. And I connected it to my Gmail and my calendar and Zapier, and now we can use Claude as the interface for those. That's really neat. What else? The Pcob shutdown fight continues. Republicans in Congress have introduced legislation that would dissolve the Public Company Accounting Oversight Board and give its responsibilities to the Securities and Exchange Commission. Erica Williams, the chair, not surprisingly, came out against that. We'll talk about that. I've got a story about how shorter turnaround time equals happier tax clients. I totally agree, I think we could use AI to do that. Make the turnaround a lot shorter. You've got a story about interest in accounting increasing among students. Some good signs there.

David Leary: [00:04:15] Yes, kids are finally interested in becoming accountants.

Blake Oliver: [00:04:19] And we're going to talk about tariffs this week. There is an impossible tariff test which I think accountants actually might be uniquely positioned to study for, because the CPA exam is notoriously difficult, notoriously broad. And if you can pass the CPA exam, I bet you could pass this tariff test. And these customs inspectors. I forget exactly what the title is, but these are the people that assess tariffs. They have to like know the tariffs that down to excruciating detail, and then they have to be able to assess it correctly. And they can actually make really good money. So that's something you might want to consider if you're in school is taking this test. Or maybe you're an accountant who wants a career change, right? Take this test. Become a a tax man for US customs. And then, of course, we've got other tariff news and whatnot. And I think PwC you got some news about PwC. David.

David Leary: [00:05:12] Yeah. Pwc they you know they're conflicted here. They're threatening to lay off staff. They are laying off staff. But hey they made a new logo somehow they had resources for that. And they're getting a little blowback on that.

Blake Oliver: [00:05:24] And and it's like every time one of these big four firms makes a change to the logo, you look at it and you're like, what did they change really? What what's what's different? Right? Not much. Um, and you've got a story about Starbucks and automation. So we'll try to get to all of that in this episode. But first, let's welcome our live stream. Viewers. Welcome to Jose and Tino and Greasy Moose. Hk geek Big Four. Transparency. Boring accountant. Great to have you with us. Thanks for commenting in the live chat. If you want to, let us know what you think. If you want to tell us what stories we should cover, put a message in that chat there on YouTube. Hey, Evan. Welcome, welcome.

David Leary: [00:06:09] We got a lot of coffees today, but HK geek brought us an apple and an orange to bring you some fruit instead of just coffee in our diet, which is good.

Blake Oliver: [00:06:17] That's right. We need to fend off that scurvy that we get from being in the virtual podcast studio for too long, and David is there as well. Hey Aaron, happy Friday to you also. And David, we should also welcome and thank our sponsors for this episode.

David Leary: [00:06:32] Yeah, this episode the sponsors are Onpay, Bluevine, Reframe and Pay Hawk.

Blake Oliver: [00:06:38] Stay tuned for messages from those sponsors. Support us and them by following the links that we will provide that lets them know that you heard about them on our show and gets them to keep sponsoring. Keeps the work that we're doing going. Okay, David, let's talk about firms using AI, making more money. Here's the details. Here's the numbers. Firms actively using AI reported $167,000 in average revenue per employee, $167,000. Not bad, not bad. Firms. Testing AI reported $129,000 average revenue per employee. So from 168 or 167, down to 129 firms not using AI reported 122,000. So that's a big spread.

David Leary: [00:07:32] And where's this data from? Like what size firms did they talk to or.

Blake Oliver: [00:07:36] It's a right works survey.

David Leary: [00:07:38] Right work survey. Okay.

Blake Oliver: [00:07:39] And I did not dig into exactly how large the firms are. But because it's right works. I'm guessing this is a broad mix of smaller Midsize firms, that sort of thing. So you know that that is meaningful, right? I mean, you know, we're talking over $50,000 per employee difference. Firms using AI. Now that could be causation or correlation. Is the AI causing them to make more money or are they simply making more money because they have already embraced technology that leads to them making more money? Right.

David Leary: [00:08:17] The firms all I know is the firm that's not using any AI may not even be in the cloud yet. They might still be desktop based. We just don't know.

Blake Oliver: [00:08:24] That's right. Now what about time savings firms using AI? Half of them say they save over two hours per week per person. Now, that doesn't sound like a lot, but I think that's going to grow over time. The fact that they can even quantify it at all is impressive. I mean, two hours per person, you know, per week if they're working a 40 hour week. Right? That's like 5% of their time. So that's meaningful. 71% of AI adopting firms report improved service levels, and 74% believe that I won't impact headcount, suggesting AI is enhancing rather than replacing staff. Now, what are they using AI for? Well, as we could expect drafting client communications, that's nearly a quarter of firms that report that as their top use. Other uses include research, including researching IRS publications. That's 22% of firms say that's their top use. And then answering client questions, that's 17%. So drafting client communications I'm going to guess emails, researching and then answering questions. Those are the top uses.

David Leary: [00:09:37] And these are going to be the firms that did not spend the last two and a half weeks creating doll memes of themselves, which I just seemed like it exploded in the accounting our space on social media.

Blake Oliver: [00:09:47] You mean those, uh, action figure.

David Leary: [00:09:49] Action figure dolls? Yes, yes.

Blake Oliver: [00:09:51] Please don't call them dolls, David. You're going to offend people who are really into action figures. We don't we don't need to get any strongly worded letters about that. I prefer to keep it to like the PCAOB and audit quality. Um, so how many firms are using AI right now? Only 39% of firms are using or testing AI currently, although that's like double what it was a year or two ago. In my experience, based on my surveys, when I do a conference, the when I ask people to raise their hand at conferences.

David Leary: [00:10:24] It seems very low. I mean, and this is where I mean, like when, you know, history tends to repeat itself when we think about the the vast differences between the firms that occurred when we had this technology shift to cloud, the firms that were on cloud. I think Xero and QuickBooks both had data on this. Those firms were they had 12% higher margins and they were growing twice as fast. Right? So. So now there's this new technology shift happening and you said 39%. So 60% of firms are just like, ah, whatever. It's just not they're not trying to use it. Or maybe they are trying but they haven't. They're not actually using it. It just seems like we're supposed to wait a decade. By the time these firms are, I'll use I. Now it just it feels way lower than it should be. It's my gut.

Blake Oliver: [00:11:13] I've got one more stat for you. How many firms have an AI policy? And this is too low. This should be much higher, especially since you can use AI to create the policy. All you have to do is have a meeting. Record yourself talking about what your AI policy should be. Take the transcript. Use AI to draft the policy. Okay, just set aside 30 minutes an hour to do it. Only 9% of firms have an AI policy, and that's only 19% among those actively using AI. So you've got, of all the firms actively using AI I only like a fifth of them have a policy about it. And this is something you should have, like it should be in your handbook. Just do it. Hk geek says I have Dana Scully and Jonathan Brandis action figures by my desk, not dolls. Dolls. Okay. And actually, I have one of myself. Someone. This is my. Well, it's a bobblehead.

David Leary: [00:12:10] But in your bathing suit. In your Speedo.

Blake Oliver: [00:12:12] That's my my I don't yeah. I didn't make this for myself.

David Leary: [00:12:18] Oh my goodness.

Blake Oliver: [00:12:18] It says live love laps. Isn't that funny? And I got my earmark.

David Leary: [00:12:21] That's pretty funny.

Blake Oliver: [00:12:22] Logo on the hat there.

David Leary: [00:12:23] Nice.

Blake Oliver: [00:12:25] Um, that was a fun gift. Okay, David, let's thank our first sponsor, Onpay. Forbes and CNBC rank Onpay number one for small business payroll. Onpay really knows how to get payroll done right for every client you serve. No matter how complex their software is, easy to use and backed by outstanding service levels, they handle new client onboarding for free and have experts on call to keep you and your clients on track. The system includes multi-state payroll, local tax filings, integrated HR tools, and more with no hidden fees. When you join Unp's Partner program, you get a custom dashboard to easily manage all your clients in one place. Plus, you can gain exclusive perks like revenue sharing or discounts, free payroll for your firm, co-branding opportunities, premium swag, and more. Onpay helps you run your practice efficiently while providing exceptional payroll that your clients can count on. To learn more about using Onpay for your firm and clients, they could be farms, startups, restaurants, bars, doctors, nonprofits, gyms, franchises, or dentists. Or who knows what sounds like everything. Head over to The Accounting Podcast. That's The Accounting Podcast. And now, David, since we're talking about AI, we should probably just continue on with app news. I'm going to let you choose what's next. Do you want me to keep going with AI stuff? Do you want to talk about this AI voice scam thing? Maybe we should hear that.

David Leary: [00:13:58] Yeah, let's do that. Do your okay about your AI voice scam story.

Blake Oliver: [00:14:01] So first, just to give people some perspective, you've probably been listening to this show for a while. You know what David sounds like. Well can you tell the difference between real David and this clip that we're going to play? So, David, let's add this to the screen and just play as much of it as you like.

David Leary: [00:14:17] Kpmg Australia's new research reveals that accounting remains one of the most common and stable professions over the past decade, despite ongoing narratives about its decline from 2014 to 2024, the number of accountants and bookkeepers grew modestly by 5.3%, underscoring the profession's enduring importance in a tech transformed workforce. While healthcare, child care and tech jobs saw the fastest growth. Traditional roles like executive assistance and travel agents sharply declined due to automation and digital disruption. The overall Australian workforce grew. That's amazing 9% adding 2.6 million workers, with top growing jobs accounting for nearly 40% of all job growth. Accounting in Australia, jobs rose from 420,400 to 442,800 between 2014 and 2024.

Blake Oliver: [00:15:05] I mean, the only thing I would say that is not quite right is you don't pause as much in the recording. In real life, you tend to pause when you read numbers. Yeah. In the recording it's a very confident. Yes. Yes. It got your it got your cadence correct. It got like the breaths in there. I would not be able to tell the difference if I didn't know that. Wasn't you already.

David Leary: [00:15:32] Yeah. And and the way you do it is you train. You upload your own voice and you train the model. It's essentially how you do it, right?

Blake Oliver: [00:15:39] And if you have.

David Leary: [00:15:40] A lot of.

Blake Oliver: [00:15:41] Recordings.

David Leary: [00:15:42] You have lots of recordings. And then the the training, you can do a quick training for these models and it's just not good. You have to do the the deep kind of longer training where you upload 2 or 3 hours of audio, and then you want to make sure your audio is saying like a vast breadth of words. If not, it'll really struggle with some, uh, for example, um, routable. It would keep saying routable over and over again. So sometimes it will struggle. Um, but you.

Blake Oliver: [00:16:12] Can teach it.

David Leary: [00:16:12] To say it. You can, you can get around those things. Yeah. You can hyphenate things. You can spell a word so phonetically it'll read it the way you want it to read it. There's, there's things you could do like this. Literally. You asked me and I just did it in 15 seconds. It took me longer to get it from my other computer to this computer than it did to actually make it.

Blake Oliver: [00:16:30] So the reason I asked you to do that is because there was a story in the Wall Street Journal about how to protect yourself from imposter AI voice scams, which are becoming more and more common. Because this is easy to do now with off the shelf technology, you can subscribe to a service, upload a voice that you have captured, and create a clone of it. And while they do have some measures to protect against this, it's not that hard to circumvent it. You can clone anybody's voice if you have enough material. So how do you protect yourself against this in your family and your company? Now, the example in this Wall Street Journal article is a personal fraud that occurred. Colorado resident Lynda Roan was scammed out of $2,000. She got a call from her daughter, someone she thought was her daughter. That turned out to be an AI voice clone of her daughter, and the voice said she had been kidnaped and she had to pay a ransom. And she paid $2,000, only to realize that her daughter was safe at home, wherever college, that sort of thing. So you can no longer trust a phone call from an unknown number that's not in your contacts. So the first thing to do is to block unknown callers. Just do what I do. Silence calls from unknown numbers. If somebody really needs to reach you, they'll figure out how to do it. They'll leave a message, they'll text.

David Leary: [00:18:07] You. They'll. It's just an email as well.

Blake Oliver: [00:18:09] Right. It's just the unknown numbers thing is just not worth it anymore. So that's that's just too risky. Um, another suggestion, which is a little harder, is to lock down social media, make your accounts private, limit family information that scammers could use. If you don't want to make your accounts private, I would say be careful what you post on social media about your family information that somebody could use to target you. Names, places, addresses, that sort of thing. Here's another good one. We've talked about this on the show before. David, create a family code word. So establish a unique word that family members can use to verify your identity or their identity during a suspicious call. So you ask, what's the code word? And we have one in my family that all of us know in the family. And so if somebody called and pretended to be, I don't know, my, my dad, I could ask, what's the code word? They wouldn't know. Okay, great. Now you also, though, even if you block these unknown numbers, you can't always trust caller ID, right? Because scammers can spoof numbers. They can make a local number, that sort of thing. So just because like a numbers a certain area code, don't trust it. Another tip is to silently text the person while you're still on the call. So, David, if you called me and said, hey, Blake, we have this situation, we need to urgently transfer some money. Can you do that? I would text you while we're on the call without telling you. I'm doing it to make sure that it's actually you.

David Leary: [00:19:47] Another recommendation. If it's not texting, just some other secondary form of verification. Send the slack message some some way. That's a different closed channel if you have that available.

Blake Oliver: [00:19:58] If the person doesn't respond after you text them, text others who could know where they are and confirm their location. Use location tracking if you have that enabled. If you've got Find my turned on on your iPhone and you can see the location of the other person, check to make sure you know they are where they say they are. And then the final recommendation is even if you hang up, you should report the incident to the FTC and the FBI's internal Internet Crime Complaint Center. So those are the recommendations. I think the code word is probably the one that everybody should set up right away. And then silently texting, I think is good.

David Leary: [00:20:35] In an article last week that didn't make the show, but it was. I saw it on Yahoo Finance. Deepfakes are essentially targeting finance professionals now. So either you as the accountant or your clients are going to be targeted. Um, and there's some notes about this. Apparently, fraudsters created convincing AI generated videos of former Goldman Sachs executives Abby Joseph Cohen and David Kostin to lure amateur investors in scammy WhatsApp groups. So they thought they were seeing video from real, the real people and doing that. Um. Deloitte in this article predicts AI enabled fraud losses could hit $40 billion by 2027. That's only like a couple months away. In the grand scheme.

Blake Oliver: [00:21:21] Of that amount.

David Leary: [00:21:22] $40 billion by 2027. And so I think, like with your clients, yes, a safe word is nice and all, but have approval processes on money before it goes out the door? Yes. Nobody's allowed to transfer money unless it goes. You have a tool, an app, whatever you have to do, but you have to have an approval process to go out the door. And it can't be a video approval process because somebody could actually clone the approver to. And then you'd really be in.

Blake Oliver: [00:21:48] That's right. That's right. Yeah. The more layers of defense you have, the safer you are. You just you don't want to be the low hanging fruit. That's what I would worry about. All right. So let's thank our second sponsor of this episode and that is Bluevine. David, do you want to read that one? I'll get the banner up here.

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Blake Oliver: [00:23:47] Giles Pearson has joined us. He is back, uh, in the US and was listening to the podcast, I guess waiting to go through customs or something like that. So welcome, Giles. Love that suggestion to get CPE while you are delayed at the airport. Okay, now that I'm unmuted, how embarrassing. Let's talk about the time saved by AI. A new study has found that the AI time savings is offset by new work created. This was a study.

David Leary: [00:24:19] Too deep on this. Blake, I just want to recap. So a couple episodes ago, you brought up the fact that what a human could do An hour I could do in 15 minutes. And we were on this this March or something like that. Right?

Blake Oliver: [00:24:31] Sort of. It was a study that looked at the effectiveness of AI based on the time to complete a task. So how good is AI based on the time it would take a human? And the current situation is basically that tasks that take a few minutes, I can now do very reliably. So looking at a radiology scan and deciding is this cancerous or not? I can do that better than a human now on average, or posting a journal entry that would take a few minutes, right? I can now do that more accurately than a human, but has to take hours. No it can't, but that's increasing, right? It used to be I could only do tasks that take a few seconds, like writing a phrase.

David Leary: [00:25:15] So now.

Blake Oliver: [00:25:15] Translating a word.

David Leary: [00:25:16] And that difference between what it took me to do before as a human and what I can do. There's a gap. Yes, this this new study is going to say what this gap is being used for.

Blake Oliver: [00:25:26] So, um, so now we're saving time, right? We're saving, like we said, you know, these firms that are using AI are saving two hours per person per week. A study of the Danish labor market last year found that AI tools like ChatGPT have had virtually no significant impact on wages or employment. Despite rapid adoption. The tools save time for two thirds to almost all of the users across various occupations, but the productivity gains were modest. The users in this study reported saving about an hour a week, but the AI tools created new tasks for about 8.4% of workers, including those who don't use the tools themselves. So, for example, teachers detecting AI generated homework now have a job to do. So I, I think that like this indicates two things, right. We're at the very beginning of I. And so the productivity gains are modest at this point. And it also indicates what I have suspected all along that the the increased outputs of AI are going to create more work for humans. We just don't know exactly what that will be. And it might be in accounting and finance. It's going to be reviewing the outputs of the AI.

David Leary: [00:26:43] And I think business nature I think I saw an article this week about, um, Microsoft. They're saying 30% of all the code at Microsoft now is probably written by AI. And the assumption is they're going to get to 90%. So I think as a business you have two choices. You could just live with that and just get rid of all the employees and be like, this is good enough. But the nature, the human nature of business is to keep growing, right. So you're going to take those people and just redeploy them into other things that I can't do yet and just continue to grow your business. And so I just don't see, I don't see hey, we got all this automated now 90% automation. Get rid of all the humans. Now, with that said, that's what happened in a lot of the manufacturing and auto industry. So they could could we get to that point with automation for knowledge work?

Blake Oliver: [00:27:31] Right. But you know, what we saw is that while the I mean, manufacturing is a tough one because of all the outsourcing or offshoring that happened in the US, but the manufacturing that did stay here, we saw wages rise, right. Auto workers at a certain point, were some of the best paid workers in the United States with the best benefits and all that. And high tech manufacturing jobs are really great jobs. So I think it's just going to be a mixed bag. It really depends on where you are when all this goes down. So I want to talk a bit about like the impact a bit more about the impact of AI. So where do I start here. Okay.

David Leary: [00:28:15] Here's manifesto right.

Blake Oliver: [00:28:18] I have this manifesto, but I think I want to start with some of these other stats first. Okay. So Cfo.com does a great series of of posts about metrics. How long does it take to close the books? What is the cost of certain functions in finance? They collect really good data and they publish this. And one of them caught my eye recently. The headline is 50% of finance teams still take over a week to close the books. And that's the stat 50% of finance teams take six plus business days to complete their month end close. Only 18% managed to do it in the three day close in three days, which is like the gold standard. Close the books in three days. It 27% take more than a week. What are the bottlenecks? Account reconciliations, especially cash reconciliations. Those are still big time sucks. Teams use 3 to 5 different systems for reconciliation. There's lots of cross team dependencies. Excel driven processes. 94% of finance teams are still heavily relying on Excel. So there's a lot of opportunity here. The reason I bring this up is because there's still a lot of opportunity to improve, to increase efficiency, and that won't necessarily result in job losses. Because just because you speed something up doesn't mean you need fewer people. You could just get it done faster with the existing team that now has more time throughout the rest of the month to do other stuff. So I actually think this is a good thing, is that we basically are inefficient. There's a lot of opportunity to improve. And so we're going to have a lot of work to do to get down to that three day close, which is what everyone is aiming for. Does that make sense?

David Leary: [00:30:09] Yeah. I mean, there's in the same way, like the internet came and there's all these new jobs that didn't exist before because of the internet. We we don't know what new jobs will exist in the future because people are going to have is it excess? Time is not the right word, but kind of if you have excess time and elbow room to do other stuff, you're going to invent new things to do, and new jobs and new products are going to be created because of this.

Blake Oliver: [00:30:30] Better customer service, more things to provide to our customers, to increase the value, to get them to pay us more. Here's another stat from CFO. This is regarding accounts receivable. And this is wild. The difference between the amount that high performing companies and low performing companies spend on collections and sending invoices and getting paid. So the highest performing companies spend just $0.18 per $1,000 in revenue on accounts receivable processes. So for every $1,000 you invoice, you're spending $0.18 to send that invoice to get paid to reconcile it all that low performers are spending $0.58, so like three times as much. And it's even more dramatic at smaller companies in small companies, which they define as less than $100 million in revenue. High performers, it's $0.28. Low performers, it's $2.77. That's two point. You know what I mean? That's a lot.

David Leary: [00:31:43] I could see. It's a big difference. I mean, I could see that when I manually create an invoice and have to send out a QuickBooks, it's costing me $2, maybe $2. Yeah. Over time.

Blake Oliver: [00:31:56] So like that is a big spread. And so if we can use AI automation to reduce that, you're still going to need people. I doubt that these these companies that are spending a lot on are on the small side. I mean, what are they going to do with the people that they're spending on right now. I imagine they're going to repurpose them into other accounting and finance functions or operations or something like that. Right. The labor market is tight. So that's another stat. Um, some more AI stuff. Lots of tax and accounting firms are already implementing gen AI tech. 21%, according to a survey here. Who did this survey? This is Thomson Reuters. So Thomson Reuters found that 21% of tax and accounting firms are already implementing gen AI. That doesn't sound like a lot, but it's also triple the 8% that was reported last year. Now, what did we say? I had another survey from Lightworks earlier that said a bigger number. It was like half. Wait, was it half of firms or implementing AI? So it really depends on who you survey.

David Leary: [00:33:07] 39% maybe.

Blake Oliver: [00:33:08] I think it was 39%. So it's like interesting right? That Thomson Reuters surveys their customers and it's a lower percent than right works. Which makes sense. Right? Because Right Works is cloud hosting is what they're known for historically, like QuickBooks hosting. So you would expect the firms that are already doing that in the cloud would be more on top of Gen I. So I guess what's not as important here is like what's more important here is the difference that they went from 8% Thomson Reuters people to 21% triple, well, almost triple, um, and 71% of professionals surveyed by them believe Gen I should be applied to their daily work. And that's up from 52% last year. So we are at over two thirds are saying I want AI in my daily work, or I think it should be applied. And 79% of firms expect significant gen A gen AI integration by 2027. Only 13% say it's already central to their workflow 77% of corporate business clients are requesting tax firms to use Jenny Jen, I. So the clients are actually asking them to use it. What are they using it for? Tax research, tax prep, tax advisory, accounting and bookkeeping, and document summarization. But tax research at 77%, that's the highest. Interesting that pros are using AI for tax return prep. I wonder how they're using it specifically for that. Like what are the actual forms that they're working with, or what are they doing with data to get it ready to go into the tax prep software? I mean, we just did a we did a webinar recently that we're going to a recording that we're going to put as an on demand course on earmark called, uh, what did we call that course?

David Leary: [00:34:56] Amazing things with AI today.

Blake Oliver: [00:34:59] Amazing things you can do with AI today. And actually, one of the things I demonstrated was, uh, taking like a bank statement and doing right up work and then categorizing it with AI I. And you could actually very easily like do like trial balance conversion into your accounting software. That way if you gave it like the export format that you want for or sorry for your tax software, like the export import format for your tax software, you could like take a PNL and get it into that format. That could be an interesting application. Only 9% of pros view gen AI as a threat to industry jobs. So that's kind of cool, right? Like, we're pretty confident as a profession. We're not worried about losing our jobs here.

David Leary: [00:35:45] Well, I think accountants, they've had this disruption over and over again. First Excel was going to take the jobs and QuickBooks was going to take the jobs. Now cloud, cloud computing over desktop. And then now with AI. So accountants have gotten used to this, these technical technological revolutions that are not taking their jobs yet. Mhm.

Blake Oliver: [00:36:04] So I got a story here about the jobs that will fall first as AI takes over the workplace. This was in Forbes, and it's kind of a summary of a bunch of different studies. So just to contrast with what we've already been talking about, Goldman Sachs is predicting that 50% of jobs could be fully automated by 2045, 50%. Mckinsey says 30% of US jobs could be automated by 2030, with 60% significantly altered. That's a lot kind of hard to imagine, but I guess other technological revolutions have done the same, although not at such a quick pace. That seems like really fast, right? 2045? I mean, that's 20 years from now, 20, 30, 30% of US jobs could be automated by 20, 35 years from now. Seems a little ambitious.

David Leary: [00:36:55] And fully automated. Is very ambitious.

Blake Oliver: [00:36:58] Yes. That's the thing is, like you could automate portions a percent, but to get to 100%, I don't know. What are examples of jobs that are already falling to AI? Data entry, scheduling? Customer service? We've all now experienced the customer service chatbot that is just an AI chat bot with varying degrees of success. Bookkeeping, financial modeling, and basic data analysis is highlighted as being highly vulnerable. But again, David, like you said, what can you automate the whole job or just part of the job? Reducing the job to the task is not always accurate.

David Leary: [00:37:40] So yeah, if if a lot of the work is poker on the internet, getting, gathering data, formatting the data and then like, that's the time suck. It's a lot of copy paste if you can have I do a lot of that work for you. You get those savings.

Blake Oliver: [00:37:53] So, you know, other jobs, uh, graphic design, copywriting, basic journalism, they face disruption. But as we've experienced, you can generate these images with AI, but you still have to, like, tweak them. You still have to adjust them. The last.

David Leary: [00:38:07] You need an artistic vision. Still, you.

Blake Oliver: [00:38:10] Gotta have an eye for it, right?

David Leary: [00:38:12] An eye.

Blake Oliver: [00:38:12] For it. Same thing with copywriting, right? We can generate articles, but somebody has to read them and and, you know, review them and all that contract drafting. That's one that we've done. We drafted an operating agreement for a business. And we sent it to a lawyer who said, this is great, I'm going to work with this and create the operating agreement like no pushback at all. So I think that.

David Leary: [00:38:35] Is Bristol on this list.

Blake Oliver: [00:38:38] Barista. Barista. Uh, no it's not. Why do you mention barista?

David Leary: [00:38:43] Well, Starbucks has discovered that more automation and less staff did not work out.

Blake Oliver: [00:38:51] So so I'm really curious about this because I worked as a Starbucks barista after college when I couldn't get a job doing anything else because it was the Great Recession and I was an unemployed musician. So like, I was the one making the drinks.

David Leary: [00:39:04] Yeah. So Starbucks is reversing its course on automation after realizing that cutting the baristas hours hurt both customer experience and sales. So the they admit that reducing staff in favor of automation failed tech could not replace the personal touch because, I mean, you know, in theory, the way Starbucks, the track it was on is you ordered your app on your phone, you just walk up to a counter and grab your drink off the counter. There's no interactions, right? And in theory, you could have a machine just filling coffee cups and putting it on the counter, right? And that's the direction they were kind of headed towards a little bit. And so they're scaling back. They have something called siren craft automation system. Um, and then they're scaling that back and they're expanding a staffing pilot to 3000 stores out of those 36,000 stores. So they've completely shifted their their thoughts on this towards human touch, no less automation because it affected their sales at the end of the day, right?

Blake Oliver: [00:40:04] Well, that makes sense, because like, when, uh, who was it? Howard Schultz was the founder of Starbucks or the who bought it and made it into the global thing? It is like he always believed in Starbucks being the third place. I remember this from, like my indoctrination, you know, when I worked there that the idea was it was this comfortable place. It was like a living room. It was someplace you could go hang out and meet people. And yeah, if you just turn it into this place where you go pick up your coffee or you drive through, then what's the what differentiates it from one of these other coffee places, like, um, what are the drive through places that are all over the place now here where they don't even have like a area to sit?

David Leary: [00:40:45] It looks like a storage container. Uh. What's that? And they have the the windmill logo. Dutch bros. Dutch brothers. That's it.

Blake Oliver: [00:40:52] Dutch brothers. Yeah. Dutch Bros is like the perfect example of, like, the competitor that is just eating Starbucks lunch or drinking its matcha latte because Starbucks lost its mojo. So I'm glad you brought that, David, because often I automation dreams run into reality and they don't live up to expectations. And that is the takeaway from a Gartner survey that teams using AI don't report. The survey found that teams using AI don't report significantly higher productivity gains than teams using other technologies. Only 37% of teams using traditional AI and 34% using generative AI reported high productivity gains comparable to the 34% of teams using Non-ai automation technologies. So basically what this means is that if you are like a CFO or a controller and you're looking to improve efficiency, you're just as good. You're going to benefit just as much if you implement one of these. Is non-ai automation tools as if you implement an AI automation tool. Why is this? Well, my theory is that there are just simply so many teams that have not moved to cloud based systems where like, you're not going to see a big benefit from using AI because AI is only as good as the data that it's connected to.

Blake Oliver: [00:42:23] And if you can't connect your data, you can't do much with it, and you're going to be copying and pasting from ChatGPT, which is not efficient, and you lose a bunch of time there. That's why the efficiency gains, like in these studies that show chat bots are so small because you still have to like. Copy paste the data in and out and massage it. And you can't save these prompts. You can't automate them. So like the only way that we're going to get real huge efficiency gains is if we put the AI prompts into our workflows, which is what we've done at earmark, but which takes a lot of work to set all that up. Like, I spent over a year learning how to do this and tweaking it and tweaking it until we got it to this point. But it's paid huge dividends, right? We only have one full time employee in the United States because of it, and we're able to push out like a thousand courses a year. So I think that's the that's where we're at. That's the gap right now. Is that connecting the data to the AI?

David Leary: [00:43:25] And I guess if you're at zero and you can be 50% better using old products and old automation type tools, who cares if you use new hot, sexy GPT tools that are maybe take you to 60% right? Take the win. You don't have to go for the perfect finish line. Just you're probably.

Blake Oliver: [00:43:47] You're probably better off using the tool that's been around for ten years because you know it'll work. You're not taking a risk on something new. Although I still do believe there are huge opportunities for those who can take that risk. But you kind of have to start from where you are at. So that's why if you still haven't gotten your ERP upgraded to something that's cloud based, that can integrate with all this stuff, or you're still using desktop accounting, God help you. It's time. It's time to make the move, because then you'll be able to take advantage of some really incredible tech.

David Leary: [00:44:22] And sometimes I think the new AI is not as beneficial as you want it to be on some scenarios. And the perfect example is I have my phone and for the last I use an android, so I have. Okay Google sorry sorry to everybody's phones going off now. And if you know sometimes it's okay.

Blake Oliver: [00:44:39] It's okay. David, based on our user demographics, nobody else has an android in the audience.

David Leary: [00:44:44] That's possible. But sometimes, like, I like set a hose up to water some plants and I want to set a timer or something. I don't want a 20 minute timer. Or the other day I was going to kick off the start of a webinar. I wanted to have a timer so I didn't forget to do it. And now that Google has added all their AI stuff to the what previously I would call is the dumb. Okay, Google not smart. I get told how to build a timer like I get all I get everything but an actual alarm or a timer set. And it's interesting because that was the big knock against Siri and Alexa and Google, where it only sets timers or it sets alarms. But it did it really, really well. Right now I just gets in the way. Oh, geez. See.

Speaker3: [00:45:27] Please tell me the duration you want.

David Leary: [00:45:29] Yeah. See, I get the whole explanation. I understand you want to create a timer. Just set the timer. Move on. Just do it.

Blake Oliver: [00:45:36] That's really funny. Um, okay, so I want to talk a little bit about, like, this new tech that Claude came out with.

David Leary: [00:45:44] Before you do that, we got to run another ad, okay. And read it.

Blake Oliver: [00:45:48] Let's thank our third sponsor, reframe.

David Leary: [00:45:53] Are you an accountant? Feeling threatened by I overseas outsourcing and tech companies muscling into your territory. Here's a sobering truth the narrative that AI and automation can replace. What you do is gaining momentum, making clients question your value. But what if accounting could be seen as the most creative and innovative field in a post AI world? Introducing Reframe 2025, the transformational conference themed pricing with confidence, created by industry leader and CPA Hector Garcia, Reframe teaches accounting professionals to think beyond spreadsheets and reposition themselves as irreplaceable, deep thinking human advisors. This is not your typical accounting conference. You'll learn a new approach to confidence based pricing strategies inspired by best selling authors like Ron Baker and Blair Ends. Master client conversations that command premium fees and join a supportive community with forward thinking professionals who refuse to be replaced by algorithms. Reframe is an annual event, but it's also a permanent movement to make accounting the most human of all professions. Get your ticket before the 2025 event sells out. Head over to The Accounting Podcast E20-e25 that is The Accounting Podcast. 2025.

Blake Oliver: [00:47:14] Okay, I want to talk about Claude and their new MCP and integrations. So MCP.

David Leary: [00:47:21] Stands for. Yeah I was going to ask that. Perfect.

Blake Oliver: [00:47:24] Yeah. It stands for Model Context Protocol. It is like an API for large language models. It's an open standard and it allows AI models to connect with external data sources and tools, which is like incredible because these models are only as good as the data you can work with. Right. And we had to copy paste stuff. And now thanks to this model context protocol, we can use apps like Claude AI which is my favorite alternative to ChatGPT to connect our Google Drive, our Gmail, our Google Calendar. I've done all of this and I tested it out this morning and it worked. I said prioritize the emails in my inbox, which is always a challenge for me when I go to an event. And I was just at two events in two weeks, so I'm way behind on my emails. So what do I prioritize? And it gave me a list of urgent and immediate action required emails. Some overdue tasks that are sitting in my inbox. I need to transfer some funds. That task is overdue. I need to run payroll for my S Corp. That task is overdue. There's a partnership opportunity and it calls out who the opportunity is. With that. It's been handed off to me. The last communication, which was suggesting a certain date for a meeting and the value of it. There's also a list of other important and time sensitive things. There's a question about whether we can participate in an event. There's an ad that needs to be reviewed for a future podcast episode. There's an event that's coming up that we are invited to that we have to respond about. It prioritizes them all, created like three different priority levels. So and then maybe a.

David Leary: [00:49:08] List because you open your inbox, you have 200 emails. Which one do you do first. You never really know.

Blake Oliver: [00:49:13] This is like what people pay executive assistants for, right? And we can just now do that with a simple query. So that's just one example of like the data that Claude can now connect to. Um, but it's not limited to that. Because of this MCP, I was able to go in this morning and connect Claude to Zapier and through Zapier, which has like 6000 plus apps. I can now use Claude to query our workflow tool, Process Street. I can use it to query tables in Zapier tables, and I don't have to build all that. And I could even give it access to like, do actions in these apps if I wanted to. I haven't done that yet because I want to like, check out and make sure, like I'm comfortable with it. But through Zapier, I could give it the access to like, create workflow runs or to modify them or to update tables. So imagine if, like, I don't know, I could do something like go through my email inbox and create a list of like high priority sales opportunities and put them into a spreadsheet for me. I could do that now. I don't know. I think this is really neat.

David Leary: [00:50:24] The concept of having a true assistant, like you said, as a, as a, as an admin, but I is monstrous. I use AC flow for to do list management type stuff and it ties into a calendar. And they added an assistant to that now. And I was able to take a photograph of the spring football schedule for my son because, you know, teachers, coaches, they never actually send calendar appointments. They give you a word doc. Basically, that's not even a word doc. It's a photo of a word doc or a Xerox copy. And it's just in kind of plain text. We're going to go on these dates. We'll be doing weightlifting on these dates. We're going to do this as well to take that photograph, give it to the assistant, and it created the appointments and put it on my calendar. And so this concept of having an assistant is huge. Organizing your emails, drafting the replies already is monstrous.

Blake Oliver: [00:51:14] It's amazing. So that is what's new with Claude. I would expect this sort of feature to come to every AI chatbot soon enough, and that means that these chatbots can become your interface for your data. And imagine if it connects to NetSuite, right? Imagine if it connects to SAP or to QuickBooks. I mean, actually, I could do that now.

David Leary: [00:51:39] Zapier did something right. Zero zero released something that's.

Blake Oliver: [00:51:42] They released their own MCP. So every every app. Now in addition to having an API, should have an MCP. Zapier kind of hacks it because they have APIs that you can then plug into the MCP to get what you want. But if every app creates an MCP, that means that the LMS can talk to that app in the most like I don't know in the best way that it's likely to get you the best results. So I'm going to try connecting Claude to QuickBooks into Xero, and I'm going to see like, can I like just chat with it and create an invoice? Or could I say look in my inbox for the latest event that we planned and create the invoice? That is the kind of automation that I have been waiting for. I'm very excited about. Let's talk about actually, we should thank our final sponsor of this episode. First, let's thank Pay Hawk. I'll read this one. David, are you drowning in month end expense chaos? Imagine getting multiple days back each month that you're currently losing to manual accounting processes. That's why I'm excited to tell you about Pay Hawk, a leading spend management solution that can automate your financial processes while giving you total control and instant visibility over all your company spending.

Blake Oliver: [00:53:01] Pay Hawk unifies your corporate cards, expense management, accounts payable, and procurement into a single platform. The best part? It works with your existing credit cards and tracks transactions as they happen, giving you real time insights into your spend. No more chasing receipts. Pay Hawk's automation handles that no more. End of month surprises. See exactly where your money is going, the moment it's spent, and with real time integrations into systems like NetSuite, QuickBooks, and Sage Intacct, reconciling expenses is faster than ever. Finance teams using Pay Hawk are saving days of work each month while gaining better cost control, real time visibility, and the ability to focus on strategic priorities instead of expense reports. Ready to transform how your company manages spending and see how payback can work for your business. Head over to The Accounting Podcast. That's The Accounting Podcast for A. And now let's talk about the great legacy Extinction A's $20 trillion takeover of professional services. I spotted this article on Venrock, which is a VC. Venture capital group.

David Leary: [00:54:17] Community.

Blake Oliver: [00:54:18] Maybe it's a community. Got it. And it's by Ethan Petroski, who's a partner in Palo Alto, focuses on AI developers and hard engineering. And kind of to summarize this, this article, this blog post is, you know, he says that it's a $20 trillion professional services industry globally, and it's going to be transformed by AI. Traditional big firms are based on reputation and prestige, and AI native competitors are going to deliver superior outcomes at lower costs with software like margins. He's talking about legal services, tax and accounting, insurance management consulting and wealth management. So there's going to be a split, right? Legacy professional services are dominated by traditional human expertise. And then there's going to be these new firms, these elite AI driven professional services that will expand what is possible. And they're going to operate on different principles. Knowledge integration combining broad domain expertise with comprehensive data to deliver superior insights. Continuous learning, which we love here on the show. Improving through experience rather than remaining static. Intelligent automation. Transparent reasoning. And outcome based pricing, so moving away from time based billing to value based models. And I think that I agree that we are going to have, particularly with knowledge, democratize access to expertise that you could only previously get if you were a fortune 500 company that hired Deloitte and got access to a partner billing $1,500 an hour for some sort of international tax issue. I think that AI is going to make it a lot easier for somebody like me to understand and work on those kind of issues, because you're not going to need like 20 years of deep expertise and experience to accumulate the knowledge that only you have in your head that you guard very carefully. Anyone will have access to that knowledge. Sort of similar to like how, you know, after Google, anyone could become an AI or anyone could become an IT expert and learn how to integrate apps. That was my experience. I didn't have to go work for a tech company to learn how to like do migrations of accounting systems. I could just learn it online.

David Leary: [00:56:51] I think about like old legacy software too. Like if you want to build before, like Amazon AWS and Microsoft Azure and Google's App Engine or whatever they call the Google hosting program developers, if you wanted to build an app for the cloud, you had to be a big, well-financed company because you'd have to build. You'd have to build a building. You'd have to build a server rack of servers to run your app and then go get your customers, etc.. So just by democratizing that, all these new startups are building software and they're disrupting the big, huge existing players. And that's kind of the same type of thing here. If the costs are so low, it's very hard for a big established company to lower its prices. That's right.

Blake Oliver: [00:57:37] Exactly.

David Leary: [00:57:38] It's very easy for a disruptor to be lean and attack them from the bottom up, and that's what's going to happen. I agree with this. This premise of this article.

Blake Oliver: [00:57:47] And I just want to put this up on the screen because he's got some good slides here. So the most vulnerable service verticals to AI, um, tax advisory services, that's a 2200 billion plus global market vulnerability listed as very high. Actually all of these are complex tax code interpretation, multi jurisdiction scenario modeling compliance verification AI could disrupt that. And who's the example. Legacy firm. It's EY with 365,000 employees and 49 billion in revenue. He's also got property and casualty insurance here State Farm. You could automate underwriting. You could do real time risk assessment, predictive claims processing. If people are willing to let State Farm or some new insurance company like plug into their car. You could literally give people daily insurance rates based on their driving. Somebody's going to do it. I think there was actually a device that you could get for a little while. It was like an experimental thing where you could get insurance that way and it would, like monitor your braking and your acceleration.

David Leary: [00:58:57] I think I have, because I'm going to have a 16 year old driver here, and I think USAA or farmers, one of the two, they offer an app, and they have to run that app every time they drive the car. And it measures how they're driving, essentially.

Blake Oliver: [00:59:13] So we're not the only ones in here. Tax and accounting, right. It's a lot of stuff in here. Legal services, insurance, wealth advisory. Um, I feel like. You know, it can be hard to picture right now, but I really do feel like AI is going to enable smaller firms to compete with the bigger firms the same way that I, as a freelancer and a small firm owner, was able to compete with regional firms in getting clients for accounting services. And IT because I could offer it at a lower price with better customer service, more responsiveness, just a better product. And I could I could kill them on the on the price because they were charging, you know, like $100 an hour for bookkeeping. And that was, you know, 20 years ago, which is like wild that anyone would pay that much, but they had no other choice until they found me. And I was willing to do it for a fixed price. And why could I do it? I could learn how to do it without having to ever go work for the regional firm, because it was all online. And I think that is the biggest differentiator with AI. And the biggest opportunity is that you can learn almost anything if it was ever written in a book, if it was ever posted online, like as an article or on a news site or on a social media site. I can ingest that and and synthesize it for you. So and there's a lot of information out there online now. So you can you can really learn anything that's available. I guess the way you protect yourself is you learn stuff that's not available on the internet or not written down. Those are the skills that I can't copy.

David Leary: [01:00:58] And the advantage they have these smart companies have is they're not distracted the way these big consulting firms are. For example, PwC I'm going to share my screen.

Blake Oliver: [01:01:09] Pwc's new logo.

David Leary: [01:01:10] Pwc.

Blake Oliver: [01:01:11] Can you show us the the old one versus the new one? I think the big four are at the biggest risk. I think they.

David Leary: [01:01:20] They're.

Blake Oliver: [01:01:20] They and the regional and smaller firms are just going to like the, the trend all these years has been that like the big firms get bigger and absorb all these smaller firms. I think it's going to reverse. I think we're going to see a massive exodus from the big firms as managers and directors and staff realize I don't need the firm anymore to do what I want to do. I can do it on my own.

David Leary: [01:01:44] And we saw.

Blake Oliver: [01:01:44] That with.

David Leary: [01:01:45] Apps and developers. Here's the old logo. That's from 2010. The PwC logo, for those of you listening. It has like an orange or red, a yellow, a pink. And there are all these overlapping boxes. So the colors will, you know, kind of blend in. And I get it like printing things like that are very hard. I think this is why, like slack, who had a logo that was like blended colors, had to change their logo early on because it's very hard when you try to print a t shirt or print a hat or do anything like that. It's hard to work with the logo, so I get some why they're changing the logo, but they've had it, you know, it's been around.

Blake Oliver: [01:02:18] What's the new one look like?

David Leary: [01:02:19] Yeah, I'm going to scroll here. Drum roll please. There's the new logo.

Blake Oliver: [01:02:25] So it's now it's like two orange.

David Leary: [01:02:28] Two.

Blake Oliver: [01:02:28] Little orange parallelograms.

David Leary: [01:02:29] Yes. Parallelograms. So in May I get the change? It makes sense. But at the same time, they're getting a bunch of grief over this because it's a little distracting, because the same time, they've also are threatening that they're going to fire staff that won't return to the office. So PwC is warning staff that failure to comply with its stricter return to office policy could lead to disciplinary action, including potential firings. The firm will take action against employees who don't show up to the office at least three days a week, per the new rules implemented in January. The rationale PwC claims they have data showing there's a strong link between office presence and productivity. So these consulting companies, if they're being distracted by new logo in office policies, a smaller company using AI is going to totally disrupt them because they're taking their eye off the prize.

Blake Oliver: [01:03:28] And the big change is going to be from like the margins that are available if you are an AI enabled firm. So an example is traditional legal services. They have about 30% margins according to this, uh, this post, this VC, AI, native legal services will have 70 to 80% margins. Traditional insurance services 25% margins. Ai native insurance 60 to 70% margins. Traditional wealth management 30% margins. Ai native wealth Management 70 to 80% margins. Basically, you take the software as a service model, apply it to professional services, and you get those margins. And yes, it's possible, uh, it it I think it really will be like specific types of services to start. But, you know, well, I don't see why you couldn't.

David Leary: [01:04:23] Like all the business units. One at a time will get disrupted.

Blake Oliver: [01:04:26] Like let's say you, you narrow the scope for legal services and you say, okay, I'm just going to have a legal service where all I do is help people set up their LLC and operating agreement and like S Corp election, right? Like just the setup, there's already services that do this, right? They do it manually with people. You could do it with AI and with AI agents. And you could automate like the entire thing and do it reliably and have very few people involved. And those margins would be 70, 80%. So you just have to find, you know, those specific things.

David Leary: [01:05:05] And I mean, you could argue that's what happened to QuickBooks desktop. Over the years. Every menu in QuickBooks desktop got sliced, payroll apps came, invoicing apps came, expense apps came, each menu reporting and dashboard apps came. Every menu was attacked by cloud accounting. And what? There was one app that did everything. Zero. That was it. But there was thousands of apps that sliced up that whole menu and just stole little pieces of QuickBooks away from into it over the time.

Blake Oliver: [01:05:34] So we spent the whole episode on AI apps, uh, which is good. I'm glad we did, but we didn't get to the pcob. The shorter turnaround time equals happier tax clients. The tariffs thing I really want to hit on the PCB and the tariffs real quick because that is in our headline or it's in our episode title. And then we'll talk more about it next time. Uh, and I don't know if there's much more I have to say about the PCAOB, except that Republicans are looking to shut it down in the House. We'll see if it gets through the Senate. The chair of the Pcob, Eric Williams, is strongly opposed to it. Um, and I know that many in the accounting world are strongly opposed to this and believe that it will, you know, lower audit quality if we don't have the PCAOB. My question is, can you prove it? Prove that the Pcob actually improves audit quality. And if you look at the Pcaob's own metrics over the years, there are still major deficiencies. Part one A deficiencies in like 40% of audits. So does the Pcob actually improve audit quality? I am not convinced I would be open to being convinced. And so maybe we should get some folks on the show who can talk about this.

David Leary: [01:06:49] So I think the Pcob may have heard you about this because they've been on a data onslaught this week as well. So they updated the website on their firm inspection reports and added a bunch of new filters and searches to make it more valuable. Right. Their output. But the other thing they do, which is really great for covering part one A deficiencies in part one, B, deficiencies of those inspection reports, they're going to make all that data available in a CSV, XML and JSON formats. No more. Previously it was just like a PDF PowerPoint deck is how they publish the results.

Blake Oliver: [01:07:26] So so that's funny. So now that they are worried about getting shut down, now they're finally making the data available to people. Maybe they should have been doing this for 20 years. Why not? Why didn't they do it. It's funny.

David Leary: [01:07:41] And this will give you all the data back to 2018. And they plan on updating it every quarter. Well, if they still.

Blake Oliver: [01:07:46] You know, what's not in there is still the names of the companies, that of the audits that were inspected. Right.

David Leary: [01:07:54] They never firm level information is there but not the companies inspected.

Blake Oliver: [01:07:57] Right. So that's what everyone wants to know is if if the audit was deficient and it was so deficient, the auditors should not have issued their opinion. I want to know what company was that? But the Pcob has never released that information. And I don't.

David Leary: [01:08:10] Put a link in the chat to so you can get to the downloads yourself.

Blake Oliver: [01:08:14] David Sculley says name and shame. That would actually improve audit quality if like you know If a if a company found out that their auditor wasn't doing a good job, they'd probably switch auditors, right? That's what creates competition. So anyway, I agree with Sean that we need something, but I'm not convinced that the Pcob is doing their job. I'm not convinced that they do improve audit quality, and I want to talk about this next time. But there's a actually a great article in CPA Journal about ways to increase competition, maybe have multiple, uh, audit regulators. Um. Interesting idea. I want to talk about this tariff test, the impossible four hour test you need to pass to become a tariff pencil pusher. The Wall Street Journal reported this, and I find it fascinating. So the US customs broker exam is notoriously difficult. It's a 4.5 hour open book test with a staggeringly low pass rate. Kind of sounds like the CPA exam to me, although we don't get to have an open book. The most recent six exams averaged only 21% passing before appeals. The one of the exams in 2019 had just a 4.2% pass rate. To take this exam, you just need to be a US citizen and 18 years or older and the exam is 80. Deliberately obfuscating multiple choice questions. So what makes it so difficult? Candidates have to master an incredibly detailed classification system for imported goods. Every component of a product must be accounted for. Materials, origin, manufacturing process, weight, etc. test takers bring rolling crates or suitcases of reference materials to the exam hall. No electronics are allowed and you are allowed to use your reference materials, though it's open book. One test taker described it as, quote, pure hell. And unlike anything I've ever encountered. So if you're interested in helping to enforce the Trump tariffs, there's an economic opportunity here. There's going to be a lot of demand for more tariff collections. Agents. The brokers who are licensed to collect tariffs earn around $75,000 to start, which is higher than most accounting starting salaries. Experienced brokers can earn upward of $250,000.

David Leary: [01:10:54] And so this is the knowledge of I'm just going to this example. I don't know if it's a perfect example, but like if a. A robe like a bathrobe comes in and if it's shipped in as a bathrobe, it has X tariff. But if it's part of a Halloween costume and packaged differently, it's different. This is the kind of knowledge you would have to know or either know where to go, look it up to assess the correct tariff. That's what this job is essentially.

Blake Oliver: [01:11:19] And perhaps the material it's made of and the sourcing of the material and where this item has gone through in the world, yes, it all changes the tariff calculation. And that's the job that we're talking about here. They you just handle paperwork for imports and calculate the duties and fees.

David Leary: [01:11:36] And this is exactly I was thinking the same thing.

Blake Oliver: [01:11:39] Why can't I just fix that problem. It's essentially a matrix database. My guess is going to be that when this stuff comes in, it's probably a lot of paperwork, right? It's not. It's not documented in some structured data way. And US customs is is not going to like build a system to scan all this stuff and run it through AI anytime soon. So what are they doing? They're just going to hire a bunch of people.

David Leary: [01:12:02] And those can't go after that because it's a conflict of the Trump agenda, right? They can't go make the tariff board the tariff employees more efficient by getting we're going to get rid of all these tariff employees. It's just not going to work.

Blake Oliver: [01:12:15] So I'm not sure exactly how the collections work, because it says that like the tariffs are collected by customs businesses and each business must employ at least one licensed broker. So I guess I want to dig into this. It sounds like you have to get licensed as a broker by the US government, but then you go work for like a company that does this at the port. I'm not clear. But anyway, there's your opportunity paperwork for tariffs. And doesn't sound like Trump's going to back off from tariffs in general anytime soon. So you might have job security for quite a while. And we saw actually after the last change that uh, you know, the Democrats didn't get rid of the tariffs that Trump put in place. So something to consider. All right David.

David Leary: [01:13:01] I'll close out with one story. I'm sorry. Just one more. Go for it because I don't know if it'll make sense. So this follows up on two stories we've talked about before. Well, last week we did the interview or your story about how firms are not letting accountants use CPA. And I think one of the firms was Citrin Cooperman.

Blake Oliver: [01:13:19] Yes. Yeah. After they were acquired by private equity and they did the alternative practice structure, they said to their CPAs, don't call yourself a CPA in emails or on LinkedIn.

David Leary: [01:13:29] And the private equity was Blackstone. Remember we the reason why is their Citrin Cooperman was heavily involved in the music industry and valuing music contracts. Well, there's an article. So Joel Cooperman has left Citrin Cooperman as of March 31st, and I probably wouldn't have, like, who cares if a partner, a founder, a partner leaves an accounting firm? But the article was interesting because it's the way the firm was started. So Citrin Cooperman was essentially tied to the music industry since day one, the way Joel Cooperman started the firm in his New York City apartment, he used the money he earned while working for two different bands in 1979, The Who and the Rolling Stones. So full circle. Like Citrin, Cooperman has always been involved in the music industry from day one. Wow. So now full circle. I did check The Who and the Rolling Stones. They own their own catalogs, so they're not owned. Well, they're not owned by Blackstone, but I thought that would have been interesting. Like full circle. The money that started the firm now owns the music rights. But to. Yeah, the who and the Rolling Stones financed one of the biggest accounting firm PE acquisitions ever. So way to think about it.

Blake Oliver: [01:14:43] That's amazing. And you know, it ties into our discussion with Mark Koziel of the AICPA last week where we talked about this issue. And I said, you know, he said that even when private equity comes into these firms and takes a controlling stake, that the CPAs are still running the show. They're still leading the organization. And he doesn't expect that to change anytime soon. But you just said this guy's leaving, right? The founder.

David Leary: [01:15:10] Yeah. The founder.

Blake Oliver: [01:15:11] Yeah.

David Leary: [01:15:12] So check it out now.

Blake Oliver: [01:15:13] Right. So like I would expect over time that as private equity makes these acquisitions, the partners aren't going to want to be there forever. The CPAs are going to leave. Who's in charge? It's private equity. Is that good for the staff and the managers and the directors remains to be seen.

David Leary: [01:15:28] I imagine he's one of the founders. He leaves. They're not going to be like, well, let's find another CPA that works for us and promote them. There's like, there's going to it.

Blake Oliver: [01:15:38] Could be a it could be a CPA, it could be a CPA. Right.

David Leary: [01:15:41] So um, guarantee.

Blake Oliver: [01:15:44] By the way, on his LinkedIn, does he use his CPA?

David Leary: [01:15:46] He does not have CPA on there. So I don't even know if he's a CPA or not. I'm assuming maybe did you have to be in 1979 to create an accounting.

Blake Oliver: [01:15:53] To own a CPA firm? I think I, I imagine I don't think those rules change that early, but maybe they did. Anyway, David, that's enough for this week. Thank you to all our listeners who stuck with us through to the end. You can earn free continuing professional education for having done so. Go grab your CPE certificate. All you have to do is take a quick five question quiz on the earmark app. Just wait a few days until after this episode drops on the podcast feed, and you can go in and, uh, get your free CPE credit earmarked. And there's lots of other great shows, uh, tax audit fraud. So many. Oh my fraud, our most popular show on earmark. You can earn CPE for learning about all sorts of frauds and how to improve your internal controls. Thank you everyone who joined us live to boring accountant. Really love having you here. Our number one fan. Um, Rafi, Jose, David, Matt Grev, nightlight, Eric, all those of you who commented hey Sean, love to chat with you. Makes it so much fun. Have a great weekend and we'll see you around here next time.