Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!
David Leary: [00:00:04] Imagine me taking the car to the mechanic and the mechanic saying, can you provide me the documentation that says what kind of battery to put in this car? Like, imagine if I had to do all this work with a mechanic or a plumber or anybody, like, why do I have to do work to work with an accounting firm? Like accounting firms have to understand. That's the difference. That's what the threat is. It's not AI. The threat is the experience for the client. And they have to understand that. Coming to you weekly from the OnPay Recording Studio.
Blake Oliver: [00:00:35] Hey, everyone, and welcome back to the Accounting Podcast, your weekly roundup of news in the profession. I'm Blake Oliver.
David Leary: [00:00:41] I'm David Leary. And not just welcome everybody. Welcome you back to the United States. You were on a little guy floating around Europe. There I saw.
Blake Oliver: [00:00:50] What's that word.
David Leary: [00:00:51] Flatten. What's the word? Yeah. Fix that.
Blake Oliver: [00:00:55] Gallivanting, gallivanting.
David Leary: [00:00:58] Work. Yes, yes.
Blake Oliver: [00:00:59] I was in London. In Paris for 12 days, and for the first time in my life as an adult, as as like a professional. I did not open my laptop for 12 days. That's great. And I gotta say, I highly recommend it if you can do it. Just do it. Uh, it will reset you completely.
David Leary: [00:01:21] So any accounting stories were there? Did you is anything interesting? You're like, oh, I saw this on vacation. It ties back to accounting.
Blake Oliver: [00:01:27] No, I didn't even think about it. It was great. I'm sorry. No stories.
David Leary: [00:01:31] Good, good, good.
Blake Oliver: [00:01:32] No, no. No discussion of how the French pay too much in tax or whatever it is, I don't know, but. Yeah. Uh, by the way, they have amazing public pools. The best. I went to the best pool, like for lap swim that I've ever been to in my whole life. Uh, it is. I can't even pronounce it. Um, Eastport pond. Pontoise, Pontoise. Uh, in Paris. Uh, just. You got to go. If you're a swimmer, you got to check it out. €5 tax and.
David Leary: [00:02:01] Taxpayer funded, right?
Blake Oliver: [00:02:02] That's right. Exactly. So that was amazing. But David, we have to get to the news. There's a lot to discuss this week. We don't have a ton of time. Uh, we've got this federal investigation now that the Wall Street Journal is reporting into the poly market better. That was apparently a maybe a KPMG employee using audit info to make bets on poly market and winning a lot of them. And this compliant founder, this, uh, founder of a tech startup called, uh, compliant, actually a tax services business has been charged with wire fraud. Two big stories about fraud or insider trading. You've got some stories about KPMG, about revolute, uh, how AI is making fraud 4.5 times more profitable for scammers. And we've got that whole zero influencer mess in the UK. Not a great week for zero. But first, let's thank our sponsors, David, our sponsors.
David Leary: [00:03:02] This week we have Cloud Accountant staffing on pay Thomson Reuters and Savant Labs. Are you tired of the endless search for qualified accounting talent? You're not alone. Growing accounting firms are struggling to find available and affordable team members when they need them most. Cloud counting staffing has a solution with their revolutionary candidate portal. Unlike traditional staffing agencies that waste your time with sales calls, paperwork deposits, the Cloud Accounting Staffing candidate portal gives you instant access to highly vetted, qualified accounting professionals. No waiting, no hassle, just top talent right now. What makes this different? Speed and simplicity. While other firms make you wait weeks or months with Cloud Accountant staffing, you could interview someone as soon as tomorrow. Their boutique support ensures you're getting the quality talent that's both available and affordable. Exactly what a growing firm needs. The candidate portal puts you in control. You can browse live candidates, make your selections on your timeline, and build your offshore team without the traditional headaches. To find, review and book interviews with potential team members, all in less than ten minutes, head over to The Accounting Podcast dot promo dot The Accounting Podcast dot promo slash The Accounting Podcast dot promo forward slash CAS. Cluster networks. Obviously.
Blake Oliver: [00:04:17] Cluster of poly market accounts one big on companies audited by KPMG. That's the headline in the Wall Street Journal. A mystery trader made about $22,000 by winning 41 out of 42 Polymarket bets tied to companies audited by KPMG.
David Leary: [00:04:37] And I brought this up months ago because we saw a post about this where people noticed there's a connection, and I think we brought up, but we didn't have any details.
Blake Oliver: [00:04:46] It was originally exposed on I think it was Reddit. And Polymarket is a blockchain based. Uh uh uh uh uh uh, what do they call it? Uh. Betting site. It's a.
David Leary: [00:04:58] Predictor.
Blake Oliver: [00:04:59] Prediction. Market prediction. Prediction market where you can make bets on real world events. And you can bet on the earnings of companies. And somebody noticed because it's on the blockchain, you can, you can see, uh, who is betting on what not who they are, but their username or there's like a unique identifier and they saw that somebody's making all these bets and the bets all happen to be about the earnings of companies that are audited by KPMG. And this particular account won 41 out of 42 bets. That's a 98% hit rate. And now there is a federal insider trading investigation. Blockchain forensics firm Bubble Maps analyzed dozens of yes or no contracts, predicting whether companies would beat quarterly earnings estimates. The activity covered 18 KPMG audited companies that includes Wells Fargo, Home Depot, DoorDash. It started in November of 2025 and continued for several months across the KPMG bets. All but one succeeded, and this individual got $22,000 in earnings. The. The trader also wagered smaller amounts on companies with other auditors and got an 82% win rate. Bubble maps was able to link 19 different Polymarket accounts through a complex flow of digital funds, which suggested. Controlled by one person or a team, and attempts to obscure this by using multiple accounts. Some of the accounts also traded on sports and politics, but a vast majority of the profits came from KPMG audited companies.
David Leary: [00:06:46] And the success rate is insane.
Blake Oliver: [00:06:50] Oh yeah. I mean, that's extremely high, right? 98%. How could you know that these companies are going to beat their earnings or not? Unless you had some kind of information ahead of time. The CEO of Bubble Maps, Nicholas Wyman, called the pattern highly symptomatic of an unfair information advantage. It's not proof of insider trading, and The Wall Street Journal couldn't determine whether the accounts were actually connected to a KPMG employee. But now there is an investigation. The Journal previously reported that feds were preparing possible charges against a KPMG employee suspected on a suspected of betting on on these earnings announcements. Charges could come in the fall of this year, but authorities have not yet made a final decision. And these insider trading cases can be criminal or they can be civil. Kpmg said it has zero tolerance for trading on nonpublic client information. Uh, Polymarket said it refers matters to law enforcement and supports investigations, but would not discuss this particular case.
David Leary: [00:07:59] So law enforcement has named and said we were probably going to bring up charges against a KPMG employee, because it's that black and white.
Blake Oliver: [00:08:08] That is what the Journal is saying. And I think that was like off the record type of stuff, right? Like sources are saying there's possible charges coming. So I mean, it makes sense, right? Like who else could it be? It's either somebody they're like, or it's somebody connected to somebody with access to this information. It's hard to imagine how it could be anything else.
David Leary: [00:08:32] Yeah. Because it was too coincidental. Right. And the only, what, 80% on other companies that they didn't audit.
Blake Oliver: [00:08:38] Yeah. No. I mean, you know, the KPMG related win rate was 98%, but they also won 82% of bets involving other auditors.
David Leary: [00:08:46] So it's probably friends with other auditors at other big four firms probably.
Blake Oliver: [00:08:51] Right. That that's possible. So, you know, I mean, what does this say? It's it's like these prediction markets are making it harder in some ways to prevent insider trading in the sense that anyone can create an account. They're anonymous. The money moves through the blockchain. But at the same time, all of it's public. So if you can analyze all this stuff like this company did, what was it called, a bubble maps. Then you can get caught. So new ways to do insider trading. But also you.
David Leary: [00:09:23] Could use you could use the prediction market. Assuming there's insiders doing things and to buy or sell the actual real stocks based on the data you're seeing in the markets, which I'm sure somebody probably did. I mean, that's what bubble bubble, what's your what's it called?
Blake Oliver: [00:09:40] Bubble bubble maps. Yeah. That's what I would be doing actually. That's what I would be doing is because that's not as far as I know, that's not illegal.
David Leary: [00:09:48] No, you're.
Blake Oliver: [00:09:48] Just taking.
David Leary: [00:09:49] Data you found.
Blake Oliver: [00:09:50] Right? Monitor the prediction markets and then buy stocks based on what's going on in the prediction market. So it's like it's like a derivative insider trading. Yeah. I need to consult with my, you know, cloud Esquire on that to see if that will hold.
David Leary: [00:10:04] Esquire.
Blake Oliver: [00:10:06] All right, David, you've got some more KPMG stories and we will get to those right after I thank our next sponsor, and that is on pay. Are you tired of payroll headaches getting in the way of the client experience you want to deliver? Manual workflows, creating bottlenecks, compliance, nightmares, and endless support calls that go nowhere. There's a better way for your team and your clients on pay. Is the payroll partner that accountants and bookkeepers actually love. Why? Because it's easy to use, packed with value, and backed by support that actually supports you. Their team gets rave reviews for being fast, expert, and actually reachable when you need them on pay. Handles the heavy lifting. You get a dedicated onboarding coordinator who sets up worker profiles and transfers year to date data from previous providers, all at no extra cost. Their seamless QuickBooks and Xero integrations eliminate manual journal entries. And they support any type of business you serve. Farms, restaurants, nonprofits, you name it on pay can handle unique requirements without adding complexity. And on pay keeps pricing simple, too. Everything your clients expect from multi-state filing to off cycle pay runs. It's included. There are no hidden fees and no surprises. To book a demo, head over to The Accounting Podcast dot com slash pay. That's The Accounting Podcast dot pro forward slash OPAY. And please do follow those links. Type those into your browser. I know it's a little extra effort, but it goes a long way to helping our sponsors know that you heard about them on the podcast. That is great for us and great for them. That's the, the, the one thing you can do other than subscribing to the earmark app to support the work that we do here on the show every week.
David Leary: [00:11:47] I might flip things around a little bit just because I have two KPMG stories. So I'm going to do the one because it's not tied to other stories. We'll just as a solo story, then we'll get into the other one. So KPMG is rolling out an accounting simulator. They're calling it tax SIM and it's a gamified accounting simulator. They developed it with Centurion AI. And the whole point of this, Blake, is to solve this big problem. How does a new entry level accountant get experience? And the way I'm thinking about this, it's like a flight simulator for pilots, right? But how many hours does it take? Like, like if you have to do entry level accounting work, is it two years? Three years? Like how much how much grind do you have to do to become a senior level?
Blake Oliver: [00:12:32] Well, that's a good question because a lot of that grind is repetitive and maybe you don't learn anything. So if it took two years of just doing data entry and grinding and gathering information and like admin to, to get the skills you need to be a senior accountant or to move beyond just being entry level. Like maybe if you just focused on the actual work, you could do it a lot faster, like in months, not years. But my question is, David, have they.
David Leary: [00:13:00] Have 20,000 hours in a simulator?
Blake Oliver: [00:13:03] Are they are they fully going all in on this? Right. Are we going to be doing this in VR? Like get meta involved, you know, bring back the metaverse?
David Leary: [00:13:14] It doesn't really say that that it's going to be like that. It's it almost feels like it's going to be a, you know, a quiz game or like a game a little bit. It sounds like a little bit. But the point is it wants to help them build muscle memory, but you have to do the 10,000 hours to have muscle memory. I think pilots, I could let me open up chat. How many hours does a pilot have to have on a simulator before they can fly a plane, a commercial pilot? Let's see.
Blake Oliver: [00:13:41] Well, you figure that out. David, I want to talk about KPMG and OpenAI They're working with open AI on a new strategic alliance. Well, they've already announced it. Kpmg and open AI are going to build and deploy AI solutions around what KPMG calls a, quote, headless model of enterprise engagement, unquote, headless model of enterprise engagement. What could that possibly be? That is a word salad if I ever heard one. The consultants definitely use ChatGPT to come up with that one, I imagine. Well, basically it is this idea that core systems like ERP and CRM, your, your, your G.L. and your, you know, enterprise resource planning system, right? The NetSuite, your Oracle, your SAP, right. And your CRM, Salesforce, right. Those are the systems of record for data and transactions and controls and governance, but users are going to increasingly interact through an AI powered work surface, which is another word salad for chat. They're going to chat with an AI instead of logging into individual apps. And so they are going to work together. Kpmg and OpenAI are going to work together on basically building that front end so that employees don't have to actually log into the ERP or the CRM anymore. So it's going to be headless, right? It will be invisible UI user interface, which is kind of a, uh, a magical thing or a wonderful thing. If you've ever had to work in any of those systems, which basically have the worst UI.
David Leary: [00:15:35] In the world. I have nightmares still using Oracle. I expense to file expense reports when I was at Intuit for half a decade. It's the worst. I do have an answer on pilots and flight simulator training. This is going to scare you. They typically need 20 to 30 hours of full flight simulator training a pilot before.
Blake Oliver: [00:15:54] That's before.
David Leary: [00:15:55] The commercial. A commercial pilot that's like a week, right?
Blake Oliver: [00:15:59] But the actual flight hours they have to get is a lot.
David Leary: [00:16:03] Yeah.
Blake Oliver: [00:16:04] I know this because, uh, I've got a buddy who's a pilot and I actually, I took a, uh, an introductory flight lesson here in Scottsdale.
David Leary: [00:16:15] So 1500 hours of flight time.
Blake Oliver: [00:16:17] Yeah, 1500 hours of flight time.
David Leary: [00:16:19] Almost a full year.
Blake Oliver: [00:16:21] That's almost like, you know, that's like the billable hours of your typical accountant in a year. It's like a full time job.
David Leary: [00:16:30] So how many hours of the simulator somebody's going to do? Are we going to require somebody to put 1500 hours on a simulator? This is crazy to to get that muscle memory built up.
Blake Oliver: [00:16:39] Well, and is the firm going to pay for it is the question.
David Leary: [00:16:43] And then can you do it in 30 hours, 40 hours, one week? No. So this like maybe.
Blake Oliver: [00:16:49] Months, maybe hundreds of hours, I don't know.
David Leary: [00:16:52] That's worse than doing accounting work. You should beg. People will be begging to do the grind work over using a simulator for 1000 hours. They're going to be begging for the accounting work. It's probably just a way to drive staff or wages down, ultimately.
Blake Oliver: [00:17:09] All right. What is this other story you've got here? You've got like KPMG buying a stake.
David Leary: [00:17:13] Yeah. So KPMG is buying a stake in a company called Reality Defender. And this is one of these, uh, AI firms that can verify fake voice video in real time. So it can help stop these frauds where Blake somebody clones Blake and says, pay this bill to this company. Right? These types of frauds. So and it makes sense why they're doing this, because I have another article where it says, I saw that AI is helping make fraud 4.5 times more profitable than it used to be.
Blake Oliver: [00:17:46] 4.5 times more profitable.
David Leary: [00:17:48] So if you're doing a large scale fraud, you'd have to have a big old building. You'd have to have lots of employees making calls, trying to trick people to give him their credit card numbers and things like that. Now you just have like two agents running on a server in a basement. Yeah.
Blake Oliver: [00:18:01] And you know, if anything, this is proof. This is proof of the productivity gains that are possible with AI. Right? We've been saying 5 to 10 X and we're already getting 4.5 from the fraudsters. And you know, if you think about it, financial crime criminals, fraudsters are some of the most innovative accountants out there.
David Leary: [00:18:23] Yes.
Blake Oliver: [00:18:24] Yeah. Fraudsters out there. Right. Like, I mean, that's where the money's at, right? It's the least risk, highest reward if you want to be a criminal.
David Leary: [00:18:30] So and I have an example specifically of this happening. So are you familiar with we may have talked about in the past revolute. They were a European bank, one of these new neobanks. They've recently came to the States and they've rolled out their business accounts and they've rolled out they've got a bank charter. So they're on the. It's just I don't feel like a lot of people in the States know about them. Maybe they don't have their marketing machine on, but they exist. Well, they fell victim to a social engineering attack where fraudsters use the legitimate government email domain to request customer data. So they said this is blah, blah, blah, government agency, we need this information and handed it over. Now, what's crazy about this is if you go to their website, they have this whole section. When you scroll down that says your money is in a safe space. With revolute secure, you're entering a new era of money security, where a proactive, purpose built defenses and team of fraud specialists help protect every account 24 over seven. And they even have a scam education page that they have on their website.
David Leary: [00:19:31] And there's like nine different boxes of different scams. And one of them is right at the top. The very third one listed impersonation scam scammers pretend to be legitimate organizations like tax officials, the police or Revolut. Don't feel pressured to share anything on the spot? Contact the supposed organization via their official contact details instead. So Revolut is providing marketing information of what not to do in a scam. And then they completely did it and they got scammed. And this is this is what and it makes sense. Like if you think about all the fortune 500 is being targeted like this, right? All companies. Yep. And it makes sense for KPMG to be involved in this. And that's a part of your consulting division. Now you have this company you own a piece of. They're getting a piece of that action. They'll be able to come in and say, hey, we can help you stop this from ever happening in the future. But I just find it ironic that they provide information on how to not fall for this, and they fell for it themselves.
Blake Oliver: [00:20:28] That's the irony is palpable. All right, let's talk about this startup tax startup CEO who has been federally charged with conning venture capital funds out of more than $13 million. She said she was a CPA, started a tax services business, a startup to do taxes, raised $13 million. The Department of Justice says she has never been a licensed CPA. Shilo Luckey, 42 years old, founded Los Angeles based compliant in 2019. Prosecutors say she inflated the company's revenue, customer account subscriptions and cash reserves in pitch decks and investor updates from 2020 to 2023. Investors put in millions 13 million, and they lost all of it when compliant ran out of cash and shut down in 2023. Some of that money allegedly went to a house in Inglewood. A Tesla and a wedding in. Anguilla, A NGUILLA. The indictment also claims she bought the house using a check kiting scheme. She allegedly wrote a bad $1.5 million check from one compliant account, deposited it at another bank and wired the money out before the first bank caught on, then paid off the negative balance with fresh money from new investors. She was arrested in Fort Lauderdale in Fort Lauderdale on Sunday, right before she tried to board a cruise ship. 15 counts total, nine securities fraud, three wire fraud, one bank fraud and two money laundering. You know, she claimed to be a CPA but wasn't. And, you know, CPA licenses are publicly searchable. So I guess none of the due diligence that the investors did included actually checking to find out if she was a CPA.
David Leary: [00:22:34] It's interesting because I found like one of the articles about them that we covered in the past, where they where they had the raise, and they raised 5.5 million seed money. And she talks about how she had a firm, but she didn't have the technical expertise to build an app. Right. And but it turns out maybe she never really had a firm either. So she, she was an engineer who with a startup. And she actually wasn't the tax person, the startup, like, was this just a straight up fraud beginning to end? Obviously maybe arrested probably. Yes.
Blake Oliver: [00:23:10] I mean, like the check kiting combined with the investor scamming and just like raising the money and spending it on personal stuff. It's wild. But and it happens. It happens more often than you might think.
David Leary: [00:23:26] And this is why I'm never as impressed when when, you know, companies reach out to us and we're like, we just raised this much money. You should talk about it on your show because over and over again, we see illustrations of these investors just seem to give money to anybody, like no due diligence. Like you're right. Like, how did they not nobody actually checked to see if she was truly an accountant or an E or a or a CPA.
Blake Oliver: [00:23:52] All right, let's talk about this, uh, zero influencer scandal or embarrassment. But before we do that, I'm going to thank our next sponsor, and that is Thomson Reuters. If your tax workflow still feels like a grind every busy season, you're not alone. We hear from firm owners every week who are buried under disconnected systems. Manual data entry and staff stretched way past their limits. But it doesn't have to be that way. Thomson Reuters built the tax automation suite to solve exactly this headache. It connects safe, send Sure Prep and Ultra tax CS into a single ecosystem that covers every step with true end to end automation from gathering a client's documents to final delivery. We're talking about up to 65% fewer clicks per return. Ai powered data extraction that saves 90 minutes per return. A 58% increase in capacity with current headcount. And a 55% improvement in profitability because those time savings go straight to your bottom line. This isn't some patchwork of tools bolted together. It's a purpose built suite where data flows automatically between every stage. That means no rekeying, no bottlenecks, and no back and forth with clients. Firms using it aren't having to bring on additional staff during peak season while still growing revenue. That's the power of real automation. To see why tax professionals across the country are making the switch to Thomson Reuters. Head over to The Accounting Podcast dot ProAdvisor automation. That's The Accounting Podcast dot com forward slash automation. I'm putting this up on the screen now. David, the headline is zero apologizes for Instagram influencers Sponcon calling to cut out accountants Sponcon. That's a new word for me. Must be a a UK term controversy.
David Leary: [00:25:45] Is that what it means? Maybe.
Blake Oliver: [00:25:46] Sponsored content or sponsored controversy? Yeah, I don't know. This is this was in smart company. Uh, and basically in a zero sponsored post, a British entrepreneur said she could save hundreds of dollars in accounting fees each month by connecting zero to Claude instead. And we go down to a screenshot of the post. It's an Instagram reel and it's no longer available. It's been taken down.
David Leary: [00:26:12] But we can describe it. It is, uh, attractive female wearing, possibly a halter top and a hat. Maybe hiking in the Tuscany. Right somewhere.
Blake Oliver: [00:26:23] And yeah, I'll read the go ahead and read the caption. David.
David Leary: [00:26:27] Yeah. So the caption says, over the last six years, I've spent roughly 120 zero zero 0 pounds on accountants and probably another 10,000 pounds on accounting software. Last week I connected my zero to Claude and asked it to create a full management account spreadsheet, something I used to spend 800 pounds on a month having accountant do it for me. And then there's a coupon that says get 90% off a zero for six months, and then it has a hashtag zero, hashtag zero partner.
Blake Oliver: [00:26:54] It says add. So this was something that zero did in collaboration with this influencer.
David Leary: [00:27:01] And people had beef with this. Who would have the beef. Accountants right.
Blake Oliver: [00:27:05] Well you know it's unusual for zero to, to, to do something like this because like, it wouldn't surprise me if that came out of Intuit, given that Intuit has this like direct channel direct to businesses is the main thing that they do. Accountants are like this, you know, have been in the past a secondary channel. And although that's changing, as we've talked about on the show, they're they're viewing their customers or their accountants as customers. Now that's a big pivot. But Xero has always gone through the accountants as their primary channel, not direct to businesses. And so this really riled accountants in the UK where zero is huge. I think it's their biggest market outside of Australia and they were not happy. David, do you have any of the reactions?
David Leary: [00:27:53] I mean, a lot of the reactions were this I'm done with zero. This is my last straw. A lot of that's it's in it makes me I think I said this a week ago or two weeks ago. Xero is becoming the new Intuit like because Xero raised prices a couple of weeks ago and the backlash was all online and people were like, this is so ridiculous, I can't believe they're doing this. And now this happened like zero is they've unlocked the achievement. They are the new Intuit Accountants bitch about them just as much as they bitch about QuickBooks and Intuit now. Congratulations.
Blake Oliver: [00:28:23] Well, make some a good, uh, a good stock to buy though, right? David. Intuit Intuit has always been a great buy. Uh, may not be popular, but hey, you don't need to be popular to get rich.
David Leary: [00:28:36] But I do feel like this was everywhere. Like every accountant reshared it. It just like you want to talk about attention. Zero. Got tons. There's that whole, like, concept of, like, no bad press. Yeah. Like this was everywhere. It was, it was shockingly how it wasn't like it was one person reshared it over and over again. Accountants kept resharing this resharing this Resharing this.
Blake Oliver: [00:28:56] So zero issued a public apology on their blog. Um, and what did they say? Let's see. Kate Hayward, the UK managing director at Zero, apologized and said the ad did not reflect Zero's values and should never have run. The chief strategy officer, chief strategy officer of Zero's Australia and New Zealand market. Um oh, and global chief strategy officer Angad Soin said zero did not write or approve the post and that it bypassed the company's normal review process and that the guidelines have now been upgraded and acknowledged that accountants felt bypassed. Zero maintains the AI should handle routine heavy lifting, leaving accountants and bookkeepers more time for expert judgment and client advice. Hayward, that UK managing director, compared AI with cloud computing, arguing it should reshape accountants work rather than make them obsolete. Which leads us into a personal anecdote. David, you recently did the same experiment that I did.
David Leary: [00:30:09] Kind of. Yeah, except for you. You were you had a little bit more courage than I did because you connected, you had cloud Co-work do all the mouse clicking and pasting in to create the tax return for.
Blake Oliver: [00:30:22] Yeah, I did my well, I did my S corp return, uh, like in the last episode with Claude Cowork working in Tax Act, and I had it like in the browser, clicking around, filling it out for me doing it. And it was, it was really it was not the fastest it takes a while, but like it was just chugging away on my other screen while I actually it was while I was packing for the trip, I had it, I had my laptop up on my like dresser and I'm just like going back to it every time, every now and then. So.
David Leary: [00:30:54] So I basically did the same thing this week. I've tried to get my S Corp filed, you know, the deadline's today. Um, but I did a cocktail of I still, I TurboTax and ChatGPT and I started with a simple prompt. I said, hey, I need to file my, my corp S corp tax return. I, uh, plan on using TurboTax. Can you help me? What do you need first? And it says first upload your last year's tax return. And then I need these reports from QuickBooks. So I just did this dance, right? I went to QuickBooks around report. It would look at stuff. It's like, hey, why is this off by $28? This reconciliation, you run me this report. And then it helped me figure out why there's a reconciliation different, which ironically was probably created by AI and bank feed crap anyways. But that's a different, I digress on that. And then when we're in TurboTax, I just grab a screenshot and said, what do I do on this screen? What's next? What's. And I just kept asking, what's next? I don't have any skills. I didn't like try to outthink it. I just said, what's next? What do I need to do next? What number goes here? And then it just chugged along, chugged along, chugged along, and then I filed it. Now the post I made on LinkedIn, I think it's gotten a lot of accounts upset is, you know, we've talked about the SaaS Pocalypse, and everybody thinks AI is going to steal all these returns from Intuit. You know, that 45 million returns Intuit does. But my opinion is it's going to steal some of the 80 million returns that are done by tax pros, because that's all I did. I eliminated the tax pro. And to be honest, Blake, it was nice.
David Leary: [00:32:24] And what I mean by that. I didn't have to go through emails and portals. It asked me a question. It needed clarity. I just did it right then. I didn't have to wait three days for an email again. Then I sent something else. Then I realized, oh, I sent you. I uploaded a an accrual report instead of a cash report. It told me I fixed it re uploaded it. It was actually a great process. Now the feedback I'm getting is, oh, um, how do you know it's correct? And I would argue, I don't want to hear that argument because I've now done four different, uh, accounting firms to do my taxes. Like, you know, I post my DIY world and I've gotten mistakes on them every single time. So you can't argue. What if there's a mistake because tax pros are making the same mistakes. And I think somebody has a really good point in here. And it ties into another blog post I saw from Christine Gervais, where she talks about what happens when your AI assistant lies to a client, and her piece of advice is talking about Treat every AI AI answer like work from a first year hire and trace citations back to the actual code text before sending it to clients. And I agree, but firms should have been doing this before AI I have, I've had I got a tax return back. They ran the whole thing on accrual. Did not do it on cash once. I've had another mistake where two firms, two different firms two years in a row made the same mistake, which I think now when I do, this year's taxes is going to cost me about $100,000 to the IRS.
Blake Oliver: [00:33:53] Like remember. Remember how my mom. Uh oh yeah. The, the new firm that she got, like marked her as blind on her return. And she's the one who caught it and, and she's not.
David Leary: [00:34:06] And my.
Blake Oliver: [00:34:06] Argument.
David Leary: [00:34:07] Here is it's not I don't want to use a tax professional. It's not that my argument is why is it a better experience to not use the tax professional, my car or my wife's car? I had to do some work on it. She's got an electric vehicle. Apparently electric cars have two batteries. There's the battery that replaces the combustion engine, but then there's a battery that works the radio and the air conditioning like an old school battery. I open up a car. Where's the battery? I don't even know. So, you know, I use AI and I use some YouTubes and I change out the battery. I had to do the work myself, but if I would have went to the mechanic, to the dealership, I would have gave them the car and I would have drink a coffee played on my phone and did no work. How come when I use an accounting firm, I have to do the work? Imagine the. Imagine me taking the car to the mechanic and the mechanic saying, can you provide me the documentation that says what kind of battery to put in this car? Like, imagine if I had to do all this work with a mechanic or a plumber or anybody, like, why do I have to do work to work with an accounting firm? Like accounting firms have to understand that's the difference. That's what the threat is. It's not AI. The threat is the experience for the client. And they have to understand that.
Blake Oliver: [00:35:16] Yeah. And, and having an AI agent do your return for you is just, it's, it's there, it's fast. It's communicating with you. There's no delay. It's not. You send something and then it waits days or weeks to ask you for something else, and it just never ends. It's like it's right there. It's happening. And like you said, yeah, there might be mistakes, but humans make mistakes too. So what really matters is the, uh, the like whether or not those mistakes materially change anything.
David Leary: [00:35:45] Yeah.
Blake Oliver: [00:35:45] And, you know, it's funny too, because it's like I, I used, I used to do our partnership return after I did my S corp return. Just did that. Uh, embarrassingly, yes. This morning on the, on the deadline. Got the K one out and you know, it found again errors in how tax act calculates the the schedule M and L like it doesn't it doesn't adjust for the nondeductible expenses. And so basically if that's how tax act works, every single balance sheet is going to be wrong. If it's not manually changed. And I guess that doesn't matter much because most of the people using like tax act business to do their own whatever partnership or, you know, return, like are not actually like filing those because, you know, there's a threshold where you actually have to do it. But still, it's like all the stuff that carries forward is wrong. It's never going to be right. And it's just crazy to me that like these tax software companies can get away with designing software that just is incorrect and clod can catch it and fix it and manually adjust it. This is stuff that like professional preparers don't even bother to get right. A lot of them.
David Leary: [00:36:55] And I'm not declaring war on accountants. I just don't be so naive. Like just because you think you're better than the eye and you very well may be. It's still my experience in my time. And when I work with you, I still get mistakes, but I did more work. So if I'm going to do work, I'm going to get the mistakes myself and not pay. You overpay you for the return because that's actually more maddening. I pay more money and I do more work. That's insane. What other. What other thing do you. Has it ever worked that way? I don't pay a plumber 380 bucks an hour and still have to do all the plumbing work. Right. It's insane why? There's something broken in our industry and our mindset on the client experience. And somebody's got to figure it out. Like an accounting firm, some accounting firm somewhere. Somebody has to figure this out because it doesn't make sense that I have to make do more work to get my taxes done with an accounting firm.
Blake Oliver: [00:37:48] If you're listening and you are one of those firm owners or operators and you are getting it right, tell us how. Email The Accounting Podcast at earmark.me. We want to hear it. Tell us what you're doing different. How are you focusing on customer experience? We will read your email. We read them all and hey, we'll maybe even share it on the air. And maybe we'd like to talk to you here about it.
David Leary: [00:38:12] I'll let you do my return. We'll try another, another firm.
Blake Oliver: [00:38:16] I'm going to thank our sponsor of this episode. And that is Savant Labs. If your finance team is using AI for drafts and research, but still closing the books by hand, you're in the same spot as most enterprise accounting teams. Claude and Copilot handle the easy stuff, but what about the clothes, the reconciliations, and those tax provisions? Still manual, still spreadsheets. Still eating up days every cycle. The real issue isn't effort. It's trust. General purpose AI gives you a different answer every time. And an auditor can't follow the trail. That's why savant exists. You describe a finance task in plain language, and savant turns it into a governed agent. It pulls, cleans, and reconciles your data across ERPs, spreadsheets, and PDFs. With over 500 connectors, every workflow runs the same way every time. Same input. Same output. Every cycle. Data lineage approvals and Sox reports are built in automatically. The result is up to 70% less manual work and 80% fewer errors. Here's the best part. Bring savant a complex use case that's eating 20 plus hours a month, and they'll build you a custom agent for free with a 30 day trial. To learn more about savant and start building your first agent, head over to The Accounting Podcast dot ProAdvisor. That's Accounting Today dot promo forward slash SAVANT. So.
David Leary: [00:39:44] Uh, zero pissed off accountants. I might have pissed off accountants and tax professionals. One more person may have pissed off a tax professionals the IRS. Oh my Lord.
Blake Oliver: [00:39:55] You still haven't figured out that new AI Google phone you got? Is it a is it Samsung or Google? What is it?
David Leary: [00:40:01] It's the new Google phone.
Blake Oliver: [00:40:03] And you like, can't you just tell it to like silence your notifications.
David Leary: [00:40:06] Called doctor mode and it makes the whole phone gray like. And it's still went off. I don't know, I'm like a boomer, but the IRS, they basically are saying tax proficient to tax practitioners that if you're using AI tools to do the return faster, you should pass those savings on to your client, which is a kind of professional tax profession, are losing their minds over that. Because if you think about a smaller tax professional, you're assuming the risk.
Blake Oliver: [00:40:35] Yeah. Well, that's because the IRS is assuming that these tax pros are billing by the hour. And yeah, if you're billing by the hour and it takes less time to do the return than logically, ethically, morally, professionally, you can't bill the same time you did less work. Yeah.
David Leary: [00:40:54] Unless there's a term they use unconscious unconscious, unconscionable unconscionable fee.
Blake Oliver: [00:41:00] Unconscionable fee. Yeah. I mean, like basically, if you're padding your hours, that's that's unethical. And so the IRS came out and said it. I don't know why they feel like they have to say that, you know, they probably could be doing better things with their time. But it's funny because it got, you know, tax pros up in a tizzy and AICPA has issued a. I don't know a letter or some statement seeking clarification from the IRS over these guidelines.
David Leary: [00:41:26] And they push back right away. Finally, the AICPA just did the right thing as fast as possible. Instead of forming a committee on how we should respond to the IRS.
Blake Oliver: [00:41:34] Well, no.
David Leary: [00:41:35] I mean, for the profession.
Blake Oliver: [00:41:36] I don't understand why they need to seek clarification. I don't understand that if you're billing by the hour and it takes less time to do it, then it's ethical that you would charge less. And so the solution is not to push back on the IRS, which is correct. It's to get your members to stop doing dumb stuff like billing hourly for tax. It's which like, not that many firms I think are doing that anymore. It's it's like I forget what the numbers are, but it keeps dropping every year. But, you know, yeah, there's still thousands and thousands of firms doing it and especially big ones. But it's just, you know.
David Leary: [00:42:14] It's so obvious. We've talked about AI is going to kill the billable hour. The IRS is just like reinforcing. Yes. Stop charging hourly billing for your return.
Blake Oliver: [00:42:26] Yeah. So I don't know. I don't know what else is in here, but like, yeah, like what's what's what's the pushback? Um, you know, and like, yeah, just don't, don't bill by the hour anymore. Problem solved.
David Leary: [00:42:40] Well, and I think the pushback is if you just see the headline, you just see the initial thing, it makes it feel like the IRS is telling tax pros to charge less. You can easily read it like that and react to it that way. But they're really not. They're just saying build your clients in a better way is what they're really saying.
Blake Oliver: [00:43:00] I got one final story that I've just been saving here for a while. It's just, I don't know, kind of interesting. Interesting to me anyway, because I used to live in LA. I had my firm there, worked for a firm there. Um, PwC is moving out of downtown LA to Century City, and that is a visual, big visual change because they've got their logo at the top of that iconic building, that 52 story tower on Figueroa Street. Their lease is expiring in 2028 and they're going to go to Century City. The new address is 2121 Avenue of the stars, which is better known to movie fans as Nakatomi Plaza from Die Hard.
David Leary: [00:43:46] Wait, wait, they're actually going to be in Nakatomi Plaza?
Blake Oliver: [00:43:49] Yeah. Yeah. Dwc la. They signed a 15 year lease worth about 200 million for 150,000ft², according to a person familiar with the deal, as reported in CPA Practice Advisor. That's actually bigger than their current downtown space, which is 114,000ft². So it's a growth move. Not great for downtown L.A., which is, I guess, had a renaissance and has now started hollowing out again. Office vacancy there has jumped from 14% in 2019 to a shocking 34% today. So a 20% bump in like, you know, just a handful of years here. Nearly 40% of financial district space sat empty at the end of last year, according to CBRE. Pwc joins Deloitte and KPMG as the big accounting names shrinking or leaving downtown. All right, David, that's all the time we have this week. Thank you to everyone who joined us live on this unusual recording time, but appropriate given that it's September 15th. Always fun to do an episode on a deadline. Thanks for joining us. Boring accountant and ESYY4HMS says hello, new viewer I have been watching for the past two months. Big fan. Hey. Great to have you. Uh, we've got 500 or so episodes in the in the back catalog, and you can earn CPE for listening to hundreds of them, I think, at this point. Go to earmark.app in your web browser, or get the free earmark app on the App Store. Create a free account, earn one CPE for free every week. Listening to this show or many others such as Oh My fraud and Federal Tax Updates and Tax in Action and our new show Audit Fundamentals. Or what's the other one?
David Leary: [00:45:47] Standard practice.
Blake Oliver: [00:45:47] Standard practice which is standards updates. We're creating more technical content for all you, uh, all you accountants and auditors out there looking for that technical stuff, not just me and David spouting our opinions. Uh, also welcome to Knowles. Knowles, 99, says, what are the chances of some accounting podcast merch coming out in the future? Ooh, David, now that we've got the rebrand for earmarks.
David Leary: [00:46:11] Yeah. We never created New Bird's Eye. I'll get on that for the fall, because we'll be traveling to a bunch of conferences and stuff in the fall. Uh, I'll take this on. I'll make sure we get new branded stuff. Stick at least stickers at a minimum, but maybe some shirts too.
Blake Oliver: [00:46:25] Tate says AI doing accounting. Lol. Good luck. Well, give it a shot, Tate. You might be surprised. Tate also says nice water bottle. Blake. Love those. Yes, this is my fearless foundry water bottle, by the way. Fearless foundry is doing their advisory amplified tour again and I'm going to try to make it to the Phoenix stop. Uh, looking forward to that. Check them out for some good in-person events. Advisory amplified. And Tate said accountants are actually very bad at customer service generally. That's why you prefer your AI boring. Go ahead. David.
David Leary: [00:47:00] So so what I think the problem is accountants, they go through school, they get a job in an accounting firm, but they never become a client of an accounting firm so they don't ever experience it, so they don't understand how bad it is. This was eye opening for me. I didn't know this until I became a client of accounting firm. I became a client and I was like, this is not good. And it's not a one firm thing. I've had a bad experience with 3 or 4 firms. Now. It's not this is not a one firm thing.
Blake Oliver: [00:47:28] No, I agree. I mean, and that's the differentiator, right? If you just have good customer service and actually I would say that like with my firm, that was the difference. It's like the old stodgy firm in the fancy high rise in wherever PwC is moving to. Right. Avenue of the stars. I was competing against them. I won clients from them. And you know, they're they're paying like, I don't know at the time, like this is 20 years ago, like 90 bucks an hour to, to have to print out their bank statement and code it manually and like fax it to a bookkeeper who's like keying it into a desktop app. And I'm just making it easy for them. You know, to.
David Leary: [00:48:05] Clarify, it's not that I've had bad customer Service. Like I've had great experiences with all the humans I've spoke with at these firms. It was never about that. It's always about the overall experience. Like, why am I doing more work? I think the mechanics are good. The great analogy for this. I go to a mechanic, I drink my coffee, I scroll my phone and my car gets fixed. That's what I want in my tax return. That's what I want. Like, figure that out and you win everything. You win it all. Be the accounting firm that does that.
Blake Oliver: [00:48:37] And that is a great way to tie out this episode. Thanks everyone for joining us. Tune in next week for all the accounting news you need to know. Maybe not everything you need to know, but certainly, like the most entertaining accounting news you need to know.
David Leary: [00:48:52] And welcome back. Now that you're past the deadline for the corporate returns.
Blake Oliver: [00:48:55] Great to be here. I'll be here around here for a while. Um, and yeah, that's it. All right. See you around here, everyone. Thanks for joining us.
