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Blake and David examine the mysteries and motives surrounding the recent Macy's accounting scandal, where a single employee allegedly concealed $132-154 million through improper accrual entries. They also examine Trump's proposed 25% tariff plan on imports from Mexico and Canada (plus an additional 10% on China), discussing its potential impact on American businesses and consumers.
Chapters
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Chapters
- (00:46) - Macy's Accounting Error: Breaking News
- (01:40) - Understanding the Impact of Macy's Error
- (02:46) - The Mystery Behind Macy's Accounting Error
- (02:53) - Join the Live Discussion
- (03:42) - Upcoming Topics and Teasers
- (05:15) - Thanking Our Sponsors
- (06:42) - Diving Deeper into Macy's Accounting Mystery
- (19:29) - Exploring the Fraud Triangle
- (27:54) - Auditors and Materiality Standards
- (32:04) - Auditors' Role in Detecting Fraud
- (33:25) - Impact of Fraud on Macy's Stock
- (33:47) - Challenges in Auditing Practices
- (34:08) - Internal Controls and Their Limitations
- (38:53) - Expense Fraud: A Growing Concern
- (44:01) - AI in Auditing: The Future of Fraud Detection
- (52:28) - Trump Tariffs and Their Economic Impact
- (01:03:13) - Thanksgiving Reflections and Closing Remarks
Show Notes
Macy’s says employee hid up to $154 million in expenses, delaying Q3 earnings
Macy’s says accountant hid as much as $154M in expenses
UPS to Pay $45 Million SEC Penalty Over Improper Valuation
Strippers, Christmas gifts and an RV: Workers push it with company cards
Ex-Jaguars employee who stole $22 million from team files lawsuit against FanDuel
Trump's Truth Social tariffs pledge is a teachable moment for America
What does Trump’s latest tariff plan mean for the U.S.?
Walmart CFO Says They Don't Want To Raise Prices, But 'Prices Will Go Up For Consumers' Due To Upcoming Tariffs
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Transcripts
The full transcript for this episode is available by clicking on the Transcript tab at the top of this page
Creators & Guests
What is The Accounting Podcast?
The Accounting Podcast (formerly the Cloud Accounting Podcast) is the world's #1 accounting, bookkeeping, and tax podcast! Join us weekly for a roundup of accounting news, analysis, and interviews. Plus, earn free NASBA-approved CPE credits for listening with the Earmark app. Learn more at https://earmarkcpe.com.
Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!
Blake Oliver: [00:00:04] When Trump says, I'm going to put in place a 25% tariff, it's not a punishment on China. It's a tax on Americans and American businesses.
David Leary: [00:00:15] Coming to you weekly from the OnPay Recording Studio.
Blake Oliver: [00:00:20] Hello and welcome back to the Accounting Podcast, the number one podcast for accountants in the world and your weekly news roundup. I'm Blake Oliver and I'm David Leary. And David, I am gearing up. It is Thanksgiving week. I cannot wait to watch the Macy's Thanksgiving Parade. One of my favorite things to do on Thanksgiving to sit at home, relax and watch the floats go by. And what do you know? But Macy's is in the news yesterday. On Monday, they announced that they have to delay their quarterly earnings due to an accounting error.
David Leary: [00:01:01] And when you say in the news it was in my news feeds 800 plus times and it was all over LinkedIn actually, when you were telling me about it yesterday, I got an email from LinkedIn saying, look, what's hot on LinkedIn. And everything in that email was the Macy's. It was all about Macy's. It is unbelievable how big of a story this is for it all to have the exact same teeny paragraph of nothing.
Blake Oliver: [00:01:23] Well, and what's interesting about this, there's lots of things that are interesting about it. But the first thing that really strikes me is that it's not that big of an error in the big scheme of things. We're talking 132 million at the low end, 154 million at the high end. And this relates to small package delivery expenses. And for a company like Macy's, which does tens of billions of dollars a year in revenue, that is not that much. But the news broke and maybe it was just a slow news day or a slow news week, so it got a lot of attention. It got picked up in the New York Times, Wall Street Journal, CFO, all the accounting publications. You got it pushed to you via notifications, and I'm sure many people saw it. My my wife saw the story and brought it to me before I even saw it. I'm sitting there drinking my first sip of coffee and she's like, did you hear about what happened at Macy's? So this is like big news. And there's something very strange about it. There's some really odd things about this story that don't quite add up to me, and I'm eager to discuss them with you and share them. Share my thoughts with our listeners, and welcome to our live stream viewers, including Gerrilyn Dressler. Hello, Gerrilyn, welcome to the show. Great to have you here live. If you haven't yet joined us live, be sure to subscribe to The Accounting Podcast on YouTube. Subscribe and hit that notification banner and you can get notified when we go live. Join us, chat with us. Let us know what you think about the stories we're discussing, or share stories that you think that we should be talking about. So David, we will get cap.
David Leary: [00:03:10] Go for the facts of this story. First, before you go into the the mysteries of what this story is.
Blake Oliver: [00:03:16] And and that's going to be the first thing we do after. Okay. That'll be the second thing we do after we give a rundown of what else we're going to talk about, the tease, the teasers. Yes, we're going to tease it. We want to talk about Trump's tariff plans. That is also big news and arguably far more impactful than an accounting error. But we'll get to that. Second, because this is an accounting podcast. But I think there are massive implications if this plan is enacted on small businesses and and it will impact many, many, many accountants, all accountants. And we've also got that story about expense fraud that we didn't get to last week, which is really actually very relevant given what's going on at Macy's. I've got a story about firms raising prices. How many are doing it, how much they're doing it. That should be of interest to any of our firm owners or operators out there. Pcob is updating their firm reporting inputs. Well, their firm reporting, which has a lot to do with inputs. I have opinions on that. This is for audit firms. And of course that ties to what's going on with Macy's because where were the auditors David. That's one of those questions. And finally I hope we can get to it. We have an update on the experience Learn and Earn program from the AICPA. How is that doing? You know, how how is that pushing more accountants to become CPAs? We'll find out because that's about.
David Leary: [00:04:43] Three years old now that program. So it'll be interesting to see the status.
Blake Oliver: [00:04:47] Yeah, we'll get an update. We'll see. Just just how many new CPAs they are churning out from that. But before we get to the Macy's accounting error. The mystery. The Macy's accounting mystery. Let's thank our sponsors David who are our sponsors for this episode.
David Leary: [00:05:02] So we have Zoho Practice Sharelink and Cloud Accountant Staffing.
Blake Oliver: [00:05:07] Thank you to our sponsors and welcome to more live stream viewers. Heather Smith says hello from Melbourne at 5 a.m. here. My last conference of the year access all areas. The first access conference. They bought fathom and changed GPS and Tradfi recently. What a treat to wake up to your pod. Great to have you with us bright and early, Heather Tyler says. Glad I could make it. Happy Thanksgiving guys. And uh, Quentin, Quentin says Happy Thanksgiving from PA guys.
David Leary: [00:05:37] Happy Thanksgiving for an email exchange I had with Heather this week. She sent me an email asking if we were if we've attended the Microsoft conference. Microsoft has an AI conference. And I said, of course not. We're just accounting celebrities. And she said, but don't Microsoft realize the accountants are like the biggest users of Excel? And it's like, oh yeah, that makes sense.
Blake Oliver: [00:05:57] But that's right. I have a story about Microsoft working on like making AI agents or AI llms work better with Excel, but I just never got around to it. You know, maybe when they release that, we'll talk about it. But I do know that like, copilot is like the way that most accounting firms, especially larger ones, are interacting with AI right now. So, you know, hopefully we can get out there next year. That would be great. Maybe maybe we should we should pitch their their events people. But anyway, let's talk about this Macy's accounting mystery. So what happened here. Uh, on I don't know if it was on Monday. Maybe it was like on Friday. The news broke on Monday that, uh, Macy's included in their, uh, quarterly filing A an investigation, an accounting error. An accounting error led to. That led them to delay their quarterly reporting. That's the big news, right? So Macy's could not put out its quarterly earnings because of this accounting error that they discovered. And you can actually see it in the in the regulatory filing here. If you go to the Macy's financial reporting page on their website, Investors Financial reporting SEC filings, you can open up the 10-K. And it was filed on November 25th. So I guess that was yesterday yesterday yesterday.
David Leary: [00:07:25] Right.
Blake Oliver: [00:07:26] So uh, in that in that filing, um, if you scroll down to it says page two, but it's actually much further, it's under the section Other Corporate Developments. We have this very intriguing paragraph. The company also reported today that during the preparation of its unaudited It can condensed Consolidated financial statements for the fiscal quarter ended November 2nd, 2024. It identified an issue related to delivery expenses in one of its accrual accounts. The company consequently initiated an independent investigation. As a result of the independent investigation and forensic analysis, the company identified that a single employee with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries. Erroneous accounting accrual entries say that ten times fast to hide approximately 132 to 154 million of cumulative delivery expenses from the fourth quarter of 2021 through fiscal quarter ended November 2nd, 2024, so approximately three years. During this same time period, the company recognized approximately 4.36 billion of delivery expenses. There is no indication that the erroneous accounting accrual entries had any impact on the company's cash management activities or vendor payments. The individual who engaged in this conduct is no longer employed by the company. The investigation has not identified involvement by any other employee, and then they discuss that Macy's is delaying its earnings release and conference call related to the third quarter to allow for completion of the independent investigation. And they're going to try to they expect to release their results, their quarterly results on December 11th or by December 11th, they said. And then there's a quote from the CEO. So like this triggered a lot of questions. And there's a lot that I don't quite understand about this.
David Leary: [00:09:39] Given the verbiage of this, because this is to some extent the official statement about this, and it really focuses on a sole employee. They use the word hid, which is very odd.
Blake Oliver: [00:09:53] Intentional.
David Leary: [00:09:54] Intentional? No. And there, over and over again. Nobody else was involved. We did an internal investigation. It almost like my first reaction listening to it now that you read it out like that, is are they kind of. Don't look over here. We got it under control. Like to avoid a bigger investigation.
Blake Oliver: [00:10:13] Right? This is this is a little odd I agree. Yeah. It's it's it's strange too, that they announced that like, the internal investigation determined that the employee acted alone. But also the internal investigation is ongoing. And it also feels like this was discovered very recently because their earnings were due like that day. Right.
David Leary: [00:10:40] How long ago was the investigation?
Blake Oliver: [00:10:41] I don't know, It's unclear. And by the way, if you want to go check this out for yourself, you can look it up on the On Macy's Form 8-K. Do you want to.
David Leary: [00:10:52] Paste that link in the chat?
Blake Oliver: [00:10:54] Yes I will. Go for it. Have fun everybody dig into that that 8-K. It's only nine pages so not too bad. Um okay. So that was a lot of text. That was a lot of me reading from a financial report. I hope you're all still here with us, your accountants though. So, you know, I'm sure you can you can stick with me here. So let's just go through the facts again, right? A single employee, according to Macy's, intentionally concealed between 132 million and 154 million of delivery expenses. Like. I'm also a little curious why there's that range. Like, why don't they know exactly what the amount is? But I guess that's because the investigation is ongoing. And this employee did this for three years. And I am assuming that this was an employee in the accounting or finance team. And this is important. You might wonder, well, okay, what happened to the money? Macy's is saying that cash management was not impacted and that all vendors were paid. So if this was a fraud, it wasn't the employee stealing money. It's a true financial statement fraud. And we could actually do a little CPE. David, would you like to learn how these debits and credits work? Like where did the money go? Right.
David Leary: [00:12:22] That's the question. Before we do that, can we even take it one level higher? Can we define what is small package delivery. Is this packages. I order a pair of shoes for Macy's and they ship it to me. And now that small package costs $3 to ship. And they're going to pay that to UPS or somebody or what.
Blake Oliver: [00:12:37] I didn't actually look it up, but I just assume that when they say that, they mean what you're talking about. Like shipping a package via the United States Postal Service or Fedex or UPS. And so when Macy's does that, they are not providing the delivery service. They're using a vendor. So you would.
David Leary: [00:12:54] Credit cash and you would debit delivery expense.
Blake Oliver: [00:12:58] Uh, so well it there's a few steps before that for that. So let's say Macy's gets the bill from Fedex. You debit prepaid delivery expense and you credit accounts payable. So it's an increase to accounts payable. You you got to pay that money out right. And it's an increase of prepaid delivery expense. And typically you don't recognize these expenses right away. It doesn't go straight to the income statement. It goes to a balance sheet account a prepaid expense account. And then later at the end of the period, you're going to calculate just how much of that expense you need to recognize based on the packages that were shipped. Now, this is vastly simplified. I'm sure it could be extremely complicated with lots of entries in Macy's ERP system. But basically this is this is how it works in school, right?
David Leary: [00:13:54] In a perfect world, you want that to line up. You want the the fees you paid for shipping to line up with the packages you shipped and the inventory that went out. So you have nice accrual statements. Yes.
Blake Oliver: [00:14:02] And it all ties to that fundamental principle of accounting, which we often too often forget in GAAP, which is we need to match up the timing, the timing of revenue, the recognition of revenue should match up with the recognition of expense. So the revenue from those packages, from those orders that are shipped should line up in the same time period with the delivery expense. And that way you can calculate the profit on these items or just on all of the sales. Right. That's the that is like a core task of accounting, and when it doesn't happen, it distorts profit because it might delay or accelerate expense or delay or accelerate revenue. And now there's no longer a match, right? The timing principle. I may not even be saying that. Right. But that's the idea. You all understand what I mean, right? So so what happens is that was that was the bill gets gets received. Right. So then the bill gets paid and Macy's is saying all the bills got paid. The vendors got paid. So it wasn't like this employee was siphoning off funds and paying somebody else. That often happens. But they're saying that didn't happen in this case. So what's the entry when that happens. Well you got to decrease that accounts payable. So that's a debit. And then you've got to decrease your cash right. You paid out cash. So that's a credit to cash. So debit accounts payable decrease debit credit cash decrease. Now we are taking as a given that those things happen because that's what Macy's said. Vendors got paid cash. Management was not impacted. Where could things have gone wrong? And this is where the accrual entries come into play. So as the prepaid delivery expense is utilized over time, Macy's has to make adjusting entries periodically to recognize the expense on the income statement.
Blake Oliver: [00:15:53] You have to take it out of that balance sheet account bucket and move it over into expenses on the income statement. And so that entry is a debit an increase to delivery expense. Maybe they have a separate account called small package delivery expense. Maybe they have lots of accounts. It all gets rolled up and probably on the financial statements I haven't looked at them. I don't even know if they they've got to have like a separate line for delivery expense. I would hope that so that we could see that. Right. But it's probably just like one line is what I'm guessing often, maybe not that many. But anyway, in their system they have this right. They have a way to track it. So there's a debit to that expense account in A and a credit to the asset to the prepaid account, and that decreases the prepaid. Now, if that is done incorrectly or not done or manipulated, then what you're going to have is an understated expense and an overstated prepaid asset. And this can compound over time if it's not done. So what happens is then all that stuff that should have gotten expensed on the income statement just accumulates and builds up into this asset that should not be there on the balance sheet. This prepaid asset. Um, so that's basically what happened here in in theory, according to the facts that I know, is that the expense was not being recognized for many, many quarters, something like three years, and that prepaid asset was just building up to where it got to be 130, 140, 150 million, something like that.
David Leary: [00:17:32] Essentially the employee wasn't doing his job of making the adjusting entry on a regular basis.
Blake Oliver: [00:17:37] Well, and this is what's weird is that Macy's is saying this employee intentionally did this. And that's where we get to the real mystery, which is the question, why would any accounting and finance employee do this alone? What is the motive on the fraud triangle? You always have a motive. Maybe it's greed. Maybe it's gambling debts. Maybe it's, you know, some reason that somebody wants to steal money, right? But here, I don't see a motive to intentionally do accrual adjusting entries. Wrong.
David Leary: [00:18:18] And I'm assuming that the role. This role is not VP level role. I'm assuming at his role, there's no it's not like a sales department, right? Or the marketing department who have revenue based goals to get a bonus hit. Right. Like, where's the motivation? That's hurts my head.
Blake Oliver: [00:18:38] Exactly. That's how financial statement fraud usually happens. And that's how accountants get in. Trouble is there's pressure from management to make Wall Street's earnings right to to beat the street. And so accounting accountants get pressured to make these entries they shouldn't be making.
David Leary: [00:18:58] And we've seen this with Under Armor clothing. We've seen them with Archer Midland Daniels. They do all the stuff to hit their bonus and they do crazy. They do this. It's it's unfortunate. It's common lovesac now too. Yeah. Yeah. It's common unfortunately.
Blake Oliver: [00:19:12] So you know, for the fraud for for fraud to happen usually there's three things present. I mentioned the fraud triangle. So I just want to cover this. So the first is opportunity. That means you have to have some sort of weakness in your internal controls that allows the fraud to occur that it's clear that happened here, because a single employee was able to make improper accrual entries for years and nobody caught it. That's an internal controls deficiency. There should be a there should be something in place to catch this. The second is pressure or incentive. That's also motive. Personal financial difficulties addiction problems you know fear of job loss. That could be one we'll talk about.
David Leary: [00:19:56] We don't know anything about that because he's a mystery employee. Still we don't know.
Blake Oliver: [00:20:00] And then there's rationalization, which is like the person doing the crime rationalizes why they're doing it. And usually it's something like in finance, I'll pay it back later, I deserve it. I'm underpaid, I was mistreated. Right. That sort of thing. Um, so going back to the motive or the incentive, I don't understand why any accounting employee acting alone would cause a material misstatement in financial statements. What is the benefit to them? It's extremely risky. It's career ending. It's you could go to jail for it. So that doesn't quite add up. That is a mystery to me. And so if that is not true, maybe the employee was not acting alone. Maybe the employee was pressured. That's possible. We don't know. But I would be very curious to learn more about this internal investigation and how exactly they determined that the employee was, in fact acting alone. If they did, maybe that's just what they're saying. We don't know. Um, so but but as I'm thinking about this, I did think of one motive, which happens. It's not common, but it's possible that this employee didn't really know what they were doing, was just following last year and maybe made some mistakes, maybe did it wrong and didn't want to own up to it, and so just kept doing it the wrong way and covered it up and did not report it. That would be intentional and that would be a fraud.
David Leary: [00:21:42] They realized they were doing something wrong, and so they're trying to fix it. But they didn't want anybody to find out they were wrong. Like maybe a good analogy is somebody who can't read like tends to pretend they can read.
Blake Oliver: [00:21:56] There you go. You know, somebody who doesn't know their debits and credits gets a job working at Macy's, is responsible for the small package delivery expense account and makes the incorrect entries for a while, and then realizes what happened and decides to just cover it up as long as possible. And so that's a possibility. The other possibility is that they were simply incompetent. But then I don't understand why Macy's would call it intentional and throw them under the bus. So to me, the most likely explanation is that the employee didn't know, wasn't doing it properly, and covered it up. And Macy's failed to detect it for a while. And so that would be the intentional part. But the conspiracy theory is that there's a reason that somebody in management at Macy's pressured this employee to do it. And the only reason I think that makes any sense at all is because Macy's has many years in which it swings back and forth in terms of net profit from a loss to a to gain. And some years they make like a billion or more dollars in profit, but some years they lose money and some years it's very, very close. And in 2023 their net income, I believe their net income was like 105 million, which is less than the amount of this misstatement. So think about that. If they had recognized this last year, in 2023 fiscal year, they would have had a loss instead of a right. Instead of a profit, they would have lost money. So that's the that's the that's the conspiracy theory behind the conspiracy theory.
David Leary: [00:23:48] Is this just a you know, they're saying that all these fortune 500 companies now are infiltrated with Chinese spies. Like, is this like a Chinese spy just messing around with the books just to wreak havoc and distract Americans with this story?
Blake Oliver: [00:24:01] Like, well, now you're now you're going to a real conspiracy theory there, David.
David Leary: [00:24:06] So one thing I want to touch on, but I think we should run our next ad, is because there's not a lot of information about this. All the press reached out to a bunch of people in the accounting industry to get their $0.02 and their takes on this, and I have A couple takes I want to review with you and give you my opinion of what's coming out of their mouths, but we should run our first ad, so. Okay, let me jump in for that.
Blake Oliver: [00:24:28] Let's do that. Thank you to Zoho Practice for sponsoring this episode. Go for it. Do you want to.
David Leary: [00:24:34] Read it or me?
Blake Oliver: [00:24:35] Why don't you read it and I'll put up a banner.
David Leary: [00:24:38] Perfect. Introducing Zoho Practice, the all in one practice management platform built to streamline accounting firm operations. Zoho practice saves you time chasing clients by automating reminders and requests to get you the documents and clarifications you need when you need them. Staff and clients stay connected through a centralized communication hub to resolve accounting queries faster. Seamless timesheets and billing translate into billable hours into invoices with just a few clicks and a robust document management needs means no more digging through piles of paper to find what you need. Beyond workflow efficiency, Zoho Practice also enables real time financial visibility across clients thanks to thanks to seamless integrations with Zoho's accounting tools, allowing you to gain actionable insights to identify and resolve reporting inconsistencies quickly. Whether you're ensuring tax compliance, monitoring cash flow health, or simplifying collaboration, Zoho Practice is the unified solution to manage all aspects of an accounting practice. To explore how Zoho Practice can save time, enhance oversight, and help your firm work smarter. For free up to five users, head over to The Accounting Podcast Dot promo Zoho. That is The Accounting Podcast Dot promo forward slash Zoho. Thank you.
Blake Oliver: [00:25:55] All right. Thank you Zoho. And we have stimulated quite a lot of discussion in the comments. Some folks agreeing with it's probably just a new college grad who was was doing it incorrectly. There's some conspiracy theories going on, Ralphie says. Maybe they could be trying to make the statements look better for some sort of bonus for a friend. Could it have been insider trading? It seems like kind of a poor way to do that. Um, yeah. Were they were they their pension had the stock shorted. Preparing for retirement. Laughing emoji. Quentin says it's an old adage senior management pressures employees into overstating revenue and understating expenses in order to qualify for performance bonuses. That's usually the case. I would be like, I mean, this would be like really juicy if that is what actually happened here.
David Leary: [00:26:49] And if you go back to the statement, the is it the CEO talked about? We have a culture of ethical behavior here. Like if you start reading between the lines, it feels like there's more to this story. We're going to find out.
Blake Oliver: [00:27:01] Well, because when whenever anyone says we have a culture of ethical behavior, usually that's an indication of an ethical problem in the company culture.
David Leary: [00:27:09] We actually.
Blake Oliver: [00:27:09] Yes. Yeah, we actually just talked about that on one of our episodes, that the more a company talks about how ethical it is, often the it's less that that is a sign that there are ethical issues, right? So yeah, that's fascinating. Um, Jenny says, was there someone reviewing their work? Uh, I if there was, then the review didn't accomplish its goal, did it?
David Leary: [00:27:36] You mean the auditors?
Blake Oliver: [00:27:38] Well, and that's I'm glad you brought that up, David, because that's always the question here is, where were the auditors? Where were the external auditors? And Byron on LinkedIn Byron Patrick brought up a good point, which is that this is a very small amount compared to the overall delivery expense, something like 3 to 4% of overall delivery expense. Uh, this this misstatement that built up this improper accrual. So in that respect. Well, yeah, that's not That's not particularly a material often like there's no there's no hard and fast definition of what's material, but less than 5%, 5% is often a benchmark in certain categories in.
David Leary: [00:28:27] Comparison to gross margin over the three years. The cumulative gross margin, it's only a 20 basis point. So 0.2 of a percentage, right. That's how immaterial it is. It's very, very teeny.
Blake Oliver: [00:28:36] But it depends what you look at. Are you looking at net income. Are you looking at the bottom line.
David Leary: [00:28:41] Cumulative gross margin.
Blake Oliver: [00:28:42] Right. So gross margin though like that's before. That's just after cost of goods sold. Right. So that doesn't include any of their like operating expenses, which you know, in many years Macy's has had a loss of billions of dollars or they've just broken even. Right. So like this even though this was a small account, this was more this amount is more than their net profit last year in 2023. So it is.
David Leary: [00:29:08] It doesn't pass the smell test for Main Street America. You can't tell people $150 million is in material. It's very hard for people to comprehend this, right? Like $38 is immaterial, but $150 million is a lot of money to just write off as immaterial, right?
Blake Oliver: [00:29:29] Yeah. Well, and that's because these are giant, you know, businesses and we use percentages. We don't typically auditors, external auditors use percentages, you know, because we can't just use like fixed numbers when it comes to materiality because it would just be too much work. So I think a common I mean, it's different for every account. It can be. And here's the thing that's really fascinating about this. We don't know what the auditor's materiality standard was. We don't know what number they chose, what percentage they chose, because external auditors in the United States are not required to disclose this information to anyone. But the Public Company Accounting Oversight Board, the PCAOB, the auditor of the auditors. And that only happens when the Pcob selects a particular audit for inspection. And then the PCAOB gets to know what the materiality was, but the public never finds out. It's not. The only way that we find out is if the PCAOB determines that there was a part one, a deficiency or something like that related to perhaps materiality.
David Leary: [00:30:40] So so this is in all these people. I'm going to use air quotes here. And our industry experts, whatever, all got interviewed and just got a little quote here, quote here, quote here, including you, Blake, I think you got quoted in the New York Times, correct?
Blake Oliver: [00:30:57] That's a first for me. It was really fun talking to The New York Times about this, and.
David Leary: [00:31:00] I was happy because your comments didn't make accountants look stupid. And a lot of other people's. Ah. Um, we can, uh, like, I can summarize it like this. Okay. Uh, this is the reason companies hate financials that are accrual. Auditors hate accrual financials because they can play games with the numbers. Um, this is very difficult for enterprise software to track an ERP to track ERPs can't detect this. Audits can't detect this. It's immaterial. Over and over again all these comments about this make the public think accountants are morons. They really do. Well, how is it insignificant or you can't track $150 million? Everybody looks like a fool. Everybody looks like a fool because of this.
Blake Oliver: [00:31:47] Yeah, and that's why. That's why I didn't focus on that in my response. Because as a CPA, because it really frustrates me when the response to where were the auditors is, well, it's not the job of auditors to find fraud because I think it should be. If fraud is material, then auditors should be finding it and detecting it. And a very, very tiny percentage of frauds are actually detected by the external auditors. It's like a few percentage points, which and it's way less than the percentage of frauds that are detected by tipsters and internally and external people that are not auditors. So, yeah, I mean, to me, every time something like this happens, it is diminishing the respect that the public has for auditors in the Certified Public Accountant license and everything that we stand for. Because what do we say all the time that our job is as CPAs, it's to protect the public. That is why the word public is in certified public accountant. And we are failing to do that job because we are not detecting fraud and people lost money on this. Uh, you know, Macy's stock dropped like 8% in Pre-trading after this came out and then like another 3.5% midday. Like, that's that's a lot. And they could detect it if they had better methods.
Blake Oliver: [00:33:29] I believe that like the methods that auditors are using to audit financial statements really haven't changed that much in decades and decades. And it's all based on like manual sampling of transactions. And so that's why we set these like really high, relatively high materiality thresholds where like, you know, nothing like that's why this thing went undetected. That's my my theory why this went undetected. Is that like the account this this shipping account was relatively small in the context of shipping and even in the terms of revenue, maybe not for net income for 2023, but for 20, 21 and 22, it was so like the auditors probably never even looked at this account. And the auditors do look at internal controls, but it's pretty common where if the company that they're auditing doesn't make the fixes to the internal controls, it's not like the auditors come back and say, well, we can't audit you next year. They do it anyway. And, you know, KPMG has been auditing Macy's since like 1988. Right? So maybe they passed their internal controls audit. But clearly the internal controls aren't working. So there's something wrong with how these audits are being conducted. If the internal controls are working and the internal controls pass audit inspection, then we should expect this to be prevented.
Blake Oliver: [00:34:53] But it wasn't. So maybe it just means like the internal controls are written down somewhere, but nobody's actually following them. That could happen. Do the auditors actually go in and look to make sure that internal controls are being followed? Or are they just looking at documentation that nobody actually uses? And management override of internal controls happens all the time, and internal controls are pretty much useless if management isn't following them. So I do think it is our responsibility and we should step up and we should figure this out. And it's sad to me that like the CPA profession, the accounting profession isn't willing to take that on, you know, and that's why salaries have stagnated. Because if you don't create value to your customer, you can't capture value in the form of compensation and salaries. So like unless we create more value, unless we do more for our customers. And in that case, when it comes to public companies, it's the investors, it's the public. Then, you know, people aren't going to value it. Audit committees aren't going to value it. They're not going to pay us to do our job right. So they'll pay us the minimum.
David Leary: [00:36:02] So you have an expense tracking story, correct. But raw expense fraud?
Blake Oliver: [00:36:07] I do. I just want to make sure the.
David Leary: [00:36:10] Second ad while you queue it up, then.
Blake Oliver: [00:36:12] Okay, cool. Go for it.
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Blake Oliver: [00:37:46] All right. Um, I'm trying to think if there's anything else I want to cover about this Macy's thing, but, um, go for it.
David Leary: [00:37:54] I only had a small side note. So because of this story was so got so much traction. Ups actually benefited from this because UPS on Friday had to agreed to pay $45 million fine to the SEC for their accounting issues. They had they basically, uh, they were accused of improperly valuing its freight business, leading to misrepresented financial results in 2019 and 2020. So even though that might be a half $1 billion discrepancy, that's happened and they got this huge fine, nobody saw it. Nobody saw it because the Macy's news is just dominating. So nobody noticed that UPS actually had a worse issue.
Blake Oliver: [00:38:27] That's funny. And UPS was probably the vendor getting paid most.
David Leary: [00:38:30] Yeah they might be affected.
Blake Oliver: [00:38:32] Stories small business delivery expense. All right. Um okay. So we were going to talk about expense fraud right. Yes. So this is kind of related. And it's kind of a mind blowing statistic, which is that um, and the headline is great. This was in the Wall Street Journal last week. Strippers, Christmas gifts and an RV. Workers push it with company cards. So, according to the Association of Certified Fraud Examiners. Expense fraud is on the rise and it costs businesses an estimated get this 5% of revenue on average.
David Leary: [00:39:13] Not material.
Blake Oliver: [00:39:15] Well, it's I don't know. We don't know, David, because otters don't have to disclose their materiality thresholds. Maybe they should. Maybe that's the takeaway from this is like I would be very curious to know what what materiality does KPMG use to audit Macy's and how do they do it. Like why why can't investors know that? It's probably all very it should be all clearly documented in the workpapers. Let us know. Maybe the maybe SEC could come up with some sort of standard and and it has to get reported in the financial statements. I don't know, let's figure it out. Um, so.
David Leary: [00:39:52] 5% of all fraud or 5% of revenue is expense reporting fraud.
Blake Oliver: [00:39:58] Yeah. 5% of revenue is lost due to expense fraud. Now, what is expense fraud? Well, here are some examples of expense abuse. Personal expenses on company cards. Employees have charged personal items like family Christmas gifts, romantic getaways, and even attempted large purchases like an RV all in the company dime. And there's, like, some really great, uh, illustrations in this article. Some employees also misclassify or alter expenses. They might disguise personal expenses as business costs. Uh, a great example in the article was a guy who figured out that a strip club was showing up on, like, the visa network as, like a restaurant. And so he he could use his company card there and it would not get flagged. And whatever expense reporting system they're using because it was classified as a restaurant.
David Leary: [00:40:51] Yeah. The merchant code. Yeah.
Blake Oliver: [00:40:53] Um. People manipulate receipts to increase costs so that they get, you know, pocket the difference. And abusing a home office allowances was pretty common during the pandemic. People would funnel Home Office stipends into unrelated home improvements or personal expenses like daily coffee runs, even seeking mileage reimbursements for working at home. Uh, and cited in this article actually is a story that we talked about in the past, which is, uh, um, the Jacksonville Jaguars, uh, financial manager Emitt Patel. So he managed to steal $22 million from the NFL team, the Jacksonville Jaguars, by skimming money from expense fraud. He would inflate hotel, airfare, catering and other expenses. And he did it for three years. And I have a follow up to this, which is that now he's suing FanDuel, the sports betting site, claiming that FanDuel got him addicted to gambling, which is what led to him stealing the money from the Jaguars.
David Leary: [00:42:06] So the owner is suing FanDuel.
Blake Oliver: [00:42:10] Well, the financial manager who stole $22 million is suing FanDuel. Oh, he's.
David Leary: [00:42:16] Suing FanDuel because.
Blake Oliver: [00:42:17] His gambling addiction made, you know, caused him to steal money. Right. So. I think every accountant who has dealt with expense reports has seen this sort of thing, either small or large. And it happens a lot in that stat from the Fraud Examiners. The Association of Certified Fraud Examiners is staggering, because 5% of revenue is how much of net income. Just imagine if your company is losing 5% of revenue to expense fraud and you were able to stop it. What would that do to your profit? A lot of companies are making. You know what? Some some businesses like Macy's. It could be a few tiny, tiny little fraction.
David Leary: [00:43:03] Of retail and grocery stores.
Blake Oliver: [00:43:05] Very small. Right. That's like a huge impact. And, you know, even if you're in a very profitable business, like, say, an accounting firm, where you get, you know, 20%, uh, EBITDA in many cases, then like 5% more like, hey, that's significant. Let's say your net is 10%, your net income is 10%. Add 5% to that, right? I mean, that's.
David Leary: [00:43:29] Employee bonuses for everybody on your team. It starts adding.
Blake Oliver: [00:43:32] Up. Yeah. So this ties back to the story we were talking about with Macy's is like how do we stop this? And technology is the answer. And I really believe that this is going to be one of the primary Benefits of integrating artificial intelligence into accounting systems and ERP systems is that human auditors, both internal and external, are extremely time constrained, and I don't blame them for not checking every single account, so they just.
David Leary: [00:44:05] Take sampling.
Blake Oliver: [00:44:06] Journal entry.
David Leary: [00:44:06] Right. Humans take samplings, right?
Blake Oliver: [00:44:08] And even before you sample, you got to set a floor on what you're looking at. So the dollar amounts can be enormous. And fraudsters are smart. They figure out very quickly. The auditors never look at anything less than $10,000. So all I have to do is limit my fraud to less than that. And I'm going to avoid scrutiny. It's it's not that hard to trick the auditors, especially when they're, like 22 years old and they've never generated a financial statement in their life. And they're fresh out of school and they don't know anything. All they know is accounting theory. So like, tricking them is not hard, but I can be programed to look through every single transaction in a general ledger and spot the inconsistencies. So if an AI were trained on reviewing journal entries, you could replace the human who should have been reviewing the employees accrual entries in that account with an AI doing it at least as a first line defense. And I bet you that if you gave an AI a bunch of journal entries, like real journal entries as examples, hundreds or thousands of them.
Blake Oliver: [00:45:20] And then you gave that. I like an analysis that was performed by a human, explaining if this entry is correct or incorrect, like case studies. Essentially, if you provide an AI with enough examples of proper and improper accrual entries, and then you set it loose on a GL and had it go through all the GS, the AGS, you would it would do great. And it would. It would probably do better than 90%. And I'm basing that on the story. Last week we talked about the doctors and the diagnostic diagnostics diagnosis. Right. So we talked last week about how I beat medical doctors at diagnosing diseases. And it got 90% right on real case studies that had not been trained on. And this is just the current GPT four you can get from OpenAI. I mean, actually not even the latest one. It's not even Ford. It's just GPT four got 90% and the human doctors got 74%. Why is that? Because humans have a very limited scope of experience and an AI can have vast knowledge. So that's how it works.
David Leary: [00:46:36] So compare them side by side. Okay. So humans cannot look at every transaction. It's impossible human order.
Blake Oliver: [00:46:42] Right.
David Leary: [00:46:42] So they have to take a sampling. And when we take a sampling, there's a chance you're going to miss some whatever percentage chance that is, you're going to miss some. On the other hand, I can look at all the transactions that might hallucinate and, you know, create some extra things, maybe false positives or whatever. Right. But so that's the real study that has to happen. All you accounting professors that have your research departments you have to publish, those are the two comparisons because is the which which one's worse, the hallucinations that might happen or all the stuff being missed by the manual auditing efforts. The sampling.
Blake Oliver: [00:47:14] Well, I'm going to that's I'm going to say that it's okay if you have a little bit of error in the eye, because it's still more accurate than a human human. And you see that with self-driving cars, right? Self-driving cars in Phoenix and San Francisco. Waymo's the Waymo's that are all over the place here now have driven 25 million miles, and there's something like 76% safer than human drivers. So they don't have to be perfect, and they can save tens of thousands of lives because, like, something like 30,000 people a year die in car accidents caused by human drivers. So it's not about perfection. And in the case of like auditing, where the bar has dropped so low because of the talent shortage, because of the overregulation of the industry, because people don't have enough time, because of the flawed business model of audit firms like that. We could we could significantly improve the quality of external audits and internal audits just by employing AI auditors on the GL.
David Leary: [00:48:20] Or actually auditing every transaction.
Blake Oliver: [00:48:22] Yeah. And there have been lots of questions going on in the, in the, in the chat, like David H is saying, where was the journal entry approval for this? Macy's employees entries should have a separate approver for their entry. Yeah. And I'm sure that as David H says, you know, most Sox control environments have a segregation of duties for entries. But guess what, David? If that's written down but it's not followed, then it's meaningless. So unless the auditors are actually like making sure that the internal controls are being followed, it doesn't matter if they do a Sox report, it's irrelevant, because what matters is what's actually happening in reality. And if management overrides those internal controls by like giving an employee the ability in the accounting system to approve their own jobs, or maybe somebody is not actually reviewing and is just like hitting approve, approve, approve, approve, then it doesn't matter if you have those internal controls. So rather than focusing on like the internal controls, maybe we should just be focusing on the outputs, auditing the quality of these entries, like actually sampling them all. We can sample with AI. We can sample 100% of the adjusting entries, and I guarantee you that it'll do a better job than human reviewers. Because what's more boring than just reviewing journal entry after journal entry after journal entry all day long. People are going to do it.
David Leary: [00:49:53] You can't even see it in front of you. Like your brain, your eyes. You can't.
Blake Oliver: [00:49:57] You can't process it. In these companies, I bet you that the reviewers are just signing off without looking, because that's all that matters to the auditor, is that there was a date and a time stamp of somebody who reviewed this entry, not that the entry was actually correct.
David Leary: [00:50:10] Just get it out the door.
Blake Oliver: [00:50:11] Right. So that's the potential for technology. And you know, I really hope that it can, uh, it can raise up the profession and make audits higher quality and detect fraud. And it's a big opportunity for audit firms that actually want to do high quality audits. We keep talking about how we want to do higher quality audits and improve the value of what we're delivering. Well, here you go. That's the way to do it. Um. All right. So we are definitely not going to make it to all of our stories this week.
David Leary: [00:50:43] Well, let me do the ad and then let's at least cover the tariffs because it's like very timely, like and I don't think it'll take that long to cover. So let me do our third ad. Are you going.
Blake Oliver: [00:50:52] To start with the tariffs. Because if so then I'll read the third ad and I'll let you.
David Leary: [00:50:55] Yeah I'll get the tariffs open okay.
Blake Oliver: [00:50:57] Thank you to Cloud Accountant Staffing for sponsoring this episode in case you missed it. In case let me start that over. In case you missed the last 100 or so episodes, David and I have been discussing almost weekly that there's an accountant labor shortage. Regardless of the root cause, the problem is real. You all feel it. My social media feeds are full of firms attempting to fill open positions on their teams, but how can anyone increase their staff size if everyone is attempting to hire during a labor shortage? That's where cloud accountant staffing comes in. They will help you hire a full time team member for your firm that resides in the Philippines, how much would your firm change? Or for that matter, your life? If you could add 40, 80 or 120 hours of capacity to your firm in 2025? Cloud Accountant Staffing was founded by a firm owner who grew his firm using offshore talent, and now he is applying everything he learned to help you grow your firm. If your firm is in need of expert bookkeepers, accountants, CPAs or virtual assistants, head over to The Accounting Podcast promo focus. That is The Accounting Podcast dot promo forward slash C a s. And now let's talk about the really scary thing the Trump tariffs. This is what worries me.
David Leary: [00:52:18] And I don't know I'm truth social I'm just going to say Trump tweeted on Truth Social. I don't know what what you actually do, what you do on social, but is it a tweet? It's not really a tweet.
Blake Oliver: [00:52:28] It's a post I guess. Post. Okay.
David Leary: [00:52:30] It's a it's a truth truth social.
Blake Oliver: [00:52:31] Was it a truth ism a truth ism.
David Leary: [00:52:34] So on day one in office, a 25% tariffs on all products from Mexico and Canada and an extra 10% tariff on China. Because the extra 10% on China is because they didn't uphold their promises of stopping drug traffickers. So fentanyl makes China 60% plus 10% more, and the rest of the world's goods 20%. Now, what happened was right away, the Canadian the Canadian dollar is now at a four year low. The Mexican peso is the weakest since 2022. The China's yuan edged lower. So the value of the US dollar is increasing. Going back to what we talked about last week, which is the opposite of Bitcoin, right? Like like do you bet on Trump who really wants us to be to number one in the US dollar to be number one. That's the opposite of Bitcoin. But what's happening now Blake is you're seeing companies start making statements about these tariffs. So Walmart Lowell's AutoZone Dollar Tree. They're basically saying they're going to raise prices. Walmart. This is the Walmart CFO recently said that if president elect in regards to the tariffs, We never want to raise prices. Our model is everyday low prices, but there are probably will be cases where prices will go up for consumers.
David Leary: [00:53:41] Lowell's CEO expressed concern, saying they're talking to suppliers to understand how the tariff tariffs might affect prices. Autozone CEO they said they plan to hike prices even before the tariffs go into effect. And Dollar Tree, I didn't know this was already like dollar 25 tree. Apparently it's not anymore, but they're going to have to go up to become $1.50 tree. But so I went on a little research because I was wondering like, how is this going to affect outsourced labor? And so tariffs aren't directly on outsourced labor because a lot of accounting firms use lots of outsourced labor. Right, right. But as the dollar goes up, that means the outsourced labor is going to be cheaper. So this is actually good for accounting firms using outsourced labor that labor will be cheaper. And then if some of these countries that are manufacturing take economic hits because of this, now there's a surplus of labor also causing even more outsourced labor to be cheaper. And the tariffs don't do this. So in a weird way, this could actually benefit accounting firms. Their accounting firm profits could be up because of these tariffs which would be interesting. You need it to go shopping at Walmart.
Blake Oliver: [00:54:49] Yeah. I mean this is the thing that really concerns me is that like if the if the goal of the Trump administration is to bring down inflation, this is a surefire way to do the opposite, because the cost of tariffs has been proven time and time again to be borne by the importer. Us. Not China, not Mexico, not Canada. It's US consumers who pay the tariff in the form of higher prices. It gets passed on to the consumer. And sure, yeah, maybe a tiny amount gets absorbed by the manufacturer and maybe a tiny amount gets absorbed by the importer. But most of the time those their margins are already pretty thin, and so it has to get passed on to the consumer. So yeah, 25% tariff and an additional 10% on China. Would that make it 35%. You know that that would be like a huge increase in the price of everything imported from China. That's at Walmart, which is a lot of stuff.
David Leary: [00:55:54] Apparently it's a third of the stuff. They said two thirds is made in the US, but I can already see 2025. We're going to have a no guacamole, no avocado policy at restaurants. I can already see it. Well.
Blake Oliver: [00:56:05] Put the surcharge everywhere.
David Leary: [00:56:07] Chipotle. Chipotle.
Blake Oliver: [00:56:08] What's the policy?
David Leary: [00:56:09] Yeah, they wanted some. The guacamole I'm like no way. It's too expensive for those avocados from Mexico. And you can't even hoard that. You can't hoard the avocados because they don't last. You're going to have to pay the 20% extra tariff.
Blake Oliver: [00:56:21] So, I mean, the hope here that I've read is online, like the hopeful view is that this is simply a negotiating tactic, and that Trump is using the threat of tariffs to as leverage to get what he wants when it comes to Mexico and Canada, helping to stem the flow of illegal immigration. Get them to do it rather than us doing it and get China and Mexico. I don't know if any of it comes from Canada to stem the flow of illegal drugs across the border, but my thinking is that there's only so much that these countries can actually do because we have a demand problem in the United States. And this is always the case with black markets, is that unless you can do something about the demand, it's very difficult to stop the flow of illegal goods and immigration because people will find a way through all the holes in in all the gaps in the wall, both literal and figurative. And like fentanyl. How is China supposed to stop the flow of fentanyl when like you, fentanyl is so potent that like in a tiny package, you can ship enough fentanyl to the United States to make, like, I don't know, thousands and thousands of pills, maybe. It's it's insane. So you can't just deal with it on the, like, supply side. You got to deal with it on the demand side. That's my take on this. So you know, I don't I don't know if Trump's going to get what he wants. So and this could be like very bad for the economy. And I guess it's something that like what's the CPA perspective here if you're dealing with your small business clients is I mean this doesn't look good. Do your best to get away from supply chains that involve these countries.
Blake Oliver: [00:58:20] But that's really hard to do because it takes years and years to rebuild supply chains, and there may not be another source for the good you need. And this is why the swamp could end up getting bigger in in in Washington. So remember the last in the last Trump presidency, there were stories about how people would, you know, set up shop in the Trump hotel and, and work on getting exclusions to these tariffs. Yeah. The last tariffs. Right. So even though like in the first term Trump imposed tariffs but then allowed companies to lobby for exemptions. And many many many companies applied for tariff exemptions. There were over 50,000 requests to the US trade Representative and nearly 500,000 to the Commerce Department, and it prompted a huge surge in lobbying efforts, with law firms filing hundreds of thousands of exemption requests on behalf of companies, and studies have found that exemptions were more likely to be granted to companies contributing to Republicans, while those supporting Democrats were less successful. That is the definition of a of a political swamp. When you donate money and you get a like advantage over your rivals, like we do not want this sort of system where people are lobbying for exemptions to to get like a huge advantage in terms of their cost structure over their rivals. And it was very inconsistent and there was lack of transparency in how this was done. And we're seeing this happen again. Companies are engaging lawyers and lobbyists preemptively to navigate and get exemptions to these tariffs. And the tariffs are even bigger. So the stakes are even higher here. And this is what sucks for small businesses.
David Leary: [01:00:05] Like import rules start coming in when it comes to like Halloween costumes. And well, if it doesn't have a beard then you bypass the whole tariff and it has a beard, like all these crazy laws come in to play because of this negotiation, right?
Blake Oliver: [01:00:18] And workarounds and loopholes and, and the problem for small businesses. And this is the challenge for us as accountants. Advising small businesses is that they do not have the lobbyists and the lawyers to get these exemptions. So it puts small businesses at a potentially huge disadvantage versus the established players that can get it. And it also is a waste of energy because companies are focusing now on securing exemptions rather than improving productivity, creating jobs and lowering costs. So tariffs are taxes. I think that is what we need to do as a profession is we need to educate the public that tariffs are taxes. So when Trump says, I'm going to put in place a 25% tariff, it's not a punishment on China. It's a tax on Americans and American businesses.
David Leary: [01:01:12] Tariffs are taxes. That's the new shirt. That's your 2025 slogan. You have to put that on your your LinkedIn profile.
Blake Oliver: [01:01:19] You know. And look I know many of our listeners are supporters of the Trump administration, and I support many of the policies and prospective policies of the Trump administration. We were talking last episode about the Department of Governmental Efficiency. And like, I think that would be a great thing. We could probably cut a ton of bloat. And I love that idea, but this one just does not make sense to me. And the business community and the accounting profession have to do something to mitigate this risk, because this is the sort of thing that could trigger a recession or, you know, like, as we saw with the Tax Foundation analysis, could reduce economic growth, GDP could go down like 1.5% or more in a single year, cumulatively over many years. Like that's a lot over time. That reduction at the.
David Leary: [01:02:17] Bottom get hurt the most in a situation like that.
Blake Oliver: [01:02:19] And actually when you consider that like, I don't know, what do we have 2 to 3% GDP over the last year. Like most of that was caused by government spending. So if you strip out the government spending, the actual economic growth was less than the impact of these tariffs. So we would actually have net negative private sector economic growth if these um, well, I don't know what the analysis would be of the 25%, because I think they analyze like 60% on China and 10% on other countries. So they'll have to do a reanalysis. But it could it could wipe out the private sector gains. That's my concern.
David Leary: [01:02:56] So on that depressing note, should we get into our Thanksgiving weekend.
Blake Oliver: [01:03:00] Get into our Thanksgiving weekend? Yes. Thank you to everyone who joined us today. I hope that you are getting some time off this this Thanksgiving. And if not, don't worry, I'll be I'll be working with you tomorrow. I like I like getting things taken care of on Thanksgiving week. You know, it's nice. I don't travel anywhere, so it's easy if you are traveling. My condolences. My sympathies. Um. I'm looking forward to the parade. What do you think the balloon would be that represents this accounting mystery? Would it be like, uh, would it be like Scooby Doo with a green accounting visor?
David Leary: [01:03:37] It could be that.
Blake Oliver: [01:03:37] Can we make that the show artwork for this episode?
David Leary: [01:03:41] I mean, it could be the turkey being stuffed. Um. It actually. Is there a, like, Inspector Gadget or something, maybe, I don't know. Is that a balloon at the Macy's Day Parade?
Blake Oliver: [01:03:51] Inspector gadget?
David Leary: [01:03:52] Yeah, I don't know. Pink Panther. The Pink Panther was always kind of like in that inspector mystery.
Blake Oliver: [01:03:57] Oh, yeah. Thank you, everyone who joined us for this episode. Happy Thanksgiving. If you want to earn free CPE, go to earmark Dot app and sign up. Create your free account. You can earn one free continuing professional education credit per week. These are Nasba CPE credits, so use them for your license renewal coming up. And if you want to support us, subscribe to the earmark app. But you don't have to do that. You can use it right now, today for free to get a free CPE for having listened, go to Earmark App and find the The Accounting Podcast. The courses come out a few days after the episodes drop on the podcast feed, so if you don't see it right now, you know, just come back later and you'll get it. But you can get CPE for all of our past episodes as well. Happy Thanksgiving to AJ and Kemang and Ralphie. No pants says I thought Trump was trying to devalue the dollar. Yeah, like this goes to those counter. Uh, like like you can't do everything you want because it's not all going to line up. Right? And that's all we got. Thanks everyone. See you around here after Thanksgiving. Bye bye.