Bridging the Skills Gap for New Accounting Graduates

Guest: Dr. Josh McGowan, CPA from Troy University; Blake calculates the cost of the 150-hour rule; Minnesota says AICPA & NASBA are not the regulators; Accounting department budgets at risk

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• (00:00) - Preview: The struggle is finding students who want to be an accounting major
• (01:08) - Josh McGowan joins the show
• (02:27) - Why should a student choose to be an accounting major
• (09:35) - How is accounting enrollment trending at your University?
• (12:25) - David asks Josh survey questions from a CPA Journal article
• (23:39) - How do we fix the work/life balance image of bigger firms
• (27:33) - Josh tell us your personal accounting journey
• (37:27) - Blake shares some listener mail
• (42:08) - Are students with accounting exposure in high school better prepared for college accounting classes?
• (43:26) - Lets talk about the 150 hour rule with Josh
• (58:20) - Is the branding of the accounting profession the bigger problem?
• (01:09:08) - What if we change the 150 requirement and still have a pipeline issue?
• (01:13:25) - Should accountants even need a bachelor's degree?
• (01:22:40) - Wrap up and where to find Josh online

Show Notes

The Beef Between the AICPA and Minnesota Over the 150 Hour Rule Heats Up

https://www.goingconcern.com/the-beef-between-the-aicpa-and-minnesota-over-the-150-hour-rule-heats-up/

 

An Update on the Future of Accounting Education             

https://www.cpajournal.com/2022/11/14/an-update-on-the-future-of-accounting-education/

 

The cost of the 150-hour rule: $2 billion 

https://www.accountingtoday.com/opinion/the-cost-of-the-150-hour-rule-2-billion

 

Former Accounting Team of FTX US Auditor Armanino Sets Up Shop as The Network Firm

https://www.coindesk.com/tech/2023/03/01/former-accounting-team-of-ftx-us-auditor-armanino-sets-up-shop-as-the-network-firm/

 

Entigrity Honored with 'Dream Companies to Work For' and 'Best ...         

https://www.prnewswire.com/in/news-releases/entigrity-honored-with-dream-companies-to-work-for-and-best-employer-brand-award-by-world-hrd-congress-301751496.html

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Full Transcript Available Upon Request: [e-mail]

Creators & Guests

Host

Blake Oliver

Founder and CEO of Earmark CPE

Host

David Leary

President and Founder, Sombrero Apps Company

Guest

Dr. Josh McGowan, CPA

I teach accounting to students, investors, and business owners. Feel free to ask me anything accounting! Go Trojans!

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!

Speaker1: [00:00:04] One of the things I struggle with and just kind of entire debate is we talk about like the accounting degree and the CPA designation that are the same thing. And it sounds like people are having trouble getting accounting students and we'll get into this later. But it's not so much, hey, like always has to do with basically public accounting and the CPA exam. But where the struggle is right now is getting high school seniors and college freshmen to say, I want to be an accounting major. Coming to you weekly from the NPR recording studio. This is the Cloud Accounting Podcast.

Speaker2: [00:00:49] Hello and welcome to The Cloud Accounting Podcast. I am Blake Oliver.

Speaker1: [00:00:54] I'm David Leary.

Speaker2: [00:00:55] And we are joined today by a special guest, Dr. Josh McGowan, co-host for this episode CPE and associate director of the School of Accountancy at Troy University. Welcome to the show, Josh.

Speaker1: [00:01:08] Hey, guys. I really appreciate you having me. Just looking forward to this discussion. Josh this would be a correct title that you have the most Twitter followers of any accounting professor. Oh, I don't know. That's probably pushing it. I'd like to claim that, but I'm not sure. Well, that's.

Speaker2: [00:01:22] The reason that I wanted to invite Dr. Josh on the show, because I follow everyone I can in the accounting world on Twitter. And Josh, you post the best posts about why people should become accountants. You are super bullish on the accounting profession. You talk about how accounting is a great major and when you do that, it gets tens of thousands of views on Twitter. So if anyone is out there spreading the good word and the gospel about accounting as a career, it's you. And so I figured, you know, we should have you on the show because we want to talk about that. I want to be more positive about accounting. I know that the profession has its challenges, but I'm also really bullish myself on accounting. I love that I'm a career changer who had a great time in accounting. I want to talk about that. So let's do a little role play, if you don't mind. Let's assume that I am a, you know, coming into Troy University and I'm a student and I'm not really sure what I should major in, you know, convince me to major in accounting. Tell me why. Why should I be an accounting major? Oh, yeah.

Speaker1: [00:02:25] This is right up my alley. I like that. All right. I've actually had five students change to accounting this week, so that's pretty cool. Oh, wow. That and kind of usually how the conversation goes. Um, the student comes in and they say, you know, I'm enjoying principles of accounting. I'm enjoying kind of the concepts of it, how it relates to business. Number one, a lot of times they're very worried about the math aspect of accounting. That's kind. So I always start there and say, if you can add, subtract, multiply and divide, you're probably good. As it relates to math and accounting, it's more about, you know, utilizing the numbers to help companies and things of that nature. And then we usually chat about, you know, if somebody comes in and they're just kind of considering accounting. One of the big things I like to talk about is just the flexibility of the career path. You know, there's a lot of degrees, a lot of careers out there that if you major in something or you go to work for a certain company, you're kind of pigeonholed. And if you do want to change to something else, you're not really going to be using any of the, I guess the knowledge you you gained in college or whatever the case may be. Accounting is completely different. So I always say, you know, none of us came in, you know, when I was a kid, I wanted to be either a professional athlete or an actor or, you know, we all are a fireman. We all had cooler dreams of being an accountant.

Speaker1: [00:03:43] But one thing accounting does is it lets you kind of combine your knowledge with a passion. So there are so many every and I always tell them, Hey, name an industry name, you know, a restaurant, your favorite restaurant in your hometown, and we'll give it to me and I'll say, You know, those people we're really good at, they're really good at cooking, great food, they're good at service. And I'm like, But a lot of times the people who run businesses aren't the best at numbers. And kind of that's where we come in as accountants, you know, we bring value to the numbers. We help businesses thrive. And just, you know, you can go tell them, hey, I like I love being outdoors. I love the beach. I did one year in public accounting and the next year I went into I worked for a boat company where I got to take out boats all the time, do all kinds of stuff, but I was doing the financial stuff. And then I also mentioned, you know, a lot of times the people who understand the financial side of the companies typically go up in upper management. It's a lot easier path to promotions and things of that nature. So that's kind of my spiel and it works pretty well on a lot of times. And it's I say it's a spill, but there's a lot of truth in it. You know, accountants are constantly changing industry and changes things of that nature. So yes, I am very positive about the accounting major.

Speaker2: [00:04:52] That's great. Yeah, I agree. The the diversity of what you can do in this profession versus other professions is spectacular. If you go and become a lawyer, you're often pigeonholed into a particular area of the law and that becomes your expertise and you can't really move around that much. It's challenging, right? Or if you're a doctor, same thing. You got to specialize and then, you know, that's your career. But in accounting, you can change careers multiple times. Absolutely. And you've got to be a lifelong learner, too, Right. That's really important is you got to want to learn new things if you're going to be good at them.

Speaker1: [00:05:24] Yeah. And even I mean, even if you just think about different types of accounting, you can easily switch from, hey, I'm. I'm worried about retirement. Let me go work for a state entity has a great retirement. You know I really have a calling to give back to my community. Okay, let's go. You know, let's get into some not for profit or some something of that nature. So, yeah, just whatever your passion is, there's there's an easy way to kind of get to it after you get out of college.

Speaker2: [00:05:51] Thanks, everyone, who's joined us today on the live stream. We've got Michael in the chat. We've got hazardous items in the chat. My favorite I think username of all time Hazardous says, I don't mean to sound disingenuous to accountants, but lawyers and doctors can switch careers just as much. I know people that went from corporate law to their own practice. Same with doctors. I guess that's true. I don't know. What do you think about that, Josh.

Speaker1: [00:06:16] Yeah, I mean, that is true. I think it's just more can't come, can't think of a word, but maybe more distinct. For example, you could go from any industry to to not even you can use your accounting knowledge to kind of own your own business very, very easily. Right. It's the skill set completely, yes.

Speaker3: [00:06:37] If I'm a dentist, right. I if I open a restaurant, the root canal expertise I have isn't going to help me in the restaurant. But if I'm an accountant, I might not be a good cook, but I'll still be able to make good decisions helping to run that restaurant because I have that accountant skill set. And does it matter what business I go into? If an account becomes a dentist, they're going to have a set of skills, you know? Yeah, exactly.

Speaker2: [00:06:58] That's a really good point. I love that. David The business, the business acumen is what allows you to do so much different stuff to become a business owner. If you know the accounting right, all the best entrepreneurs will tell you that like you need to know the numbers. Even if you watch Shark Tank, that's like the number one thing the Sharks talk about is if you don't know your numbers, you're going to get destroyed. And so, yeah, I think that's a good argument to go into accounting.

Speaker1: [00:07:23] And think, oh.

Speaker2: [00:07:24] I'm sorry, go ahead. No.

Speaker1: [00:07:25] I think that's one I kind of focus on that in the in the earlier level classes, like the very first accounting class, maybe not. You know, we're actually really considering moving away from teaching all the bookkeeping aspects at all in principles one, and just talking about how you can utilize the numbers to improve companies or, hey, you want to start your own business, Here's the here's what you need to be looking at. You know, with your accounting. Here's what you actually need to know. Maybe, you know, like I said, get away a little bit from the bookkeeping and turn it into a decision making, because when I have a class of, say, 80 to 100 students in my principles of accounting one, and I'll say how many how many people want to own their own business when they get out of college and, you know, 85, 90 hands go up. So that's what people that's what this generation wants to do. They don't want the 9 to 5. And I do think accounting, the more it's branded that way, the better it is for us, because it's true. It really is one of the best degrees, if that's your goal. Yeah, that's.

Speaker3: [00:08:20] True. Because you're right. This whole generation wants to work for themselves, even their content creator, whatever it is they want to do. And you really maybe accounting should be rebranding this early to an earlier younger generation. You don't know what you want to do, but I guarantee you if you if you get an accounting degree, you're going to be successful at these other things you may want to do. Right. And push people that way.

Speaker1: [00:08:41] Absolutely. Yeah.

Speaker2: [00:08:42] Michael says. I went from public accounting tax to industry as a cost accountant to GM, to VP, to president of a couple of different companies. Accounting is the language of business. It has served me well.

Speaker1: [00:08:56] There's a lot of negativity in our profession, but at the end of the day when you ask people, Would you do it again, it's almost unanimous that yes, I would major in accounting again. It's led me down a great career path.

Speaker2: [00:09:07] I think the thing that they say is, you know, maybe I wouldn't have gone into public accounting again. Right? Maybe I wouldn't have done the traditional path, the Big Four path. I'm curious to know, Doctor Josh, how is enrollment trending in your programs at Troy University? I've seen accounting professors say that enrollment is down as much as 20 to 40% in their programs. Are you facing similar challenges.

Speaker1: [00:09:32] I guess, to begin? You know, college enrollment as a whole is down. I think that's, you know, well-established at this point. So at some point, it's a little hard to tease out accounting enrollments from that overall decline. But I do agree that accounting enrollments are down. Even when you take that into, you know, take that into account. And then we had COVID as well. We are our accounting program undergraduate is completely on campus. So that's another confounding factor we've had to deal with. But we were down the last couple of years. I don't think it ever got to be that dramatic 40% or anything of that nature. But we have some of the largest kind of junior level classes that we've had in a long time right now. So we're starting to see a good rebound. And maybe, you know, maybe that's because we're a little bit more proactive in recruiting. Previously, when I when I came through, I Googled, I probably was probably the honest door. I can't really remember, but I Googled, Hey, top business majors with top salaries and accounting was always 1 or 2. And I was like, Hey, that sounds like a good choice nowadays, you know, you Google that and you get data analytics and we're kind of all almost very similar now. We don't stand out. And I think that's. Could be a reason. We're struggling a little bit.

Speaker2: [00:10:53] The starting salaries and I think I saw something that you posted about how your program is going to be hybrid now. Is that right?

Speaker1: [00:11:01] Yeah, Yeah. We're just just our master's program. So we're we do a mac that is really CPA exam focused. It's not just for, hey, I want to get a match. If you're in our program, you probably want to be sitting for a CPA exam because, I mean, we do a lot of other stuff, but that is one of the focuses. But yeah, it's pretty cool. We call it high flex, and so we're going to be able to stream classes live so you can, you know, log on to Zoom or teams come in, participate, you can come in person, sit in class, or you could just kind of watch your recording at your leisure and watch kind of what And that's not completely new. Those formats. But what is kind of new is, you know, student can do come to class one week and next week, hey, they're maybe they're working and they need to work. So they just watch your lecture online and the next time, hey, we got an you know I'm a work in professional and I'm going to do hours later on the day, so I'm going to log in and join live. So we're excited about it. Um, we're going to see how it works out. But definitely something I think is more flexibility we give to students better. Oh yeah.

Speaker2: [00:12:04] Both in firms and in schools. And David, I believe you have a story you asked me to put up on the screen, so I'm going to share that now.

Speaker3: [00:12:12] So this story is apparently it just popped into my feed yesterday, so I don't know if they added a sentence to the story. They did something to make it resurface. But it's it says when you click on it, right, it says it's from November of 2022. Correct. When you have it up on the screen here, let's see.

Speaker2: [00:12:28] It says September, October 20th, 22.

Speaker3: [00:12:31] Yeah. So this and it's great that Josh is here because two of his formal educational peers wrote this long form article. So it's Mark Dawkins, who's a PhD, CPA, CMA, CGM A, a professor at the College of Business at the University of North Florida. And then it's Michael Dugan, who's retired, but he was the distinguished chair of accounting at the whole College of Business at Augusta University. So they penned this long article that's really well researched, and they talk about some of these even these stats about enrollment, which you just kind of touched on basically from the spring of 2020 to spring of 22. Overall, college enrollment is down 9%. It's the largest. It's declined in 50 years. But the crazy thing about this is high school graduates are approaching all time highs. Now, the high school graduate thing in five years is going to start to decline because of the the declining birth rates. But then specifically for accounting, people are seeing accounting majors are down 35 to 50% since 2016 and they eventually get to some conclusions. But one thing I want to ask, since Josh is here, they talk about the gaps, right? The gaps that are in the knowledge that's happening. People are like, I'm not getting the training to eat even with my accounting degree. So Josh, just be a survey. I like to do these quizzes for Blake, but since you're here, so in your accounting department, do you teach data analytics?

Speaker1: [00:13:56] What we do. We have a class entitled Data Analytics for Accounting.

Speaker3: [00:14:01] Okay. So 64% of respondents for accounting departments said they do that. What about it? Audit.

Speaker4: [00:14:08] We have a accounting information systems class, which I would think not.

Speaker1: [00:14:13] It's I don't know if it completely connects it to audit, but you definitely go into the systems related to accounting.

Speaker3: [00:14:19] So 63% of departments said they do that. It risks and controls.

Speaker4: [00:14:24] Probably in our auditing class is where we cover it. Like I'm not.

Speaker1: [00:14:29] Don't hold me to any list. But I believe so only.

Speaker3: [00:14:31] 43% of county departments are doing that right now. It governance. You guys? Probably not. Probably not. Only 41% do that. Predictive analytics.

Speaker4: [00:14:42] I'm a big fan of that.

Speaker1: [00:14:44] I mean, that's what to me, that's what data analytics is, is using the data to predict. So I do think we're doing some of that in our data.

Speaker3: [00:14:50] But only 40% do that Cybersecurity.

Speaker4: [00:14:53] Na na Accounting Today.

Speaker3: [00:14:55] Well, you're only 40% do that in their accounting department. Digital acumen. Which feels broad, but I don't know.

Speaker2: [00:15:02] Digital acumen is that like technology skills or something like that.

Speaker3: [00:15:06] This is when the survey, right?

Speaker2: [00:15:07] They don't define it.

Speaker4: [00:15:08] Yeah, I would say yes, because we've made a big push.

Speaker1: [00:15:11] To put technology in every class because we kind of look at technology as you got to build on it. A lot of people stick it in one class or learn it one time, and then by the time they go out to work, you know, Well, I forgot. Yeah.

Speaker3: [00:15:24] So of learned to draw shapes for flowchart diagrams in his tech class, right? Yeah. But only 23% claim they do digital acumen. And then this is the other shocking one system organization control. So SOC engagements. Do you offer any training like that?

Speaker4: [00:15:41] We cover it because, you know.

Speaker1: [00:15:43] I'm lucky because I was a student in our program not too long ago. So I do got a little background on some of the classes.

Speaker3: [00:15:49] But only 23% of accounting departments are even covering that. So it just shows like in general. People are graduating and they have to learn on the job for three years. Skills gaps there with the.

Speaker2: [00:16:00] Well, I have a question, though. Maybe maybe this was included in that. But like, do you guys teach people how to use QuickBooks? Are there A programs where, like you actually use general ledger software when you're learning how to do accounting? Because for me, I was running a bookkeeping company while I was going back to school for accounting. And the biggest benefit of that was I got to try all of the journal entries that I was learning in the software and see the impact on the PNL and the balance sheet and all that. Do you guys do that?

Speaker4: [00:16:31] I would say to.

Speaker1: [00:16:32] Begin, I would say most accountant, most schools of accountancy are accounting programs, do not teach QuickBooks or something of that nature. That's not common. We do. Um.

Speaker4: [00:16:44] I think that's a couple. There's a couple reasons.

Speaker1: [00:16:46] One, we, I mean. Most of our students aren't going Big Four. Most of our students are going to regional accounting firms or going into industry where they got to have that skill. You know, when you hire an accountant and they don't know QuickBooks, it's like kind of, you know, a promo. Business, business owner perspective. We're like, well, what does this person know? Because it's almost synonymous nowadays with accounting that you understand at least how to pull reports and stuff.

Speaker3: [00:17:14] So accounting system, it doesn't have to be QuickBooks, but in general, like most people are coming out. Never touched anything.

Speaker2: [00:17:20] Yeah, we just did pen and paper in my classes. Right?

Speaker4: [00:17:23] So we do have QuickBooks.

Speaker1: [00:17:24] We also introduce them to Microsoft BI and we think that's pretty important getting back to some like data analytics piece. But yeah, the QuickBooks, we actually use it in our class, our accounting information systems. So that's where we're getting some of that at.

Speaker2: [00:17:39] And tax software does. Do you learn how to like fill out forms in the tax classes.

Speaker4: [00:17:45] All about So we're one of the few schools with two tax.

Speaker1: [00:17:47] Classes in the undergraduate curriculum. Most only have one. We have one class fully dedicated to individual tax and one to corporate tax. And so all of our tax students go through Jovita, which is that voluntary income tax assistant program. So they're all using tax software and basically preparing tax returns for low income individuals in our community.

Speaker2: [00:18:09] So we got a listener question. D-hall says accountants and finance professionals in management have little desire, little time and shallow skills needed for training and grooming the next generation. How should this problem be addressed?

Speaker3: [00:18:23] Well, before before, Josh answers that, I want to finish the conclusion from this article because it's kind of a layered question to this question, I guess. Okay, we'll come back to it. So, so it really layers on because it's basically I'll read this quote, The authors fear that without these major changes and you can scroll in the article, Blake, to see the changes. If you guess which the number one one is right. Okay. One 50 hours, right. Without these major changes to the profession, accounting enrollments will continue to decline at both undergraduate and graduate levels, thus jeopardizing the sustainability of many accounting programs. In turn, this outlook will adversely impact the quality and quantity of new entrants to the profession, which may lead to issues of the integrity of the auditing process and the financial reporting system itself. So is this a fear of yours, Josh? And this ties into the other question, right? If people don't become accounting graduates, you don't have a job, then who's going to train them? In the same time, we're getting the comments that somebody says, hey, we can't train them in our firms. Like who's going to teach accounting?

Speaker4: [00:19:25] I won't say don't lose sleep over that by any means.

Speaker1: [00:19:29] I there's definitely issues with our profession. And that list, you got a great list right there on the screen. Um, some of me thinks it's a little cyclical cycle. We're in a cycle. Um, one thing I always think about is man in general, I know there's fringes, but the economy has been really, really good for everybody who's 25 and under. We've never really, you know, that generation, even my generation, we've never gone through a big recession since we've been adults. And that's one thing with college enrollments in general, the economy is good. Like you were saying, high school students, what are they doing right out of high school? They're not going to college because they can go make a great wage, a great career. Right now. That's not always the case. So you typically, when we see the economy go down. College enrollment goes up. It's almost a direct correlation in a lot of sense.

Speaker4: [00:20:22] I with our accounting program. Like I said, we haven't had the.

Speaker1: [00:20:25] Dramatic decrease other programs.

Speaker4: [00:20:27] Have had. Um, if we were down 40% in two years, yeah.

Speaker1: [00:20:33] I'd be worried about that. 100%. That's a huge decrease. That's. That's scary.

Speaker2: [00:20:40] Well, based on what? The survey. Little quiz that David gave you, it sounds like your program is more ahead of all the other ones, right? I'd be scared if I was going into an accounting program or teaching in an accounting program that wasn't doing those things that were recommended in the article, that weren't teaching the information skills, the data analytics, the digital acumen, the not incorporating technology into the curriculum. You know, that's a challenge. Some of these requirements or some of these recommended changes in the article that David brought. Number one, drop the trigger warning, 150 hour requirement for CPA eligibility. We'll talk about that later in the episode. Extend the 18 month CPA testing window perhaps to 3 to 4 years.

Speaker4: [00:21:21] Which has been done.

Speaker2: [00:21:22] That's being done. That's great. Slowly increase starting salaries to compete with other fields, including data analytics, supply chain, logistics, finance and Ms. Computer science. Provide work life balance by reducing work hours and allow CPA exam candidates to qualify for the exam by reading or apprenticing under another CPA. I wonder what that means exactly? Like, does that mean not not having the same requirements? That one's unclear to me.

Speaker3: [00:21:50] Well, I think I think the way I understand it is maybe you didn't get your degree. Maybe. Maybe you have your degree. But you're just working for an accounting firm for a decade. Like people that are later in life, if they can if they've gathered enough skills just working and they could pass the exam, let them go get the CPA. Yeah, we just it's another it's just pulling down these barriers because at the end of the day, this is not about dumbing down the profession. It's about a supply issue. Like we just we need to get 300, 400,000 new people to fall in love with accounting and think it could be a career for them. Yeah.

Speaker4: [00:22:26] And if you could you pull that list back up one more time. Yeah. Yeah, sure.

Speaker2: [00:22:30] Yeah, no worries.

Speaker4: [00:22:32] One of the things I struggle with.

Speaker1: [00:22:34] And just kind of entire debate is we talk about like the accounting degree and the CPA designation as a the same thing.

Speaker4: [00:22:45] And it sounds like people are having trouble getting accounting students.

Speaker1: [00:22:51] And we'll get into this later. But it's not so.

Speaker4: [00:22:53] Much hey, like always has to do with basically public.

Speaker1: [00:22:56] Accounting and the CPA exam.

Speaker4: [00:22:58] But where the struggle is right now is getting high school.

Speaker1: [00:23:01] Seniors and college freshmen to say, I want to be an accounting major.

Speaker4: [00:23:06] And I personally don't think a lot of this.

Speaker1: [00:23:08] Stuff is on their mind. Maybe it is. But at least when I talk to my students.

Speaker4: [00:23:13] That's not the stuff.

Speaker1: [00:23:14] That's on their mind. Their stuff is what can I do with accounting? You know, What is it? Something I'm going to enjoy?

Speaker2: [00:23:20] What about the stuff that we see on Reddit? You know, the work life balance in the big firms? It's not positive. It's a lot of complaining. Do they express concerns to you about what it's going to be like to work as a staff accountant in a big firm? Definitely.

Speaker4: [00:23:35] Let me I'll.

Speaker1: [00:23:36] Tease. Work life balance out of here. That's very important because, I mean, that's just been going on, I think, for years and years. And it is it that part has definitely trickled down to a freshman in college that, you know, they know somebody that works in accounting and they. Yeah, that's part of it.

Speaker2: [00:23:53] Yeah. I feel like that's got to be a huge part of it because because I mean the, the kids these days, like I'm just trying to put myself in their shoes, right? Like, I graduated. Josh I get the feeling like you're kind of similar age. You know, I'm almost 40. I graduated into the Great Recession and I couldn't get a job at Barnes and Noble. I had to go work at Starbucks and I got really good at making cappuccinos. And my my college degree was useless because it wasn't in anything practical. And that's why I went back for accounting. But the demographics have like completely shifted in not that long. And now we don't have enough workers. We had all these people retire during COVID. We've got a shortage of workers in virtually every single industry, every profession across the board. And so if you don't want to work 60 hours to make a living, you don't have to. But the big firms are still not flexible in this regard. They're still requiring people to come in and work these long, busy season hours. But there are firms that aren't doing that right. There's lots of really great smaller firms that are offering flexible work, that are allowing part time roles. You can work 30 hours a week if you want at these firms. So like, how do we get maybe there's not enough of those firms, but how do we get these kids away from these big four recruiters that are bringing them in? And then they have a terrible experience and then they quit accounting completely.

Speaker3: [00:25:15] But is it the recruiters or is it the programs that are just pumping out there like factories? Is it the universities or is it the recruiters?

Speaker2: [00:25:22] Well, they're tied together, aren't they? Right. Like aren't these aren't these programs funded in a large part by like big accounting firms?

Speaker4: [00:25:30] Definitely. They're getting.

Speaker1: [00:25:31] Donated or getting money.

Speaker4: [00:25:32] From them. And I think I mean.

Speaker1: [00:25:35] It's ingrained in a lot of the cultures. I think in a lot of accounting programs that, hey, if you don't go Big Four. What's wrong? You know what I mean?

Speaker4: [00:25:43] Like, is.

Speaker1: [00:25:44] There something wrong with you? Were you not smart enough? Did you not, you know, make good enough grades? And I agree that's completely the wrong way to think about it.

Speaker3: [00:25:51] Well, Josh, did you go? So you you're young, relatively speaking. You said you did one year. Was it at a Big Four?

Speaker4: [00:25:59] It was a pretty large regional firm.

Speaker1: [00:26:01] Not Big Four.

Speaker3: [00:26:02] Okay. And why did you decide to go work on a boat after one year?

Speaker4: [00:26:06] I, um. My story is a little unique. I had a really great partner.

Speaker1: [00:26:10] She was an awesome, great coach. She's the one that recruited me to the public accounting firm, and she left for another position. And it just it wasn't the same for me after that. So. So and I just started looking for another opportunity.

Speaker2: [00:26:23] What were the hours like for you when you were a first year auditor?

Speaker4: [00:26:27] Uh, busy season. I just don't think I ever worked over 55 hours a week. That was probably the top.

Speaker1: [00:26:34] And I know.

Speaker3: [00:26:35] That was reported on your time sheet. Or is that right?

Speaker4: [00:26:38] Right. Yeah, that's a whole nother question.

Speaker1: [00:26:39] Right.

Speaker4: [00:26:40] But get back to what.

Speaker1: [00:26:41] Blake was saying about these newer firms.

Speaker4: [00:26:43] I think one thing, it's going to just take some time. I think we got great.

Speaker1: [00:26:48] New firm owners that are really taking things the right way. And over time, the competition, I think, are going to win out in a lot of cases. But of course, that takes some time. But I think there's one.

Speaker4: [00:27:00] Um, Brandon Hall is on Twitter and.

Speaker1: [00:27:03] I've talked to him a little bit. And one way he, you know, he, I believe how you get paid and I hope I'm not wrong with this, but it's based on, you know, how much you bill out is. And I would like that because one thing I have a big issue with right now is accounting firms are hiring sophomores and juniors. They sign a contract for, let's say, 60,000 starting salary.

Speaker4: [00:27:26] That salary.

Speaker1: [00:27:27] Does not change at.

Speaker4: [00:27:29] All based.

Speaker1: [00:27:30] On whether they're just a four year accounting, you know, four year student undergrad and they go to work for them. Or if they have a master's with all four parts of the CPA exam passed.

Speaker2: [00:27:40] Wait, so you're telling me that extra year and the CPA exam doesn't get me anything additional in terms of salary?

Speaker4: [00:27:48] In my experience, it didn't it?

Speaker1: [00:27:50] I believe now you probably get a bonus, a one time bonus.

Speaker2: [00:27:54] I got I got one of those. Right. A few few thousand dollars helped to offset the exam fees and whatnot.

Speaker4: [00:27:59] Yeah, typically, obviously you're going to be first in line for.

Speaker1: [00:28:02] Promotions down the road.

Speaker4: [00:28:03] Right. But from my.

Speaker1: [00:28:04] Experience, no, there's no change in starting salary. That's a huge issue to me.

Speaker2: [00:28:09] So the firms themselves don't value the fifth year the way that they it seems that they should like if the fifth year is making CPAs better at what they do, then why wouldn't the firms want to pay more for it? But they.

Speaker4: [00:28:23] Value the CPA.

Speaker1: [00:28:24] License, right?

Speaker4: [00:28:26] So so that's the funny thing.

Speaker1: [00:28:28] A year later or six months later when they actually get their CPA, you know, because you gotta have a little work experience in there. I guarantee you they're billing them out at a higher rate to their clients. Right? First year CPA is billing out higher than that first year without a CPA by their name.

Speaker2: [00:28:44] And we know that if you get your CPA, your lifetime earnings bump up a lot because annually you're making 10 to 20% more than your peers on average. And of course it can be a ton more if you advance into the partner ranks at a firm. It's just unbelievable, right? But even if you don't, you're still making a significant, let's say, material amount more in your lifetime from getting the CPA. So it's worth it in the big picture sense. But it seems like up front in those first few years, there's not the reward. And I feel like that's part of the problem.

Speaker4: [00:29:16] And that's part of this generation.

Speaker1: [00:29:18] Not this generation. I hate saying that because I'm pretty.

Speaker4: [00:29:20] Much these darn.

Speaker2: [00:29:21] Gen zers you know.

Speaker4: [00:29:23] I hate you said.

Speaker1: [00:29:24] I'm 29, so not not close. Oh, my.

Speaker4: [00:29:26] Gosh. Quite.

Speaker2: [00:29:28] You're are you even a millennial, I guess. I guess you are. Because right at the edge. I'm on the I'm on the very beginning of it because I'm 39. So the 20 years would be the 19 would be like the youngest.

Speaker4: [00:29:41] Yeah.

Speaker1: [00:29:41] So it's still a generation below us. So we're blaming. Yeah. Um, but you know, it is about right now. I mean.

Speaker4: [00:29:48] A lot of people, a lot of people in their.

Speaker1: [00:29:50] Generation in college have side hustles and have started things on YouTube or TikTok, and they're making pretty good money. And so it's hard to look down the future and write the CPA. If you get a CPA, you're most likely going to make a lot more money than somebody that comes out with a data analytics degree, even though right at first y'all are probably making about the same. But five years, ten years down the road, there's.

Speaker4: [00:30:13] Probably a big difference in your earnings.

Speaker1: [00:30:16] That's hard to impress on anybody right now. It's definitely more about, Hey, what can I get right now?

Speaker2: [00:30:22] Yep. With the the immediacy and you know, people are critical of that. Some people are. But I feel like, you know, how can we how can we criticize that? I mean, that's just.

Speaker4: [00:30:33] At. Yeah.

Speaker2: [00:30:34] I don't like the way the way that the way the economy is headed. I feel like even even if we hit a recession, they're still going to be demand for workers. We've seen this already. Like the Fed keeps raising interest rates and people businesses are not letting go of their workers because there's a shortage. And they spent so much time and energy getting these workers and and even these headline numbers where we see, oh, tech companies reduce their workforce by like five, 10%. It's not material in the scope of the economy. It's it's nothing. It's like a few percentage points maybe. And in the accounting firms, I think, David, you saw a story like BDO laid off some people. We saw one of the big four laid off like 5% of their consulting people. Yeah, I.

Speaker3: [00:31:18] Think it's the advisor consulting divisions, right? Because those are the contracts that are probably getting pulled back.

Speaker2: [00:31:23] The M&A deals are slowing down and stuff, but it's like the people who have anybody else who's not in that kind of deal making role. They're doing great. And so. Yeah.

Speaker4: [00:31:36] Yeah. I mean.

Speaker1: [00:31:37] You got my email. It's blowing up constantly. Please. Do you have anybody left? All right. Is there any student left that does not have a full time job yet? So it's like, no, you should have started two years ago.

Speaker4: [00:31:49] I mean.

Speaker2: [00:31:49] We hear stories about how, like, students are completing their first year of accounting and then getting offers.

Speaker3: [00:31:57] 100% to be interns. I mean, Norma, I think, is in the chat, one of the accounting twins, like she got sophomore year, basically you took two classes of accounting in your you're getting internships at top ten firms. That's incredible. And then and then then before you even finish your master's in accounting, they're getting you to commit to a contract. Right? Right. And like, in my opinion, is don't even sign it because there's somebody going to hire you anyways a year from now, two years from now, you don't you don't have to commit to any of these firms. They're. So what's.

Speaker4: [00:32:27] What's.

Speaker1: [00:32:27] Pretty typical is you intern your junior or senior year and after an internship, if everything goes well, you know you like the company. That's when a lot of students are signing their contracts and then going back and getting your master's. But yes, signing even that is kind of a little strange because right in that year, starting salaries are probably going to at least move.

Speaker4: [00:32:47] Up a little bit.

Speaker1: [00:32:48] And you're missing just like a, you know, an annual cola pretty much. And so you're kind of missing out on that as well.

Speaker2: [00:32:56] Heather said, I'm curious if students are walking away from the CPA or accounting specifically. I think you got to that a bit in one of your answers. Josh, what do you feel like it is?

Speaker4: [00:33:07] That's my yeah, that's my.

Speaker1: [00:33:08] Big thing with kind of a larger debate is it's we're losing accounting students.

Speaker4: [00:33:14] We're losing accounting students. And why is.

Speaker1: [00:33:16] That?

Speaker3: [00:33:17] Yeah, that article actually says, though, firms basically when they hire somebody with an accounting degree, half are just not even going to go sit for the CPA. They just don't care. And so it's yes, that's the biggest problem here, right, is if we don't, we're losing accounting students. And then the people that do at least become accountants, they don't even want to be CPAs. Yeah. And so that's the ripple effect of this.

Speaker2: [00:33:39] The thing I don't like is the CPA, is that the CPA has been a must have. If you want to succeed in the accounting profession, you go get your CPA. That's like no brainer, right? But I feel like that's changing and I don't like that. I mean, maybe that's fine. Maybe that's not a bad thing. But I feel like it's going to diminish the value if that happens. If it's not a must have and it's a nice to have, then why would anyone pay me a lot more for it? Right? The value will diminish in the marketplace. That's the risk. Potentially got to rebrand.

Speaker3: [00:34:09] It to CPA. Plus that indicates premium, like.

Speaker2: [00:34:14] Just make it a subscription. Allow me to spread out the cost of obtaining the CPA over my entire career. Perhaps. Right.

Speaker4: [00:34:20] Do some 399 a month.

Speaker2: [00:34:22] Yeah, exactly. Yeah. I just wanted to share with you some nice listener mail we got. Nathan said, Hey, Blake, we found your podcast about a year ago and use your podcast as education for people looking into the accounting field. We started our firm two years ago, both of us coming from audit and data backgrounds. We really appreciate everything you're putting out for the content and hope one day we can help be the change that is needed for the CPA profession. Nathan Gauger I think that's Gauger. Apologies if I mispronounced that co-founder at Blue Heron CPAs. Thank you, Nathan. That's very kind of you to write in. And a reminder to our listeners, if you want to let us know what you think, you can join our live streams on YouTube, follow our YouTube channel The Cloud Accounting Podcast or you can email us at cloudaccountingpodcast.com at Earmark cpcomm. That's Cloudaccountingpodcast.com at earmark CPE. Bill.com.

Speaker3: [00:35:13] And Blake, we have a voicemail from another college professor, right?

Speaker2: [00:35:17] Yes, we do. We have a voicemail. And I'm going to play this. This is from David. Is it David? Wait. I think so.

Speaker3: [00:35:27] I think I hope it's David in there. It stumps me, but.

Speaker2: [00:35:30] I hope it's. It's David from Utah Valley University who we got to meet in person in Tucson. Yes. When he and a colleague came to pick our brains about what you and I thought should be included in a new course they are going to be offering in the fall. So that was a huge honor. And I'm really eager to hear what David has to say. I haven't heard this email yet, so you're going to get my live reaction on this episode.

Speaker5: [00:35:54] David Blake, this is David from Utah Valley University. I just wanted to make a quick note related to this discussion on getting college credit for high school accounting classes, specifically now at UVU. This is something that can be done. There are just some limitations because of our accreditation with the AACSB. We just have to go into the high schools and ensure that roughly the curriculum that they're teaching is what we're requiring in that intro class. We're also making sure that the teachers are doing kind of what they're supposed to be doing, which is debatable whether we're doing it either. But that's part of that process with the Aacsb is making sure that they're going through the same assessments that we are. And then maybe most important, as the students come into UVU, that we're actually making sure that they're at the level they're supposed to be as they enter that next accounting class. Bottom line, it can be done. It's just something we're going to have to do a better job of making happen. I think the big question here, though, and certainly the debate as I started talking about this over the last week or so with some colleagues, is there is some concern, will they come in really prepared? And it's not even that that basic knowledge.

Speaker5: [00:37:06] Right. Do they know which side the debit and credit, as much as will they need that one semester of in that intro class working with other college students, taking it to not even a deeper level, again, with knowledge as much as just a new level because now you're at the university level. Part of the fear is as we jump them into that next class, not intermediate yet, but as they jump into that next class, are they ready for it? We don't want to scare them away as we get into the details and becoming an accountant. So we want to make that transition easy, but not too difficult that we scare them away, but also easy enough that they can come in and join this profession that we all love. Anyway, I'd love to hear your thoughts on this. Overall, thanks for this podcast. I love it. I continue to push it to my students. I continue to listen to it and. I'm grateful to get some CPE CPE for it. I think some big changes are coming. You too. And I think you two are behind them and helping this along. So keep pushing. I'll keep listening. Thanks.

Speaker2: [00:38:09] Well, that's awesome. Thank you so much, David. What a.

Speaker4: [00:38:10] Great voice. That was awesome.

Speaker2: [00:38:12] And and that was David. You want to add some context to that?

Speaker3: [00:38:15] Yeah, I think the I think a couple episodes ago I talked about we had an article about a high school student and I think in that article he even had statistics or it had some data that high school students that are exposed to accounting, right. Either through future young business leaders of America or anything like that. They're they're more successful when they take their accounting courses at the university. Right. The insured accounting course. And so that kind of led to like, why can't they just take the AP exam? Like, why can't why is there not accounting 101 AP exam? Now, it sounds like through this accreditation accreditation board, it's maybe there's a fear that Accounting 101 is not a standard of a class across the board at all. Universities and high schools, We would think it's debits and credits. It's kind of black and white, like it would be taught the same way, but it sounds like it may not. And because of that, it's a ripple effect. You can't offer the AP classes. But I would actually like to understand from you, Josh, is the do you see a difference if high school kid comes into your accounting intro to accounting class and they're like, Oh, I did a little accounting in high school. I had this exposure. Are they just better?

Speaker4: [00:39:21] Yes, typically, I mean, I mean.

Speaker1: [00:39:23] Because when you.

Speaker4: [00:39:25] First look at accounting.

Speaker1: [00:39:26] It's brand new, right?

Speaker4: [00:39:28] It's not anything.

Speaker1: [00:39:29] Most people have ever even thought of or seen before. And that's.

Speaker4: [00:39:32] Why a lot of people.

Speaker1: [00:39:33] Not a lot, but some people struggle and, you know, maybe their first accounting class if because it's debits and credits.

Speaker4: [00:39:40] Or, you.

Speaker1: [00:39:41] Know, journal entries or fixed assets like what is this stuff? So any I mean, any of that and we do have.

Speaker4: [00:39:49] I don't believe we give credit or and I don't know how.

Speaker1: [00:39:51] That whole process works.

Speaker4: [00:39:53] And all of that good stuff.

Speaker1: [00:39:54] But I definitely have.

Speaker4: [00:39:55] Accounting majors that, hey, why, you know, why are.

Speaker1: [00:39:58] You an accounting major? I love asking that question.

Speaker4: [00:40:01] Oh, I took accounting in high school.

Speaker1: [00:40:03] And I really enjoyed it and I made my decision right then. So the more I mean, and I know the state societies are trying to make a big push, especially, um, the Alabama Society.

Speaker4: [00:40:14] Of CPAs is.

Speaker1: [00:40:15] Really starting to get into high schools More and more we do that the better because other, other disciplines are definitely doing it.

Speaker2: [00:40:23] Makes sense. We got another listener message I'd like to read. This is an email from Nels. Nels said, Hi, Blake and David, I love your show. I have been listening for four years or so and I don't know how anyone can be providing accounting services, particularly to small businesses without listening to your podcast. So much great info. I have been super interested in your conversations about the CPA pipeline and particularly the 150 hour rule. As a CPA in Minnesota, I have received emails from the Minnesota CPA Society and then the CPA regarding the proposed legislation in the Minnesota House. It seems like the AICPA is using fear based communication to try to bat down the Minnesota CPA Society efforts. I came up in the profession when the 150 hour rule was just being implemented in the late 90 seconds. I had so many credits in non-business disciplines that I didn't even need to be concerned about it. Similar to Blake, I went into accounting and took the required classes after I had graduated with a bachelor's degree. In my case, in economics. Blake can have a music degree. Anyone who has been around me knows I am about as musical as a gnat. I am the poster child for why singing loudly while driving by myself in a car was invented.

Speaker2: [00:41:32] Yet my econ degree probably does help me be a better CPA than if I didn't have it. I doubt my slew of history and geography classes help. The 150 hour rule is a joke and I know it was implemented when CPAs wanted to be held in higher esteem like lawyers and felt the way to get there was by requiring a master's degree without actually requiring a master's degree. And now, with the intersection of demographics, misplaced marketing efforts and some hubris thrown in for good measure, we are faced with making our profession irrelevant except for financial statement audits. And as Blake has pointed out, only 15% or so of CPAs work in that specific field. And Blake, in answer to what are the odds that you guys will be invited as press to the Engage conference, I will will wager somewhere between slim and none. Also a shout out to the earmark app. I can't recommend it enough. I would think that even some of the mid-size and larger firms would want to get a subscription for their staff, although many of them produce their own in-house CPE. Keep up the great work. Thank you, Nels. And yes, I have bridged us into the 150 hour discussion.

Speaker3: [00:42:33] And the letter. The letter like so. So, so. So he the caller, Nels, is in Minnesota. So he got the letter from his state. Then he got the letter from the AICPA. Yeah. And then Minnesota replied back, I'm assuming you have this article bookmarked. Like I was like, There's no way you didn't. I tweeted about it today.

Speaker2: [00:42:51] Did you put it in the chat here? I just put.

Speaker3: [00:42:53] The tweet with the highlight from the article. Let me get the tweet here.

Speaker2: [00:42:56] You just put that in. Okay. I'm going to pull this up here. Keep. Why don't you start talking about it?

Speaker3: [00:43:01] So obviously, there's the for those of you who have not listened the last couple of weeks, the state of Minnesota, they have a bill they are proposing changing the 150 hour rule. And the EPA sent out a letter with some fear tactics like the caller just said or the voicemail or I guess Blake read a mail, a listener mail. We just got that. And so this is a response letter, a piece of it. If you go to the link actually on going concern, the whole letter is there. This is from Linda Woodall Wedel. She is the president of the Minnesota Society of CPAs. And she replied back to a letter that was sent out by Susan Coffee at the CPA and really strong statements in here as one of them being AICPA and Nasba. Are just they're not regulators. They just have some influence, like really putting them in their place on this and then telling them maybe they should focus more on the lack of CPAs and how it's a public protection problem. Right. It's a really strongly written letter and retort to the CPAs letter.

Speaker2: [00:44:07] I like point three here. The AICPA and Nasba messaging is focused on mobility as it currently exists, when it should focus on the critical problem. More CPAs are needed and the lack of CPAs is a public protection problem. Yeah, it is. It's a public protection problem because if we don't have enough CPAs, who's going to do the audits right? Who's going to sign off on those audits? Like audit quality is already a problem. Half of audits fail. Some measure of PCAOB inspection. So if we're not producing the accountants and the CPAs to go into the audit profession, then what's going to happen to capital markets? Can we trust the financials being put out by companies? And I saw an interesting stat that I think two thirds of accounting students or accounting graduates go into audit, even though only 15% of the profession ends up doing audit or staying in it. Right? So that's the I mean, that's what I see as the problem. If I'm going to call anyone out and maybe we should go get some, you know, audit partner who represents the audit profession to come on this show. David and talk about it. Like, to me, based on what we're seeing here, it looks like audit is what's screwing things up for us. I don't know. Is that is that is that too controversial a take, Dr. Josh?

Speaker4: [00:45:25] Well, I think maybe so. I think there's a lot of students that go into audit planning on getting out within 2.

Speaker1: [00:45:33] To 3 years.

Speaker4: [00:45:34] Just because it gives them.

Speaker1: [00:45:37] A springboard into a controller job or maybe a small CFO role somewhere. So it's definitely.

Speaker4: [00:45:44] A good group of.

Speaker1: [00:45:45] Students that aren't planning to stay in audit when they sign up. We're kind of using it to pad their resume and things of that nature.

Speaker2: [00:45:54] Yeah, and that's one of the things you go on. Like all the boards that talk about, you know, how to have a career in accounting and that's what people say. You want to get that Deloitte, PWC, KPMG on your resume and then you're out of there as soon as you hit senior or as soon as you hit manager. They debate about how long to stay, but nobody. I mean, you've got to be delusional to want to stay or you just got to like, I sorry, I don't mean to put it that way. You got to love working so much that you're happy to work 60, 80 hours a week. And I know there's people out there that like that. That's great. If that's your cup of tea, awesome. But most people don't.

Speaker1: [00:46:28] And then, like you said, what, 15%? I think.

Speaker4: [00:46:31] Somebody was speaking the.

Speaker1: [00:46:32] Other day. He started with a class of.

Speaker4: [00:46:34] 30 and his audit group or his audit class.

Speaker1: [00:46:37] When he started at his firm. And he said three are still there after 15 years. They're all partners now making plenty of money, I'm sure. But yeah, I think that's pretty common. So let's go back to that. Minnesota.

Speaker4: [00:46:49] I like that. Yeah. What I.

Speaker1: [00:46:52] Want to get y'all's opinion on this.

Speaker4: [00:46:54] When because that bill you can we can yeah they wrote it the likelihood.

Speaker1: [00:47:00] Of it actually going through is probably not great but when the state legislators come to, you know, the CPA society in Minnesota.

Speaker4: [00:47:09] And they say, hey, why do you want us to do that? Why do you want us to get rid of 150?

Speaker1: [00:47:13] Because it's going to hurt our state a little bit. We're going to take tuition dollars out of our state universities, things of that nature.

Speaker4: [00:47:19] Why do you want.

Speaker1: [00:47:20] Us to do that?

Speaker4: [00:47:21] What's the response?

Speaker2: [00:47:23] Well, the response is that and I've only ever seen two studies about the 150 hour requirement. I've seen two of them, and I can pull them up if we want. The first article.

Speaker3: [00:47:34] I had has links to three, four, five, six of them. Okay. And she actually specifies in the state of Minnesota the problem she's having of their members. The members say that it's highly unlikely from the staff of their firms. Because people won't sit for the exams like they can't staff their firms at the end of the day. And the other reason this became a legislation because she goes on to say, because of attempts over many years by various AICPA and Nasba constituents to have a meaningful discussion about the licensure were rebuffed. So basically they're like they will not even entertain discussions about this. So that's why they've moved forward finally with legislation because it forces them to come to the table. It's going to force AICPA to participate in the discussion that's happening every week on this podcast and all over the accounting industry and Twitter, etcetera.

Speaker4: [00:48:25] Okay, so let's can we do a little role playing? Yeah, I'm a state legislator. Okay. So basically.

Speaker1: [00:48:31] You're coming to me telling me you want to get rid of 150.

Speaker4: [00:48:34] Because you're having staffing issues within the industry. That's kind of a some.

Speaker1: [00:48:38] Of it, Yeah.

Speaker4: [00:48:39] Well, from my point of view. Almost every industry.

Speaker1: [00:48:43] Right now is having staffing.

Speaker4: [00:48:44] Issues.

Speaker1: [00:48:46] Ten year you know, 20 years.

Speaker4: [00:48:47] Ago, you guys.

Speaker1: [00:48:48] Came to us saying you wanted this 150 hours. Every other.

Speaker4: [00:48:53] Industry that comes to.

Speaker1: [00:48:53] Me and says this, you know what my.

Speaker4: [00:48:55] Response is? I tell them to raise salaries. That's how you solve your staffing issue. Why can you not? Why do I have to.

Speaker1: [00:49:01] Go and make a change to state law to help your specific industry staff when everybody else is dealing with it, dealing with these issues on their own?

Speaker2: [00:49:12] Well, see, that's that's an interesting economics question. And I'd love to talk to an economist about this, because an individual firm can't raise salaries on its own without incurring a competitive disadvantage if the market like they don't set the market rate, the firms don't have individual control over salaries. So salaries are right. They can't change it. Like if I'm if I'm a regional firm in Minnesota, I can't just raise salaries 20% and stay competitive. My partners will leave and go to other firms where they can make more money. Right. Because the partner salaries and compensation is a function of how much the labor costs to deliver the audit in the first place.

Speaker4: [00:49:56] How are these other professions?

Speaker3: [00:49:58] How are they? I would say it doesn't matter about other professions because the state of Minnesota cannot function without accountants and neither can the whole country for that matter. Like this is not like it's a different thing with nurses. It's with.

Speaker4: [00:50:11] Nurses. It's a huge nurse shortage. Yeah, it's pretty hard for a state to function without nurses.

Speaker2: [00:50:16] But nursing salaries have risen, right? Nurses are making way more money than they used to. Why?

Speaker4: [00:50:21] Why can they? Why can hospitals raise.

Speaker1: [00:50:24] Nurses wages but not accounting.

Speaker3: [00:50:25] For insurance companies? And there's a lot of reasons medical things are inflated.

Speaker2: [00:50:30] They can pass the cost on to the end user. Yeah. And I think the problem with I mean, now we can go deep into the problems with audit, right? But like, so most of this is in audit because two thirds of starting salaries are paid by audit firms and. The value of the audit. I mean, audits are a commodity, right, The way the profession has has designed. An audit is that every audit opinion is essentially the same. If I go get an audit from PwC, KPMG, EY or Deloitte, the market doesn't care. They're all identical and the opinions read exactly the same. So it's the same way with the regional firms too, right across firms of a same size. Every audit is exactly identical. You have no pricing power when your output, when your product is exactly the same as every other firm. So maybe that's why prices can't go up and salaries can't go up. The only thing that can change is partner compensation can go down. In order to increase salaries. But the partners aren't willing to do that because they had to work 15 to 20 years to get where they are. Right? And now. And now I deserve mine.

Speaker4: [00:51:38] Right, Right.

Speaker2: [00:51:38] Yeah. And I can't blame them for that. Right? Like they took that deal and now suddenly, you know, that wants to go away.

Speaker4: [00:51:45] And that's when and I know we kind of had this discussion.

Speaker1: [00:51:47] On Twitter, I think. But go back to David. He mentioned it earlier, you know, go branded. That is a way to raise those.

Speaker4: [00:51:54] Prices is you got you have to.

Speaker1: [00:51:55] Have the end user value your product. They have to have a higher perceived value for you to charge more.

Speaker2: [00:52:02] Yeah. And you know, if the AICPA doesn't want to talk about the 150 hour rule and rolling that back, I guarantee you they don't want to talk about the problem with audit. We had Ron Baker on our program and he said the audit has no value, that the audit is worthless. You know, he's the number one thought leader in the accounting profession, in my humble opinion, and I'm sure he'd be on the top ten list for pretty much everybody. And it's because they're all the same. And you can just shop around. Like if you don't like the opinion you got, you can go buy it from somebody else who'll give you the opinion. And we saw that with the crypto exchanges, right?

Speaker4: [00:52:39] And in private.

Speaker1: [00:52:41] And public, you don't think you can do that near as much.

Speaker4: [00:52:45] You can get.

Speaker2: [00:52:46] A auditor.

Speaker4: [00:52:47] Right? You get a pretty heavy your stock.

Speaker1: [00:52:49] Price isn't going to stay the same if you switch auditors out of nowhere.

Speaker2: [00:52:53] I don't know about that.

Speaker4: [00:52:54] I don't know. I think there's been.

Speaker1: [00:52:55] Some I'm pretty sure that like, that's a big red flag.

Speaker3: [00:53:00] I saw a good comment here about from Christopher Perez in the comments. He said, if there's no 150 hour rule, maybe a nurse becomes a CPA.

Speaker2: [00:53:09] Well, and so this is why I, I think that there's something that people aren't thinking about when it comes to 150, which is that there's a lot of career changers like me who would actually be happy to go into accounting because they can make way more than they're making now and they're actually willing to do the hours, but they are stuck because they have to go back to school. They'd have to get the 150, they'd have to do all of this stuff. It's really hard. I did it and I almost didn't do it. The only reason I kept going with it is because my wife was like, Blake, you're not going to be a quitter. You're going to finish this, right? If it hadn't been for her, I wouldn't have done it because it wasn't worth it to me.

Speaker4: [00:53:50] I guess. Just I don't want to come off as, Hey.

Speaker1: [00:53:53] I'm 100% behind 150 because.

Speaker4: [00:53:56] One thing it's.

Speaker1: [00:53:57] Really hard to defend 150 when it's in 80 hours.

Speaker4: [00:54:00] I think if it's more.

Speaker1: [00:54:01] Related to accounting, finance, data analytics, that's a lot easier to defend because it does help the individual, it helps the public interest.

Speaker4: [00:54:09] But with that said, my biggest issue with.

Speaker1: [00:54:12] The one 5120 debate is we're spending so much energy on that. When it's my and this is just my personal opinion. The issue isn't the one 2150 the issue is getting people into the accounting major. And I think that comes back to the branding of the accounting major, the branding of what accountants do, the value of an accounting degree, what people think of that. And that's like we're trying to fix the pipeline and we're focusing on the tiny issue instead of the massive whaling room.

Speaker2: [00:54:41] So so the, the what? The branding. You can't you know, you and I went back and forth on this a little bit on Twitter, Josh, about the branding. Like I'm a marketing professional and I don't think this is a marketing I don't think this is something you can fix with marketing because like the job itself that staff auditors have is really boring compared to other jobs, right? Like like audit really hasn't changed much in 100 years. You know, we've added like cloud technology and stuff, but what they're doing is still essentially the same, right? Auditing cash and like pulling transactions. Like it's super manual, it's super tedious, it's not exciting.

Speaker1: [00:55:16] But to me, you're conflating the accounting degree with public.

Speaker4: [00:55:20] Accounting audit or public accounting tax.

Speaker2: [00:55:22] Well, that's but that's what it is for two thirds of graduates is that's where they end up. And I'm concerned that they go there and they're like, Oh, this sucks. And they leave and they go do something else.

Speaker3: [00:55:31] That's what guys the best sales guys I hired at tech companies are ex Big Four year and a half, two year burnouts. And it's not that they burnt out because they couldn't do it. They just they got burnt. It's just the job burned them out. And worse than that, they've left accounting, which is the bigger issue on that.

Speaker2: [00:55:48] But that was when I was at Floqast. That's how we recruited our best salespeople was we looked for the really smart Big Four auditors who like hated the system and wanted to get out. And they were so happy to come work in a boiler room at a tech startup dialing because they only had to dial eight hours a day. And it was.

Speaker4: [00:56:09] Fun. And kind of the add on to that. I think one.

Speaker1: [00:56:12] Of the other issues is.

Speaker4: [00:56:14] And maybe it's changing, I do think it's changing some, but in the past we've always we've lost our high.

Speaker1: [00:56:20] Saunders because urga people who get fed up early, you know, they're the ones that are saying, Hey, I'm doing really well. I'm kind of kicking butt and audit or tax or whatever they're doing, and I'm not really getting compensated for it. Like an open market would compensate me. And they leave early and that probably trickles into the audit quality effects and all of that good stuff. Yeah.

Speaker2: [00:56:42] So like to me, you're not going to fix the big firms because they are monoliths. They are giant pyramid shaped monoliths, right? That aren't going to change because just the structure. So maybe the solution is we just need these schools, schools like Troy University, to be funneling these students into the firms that aren't doing audit. Right. The firms that are doing client accounting services and outsourced CFO and advisory services and offering flexible work schedules. And we're not going to work you more than 40 hours a week. Even in tax season, which exists, there are firms that offer that.

Speaker4: [00:57:20] That's hard. That's hard for me to do because I'm looking out.

Speaker1: [00:57:25] You know, I have to separate from looking out. That's great for the accounting profession as a whole, but I'm looking out also for a specific student and that person says, Hey, I want to get a, you know, a $100,000 job within 3 to 4.

Speaker4: [00:57:40] Years of getting out of here.

Speaker1: [00:57:41] Man, it's hard to beat two years and audit and public accounting then go into private industry. That's a great opportunity for them. And that's really the easiest way to make a great salary within a couple of years out of accounting. So you see, you see the.

Speaker4: [00:57:56] Yeah, to me that's.

Speaker1: [00:57:57] Tough to.

Speaker4: [00:57:58] Like.

Speaker2: [00:57:58] But so, but so people are buying into that idea. But then they go and then a certain percentage realize that wasn't it's not they don't want that deal anymore. Right. Because it's harder than they thought it would be. The hours are worse. The work is less interesting. Right? And then they go do something else.

Speaker4: [00:58:15] I mean, they just get a better opportunity, right? Having that experience.

Speaker1: [00:58:20] Allows them to get this off.

Speaker4: [00:58:21] Because there's a lot of jobs out there. If you go to job.

Speaker1: [00:58:23] Postings.

Speaker4: [00:58:24] It says CPA.

Speaker1: [00:58:25] And 1 to 2 years or 3 to 5 years of public accounting experience, that's what these industries are looking for, these private companies.

Speaker2: [00:58:34] But see, I feel like those those requirements where it and especially like the big four branding, you know, you have those logos on your resume. It's like it's does it really like is somebody who went to E or PwC really better than somebody who went to BDO or Grant Thornton? I doubt their experience is that different. And and maybe, you know, that's just discriminatory and old fashioned. Right? It's a way to, you know, because the comptroller was at PwC, they want people who went to PwC and, you know, maybe this is why we end up with corporate accounting departments where like everybody looks the same, You know, I just yeah, that's great.

Speaker4: [00:59:16] And how do we get those private companies to change?

Speaker1: [00:59:18] You see what I'm saying? It's almost like a trickle down effect where it gets to the students and they just want to do what's best for them. You know, what's the best way for me to come out of here and have a good career?

Speaker4: [00:59:29] And I don't know. I think like we talked about earlier, some of these newer firms.

Speaker1: [00:59:35] That are more entrepreneurial that are maybe rewarding their high performers, I think think are going to do really well over the next few years.

Speaker2: [00:59:43] Oh, they're crushing it. I mean, they're growing 20% or more annually. I, I hang out with these firm owners and granted, they're small firms. They're, you know, in the single millions of revenue or in the tens of millions of revenue, not in the hundreds or billions like the big four. Right. And maybe that's the problem is there just aren't enough jobs at those kind of firms yet. But like, I don't know, it's like we if we could just show people a pathway where they could graduate from university and go work for one of those firms, you know, like the and many of those owners are here in the in the live stream right now or listening to this podcast episode is I want actually I want all of our listeners to reach out to Dr. Josh McGowan. And if you are recruiting and you want awesome students who are getting like good education, like let's let's let's hook you up to Troy University because I mean.

Speaker3: [01:00:35] That's the problem. We know all these great firms and great firm owners and they can't hire anybody. And that's the ultimate fundamental problem. There's nobody to hire. And then the results of this, just like I got fired from my tax firm, when you talk about you want to play that role, play Dr. Josh like you're the city councilman or whatever, right? You're the and or state right Representative And if it's not this year, it's the next year it's the year after that. You're going to be like, don't have an accountant. Like you're going to be like, how do I do my taxes? Like, it's personally going to affect these people very, very soon if it hasn't already. And that's why.

Speaker2: [01:01:11] We're seeing all these stories in the press about the shortage of accountants. Right. Is like some reporter got fired by their firm or can't find a tax CPA like it's hitting profits.

Speaker3: [01:01:19] Can't get accountants. Yeah, I agree.

Speaker4: [01:01:22] And you kind of own y'all's kind of maybe on your side of this discussion.

Speaker1: [01:01:26] In the state of Alabama, we're having a massive shortage of teachers. And kind of going back to Blake's overall point with accountants, you know, it's hard to just raise starting salaries, especially in public education. And what have they done? They've kind of in some ways they went down the same path you guys.

Speaker4: [01:01:42] Are kind of promoting or whatever.

Speaker1: [01:01:45] You want to say. They've lessened the requirements. You know, maybe there's some other way to become a teacher at a public school.

Speaker3: [01:01:51] State of Arizona has done the same. State Yeah, Well, and.

Speaker2: [01:01:53] You look at the requirements that we put on teachers for the amount of money they make and like crazy, I'm all for having, you know, really well trained teachers and qualified teachers. But it's kind of absurd that to be an elementary school teacher, to be a kindergarten teacher, you got to go get a master's degree. You know, Like that's just insane to me. I mean.

Speaker3: [01:02:10] My wife entered the school system two years ago, got her master's degree in counseling. She has her highest level of education. She's making the lowest money she's ever made in her entire career.

Speaker2: [01:02:20] Disconnect. There's a disconnect there, right?

Speaker4: [01:02:22] Yeah.

Speaker1: [01:02:22] My wife's a first grade teacher, so I'm with y'all.

Speaker2: [01:02:26] It's actually harder to be a teacher in most states than to be in a CPA, I guess. Which other than the exams, Right.

Speaker4: [01:02:32] Which I guess I'm still not buying the whole. The only reason.

Speaker1: [01:02:38] We need to change a requirement is because of staffing.

Speaker2: [01:02:42] Well, I wouldn't say it's the only reason. I just think it's a stupid it's a stupid rule. Like it doesn't add value, right? It creates additional cost in the billions of dollars, at least $1 billion a year. I'm going to say, even if my calculations are off a little bit, even if it's half as much, it's like $1 billion a year that these students are paying to universities for a fifth year of education. That has mixed results. Like we don't actually have evidence that it increases the quality of CPAs.

Speaker4: [01:03:12] Or did drop a link.

Speaker1: [01:03:13] It definitely helps you pass the CPA exam. So that is one one benefit.

Speaker3: [01:03:18] If you're getting a master's in accounting.

Speaker1: [01:03:20] If you're getting any graduate degree as well, any.

Speaker3: [01:03:23] Graduate degree. Right.

Speaker2: [01:03:24] But for a 10th, the cost, I can buy a CPA exam prep course and pass the exam. So it's very expensive way to pass the CPA exam.

Speaker1: [01:03:33] Well, you might pass this.

Speaker4: [01:03:34] I mean, look at pass rates.

Speaker1: [01:03:36] Just because.

Speaker4: [01:03:36] You buy a.

Speaker1: [01:03:37] Prep doesn't mean anything you can do to help you pass the exam is probably good if you're looking at lifetime earnings. Like you said earlier, I think most numbers put it like a million. A million and a half is what the CPA license is.

Speaker2: [01:03:48] I actually don't personally I don't think the exam is very difficult. It's just very tedious and you have to be super disciplined about studying for it. But like the actual content of the exam is not that challenging compared to other stuff I've done in my life.

Speaker3: [01:03:59] Please send emails to Blake all over.com and.

Speaker2: [01:04:03] You have to. You have to be really good at memorizing a ton of stuff, which I happen to be like being a musician who had to memorize hours and hours of music. Like I learned that skill, but like the actual like stuff you learn in accounting. I mean, people say the CPA exam is so difficult, but like, I challenge you to go take a medical board exam or something like that. Like the stuff that those people have to go through is just nuts.

Speaker4: [01:04:26] I think it's kind of the same. Any standardized test.

Speaker1: [01:04:29] There's a lot of memorization. It has to.

Speaker4: [01:04:31] Be. I don't.

Speaker2: [01:04:32] Know. I watched this my fellow students doing like organic chemistry who wanted to.

Speaker4: [01:04:36] Like, just change your.

Speaker1: [01:04:38] Student over from pre-med. He's like, I got into or he was in organic chemistry and he's like, I'm out of there.

Speaker3: [01:04:45] Yeah, it's the it's the accounting 101 of the medical field.

Speaker2: [01:04:50] So anyway, sorry. But to me, just like CPA exam is more of a marathon than a sprint and anyone can do a marathon if they just train enough. That's that's how I view it. You don't have to. Not everybody can be a sprinter, though.

Speaker3: [01:05:04] So, Josh, I want to rewind a little bit because you're saying that you don't think the 150 hours is kind of the issue. The issue is we need more people that are interested to do accounting. But if you look at this next generation and with my wife's a teacher, my wife's a counselor at a high school, this generation is very pragmatic, like, what is the minimum I need to do to get to the finish line? And so if they're looking at I want to start making money and living my life, I am I want to be done with school as efficient as possible that you will not telling these kids, hey, you got to go to school for five years if you want to. They're going to be like, Forget it. There's too many options to go to school for four years. That's so. So if we want to increase it, the bottom, the 150 is the barrier. But you.

Speaker4: [01:05:50] Don't have to go to school five years to be an.

Speaker1: [01:05:52] Accountant.

Speaker4: [01:05:54] You have to go to right now to be a CPA. Cpa. There is a difference and. Right.

Speaker3: [01:06:00] But not but, but why can't I just go to four and pass the test? I think the test is rigorous and important and the best.

Speaker2: [01:06:06] The best jobs, say CPE preferred. Still in the listings, right? So if you want to have access to the best positions in accounting, if you want to be the controller, you want to be the CFO someday you kind of got to get the CPA.

Speaker4: [01:06:19] But that's the same thing in other business disciplines. Go try to find a job.

Speaker1: [01:06:22] Like a management job. It doesn't say MBA preferred or MBA required. And that's another you know, we.

Speaker4: [01:06:30] Were having this discussion a little bit in my graduate class.

Speaker1: [01:06:32] The other day and we pulled up a list of all CFO, not all, but a bunch of CFO and controller jobs in the state, and almost every single one of them said MBA or other master's in business required.

Speaker4: [01:06:47] And that's one thing.

Speaker1: [01:06:48] I mean.

Speaker4: [01:06:49] We're going to So now our accountants come out with four years, but.

Speaker2: [01:06:52] There's no regulator forcing people to go get an MBA.

Speaker4: [01:06:54] No, no, no, no. I agree. So like, there's.

Speaker2: [01:06:57] Nobody if the if the Mac offers the quality. Right. That businesses are looking for, make it optional. Right? Like if a business really thinks that having a master's of accountancy makes you a better accountant, they'll require it in their job posting.

Speaker3: [01:07:12] Which again is the plus, right? Take the exam. You get your CPA. If you actually get your masters in accounting, you get the plus. Yeah, like.

Speaker2: [01:07:20] Like why require it? Why make it a requirement?

Speaker4: [01:07:24] Yeah, I mean, I understand. I get it. I like I said, it's hard to.

Speaker1: [01:07:29] Argue for going 50. My overarching point is I don't from my experience, that's not the reason our pipeline is down. I think our pipeline is down for other reasons that we've kind of spoke on already. That's my biggest issue.

Speaker4: [01:07:45] I think we change this. Yeah, we change it. First off, it's going to.

Speaker1: [01:07:49] Take a long time. As we talked about going through every single state legislator, a lot of them aren't going to want to do it. A lot of them are not going to do it. Then what happens to CPAs who move or an audit firm that does audits around the nation? Now they're in trouble. They lose clients very quickly in that manner.

Speaker4: [01:08:05] But what does.

Speaker1: [01:08:06] It change that much? Does it.

Speaker4: [01:08:08] And I.

Speaker1: [01:08:08] Know it's y'all's opinion, does it?

Speaker4: [01:08:10] I haven't seen anything that.

Speaker1: [01:08:11] Shows that to me besides.

Speaker4: [01:08:13] People just saying, like, I.

Speaker1: [01:08:15] Think if we're going to do something.

Speaker4: [01:08:16] Drastic.

Speaker1: [01:08:17] Because you got to be some.

Speaker4: [01:08:19] Data or something that says, hey, this is going to really help us move forward.

Speaker2: [01:08:24] But we put the rule in place without having any of that information in the first place. Like the the 30 was added without any evidence that it would help.

Speaker4: [01:08:33] So you're thinking 150 is helped at all?

Speaker2: [01:08:36] Well, I haven't public.

Speaker4: [01:08:37] Perception anything like that.

Speaker2: [01:08:39] Well, we've said nobody cares if you have a master's of accountancy like in the public. If you have a CPA, that's all that matters. It doesn't even matter what you majored in as an undergrad. Nobody has ever asked me what my bachelor's degree was in.

Speaker3: [01:08:49] They just and over 70% of the profession right now working, 75% do not have the 150 hours. If this was so important, why don't they make all those people go back and take that extra 30 hours? Obviously, it's not needed. That's the most ridiculous thing about this. It's there's so much data proving it's not important and it's not needed. That's it's the proof is there. So important, make them go back and get their 30 hours. It's so important.

Speaker4: [01:09:16] Over 60 hours in general, studies need it.

Speaker3: [01:09:19] Not. If you can pass the CPA exam.

Speaker2: [01:09:21] I would argue that the bachelor's degree, the four year bachelor's degree is outdated as well. That it takes to college is outdated.

Speaker3: [01:09:28] Now, we're now now we're getting into if if.

Speaker4: [01:09:31] This pipeline, if if let's say we make.

Speaker1: [01:09:33] This change. Right. And somehow we get it passed, all 50 states and the pipeline is still struggling. Okay. So what's the next step? Do we do we need a bachelor's degree? Do we just take the CPA exam?

Speaker3: [01:09:44] I mean.

Speaker4: [01:09:45] You see what I'm saying? I think I think.

Speaker2: [01:09:46] Yeah, the extreme option would be that we we say if you can pass the CPA exam and you I would say CPA exam plus relevant work experience, you can get your CPA and you can make if you really want to, you can make the work experience a lot longer. You can say you have to have you know, if you don't have the bachelor's, you know, you got to have 5 to 10 years of work experience and you pass the CPA exam. You can be a CPA. Like I don't understand why somebody who has been working for ten years in public accounting but doesn't have the accounting degree, can't become a CPA.

Speaker4: [01:10:19] Good at passing the exam. Would it be okay if it had.

Speaker1: [01:10:21] Just a straight out of high.

Speaker4: [01:10:22] School? I passed the CPA exam. Should I be a CPA?

Speaker3: [01:10:25] If you're good enough. If you're LeBron James. Hell yeah. Well, y'all just.

Speaker4: [01:10:29] Told me y'all just said that. Or like you mentioned, that.

Speaker1: [01:10:31] The test is just strictly memorization. See, and maybe this is unpopular. I think a college education gives you a lot more than just accounting knowledge.

Speaker2: [01:10:40] Some college educations do. If you go to the right school and you study the right thing and you have the right motivations. But there's a lot of people even at Northwestern where I went to, that completely wasted their college education and didn't learn anything.

Speaker3: [01:10:54] It's the network you get. It's not the education.

Speaker4: [01:10:57] Network's you tell absolutely agree. It's a lot more than just education.

Speaker1: [01:11:03] It's a network education. There's a lot of skills you pick up and going, here's.

Speaker2: [01:11:08] Here's what we're competing against, guys. This is what traditional education is competing against. They're competing against stuff like the Google Data Analytics certificate. You can earn this with no relevant experience. It's 100% remote. It's under ten hours of study a week, and it costs like $40 a month to get it. Google created this because they couldn't get enough qualified people into Google and you can make $74,000 a year. After you take this. After you pass this, you can either get a job at Google or you can go get a job at another tech company that values this certificate.

Speaker3: [01:11:42] So what if, you know, all these forward thinking firms start their own organization and they start their own certification and just start and people start valuing that more? And I think that's the bigger piece of this for the AICPA. And the bigger threat is like the threat is you don't even exist in the future, right? Because there's nothing stopping people from issuing their own letter. I mean, even the AICPA creates these letters, This the CMA and this letter and this letter and this letter. They're not approved by state boards. They just create these arbitrary letters. So the valuable letters could get bypassed entirely where the CPA won't even matter. And that's where I think the really on the brink of like 40% less people enrolled in your accounting in three years. Josh, you don't have a job.

Speaker4: [01:12:31] It's true.

Speaker2: [01:12:32] Well, no, he'll have a job because you're the you're a director. So it's just the adjunct professors that get laid off, right?

Speaker4: [01:12:39] No, no, not at all. Not here. Not here. Um, in the same. Yeah.

Speaker1: [01:12:45] Mean, David, I get what you're saying, but I.

Speaker4: [01:12:47] Think at the same time, the CPA, like I said, you get to 120.

Speaker1: [01:12:52] Okay, we don't have enough CPAs. What do we do? Okay. No bachelor's degree at the same time, what you're saying, hey, the CPA no longer means anything. You can almost make an argument you're doing the same thing that way as well.

Speaker4: [01:13:05] Like there's no guarantee just going to 120 is going to magically.

Speaker1: [01:13:08] It's I've almost unequivocally say it will not improve the pipeline.

Speaker2: [01:13:13] I'm willing to bet it will increase the number of accounting students in the pipeline by at least 10% because long term, yeah, every year I think that we'll get we'll get 10% more at least accounting students. And so it'll actually be a net benefit for the universities because even though fewer people will take the master's of accountancy, you'll get more undergrads and you'll get more people in the pipeline. I mean, studies show that like, think about it. It's it's a it's an extra cost that reduces the desire ability of, you know, the accounting career path. And so if we reduce that cost, more people will make the calculation that it's a better ROI, right?

Speaker4: [01:13:51] I would argue over 90.

Speaker1: [01:13:54] 90% of college freshmen that are choosing their major, even if they're business students, have no idea.

Speaker4: [01:14:00] About 150.

Speaker1: [01:14:01] And CPA.

Speaker2: [01:14:02] Right. But then they find out as they're in it, right? They realize, oh, I have to go get a fifth year in order to get my CPA.

Speaker3: [01:14:09] They probably find out around their third year when they're starting to burn out on school towards heading into their fourth year. I got one year left. Oh, surprise.

Speaker4: [01:14:16] But if don't know till our.

Speaker1: [01:14:17] Third year, that's not what's stopping them from being getting into.

Speaker4: [01:14:20] Do we have.

Speaker2: [01:14:21] Data on this, though? This is all anecdotal, right? I would love to do a survey of accounting students and just business majors in general and try to find out why are they dropping out of accounting or why are they not getting there?

Speaker3: [01:14:33] Can we just do a graph of when the 150 rule is enacted in 1983 and the number of accountants we can.

Speaker4: [01:14:40] It did not.

Speaker1: [01:14:40] It did not go down like that. It went up for multiple years after. And that's because there's.

Speaker2: [01:14:45] Multiple factors, right? Like the recession drove the Great Recession, drove a ton of people into accounting. And so you have to you can't undo undo that from the chart.

Speaker3: [01:14:52] And salaries have stayed the same as they were in 1983 till now. Yeah. There you go. Bingo. Right. Like but, but it's our show in one year.

Speaker1: [01:15:00] Brought accountants that number down. Guess so. There's nothing that shows that.

Speaker2: [01:15:05] The cost of the education and the salaries are linked. They are not separate because students do an ROI calculation. You calculate your return on investment. Here's what I'm going to spend on my education and here's what I'm going to get out of it. And so if the education is more expensive, it reduces the ROI of the accounting career path. If you reduce the cost of the education and the time. Right. And I've calculated the cost to be as much as $100,000 per student to do that fifth year, Sure, it could be less if you are, you know, frugal, but you're still talking like an entire year's salary.

Speaker4: [01:15:38] And if anybody is going to pay 100,000 for their fifth year.

Speaker1: [01:15:41] Please get in contact with me and we'll get them in our.

Speaker4: [01:15:43] Program. Well, they're not.

Speaker2: [01:15:44] Paying it in cash. Most of its opportunity cost is lost wages from not working. Right. So every year you're in the classroom is a year, you're not making wages. And that's a significant expense. And, you know, it may not be cash, but it's a significant expense. I mean.

Speaker3: [01:16:00] Norma, so the accounting twins, her sister went and took a job in private. And the other ones she's in getting her graduate degree, right? And her master's in accounting, she had to take a $20,000 loan, you know, food bar. She's not working. Yeah. So it's 100 grand. The difference, the opportunity cost. She. She left 80 grand on the table and she took debt of 20 grand.

Speaker4: [01:16:21] What about me? I see What a lifetime earnings.

Speaker1: [01:16:24] She's probably going to come out ahead, correct?

Speaker2: [01:16:27] Right. But that's a really I mean, that's what I mean. That's long. We're talking long term. We're talking ten years.

Speaker3: [01:16:32] Five years. And that's assuming, you know, they're even in like the odds of them being an accountant. You know. Are very low. Two years from now, right. They could drop out, right? They could burn out. That's really low. So the opportunity cost there. And then on top of that, they're females. And we already know all the math and the numbers of the odds of you actually making a bunch of money as a as a partner, as a female, That's a whole nother show. Yeah, it's a huge opportunity cost of having to do it.

Speaker2: [01:16:58] So I'm just saying, like if we reduce the cost to become an accountant, it changes the ROI calculation and more people will go into accounting. I mean, it just seems like basic economics to me, like people must be considering it. If they're not. If they're not, they shouldn't go into accounting. If they're not considering the ROI, that's like a fundamental, you know, thing that you do in business and in accounting is considering the return on an investment.

Speaker3: [01:17:21] For us being the number one spreadsheet career, we're actually not the best spreadsheet career. You can put it on that.

Speaker2: [01:17:25] Yeah, ironically, right. Maybe that's what happens is they do the ROI calculation and they say, you know, I really like doing these kind of calculations. Maybe I'll go into data analytics instead.

Speaker6: [01:17:35] So I think.

Speaker2: [01:17:38] You know, Dr. Josh McGowan, we have gone way over. Thank you so much for joining us. I am awesome. This has been I've loved this. And and I want to reiterate, I love accounting. I think it's a fantastic profession. I just think there's some stuff that's messed up about it that you've got to watch out for, but the opportunities are endless. And so thank you for promoting it. You know, we really do need to get more accounting students in. I think we're all on the same page on this as we want. Well, the future.

Speaker3: [01:18:07] Listeners, I mean, we have a vested interest in.

Speaker2: [01:18:09] Yeah, we need more listeners. Yeah. So no.

Speaker4: [01:18:11] I think both of.

Speaker1: [01:18:12] You just thank y'all. This is just these discussions are, are very important and just having these and figuring out ways because we do got to do something, it has to be done. And if it ends up going to 120, you know, whatever's best for professional best for the students, I'm all behind 100%. So just kind of leave it leave it with that.

Speaker2: [01:18:36] Thank you to our friends at Audit Club for joining us. Audit Club says Keep up the inspiration, Doctor Josh and Christopher says kudos for taking the tough questions seriously. Dr. Josh We have asked people who we disagree with to come on the show and they you know, AICPA has refused to come on the show and you had the courage to do it. So thank you so much.

Speaker3: [01:18:57] So in return, Doctor Josh, can you give your Twitter handle so these forward thinking firms that are listeners, they could reach out to you to try to hire?

Speaker4: [01:19:06] Absolutely.

Speaker1: [01:19:07] It's J. Mcgowan 3883. And probably even if you if you you know you're a firm owner and you want to contact me Jay [e-mail] would be great.

Speaker2: [01:19:17] Yeah, definitely follow Doctor Josh on Twitter. So many great insights and yeah, the amount of reach you get in the profession. I would say that, you know, when Accounting Today makes its list of the most influential people in the profession, they are making a big mistake if they don't include you in that. Yeah, seriously.

Speaker4: [01:19:38] Twitter's been pretty cool.

Speaker1: [01:19:39] It's cool getting like I said, it's just about positivity. It lets you know there's there's a lot of bad stuff about our profession, but I think the good outweighs the bad.

Speaker2: [01:19:48] I agree. I agree. Thanks, everyone for watching. Hope to see you here next week. Who's on the agenda for next week? David? Do you know?

Speaker3: [01:19:57] You just keep booking people? I don't know.

Speaker2: [01:19:59] We've got a bunch of guests coming up and I want to make sure that we promote that and we talk about it because it's going to be good. It is. Oh, hold on one second.

Speaker3: [01:20:08] We might have to have a second episode of just news stories that we don't know. Right? There's so many.

Speaker2: [01:20:13] Oh, this is going to be good. We've got Paul Barnhurst, also known as the guy who's going to be joining the show. He has a whole career in financial planning and analysis and he has his own podcast on Fpna. And I think that's a great area for accountants to get into. Is Fpna doing forecasting, forward looking accounting is what I like to think of it as. So tune in to that on our YouTube Stream Cloud Accounting podcast on YouTube I am @BlakeTOliver. How about you, David?

Speaker3: [01:20:42] I'm at A @DavidLeary on all the socials. If you contact me on LinkedIn, say you're not a bot and we can almost close out with this story. Blake So remember two years ago almost you, you detected all these bots that were coming on LinkedIn, all the puppets you called them puppets, the sock puppets. And we noticed a lot of them were for an accounting outsourcing company called Integrity. And it.

Speaker2: [01:21:06] Was, it was integrity, which like integrity, misspelled with an E, Well.

Speaker3: [01:21:10] These puppets must be very happy because they got honored as one of the dream companies to work for.

Speaker2: [01:21:15] Oh, boy.

Speaker3: [01:21:16] So I just I thought that was entertaining to carry through with you.

Speaker2: [01:21:21] Thanks. That makes my day. All right. See you here next week.

Speaker6: [01:21:24] All right. Bye.