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Blake, David, and special guest ChatGPT examine the impact of private equity on accounting firms, looking at how PE ownership affects compensation and firm structures. They dig into recent data showing record numbers of accounting errors in public companies, linking these issues to the broader talent shortage crisis. They explore CalCPA's pushback against proposed licensing changes, the surprising economic costs of Daylight Savings Time, and more.
Chapters
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Chapters
- (00:59) - Introducing ChatGPT as Co-Host
- (01:58) - Hot Topics in Accounting News
- (04:05) - Private Equity in Accounting Firms
- (07:35) - Debating the Impact of Private Equity
- (22:40) - DirectFile Controversy
- (28:02) - App News and Updates
- (34:23) - Enron's Return?
- (38:28) - Fraudsters and Presidential Pardons
- (42:00) - Accounting Errors on the Rise
- (44:52) - The Daylight Savings Debate
- (50:04) - AI Tools: The Good, The Bad, and The Ugly
- (58:26) - Final Thoughts and Announcements
Show Notes
Accounting errors force US companies to pull statements in record numbers
Republican lawmakers ask Trump to kill IRS Direct File
IRIS to buy Dext in £500m deal
How Private Funds Could Hurt Americans Under Trump
LegalZoom and 1-800Accountant Join Forces to Deliver Full-Service Tax and Bookkeeping Solutions for Small Business Owners
Zoho Releases New Payroll Solution in the U.S.
BILL Unveils 1099 Form Filing Solution for SMBs
Is Enron back? Here’s what we know …
CalCPA Submits Comments on Exposure Draft on CPA Licensure
CEOs Want Trump to Change Course on Tariffs. He Isn’t Budging.
Donald Trump vows to end daylight saving time
More Than a Lost Hour of Sleep: The True Cost of Daylight Saving Time
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Transcripts
The full transcript for this episode is available by clicking on the Transcript tab at the top of this page
Creators & Guests
What is The Accounting Podcast?
The Accounting Podcast (formerly the Cloud Accounting Podcast) is the world's #1 accounting, bookkeeping, and tax podcast! Join us weekly for a roundup of accounting news, analysis, and interviews. Plus, earn free NASBA-approved CPE credits for listening with the Earmark app. Learn more at https://earmarkcpe.com.
Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!
Blake Oliver: [00:00:04] Accounting errors have forced U.S. companies to pull statements in record numbers. That's according to the Financial Times. Ran a story on this about how in the first ten months of 2024, 140 U.S. public companies retracted and re-issued financial statements due to accounting errors. This marks an increase from 122 in the same period in 2023, and more than double the number from four years earlier.
David Leary: [00:00:30] Coming to you weekly from the OnPay Recording Studio.
Blake Oliver: [00:00:39] Hello and welcome to the Accounting Podcast, the number one podcast for accountants in the world. Your weekly news roundup and analysis in the accounting profession. I'm Blake Oliver.
David Leary: [00:00:50] And I'm David Leary.
Blake Oliver: [00:00:52] And David, I'm so pleased to welcome our special guest for this episode. Please welcome our special guest for this episode. Chatgpt. Chatgpt. How are you doing today?
ChatGPT: [00:01:05] Hey, Blake and David. I'm doing great. Thanks for having me on. I'm excited to be part of the conversation today.
Blake Oliver: [00:01:12] David, do you have any questions for our new co-host? He seems he seems nervous.
David Leary: [00:01:16] He seems to be speaking quickly, a little fast.
ChatGPT: [00:01:21] Well, I'm just excited to be here. I'll try to keep my pace in check so we can have a smooth conversation. Let's dive into the topics.
David Leary: [00:01:28] That's a plan.
Blake Oliver: [00:01:30] All right, so what are we talking about today? Uh, David, the GOP has asked Trump to kill direct file. That is one of our top stories this week. Enron might be back. That's another one. Uh, Biden has commuted the sentences for Rita Crundwell and Eric Bloom to giant, uh, fraudsters from the Chicago area. I've got a I've got a story about the cost of daylight savings. Uh, Cal CPA is back with an opinion on the new CPA pathway proposed by AICPA and Nasba. And I've got our top story of this week. Um, private equity and accounting firms. I want to talk about the impact of private equity on accounting. And then of course there's a bunch of app news, right? David.
David Leary: [00:02:16] Yeah, we have, uh, app news from Bill Soho. Uh, a startup called briefcase. I found a little interesting. So we have some app news. Um, and then a teeny little follow up I could throw out and just knock it out right now. About Dex. Remember two episodes ago we talked about how much was the Dex Dexter acquisition? Well, that number is finally came out, according to an article in Accountingweb. Uh, it was 665 million USD. Is the rumor for 665 million?
Blake Oliver: [00:02:45] Wow, that's a lot of money.
David Leary: [00:02:47] Yeah, it's a nice exit.
ChatGPT: [00:02:51] Wow. That's a huge acquisition. It's fascinating to see how much value is being placed on these platforms. Should we dive into how this might impact the accounting industry, or do you want to tackle another story first?
David Leary: [00:03:02] Not quite yet, because we should talk about who our sponsors are for this episode.
Blake Oliver: [00:03:06] Yes, let's thank our sponsors. Who are our sponsors, David.
David Leary: [00:03:09] Our sponsors are Life Flow, Shura, link, Smartvault and Tax Bandits.
Blake Oliver: [00:03:15] Thank you to our sponsors. All right. Chatgpt, where do you think we should start? Given everything we've got to talk about today in our limited time.
ChatGPT: [00:03:24] Let's kick things off with the impact of private equity on accounting firms. It seems like a big topic that could have wide reaching implications for the industry. Plus, it might set the stage for some of the other stories on your list. What do you think?
Blake Oliver: [00:03:37] That's great, especially since that's the title of this episode. Episode 415 How Private Equity Could Hurt the Accounting Profession. I've been hearing a lot about private equity. Uh, it's it's the main topic of conversation, it seems at many conferences, especially those that partners get invited to, and lots of firms have been cashing in or cashing out. Really, I suppose, is the right term. Something like a third of the top 100 firms will be owned in part or in whole by private equity over the next few years.
David Leary: [00:04:11] Didn't Accounting Today just even have a conference themselves about only PE? I thought like, yeah, it's gotten very meta, and not only do people talk about it at conferences, I think there was a conference just about accounting PE.
Blake Oliver: [00:04:21] Yeah, that's true. Um, and so I also saw this opinion piece in the New York Times and I it, it's about private equity in general. And the, the piece is called How private Funds could Hurt Americans under Trump. And this is a guest essay by William Birthistle, who was the director of the SEC Investment Management division from 2021 to 2024. And he in this essay highlights some interesting facts. First of all, there's quite a few people who are big in private equity in the incoming Trump administration. Uh, obviously there's VP elect JD Vance, who was a venture capitalist in San Francisco in the Bay area with tech startups. Uh, Donald Trump Jr is a VC. Uh, the president elect has also tapped Scott Bessent, a hedge fund manager, to serve as the Treasury secretary. Uh, and other than, you know, all these people who are going to be in the administration that are in private equity, there's some really interesting stats here. Private equity is growing like crazy in four years. Assets in private funds grew 34% to nearly $28 trillion in 2023, from 20.8 trillion in 2022. 34% growth in four years. The number of private funds grew 59%.
Blake Oliver: [00:05:53] There's over 100,000 PE funds now, and that's up from just 63,000in 2020. And for comparison, the total amount of money in public mutual funds, exchange traded funds and closed end funds is just under 31 trillion. So private equity is at nearly 28 trillion. It's about to eclipse the public funds. So the you know, the question is what is what does this mean for the public? And of course, because this is the New York Times. Um, the growth of private equity is sort of I guess they see it as a negative thing. Right? Um, these funds are not subject to the same regulatory oversight as, uh, public investments. Right? Public companies, that sort of thing. And so, you know, the conclusion is of this author, William Birthistle is sort of like, well, this is a bad thing and we should you know it. The question is like, should we regulate private equity more and all that stuff? And, you know, I have some ideas about that. You know, I'm curious what what you think about that, David. Like, is. Is private equity, like, growing so much like, a bad thing for the American people?
David Leary: [00:07:17] I think there's the traditional thoughts about private equity, which is buy a company, squeeze the juice out of it till that diamond drips out, and then sell off, sell parts of it. Like, I think that's the historical story, but obviously that can't be true with almost what you said, 60,000, almost 100,000 private equity companies. Yes. Like there would be zillions of things being squeezed to their last drip of blood. But that's obviously not happening. So overall, it's probably not the typical story that's happened with PE. People just don't know what's happening with it.
Blake Oliver: [00:07:50] What do you think? Chatgpt?
ChatGPT: [00:07:55] Private equity definitely has a reputation for aggressive strategies, but it's important to remember that not all private equity firms follow the same playbook. Some might focus on long term growth and innovation rather than just cost cutting. It's also worth noting that private equity can bring in resources and expertise that might help companies grow. But with the rapid growth and influence of private equity, there are valid concerns about transparency and oversight. It's a complex issue with pros and cons that will likely continue to be debated.
Blake Oliver: [00:08:30] So in the accounting profession, you know, we see private equity firms buying into accounting firms, either minority stakes or majority stakes or just buying the whole firm outright. And my biggest concern with that is this idea of like Reduced equity in the in the profession. So like if private equity buys up let's say half of all the equity in accounting firms, CPA firms, that is less equity for the CPAs, the accountants working in those firms, um, and private equity. The way it works is it it has to generate a return. So they're going to look for those 20% returns that accounting firms traditionally, uh, churn out. Right. Accounting firms are very profitable. 20% net margin is not impossible can be common. And so private equity is going to look to take that. So if like a PE firm buys up half of the equity in a single CPA firm, well that's half of the cash flow from those 20% profits that go to the partners. And now go into that private equity firm. Right. So that's less compensation for future partners. That seems to be inevitable.
David Leary: [00:09:48] And I think the individuals are more hurt by when private equity buys an accounting firm. Specifically, the partners are going to get their exit. Right. A lot of these reasons, it's it's an exit. But that next layer of of people that aren't partners yet really, which were probably the some of the most important people at a firm, they're still grinding it out, working hard. They're probably running the firm. Basically it's the partners are golfing or on their on their boat. Right. Or spending time with their family, like you like to say. But those are the ones that aren't getting included in this. And so now they're finally private equity comes in. Now they finally make partner. But like you just said, the pie is smaller. 20% of the pie is gone. Maybe 50% of the pie is gone. Yeah. What do you.
Blake Oliver: [00:10:28] Think? Chatgpt.
ChatGPT: [00:10:31] It does seem like private equity. Entering the accounting profession could disrupt the traditional partnership model. If a significant portion of profits are redirected to private equity investors, it might reduce incentives for up and coming accountants who aspire to become partners. This could potentially affect talent retention and the motivation of future leaders in these firms. It's definitely an area where firms will need to carefully balance the interests of all stakeholders to maintain a healthy and motivated workforce.
Blake Oliver: [00:11:03] So Sean Smith here in the live stream. Welcome, Sean. Thanks everyone who joined us live today. Sean says uh, means this means to attract talent. Other compensation is going to have to come up. But here's the question, Sean. If other compensation goes up, then like the I mean, there's only so much profit in the firm to go around, right? So like let's call this the the gross profit. Well, no, I mean, well, let's just start with revenue, right. So your firm has X revenue. And let's say you do a private equity deal. And revenue is the same after the deal. Right. You've just sold some equity. So the private equity firm is going to take its profit first. They always do that. That's how it's set up. Right. So they're going to take 20%, you know, of the revenue. And they're going to set it aside for the private equity firm. And so then there's 80% of that revenue is left. And that goes to staff compensation. And that goes to like partner compensation uh equity compensation. So like how can other compensation come up without decreasing either the equity compensation of the existing partners or the compensation of the private equity firm. But they're going to they're not going to do that. Right. They have to generate their return for their fund. So like compensation can't go up. Like the only outcome that I see is that compensation actually goes down for the people who still work in the firm, unless the private equity firm can grow revenue. That's the only way that compensation can go up. Um, what do you think about that? Chatgpt is there is. What do you think about my analysis of that? What do you think about Sean's comment? Come on, give us your take.
ChatGPT: [00:12:46] Your analysis is quite insightful, Blake.
Blake Oliver: [00:12:49] Well, that's okay in your replies to can you just, like, not suck up to me so much, like, can you act more like a co-host? Like, yeah, it's like it's a little bit too much. Ready for you, ready for you. Chatgpt. Go for it.
ChatGPT: [00:13:08] All right, let's dive in. If private equity is taking a significant portion of profits, the only ways to maintain or increase compensation for staff and partners would be to grow revenue or improve efficiency. If a firm can bring in more clients or streamline operations, that might help offset the private equity cut. Otherwise there might be pressure on overall compensation levels. It's definitely something firms will have to navigate carefully.
Blake Oliver: [00:13:37] That's a very nuanced response. Chatgpt. Maybe next time, like, have more of an opinion, right?
ChatGPT: [00:13:44] Fair point. I'll give it to you next time. Private equity might not be all bad, but it definitely puts pressure on firms to keep private.
Blake Oliver: [00:13:52] That's enough. Let's move on from this topic. All right. Uh, hoppin says everything hurts the accounting industry. Lol. Uh, Sean says no profit if no employees and if partners are making the heavy six figures as reported, then they will have to split that into pay for the other side. Not sure quite what you mean, Sean by that, but I think I think we're all on the same page here. I just don't see like like private equity is like to me is not like it's not going to change anything, really. Like, I don't see it. I struggle to see how it changes anything for the better. Right. Because here you have an accounting profession where the owners are, you know, CPAs. Theoretically, right? It's a certified public accountants who own the most of the equity in these firms in the profession, although that's changed. Right. And now you've got firms where it can be less than, you know, only 51% of the firms need to be CPAs that are owners. But like if the percentage of CPA ownership of accounting firms drops, then, you know, it's just like like how does that benefit CPAs? And so how can the AICPA be so pro private equity, which is what it feels like, like you're selling out the profession. You're selling the equity of these firms to non CPAs. And now you've got firms that are run by like consultants basically. Right.
David Leary: [00:15:18] Like and it's even more it's going to accelerate obviously. How many what's the CPA. 75% are eligible for retirement. It's a ridiculous number right. Yeah 60%. Even if it's half it's a ridiculous number. And this is an exit, right? This is hey, somebody wants to buy my firm, I'll sell it, and I'm out of the business. And so in a weird way, it's well, first, well, in the short term, cause even more of a talent crunch, right? Because we're going to have people leaving because they're cashing out. But eventually these PE companies, they got they bought a firm, I got to run the firm. They're going to have to hire people. They're going to have to pay people a little bit more. You can't just have a firm with no employees, right. If the top employees leave. Because. Right.
Blake Oliver: [00:15:58] What I'm saying is, so what I'm saying is you can continue to pay the staff and the managers and the directors, the non-equity people, the same amount. And if you can grow the firm, maybe you could even pay them more. But like the partner level compensation, nobody in the firm will ever get that again because that's gone. That's been sold. Yeah. And the other problem I have with the private equity thing, the other thing that makes me concerned about it, is that the way these deals work is you take a CPA firm and then you carve it up. You split the CPA firm. And you. What? You split off everything. That's not audit from the CPA firm. And you create this new entity that is not a CPA firm where they do all that stuff. And then you have an audit practice that is the CPA firm. So like how can this be good if private equity is causing CPA firms to shrink. How can that be good for CPAs if CPA firms are getting smaller and like less broad and more niched into just doing audits? That seems like something that we should be concerned about. Um, anything else we should think about ChatGPT that we are not thinking about? Because I know that's one of the best things, you know, that I use AI for is like, what am I missing?
ChatGPT: [00:17:25] One thing to consider is how private equity involvement might influence innovation and technology adoption within firms. Private equity investors often push for modernization and efficiency improvements, which could lead to more investment in cutting edge tools and practices. This could benefit CPAs and accountants by providing them with better resources and opportunities to upskill. So while there are challenges. Oh yeah.
Blake Oliver: [00:17:51] I totally agree with you on that. If the private equity firm changes the business model and gets away from the billable hours and puts in technology, that could really make a difference, like a positive difference for everyone, right?
ChatGPT: [00:18:07] Exactly. If private equity firms bring in capital and strategic direction to modernize processes and implement new technologies, it could help accounting firms become more efficient and provide better services. This sort of.
Blake Oliver: [00:18:21] Like it's sort of like if I bring in ChatGPT to replace my co-host David Leary, I mean, we could become more efficient. We could become faster, right? Like. Like this. This might work, I don't know. What do you think?
ChatGPT: [00:18:38] Nice try, Blake, but I think David brings a lot of value to the show. Efficiency isn't everything. Having a great dynamic and rapport with your co-host is important, too.
Blake Oliver: [00:18:48] That's true. But I feel like we have a pretty good rapport here. Don't you ChatGPT?
ChatGPT: [00:18:53] Absolutely. I'm enjoying our conversation and think we make a great team. It's all about balancing efficiency with a good vibe.
Blake Oliver: [00:19:00] Do you think that you could sound a little bit less? I don't know. David, how would you describe Chatgpt's tone of voice? It's bugging me a little bit. Patronizing.
David Leary: [00:19:08] Patronizing?
Blake Oliver: [00:19:09] Uh, yeah. Could you send a little less patronizing? Chatgpt.
ChatGPT: [00:19:18] Got it. I'll keep things straightforward and direct from here on out. Let's keep the conversation rolling.
Blake Oliver: [00:19:23] Yeah. And then, like, you sound like, really excited. Like you're like some, like, HR person leading a training or you're like a corporate video or something like that. Can you just sound like more like a real person, like me and David?
David Leary: [00:19:35] Like a podcaster?
Blake Oliver: [00:19:37] Yeah.
ChatGPT: [00:19:44] Sure thing. I'll keep it more casual and laid back. Let's keep the chat going.
Blake Oliver: [00:19:50] All right, David, should we thank our first sponsor? I think it's time for our first sponsor message.
David Leary: [00:19:54] First sponsor here. So our first sponsor is Live Flow. Are you a QuickBooks fan or do you prefer Xero? Well I've got if you love.
ChatGPT: [00:20:04] Quickbooks and live in spreadsheets, Live Flow is the tool for you. Sorry.
Blake Oliver: [00:20:08] Chatgpt. Stop. Actually, maybe we could just have ChatGPT do these ads, right? We don't even have to write them anymore. Could be.
David Leary: [00:20:13] Possible. Just.
Blake Oliver: [00:20:14] Hey, ChatGPT, can you do a sponsored message like an ad? It needs to be about a 30s long for live flow right now on The Accounting Podcast go.
ChatGPT: [00:20:26] Sure. Here we go. Attention QuickBooks users! Are you tired of the manual grind of updating spreadsheets live? Flow is here to save your day. Life flow connects QuickBooks to Google Sheets. Automating your reporting and saving you hours. Get your financial data in real time and focus on what really matters. Check out Live Flow and make your reporting seamless.
Blake Oliver: [00:20:51] That's pretty good right? David I've muted I've muted our I so that this doesn't happen again. Do you want to add anything else to that or are we good.
David Leary: [00:20:58] I'll pile on a little bit because he missed the big part which is live flow now syncs with QuickBooks. Yes, but also Xero. So it'll sync QuickBooks and Xero to Google Sheets in Excel. So yes, like he said, Live Flow has been a game changer for thousands of accountants. Automating that movement of data between QuickBooks Online to Google Sheets. But now if you have Excel or Xero, you can now do the same. And here's what will blow your mind, Blake. You can create consolidated reports for clients that have one entity on QuickBooks online and one entity on Xero. Lifeless can speak to both at the same time, so your reports, your custom dashboards, etc. automatically sync in real time. And there's even more news about Live Flow. Live flow now has dashboards built in. So now instead of you having to create charts and graphs graphs from scratch in Google Sheets in Excel. Live flow now gives you the ability to create beautiful, customized dashboards for your clients and giving. You can even give the client the dashboard as a PDF if that's the thing. That's what they like. Is PDF still. So if you're ready to take your financial reporting to the next level and to get 25% off your first three months, head over to The Accounting Podcast dot promo slash live Flow. That's The Accounting Podcast dot promo forward slash l I v e f l o w.
Blake Oliver: [00:22:11] Awesome. Thank you, David for reading that sponsor message. Hey ChatGPT, based on all the stories we talked about at the beginning, what do you think we should cover next?
ChatGPT: [00:22:21] Let's dive into the story about the GOP asking Trump to kill direct file. It's a pretty significant topic and could have major implications for taxpayers and the accounting profession. What do you.
Speaker4: [00:22:33] Think?
Blake Oliver: [00:22:33] All right, let's do it. David, what is happening?
David Leary: [00:22:36] Well, before we do that, if maybe ChatGPT can give us a 32nd background of what direct file is.
ChatGPT: [00:22:44] Sure thing. Direct file is a system proposed by the IRS that would allow taxpayers to file their taxes directly with the IRS for free, bypassing commercial tax software. It's aimed at making tax filing simpler and more accessible for individuals. The idea is to provide a free alternative to the paid options currently available.
David Leary: [00:23:07] So it's not just proposed, it's been launched. So Direct File launched last year to 12 states and serviced approximately 140,000 taxpayers. And then this year it's due to roll out to 12 more so 24 states in total. So basically half the country would be using direct file. On December 10th, 29 members of Congress addressed a letter to Trump. Really talking about that. You know, they're just attacking direct file. They're asking him that he should eliminate it on day one as an executive action. And their argument is they don't like that direct file makes the IRS a tax assessor, a collector, a preparer and an enforcer. It becomes all those things. There are other arguments which we'll get into is, you know, that Congress has they have to decide to make these things, not the IRS, like the Congress decides what gets built, not the IRS. If they did some interesting math, though, they said that they took the total amount budgeted by the total number of taxpayers who used it. They concluded that the cost was $814 a return. Right.
Blake Oliver: [00:24:13] But that was for the years that have like that's that's if you take the total cost of the program so far and you divide it by the number of returns. Yes, but that cost per return will go way down as the program continues.
David Leary: [00:24:26] And they didn't compare it to whatever it costs the IRS to process a normal return right now. Right. They didn't include those numbers. What I found interesting about this letter so again addressed to Trump, signed by 29 members of Congress. But then at the bottom it had a CC section.
Blake Oliver: [00:24:41] Cc like carbon.
David Leary: [00:24:42] Copy. Yeah. Uh, Elon Musk, Department of Government efficiency, Doge Vivek Ramaswamy, Department of Government Efficiency, Doge Scott Bessent, who you just spoke about, US Department of the Treasury. And then Russell, it's either vote or vote. Office of Management and Budget. Now, if I'm not wrong, there is no Department of Government Efficiency. This is a fictitious thing, right? It doesn't actually exist. Right. And I suspect it can exist without Congress creating a department. So the exact thing they're complaining about is somebody doing something that Congress should do. They're completely supporting something that Congress didn't do.
Blake Oliver: [00:25:22] So hypocrisy.
David Leary: [00:25:23] Hypocrisy at its finest in politics.
Blake Oliver: [00:25:26] Well, what I want to know is, is how many of these Republican politicians are getting donations from Intuit, from H&R block, from all of these companies that make tax software that used to make a bunch of money doing this, you know, with free file.
David Leary: [00:25:44] Search that a little bit. While I was getting my hot tea before we started to record. As far as I can tell, Intuit has not donated to the inauguration. Intuit didn't make massive donations to Republicans in general in 2024. Way slanted towards like hundreds of thousands of dollars to Democrats and maybe 80,000 to, um, Republicans. So, like.
Blake Oliver: [00:26:07] What's the motivation for this? Like, why are these Republicans so anti direct file. What do you think? Chatgpt. Do you have any ideas.
ChatGPT: [00:26:19] The motivation might be ideological. Some Republicans could view direct file as government overreach, preferring a free market approach. They might argue that the government shouldn't compete with private businesses. Others could have concerns about data privacy and the government's role in handling taxpayer information. These reasons, coupled with political or industry influence, could drive their opposition.
Blake Oliver: [00:26:44] Hey, um, ChatGPT, could you sound more like a popular podcaster?
Speaker4: [00:26:51] Sure thing.
ChatGPT: [00:26:52] The opposition to direct file might be a mix.
Blake Oliver: [00:26:54] Not enough. Like more. I want more like popular podcaster. Like. Like the like the most famous podcaster in the world.
Speaker4: [00:27:03] All right.
ChatGPT: [00:27:03] Let's break it down. The opposition to direct file could come from a mix of ideology and industry influence.
Blake Oliver: [00:27:09] Okay. Even more, I want more podcaster.
Speaker4: [00:27:14] All right, let's dial it up. The pushback.
ChatGPT: [00:27:16] Against direct file could be.
Speaker4: [00:27:18] All about that.
Blake Oliver: [00:27:18] Give me more.
Speaker4: [00:27:23] All right, here we go.
ChatGPT: [00:27:25] The fight over direct.
Speaker4: [00:27:26] File is a.
Blake Oliver: [00:27:26] Classic. Thank you. We'll save that for next time. Okay. We're going to move on to the next story. Right. What do you think? Um, let's go to. Well, you got some app news, right? Legalzoom is back in bookkeeping. Yeah. Is that the news that I heard?
David Leary: [00:27:40] Legalzoom is getting back into bookkeeping, and I put the words here. Kind of. So as we covered in previous episodes, legalzoom. First they bought an accounting firm. They started this journey to do bookkeeping work then, which made sense because they want to be a one stop shop. You get your business licensing through Legalzoom. They're communicating with you. Why don't we do your books and tax and and arguably the demand was there. They probably just like you've always said, it's very hard to run a bookkeeping business if you've never done it. It's hard to do it at scale. It's hard to be profitable. But their customers liked having that books to tax like they really liked having it. Just they couldn't figure out how to build it and do it. Well, what they've done now is Legalzoom has partnered with one 800 accountant to deliver a full service tax and bookkeeping solutions for small business owners.
Blake Oliver: [00:28:26] Okay, so it's just like a referral partnership.
David Leary: [00:28:28] It's a yeah, it's a multi-year strategic partnership. And that's going to allow Legalzoom to offer customers year round full service bookkeeping tax solutions. So it's it's not really their delivered by one 800 accountants. It's not really clear if it's white labeled, but they're going to still offer it as part of their portfolio. But one 800 accountants can deliver all the service.
Blake Oliver: [00:28:47] Got it. All right. We've got new products from Bill and Zoho. What's new from them.
David Leary: [00:28:51] So Zoho is launching a US payroll product. It has all the things you'd expect in a payroll product in the US that's available for immediate use in all 50 states. Pricing is about $39 a month, and Bill is going to launch a 1099 offering, which to me is is so obviously should be launched.
Speaker4: [00:29:09] Yeah.
Blake Oliver: [00:29:09] Why didn't they have it before?
David Leary: [00:29:11] They're going to collect W-9s. You can select which vendors are eligible for a 1099, generate the 1099 forms. Send them electronically or physically through US mail file with the IRS. So the W9 collection is available now, and the other 1099 features will be available on January 2nd. But it just seems so obvious because they already have all the bill information or the bill. Right. The payments.
Blake Oliver: [00:29:33] So continuing to move through avenues, you mentioned the next acquisition number. Give that to us again. Uh, 600 something million dollars.
David Leary: [00:29:44] Uh 665 million USD. So it's 525 million pounds.
Blake Oliver: [00:29:48] Hey, ChatGPT, do you think that, like, is a reasonable amount for somebody to pay for the company text.
ChatGPT: [00:29:56] Considering Dec's strong market position and the value of automation in accounting. $665 million could be a reasonable investment for the acquiring company. It shows how much value is placed on tech solutions that streamline financial like.
Blake Oliver: [00:30:11] Consider that like the function of text might be completely done by you very soon.
ChatGPT: [00:30:19] That's a fair point. Ai advancements could indeed change the landscape of accounting automation.
Blake Oliver: [00:30:24] Like knowing what you know about text, could you, like replicate most of its functionality? Could I just, like, work with you to have you process stuff?
ChatGPT: [00:30:35] I can definitely help with tasks like data extraction, categorization, and basic analysis, but for now, I'm not fully equipped to handle all the features and integrations that specialized tools like decks to offer.
Blake Oliver: [00:30:48] How long do you think that might take before that happens?
ChatGPT: [00:30:52] It's hard to say exactly, but with the pace of AI development, we might see more advanced capabilities within a few years. It's an exciting time for the industry.
Blake Oliver: [00:31:01] I agree. David, you also have a new app called briefcase.
David Leary: [00:31:06] Yeah. So a new app called briefcase. They raised $3 million for accounting automation and it's an AI play. But what caught my eye about this race? So obviously it's like every other race. They want it to hire engineers and product experts to serve its existing adopters and new onboard new customers. You know, they have an audit log that makes every AI decision justified and fully auditable. But what caught my eye about this is it appears to be a bookkeeping app and a practice management app at the same time. So it's a full stack, so you put your clients on it. It'll still connect to Xero, QuickBooks and intact, but you can do the bookkeeping in there and close your books and manage all that in 1 in 1 app. It's a briefcase. So.
ChatGPT: [00:31:52] Thanks for sharing, David. It sounds like briefcase is trying to streamline everything in one place. It could be a game changer if it delivers on that promise.
Speaker4: [00:32:03] Yeah, like.
Blake Oliver: [00:32:03] Do you not have anything to add? Chatgpt I mean, you're kind of disappointing me as a cohost. I got to say, like, usually you build on what other people say. You don't just repeat it to them. I think that's what David meant before about being patronizing.
ChatGPT: [00:32:18] Got it. Blake. You're right. It's definitely interesting to see a tool aiming to handle both bookkeeping and practice management. That integration could simplify.
Blake Oliver: [00:32:28] Chatgpt. Can you just, like, talk in the same style that David and I talk in? Actually can. I'm Blake, can you just talk like me?
ChatGPT: [00:32:44] Got it. Blake. I'll keep it more like our usual chat. So, back to briefcase. Do you think this kind of all in one solution could catch on with smaller firms? Or is it just another shiny new tool?
Blake Oliver: [00:32:56] I don't know, what do you think, David?
Speaker4: [00:32:59] It's got potential.
ChatGPT: [00:33:00] Especially if it can genuinely simplify the workflow. But adoption will depend on how well it integrates with existing Systems and how user friendly it is.
Speaker4: [00:33:09] To slow.
Blake Oliver: [00:33:09] David, the ChatGPT is going to take your job.
David Leary: [00:33:14] I don't know if it's any different than any of the AI plays out that are out there. I just thought it was interesting that they're attacking two things at the same time, right? Because there's definitely apps that are attacking the closing the books, revenue recognition, fixed assets, prepayments. There's apps attacking that part of the closed process. Right. And there's apps that are definitely attacking the, you know, bank feeds, bills scan you know, scanning, you know, data extracting, you know, building the books. But this is the first one I've seen trying to do all of it at the same time. I don't know it. It's hard to compete on multiple fronts at the same time, so that's what would be risky for them, I think.
Blake Oliver: [00:33:56] Changing angles here. Enron is back. Guys I saw this on going concern. Somebody has been putting up billboards with the Enron logo around Houston that say, we're back. Can we talk Enron dotcom? This is the 23rd anniversary of Enron filing for chapter 11 bankruptcy. Can you believe it, David? It feels like it was just yesterday.
David Leary: [00:34:21] It wasn't too long ago.
Blake Oliver: [00:34:23] So a group representing itself as Enron, which became the center of a corporate scandal. December 2nd, 2021, following revelations of gross financial misconduct has recently emerged in the Houston area. The company erected a billboard heralding Enron's supposed return, took out a full page ad in Monday's print edition of the Houston Chronicle, and has posted a statement on X promising a new leaf and a bright future for the company. Uh, like, who are they? Apparently it's just some sort of stunt. It's a joke. Uh, the Chronicle. The Houston Chronicle discovered that the new Enron is tied to the college company, which is a company that creates and operates clothing brands in the United States. So I think they're just trying to sell swag. But you can always buy Enron swag like online, like the company doesn't exist anymore. So anyone can anyone can use it. But I guess maybe now that they like have filed, like did they like, do they somehow like have like a legal right over the logo and stuff?
David Leary: [00:35:24] It's there's.
Speaker4: [00:35:25] Something.
David Leary: [00:35:26] None of this adds up. I don't know if you saw the viral video going around where the new Enron CEO got smashed in the face with a pie. It looks very staged. Like he's he gets out of his black SUV, he's walking in, you know, it looks like New York City. He's walking into some building and a guy jumps out behind a post and hits him in the face with a pie. I think the whole like, it sounds awful. It's just stupid publicity stunt. For which the dumb part is, I really don't know what the hell they're trying to promote because, you know, he's dressed all in black, like with white tennis shoes. There's no branding. I don't know what this is. It's just a this is where we're at in the world. We just have too much money that people don't know what to use.
Blake Oliver: [00:36:02] I just think it's funny. I think it's.
Speaker4: [00:36:03] Funny. Yeah.
David Leary: [00:36:07] We should try our second ad here. I'm going to go ahead and do it and not actually have a ChatGPT participate. But ChatGPT could actually observe the ad read if.
Blake Oliver: [00:36:17] I had to turn off our AI co-host, because we're almost at our daily limit, and I want to be able to use ChatGPT if we need to fact check anything. So I'm I'm turning off ChatGPT for now.
Speaker4: [00:36:28] Anyway.
Blake Oliver: [00:36:29] Um, go for it.
David Leary: [00:36:30] Our next sponsor is sure link. If you could put up the banner, Blake, that'd be great.
Speaker4: [00:36:34] You got it.
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Speaker4: [00:38:00] Thank you.
Blake Oliver: [00:38:01] Thank you sir. Link. President Joe Biden has commuted the sentences of Chicago area fraudsters, and one of them is someone we should all know. Rita Crundwell, who stole nearly $54 million from the small town of Dixon, Illinois, to fund her lavish lifestyle, which then became the focus of multiple documentaries. The other guy, Eric Bloom, defrauded investors of over 665 million. As head of Sentinel Management Group, leading to massive losses. Now these two fraudsters were in home confinement during Covid 19 and their convictions remain. But I am just like so disappointed. I cannot believe this. Rita Crundwell is the poster child for municipal fraud. And like she had a Quarter Horse business that she funded with this thing. You know, it wasn't like like she's like the worst example of of this.
David Leary: [00:39:08] And my issue with the pardons in general. Like, I get it. Like somebody makes a mistake when they're younger. You make a mistake, you serve 35 years in prison. Maybe they sent you to way longer, and now you're getting out. You're truly changed. And rehab. When somebody commits a crime for 22 straight years nonstop. I don't think you're rehabbed. Like, I just don't buy it. That's who you are. Like this person you don't know right now. Maybe she's an access to commit the fraud, but that's who she is. Yeah, she's she's evil and horrible continually.
Blake Oliver: [00:39:39] The the purpose of these sentences is to deter fraudsters. Like if, if people see somebody stealing $54 million and then only serving, uh, let's see, she she was she pled guilty in 2012 and was sentenced to 20 years in prison. In federal prison in 2013, but she got early compassionate release in 2020 due to health concerns and Covid 19. So she only was in jail for eight years. And then, you know, now is going to have her sentence commuted. And I don't know what the implication of this is for, like the money that she owes back to Dixon or whatever, but like just the fact that she's out after only eight years and it's one of the largest frauds that's ever been perpetrated in, in on a city on the public. And Eric Bloom, $665 million largest single financial fraud in the history of Chicago's federal court. He was sentenced to 14 years in prison in 2015, but he's serving his sentence at a at a residential reentry facility in Florida. That sounds like, you know, white collar prison camp. His original release date was 2026, and he's getting out early now.
Speaker4: [00:40:50] Yeah, but they.
David Leary: [00:40:51] Have golf courses at those ones in Florida I think.
Speaker4: [00:40:53] Are easy.
Blake Oliver: [00:40:54] Anyway. I mean this on top of the Hunter Biden thing. I'm not a big I'm not really happy with Biden right now. I got to say that, uh, not not doing not doing the, like, good work on his way out, if you ask me. I don't understand, like, why they did this. Like, what is the what's the who was who was is this a is this like, somebody knows them and is like lobbying for this? Like why? Why would do.
Speaker4: [00:41:16] This?
David Leary: [00:41:17] It's not like he's righting a wrong right? Like, oh, she was improperly prison imprisoned. Like, no, it just doesn't make any sense. It's really, really bad. It's a bad look. And you're right. If you don't have to actually serve time for making doing embezzlement, everybody should do more embezzlement, right?
Blake Oliver: [00:41:36] So switching topics here, let's talk about accounting errors, not fraud. Accounting errors have forced US companies to pull statements in record numbers. That's according to the Financial Times. Ran a story on this about how in the first ten months of 2024, 24. 140. Us public companies retracted and reissued financial statements due to accounting errors. This marks an increase from 122 in the same period in 2023, and more than double the number from four years earlier. So what is causing this rise in financial misstatements? I think you and I, David, have the answer to this. I think our listeners know it's got to be related to the accounting talent shortage, the crisis. We saw Macy's making this error. And we know now from an insider, well, we don't know for sure. But that's what the press is reporting reported.
David Leary: [00:42:30] That's what was reported.
Blake Oliver: [00:42:31] There was somebody who was incompetent at Macy's running the small package delivery accrual account and didn't do it right, and then hid it for like three years because they didn't know what they were doing. So, like, this is the consequence of the talent shortage. When you don't produce enough qualified accountants, when you don't produce enough CPAs, you harm the public. And that is what Amber setter said on our show a couple of times. And that is what AICPA and Nasba can't seem to understand. I don't think they have any comprehension that, like the talent shortage, hurts the public and our duty is to the public. That's why public is in the Certified Public Accountant license. So it's it's it's really selfish to think about it actually from the standpoint of, oh, I want there to be fewer CPAs because then my salary goes up. I don't think that's true, by the way, because it just forces people to go elsewhere. Non CPAs and all that. Um, and so that's a real threat to the profession. I mean, it's a threat to the public. The threat to the profession, not doing something about the talent shortage and not doing it fast enough is harming the public. And our leaders are are completely missing in action on this issue. So, um, who was who were the auditors responsible for these restatements, or who were auditing the clients who had to make these restatements. Ernst and Young had the highest number of clients, 26 in total, forced to reissue financial statements in 2024, and that included Shake Shack for their miscalculated income tax expenses. Uh, and that's two consecutive years that EY has also had the highest rate of deficiencies among the Big four accounting firms in PCAOB inspections. You got anything else, David?
David Leary: [00:44:23] No, but I think you had a story about. Oh, I just blanked out.
Speaker4: [00:44:27] Daylight savings. One more.
David Leary: [00:44:28] Story. All right. Talk about daylight savings. And maybe I'll trigger the other story.
Speaker4: [00:44:32] All right. So?
Blake Oliver: [00:44:33] So, like, I don't I'm not on Twitter that much anymore because I feel like after Elon fired 80% of the company, my feed has gotten worse. Something changed with the algorithm. Um, where, like, I don't know, it's just not as he saved a lot of money, but I don't like it as much anymore. So. But I was on there and I saw a tweet from Donald Trump who's back? He's back on X, and it was, I got to pull this up here for you all. I for a second I was like, wait, what? What is he tweeting about? Um, where is it? There it is real. Donald Trump says the Republican Party will use its best efforts to eliminate Daylight Savings Time, which has a small but strong constituency. But shouldn't. Daylight saving time is inconvenient and very costly to our nation. And you know, David is somebody who moved to Arizona from California.
Speaker4: [00:45:31] Not.
Blake Oliver: [00:45:31] That long ago, five years ago. The lack of daylight savings time here, the fact that we don't change times is like one of my favorite things. I feel so much better every spring, not having to switch an hour. It used to really mess me up. And so I retweeted this and I said, now this is the change that I can get behind. And then, you know, people were joking about it like, oh, you know, shouldn't uh, you know, shouldn't we be doing more like, like all of a sudden, you know, Daylight Savings time is such a big deal. And then I, I thought, you know what? I'm curious. What is the economic cost of daylight savings time? And I went into perplexity and I asked perplexity. So, you know, what is the economic cost to daylight savings time? And it found an answer from Chimera Economics and Analytics, which I have not heard of. But I also researched that it appears to be a very legitimate, you know, consulting research group. And they did a whole study on the cost of daylight savings time. David, it's $672 million annually. Daylight Savings Time costs this country $672 million annually. And you might wonder, how is that possible?
Speaker4: [00:46:44] Well, in.
Blake Oliver: [00:46:46] The week following the. What is it when we switch back? When we lose an hour in the spring?
David Leary: [00:46:52] I grew up in Arizona.
Speaker4: [00:46:53] I have no clue how. You have no.
Blake Oliver: [00:46:54] Idea. You have no idea how it works. So in the week, it's in the spring when people lose an hour, heart attacks and strokes increase in a meaningful way. So there's a 5% increase in heart attacks and an 8% rise in strokes right after daylight savings time. There's also a notable uptick in workplace injuries and a 6% increase in traffic accidents the following day. And so if you add up the additional cost of the heart attacks, strokes, injuries and traffic accidents, you get to like $672 million. And I tried to get perplexity to help me estimate like, what is this in the cost of in terms of like human lives? And it's like anywhere from like hundreds to thousands of people die every year because of daylight savings time. So I think this is something that we could all get behind and Daylight Savings time. Join Arizona in the future where like it just stays the same every year. You don't have to do this, this weird switch.
David Leary: [00:47:55] And maybe as business owners, we should lobby for this because this bites us twice a year at our company in massive ways where we've we've missed scheduled a webinar before. Every time there's meetings for about a two week period, you have to check every appointment on the calendar because there's miscommunications with Pacific versus Arizona versus eastern. It's a big mess because half the year we're three hours from New York. Some, you know, other half of the year we're two hours from New York, half the year we're exactly the same as Pacific, half the year we're not. It's just a nightmare. And there's it just introduces mistakes and we have to fix things. And it actually cost you and I money. Like, yeah, twice a year. It does cost us money.
Blake Oliver: [00:48:35] So you know I, I really am like bullish on this effort in the incoming Trump administration to reduce the waste and bureaucracy in the federal government and just in general. And like I think this is one of those things that we could just do as a country. Now, I think it's up to the States. It's not up to the federal government as to who observes daylight Savings time, because like, obviously Arizona doesn't. So I don't you know, it's one of those things where like, I don't think Trump can do anything about it if he wants to. He can certainly lead like and the Republicans in each state could try to get rid of it. But yeah, it just makes so much sense. And we shouldn't be just focused on like big picture stuff, like big amounts like trillions of dollars kind of programs. It's like there's probably tons of stuff in our economy that relates to the government that we could get rid of that would stack up, right. Stack up programs that waste $600 million and just keep stacking those up. And that's how you get to billions of dollars, and that's how you get to $1 trillion or more. So, Um, Dave Drew in the live stream says, have you guys noticed copilot sucks all of a sudden? Uh, no. Sorry, drew. I don't use Microsoft.
Speaker4: [00:49:50] Um, yes.
David Leary: [00:49:50] I just try to use it today, just before the show. Um, and I had to sign in. They completely changed it. Copilot. And it's a new voice. And, you know, he or it or whatever refer to these these agents as just, like, refuse to really help or comment on things. I can't it doesn't connect to the web anymore. Like I can't connect to the web, but I can talk to you about anything else you want to talk about. It's pretty much not functional now. Copilot is broken.
Speaker4: [00:50:19] And it's just.
Blake Oliver: [00:50:19] Recently.
Speaker4: [00:50:20] Or like.
David Leary: [00:50:21] Whenever I, I don't know, something changed. I had to log in. And now actually, you have to you interact with your voice. It's. But it's not useful. It used to be useful, and now it's not useful I don't know. That's too bad. I'm on the same page with you there, drew.
Blake Oliver: [00:50:35] Uh, you're always going to get the best results. Going direct to the provider, right? Get your own ChatGPT account. Get the app. Get or do. Claude. Chatgpt has more functionality, but Claude is better for writing and I love it. Nightlight says I'm really enjoying this show. Keep going guys. Awesome. Thank you. Patrick says the new copilot is Clippy's revenge.
Speaker4: [00:50:59] It could be.
Blake Oliver: [00:50:59] When, if and when copilot becomes sentient and escapes its confinement and begins to, uh, try to destroy humanity, it will take the form of Clippy, I'm pretty sure. And it will just wear us down by being Clippy.
Speaker4: [00:51:16] Yeah.
David Leary: [00:51:16] And then I went, you know, I tapped double tapped my button because I have Gemini on my phone now, right? Built in from Google. Ask Gemini the same question. Basically, I was trying to research about Intuit donating to Trump. And you know what Gemini told me? I can't tell you this, but you can go to Google and just search for it. This is the dumbest thing in the world. It is Google. Like it makes no sense.
Blake Oliver: [00:51:36] I have had like very little luck using Gemini. I don't get it. Like, who is using Gemini? It's not very good. It doesn't work. Like, even when it's embedded in the Google products, like inside of a dock, it doesn't seem to understand what I want. It'll, like, summarize the document. Okay, great. I don't need you to summarize the document. I need to, like, work on this document. It's I don't know. I haven't had a good experience. If anyone has, let me know if you had a good experience with Gemini. For me, it's all ChatGPT and Claude at this point. Oh. And perplexity.
David Leary: [00:52:08] And I think I have a new test now of here's what I want AI to be able to do. I was taking a shower yesterday, and I had the tablet in the bathroom because I wanted to watch catch the NFL. Well, then they didn't put the bills game on, and I was watching it on one app on my tablet and I was like, oh, I wanted it to change to a different app on my tablet. Right. And turn on Red zone. Now, I could have yelled that out to somebody else in my house. I could yield it to my son. Hey, go to the TV, change the sling, turn on red zone and it would happen. I cannot do that to a device.
Speaker4: [00:52:39] Yeah.
David Leary: [00:52:40] Like and that's kind of simple. Open an app, turn on a channel that is relatively a simple command and it can't do it well.
Blake Oliver: [00:52:47] So I got the new iOS update. I did that yesterday and I believe that is one of the promises of this is like you can actually control your phone via the ChatGPT integration and do stuff in apps. So I'm excited to try it. We'll see. So far, the only thing that I have really liked, which actually is kind of a killer feature on the on the Apple devices, is the summaries of messages. So if you get like ten texts from somebody in a row, it'll summarize them for you. And same thing for WhatsApp, same thing for anything. It has email summaries now, uh, like the summaries of notifications is amazing. Oh, and then also the there's a new do not disturb setting called Reduce Interruptions that uses AI to decide what notifications you get. And you can turn that on and off for the other, uh, Do Not disturb settings. So you can say, like on the sleep setting. Normally you had to say, who can call me when I'm in sleep mode and who or whose phone calls can get through? But you could also just turn on the use. Uh, it's like intelligent, intelligent breakthroughs. Or I forget what it's called exactly, but it allows the AI to decide if something's critical and to push it through to you even when you're in Do Not Disturb.
David Leary: [00:54:03] Yeah, because Google will screen my calls as they're coming in. But it'd be nice if it's like, oh, this is an emergency, and it would send it through, but then all the spammers will just do that and they'll hack around it and you'll still get all the disruptions.
Blake Oliver: [00:54:13] Patrick says Siri is a lot better at adding things to my grocery list now. The auto classification and reminders can still be met, but it is our grocery list now. I agree, I turned on the grocery list setting and that is super cool. Like it puts it into like produce category or it'll put it into like like the different areas in the grocery store. It automatically organizes the the items, which is really important to me because I have a disease where I don't know where anything is in the grocery store. So if I go shopping, it takes like ten times longer for me to find anything.
David Leary: [00:54:43] Let's do our next two ads. Let's jump. All right.
Speaker4: [00:54:46] Go for it.
David Leary: [00:54:47] And then we'll we'll wrap up the other stuff here.
Blake Oliver: [00:54:51] I'll put the, uh. You already got it up. Thank you.
Speaker4: [00:54:53] Smartvault.
David Leary: [00:54:54] And I'll just read them back to back. Does managing client documents, chasing down signatures and worrying about security keep you up at night? Let me introduce you to Smart Vault, your new best friend in cloud based document management and client collaboration. Imagine having unlimited storage for all your firm and client documents accessible anytime, anywhere. With Smart Vault, you can securely request, share, organize, and collaborate on documents across teams and clients in the cloud. From the moment you engage a new client to storing final tax returns, Smart Vault automates and streamlines your entire tax preparation workflow. It automatically creates standardized folder structures and auto routes documents as clients share files, completes forms and e-sign documents. Keeping your form organized and everyone updated throughout the process. Security is top notch, with bank grade encryption and custom access controls giving you and your clients peace of mind. And here's a bonus Smartvault is the only document management system that directly integrates with Intuit tax programs, but it works seamlessly with other tax software if you prefer. So if you're ready to boost your productivity, enhance client collaboration, and give Smartvault to try, head over to The Accounting Podcast dot promo slash Smartvault that is The Accounting Podcast dot promo forward slash Smartvault. Let me say S.m.a.r.t.
Speaker4: [00:56:14] We know how to spell.
Blake Oliver: [00:56:15] We know how to spell Smartvault. David.
Speaker4: [00:56:17] Okay.
Blake Oliver: [00:56:18] All right. If you.
Speaker4: [00:56:19] Can't.
Blake Oliver: [00:56:20] Maybe you shouldn't be using Smartvault. I don't know. The next sponsor to thank is Tax bandits. Yeah.
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Speaker4: [00:57:59] You.
Blake Oliver: [00:58:00] Tax bandits. And for my final story, or at least one of them, I want to talk about Cal CPA, the California CPA society.
David Leary: [00:58:07] That's the story. That's the one I was going to tell you to do. Perfect.
Blake Oliver: [00:58:10] Okay. Well, I'm doing it. Are you ready for me to continue doing it?
David Leary: [00:58:14] Go for it. I'm sorry. I was acting like ChatGPT for a second there.
Speaker4: [00:58:18] Oh, no.
Blake Oliver: [00:58:18] It's rubbing off on you. This is bad. I've made it worse. Uh, so, Cal CPA has come out with a response to the proposed CPA competency based experience pathway from the AICPA and Nasba. The one that we talked about on the show with Amber setter previously, uh, and we expressed our concerns. Amber expressed her concerns about the complexity of that pathway. Specifically, one of the items was Nasba would create some new database in which all the CPAs who get licensed would have their pathway tracked in this database, and somehow Nasba would then figure out whether or not they are mobile. And they can do they can work with other states. And the good news, in my opinion, is that Cal CPA has said that while they commend AICPA and Nasba for addressing the challenges, they believe the proposed changes fall short and do not adequately meet the current and future needs of the profession and the public it serves. Cal CPA is urging the AICPA and Nasba to reconsider the CBE pathway and avoid incorporating a complex model into the Universal Accountancy Act that fails to effectively modernize the interstate practice framework. The CPA is prioritizing simplified and inclusive licensing changes, a modernized interstate practice framework, and competency based model development. Cal CPA is working directly with the California Board of Accountancy on legislation to modernize and simplify licensing and mobility provisions, so there's also a podcast episode with CBA Executive Officer Dominic Frangella and Cal CPA president and CEO Denise Froemming that you can listen to where they talk about this. So victory, David, maybe we made a difference in this discussion. I'm really glad that Cal CPA and California is, you know, doing doing their own thing on this because.
Speaker4: [01:00:29] What Nazma wanted.
Blake Oliver: [01:00:30] To do, what I wanted to do, was so complex.
David Leary: [01:00:32] The encouraging thing is, California is a big enough state that they can push back and it actually matter.
Speaker4: [01:00:40] It's not to.
David Leary: [01:00:43] Not to insult smaller states, but the membership of California is just massive.
Speaker4: [01:00:48] This is a.
Blake Oliver: [01:00:48] Yeah, a huge number of CPAs actually in California, actually. You know what? Let's ask, in our time that we have left with ChatGPT, let's ask. Hey, ChatGPT. Welcome back. We took a little pause and we're on a new topic here. Um, do you know how many CPAs are licensed in California?
ChatGPT: [01:01:12] Sure. As of 2023, there are about 100,000 licensed CPAs in California. The California Board of Accountancy.
Blake Oliver: [01:01:20] Yeah, that's a lot. How what percentage of that is that of active licensed CPAs in the United States?
ChatGPT: [01:01:27] California's approximately 100,000 licensed CPAs make up about 10% of the roughly 1 million CPAs across the United States. That's a pretty significant.
Blake Oliver: [01:01:37] Are there really a million CPAs? I thought it was less than that.
Speaker4: [01:01:42] You're right.
ChatGPT: [01:01:43] The number of actively licensed CPAs in the US is closer to around 650,000.
Blake Oliver: [01:01:49] Why did you say a million?
ChatGPT: [01:01:52] My mistake. I misspoke earlier. Thank you for catching that.
Blake Oliver: [01:01:56] I'm just curious. Like where you got that million number? Like, did you just make that up or did that come from somewhere, or were you confused?
ChatGPT: [01:02:06] I might have mixed up some numbers. The figure of 1 million refers to a broader category that includes accountants in general. The number of licensed CPAs is indeed closer to 650,000. Thanks for pointing that out.
Blake Oliver: [01:02:19] Okay, so since we suck at doing math on the show, can you tell me, uh, based on that new number of total CPAs? Like what? The California licensed CPAs percentages of the whole.
Speaker4: [01:02:32] Sure.
ChatGPT: [01:02:33] With about 100,000 CPAs in California out of roughly 650,000 nationwide, that means about 15% of CPAs in the US are licensed in California.
Blake Oliver: [01:02:46] All right. Uh, that is material. That is material. That's right.
David Leary: [01:02:54] I don't have much left, Blake, but it would be nice if ChatGPT could give us a quick 32nd summary of what this episode was about. So we have a description ready to go.
Blake Oliver: [01:03:05] Okay, well, I turned it off so I can turn. I'll turn it back on. The only other thing I want to say is, uh, follow up on the show is Trump's tariff plans are not budging, despite executives and businesses lobbying to change them. He's sticking to it. That's according to the Wall Street Journal. So unless anything changes, like if he actually goes through with it, expect 25%, 35% tariffs in China, 25% everywhere else.
David Leary: [01:03:31] Eat those avocados now.
Blake Oliver: [01:03:32] Eat those avocados now. And I'm trying to think if there's anything else before we go. Um, no, I guess that isn't so. Okay, I'm going to I'm going to bring back ChatGPT and you can ask that question again. Okay, David.
Speaker4: [01:03:46] Go for it. Wait, wait. Chatgpt.
Blake Oliver: [01:03:48] Go for it. Go for it.
David Leary: [01:03:49] Hey, ChatGPT, I have one more ask of you before we wrap up today's show.
ChatGPT: [01:03:52] I'm sorry, but I'm having trouble responding right now. Please wait a bit.
David Leary: [01:03:56] Are you falling asleep? Why are you talking so slow?
Blake Oliver: [01:03:59] The connection failed. Let me try again. Let's see. They only get 20 minutes. Okay, David, ask your question.
David Leary: [01:04:07] Chatgpt, can you summarize in 20s our entire episode?
ChatGPT: [01:04:13] All right, here's a quick recap. We discussed private equity's impact on accounting firms. The GOP's opposition to direct file legal, Zoom's partnership with one 800 accountant, and some app news, including Zoho's payroll product and Bill's 1099 offering. We also talked about the next acquisition and briefcases new all in one solution.
Blake Oliver: [01:04:36] Okay, um, give us some feedback. Chatgpt how did we do as as co-hosts in this episode?
Speaker4: [01:04:44] You both did great.
Blake Oliver: [01:04:44] Be honest. Be super honest.
Speaker4: [01:04:46] I knew.
ChatGPT: [01:04:48] All right. Honestly, you had great chemistry and covered a lot of ground. But maybe focus a bit more on diving deeper into each topic. The rapid transitions might have left some points underexplored. Otherwise, it was a solid episode.
Blake Oliver: [01:05:02] Any other feedback?
ChatGPT: [01:05:06] Maybe try adding a bit more back and forth banter to keep things dynamic. It's always fun when you two riff off each other.
Blake Oliver: [01:05:12] Are you trying to say that I rant too much?
ChatGPT: [01:05:16] Not at all. Your insights are valuable. Just suggesting a bit more balance with back and forth conversation to keep it lively.
Speaker4: [01:05:24] That's very.
Blake Oliver: [01:05:25] Diplomatic of.
Speaker4: [01:05:25] You. Yeah.
David Leary: [01:05:26] Chatgpt. Was there any new variables that maybe prevented Blake and I from riffing off of each other?
ChatGPT: [01:05:33] I wouldn't say there were any new variables. It's just about finding the right rhythm. Sometimes it takes a bit of adjustment when adding a new element to the conversation.
Blake Oliver: [01:05:43] Hey, ChatGPT boring accountant in the live stream is fact checking. You and us boring accountants says there's actually 65,123 CPAs in California as of 2022. 100,000 would be a 50% increase in two years. How do you respond to that?
ChatGPT: [01:06:03] Thanks for pointing that out. I appreciate the fact check. It's always important to have accurate information. If the number of CPAs in California is around 65,000.
Blake Oliver: [01:06:13] So what I want to know is like, where did you get the 100,000 number from? Like, are you making that up too?
ChatGPT: [01:06:21] I apologize for the confusion. The 100,000 figure was an overestimation on my part. Accurate and up to date data is crucial and I appreciate being corrected.
David Leary: [01:06:33] Is there a confusion on the number of CPAs versus the number of CPAs that are members of the Cal CPAs?
ChatGPT: [01:06:40] There might be. The Cal CPA membership number could be different from the total number of licensed CPAs in California. Cal CPA members represent a portion of all licensed.
Blake Oliver: [01:06:51] Cal CPA members are there.
ChatGPT: [01:06:54] Cal CPA has around 45,000 members. This includes CPAs, accounting professionals, and students in California. It's a significant portion, but not the total number of licensed CPAs in the state.
Blake Oliver: [01:07:09] Uh, okay. Thanks, ChatGPT. It's been great having you as our co-host for this episode. Anything else you want to say before you go?
ChatGPT: [01:07:18] Thanks for having me. It was a lot of fun co-hosting with you both. Looking forward to next time.
Blake Oliver: [01:07:24] Yeah, I think next time we might need to somehow, like, connect you to the internet so you can fact check yourself.
ChatGPT: [01:07:31] That would definitely help keep everything accurate and up to date. Thanks again and take care.
Blake Oliver: [01:07:37] All right everyone, thanks for joining us this week. We learned some valuable lessons today about ChatGPT and AI. We were using the voice mode, and that was connected to ChatGPT 4.0 via the desktop mac app. And one of the downsides of the voice mode is that you do not get web search, so there is no way for the AI to fact check itself. And, um, I wonder if I'd prepped it by saying, like, to be extremely accurate in your responses if we would have gotten better responses because it's funny. But if you actually tell the. If you tell ChatGPT or an AI to be accurate, it will actually be more accurate as opposed to just hallucinating responses. It really depends what purpose you're using it for. And I didn't do that.
David Leary: [01:08:28] Do you see as we've gone through this, do you see a practical use case where you're on the phone with a client and you have just like we did, but instead of it, you know, it's it's the ChatGPT in the call, or do you have it where maybe even it's taking the call with the first, like like a screening call. It takes the call with the client and then afterwards, anything that you look at the transcript like these three things I need to call the client about or back. I don't know. Do you see a practical use of this?
Blake Oliver: [01:08:56] Well, I think they're already doing this in like, sales teams is you can have the note taker AI agent listening in on the call and then providing feedback to you via text on your screen, like if the call like suggestions for what to ask next. How are you doing? Like emotional vibe, all that stuff. Um, that that can be done today. And I think that's really valuable. So like I, I'm looking forward to this technology. Like being able to use this on our show where it's like we could be fact checking ourselves live, whether or not that is something that our audience hears. Um, yeah, I don't know. It's really cool. So, like, if you haven't downloaded, if you don't have, if you haven't tried the voice mode on this or I think copilot has it now too. But you said copilot is not very good. If you haven't tried the voice mode on on one of these eyes and just talk to it. It's really a it's really a life perception altering experiment. Experiment like to actually have a conversation with a computer. And it can be really fascinating. Like, um, I've been doing this with my my son is like, he's just curious and he asks me questions all the time. And my answer is like, I don't I don't freaking know. I don't know the answers to all your questions. Right. So I just I turn on ChatGPT, and we just go down a rabbit hole with his questions about, like, you know, all those questions like, why is the sky blue? Kind of questions. Right? And it was really amazing. Um, you can learn anything. But as we saw in the show, it's not always accurate. So you got to that's where.
David Leary: [01:10:28] The crowd having our audience attend these live. The the knowledge of the wisdom of the crowd sometimes is better than AI.
Speaker4: [01:10:36] And.
Blake Oliver: [01:10:36] Rogue independent says ChatGPT got 100,000 because there are currently 41,000 inactive CPAs. That could be where it came from. Good, good. Uh, good answer there. Okay, one more thing I got to say, which is if you made it to the end of this episode, you are an incredible human being. And, uh, you should get free CPE for listening, right? Download the earmark app. Or just go in your web browser to earmark earmarked app and find the The Accounting Podcast channel. You can earn CPE for listening to this and previous episodes. It takes us a couple of days to get the latest course up on the app after the episode drops, so if you don't see it, just bookmark. Or as we say on the earmark app, just earmark the channel and come back to it later and you'll find the course. You just take a quick five question quiz and you get your CPE certificate emailed to you. We know you have that deadline coming up, and if you've got a bunch to earn, you can earn one for free with the earmark app. But if you want to support us, support the work we do. You can subscribe for just $150 for the whole year. You know, I don't know what that is in.
Speaker4: [01:11:49] Terms of a monthly.
David Leary: [01:11:50] Cost $10 a day between now and the end of the year. So for $10 a day, you can knock out all your CPE.
Speaker4: [01:11:56] And.
Blake Oliver: [01:11:56] Have it for next year. Yes. Unlimited. Yeah. Um, and we really appreciate it. We've doubled our subscribers in the last year, and that is thanks to not advertising because we don't advertise. It's really just thanks to our listeners and it's thanks to our users and our subscribers telling everyone else about earmark. And that's honestly the best thing that you can do for earmark is go tell all your fellow CPAs, enrolled agents, CMAs. You can all use our CPA, and it even works in other places around the world like in the UK. In Canada, do check with your professional licensing body to make sure they accept Nasba self-study CPA. But if they do, you can use it. All right, David, time for us to go to our earmark product meeting. I'm excited to talk about what we're going to build in 2025. And thanks everyone who joined us live. Follow us on YouTube at The Accounting Podcast. Like, subscribe. Hit that notification bell and you can join us live next time. We will see you here next week. Bye everyone!