The Accounting Podcast

FTX had 80,000 transactions in Ask My Accountant; the crazy cost accounting behind EY's failed breakup; using ChatGPT for financial statement analysis; what the tech world thinks AI will automate in accounting and more!

  • (00:00) - CAP 329
  • (00:39) - PREVIEW: How ChatGPT saved Erica
  • (01:09) - Introduction
  • (07:48) - FTX had 80,000 transactions in Ask My Accountant
  • (12:04) - Blake plays a clip from the All-In podcast on AI accounting
  • (17:25) - ChatGPT vs real accountants and students on tests
  • (25:48) - Hector Garcia's example of using ChatGPT for analysing financial statements
  • (31:24) - Is Erica using ChatGPT at all in her firm?
  • (36:18) - EY breakup news
  • (42:13) - Donna's voicemail on her sons college tour and accounting majors
  • (48:18) - Deloitte kicks off program for high school students to earn accounting credits
  • (49:29) - Can AI help save education?
  • (52:48) - The IRS shows customer service improvements in 2023
  • (54:22) - Are accountants actually experiencing a better tax season?
  • (01:01:49) - Crazy MYOB commercial
  • (01:03:41) - Wrap up and where to reach everyone

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Show Notes
Blake Oliver on Twitter: "My speaking session was selected for #Expensicon”
SURVEY: Busy Season Looking Good - CPA Trendlines
EY Confronts Slowing Growth After Breakup Deal Fails - WSJ 
Magic Workflow: AI-Powered Workflow and Process Generator
Ernst & Young has axed its plan for a split of its auditing and consulting arms, marking a dramatic and costly retreat       

Is that the IRS with your refund? No, it's a ChatGPT scam
Taylor Swift avoided $100 million FTX deal with securities question: lawyer
ChatGPT less than 50% accurate in accounting exams, study finds

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The full transcript for this episode is available by clicking on the Transcript tab at the top of this page

Creators & Guests

Blake Oliver
Founder and CEO of Earmark CPE
David Leary
President and Founder, Sombrero Apps Company
Erica Goode, CPA
Accounting for Coaching & Consulting Companies

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

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Erica Goode: [00:00:05] I did this two weeks ago with Chatgpt. I, for my own firm personally, had to draft up an accountable plan, and I was like, I'm sure I can find a template somewhere. But then I was like, I'm sure Chatgpt will give me a template. And so I, you know, typed up S-Corp accountable plan for this company based on IRS guidelines and that thing. Spit it out in ten seconds, and I was done.

Blake Oliver: [00:00:34] Welcome to The Cloud Accounting Podcast. I'm Blake Oliver. And I'm David Leary. And we are coming to you live from the NPR recording studio. And this week, our guest is Ericaa Goode CPE. Ericaa, welcome to the show.

Erica Goode: [00:00:48] Hey, thanks so much for having me.

Blake Oliver: [00:00:50] Yeah, great to have you.

David: [00:00:51] So, Erica, are you in the office? Are you on vacation because you just finished the big tax deadline was yesterday.

Erica Goode: [00:00:58] I, uh, my business is not have tax heavy work, so I look this good all the time because I'm not overworked. And, yeah, I'm. I always feel. Look, thus you just asked. I have a shirt that says always on vacation. Oh, I love it. Um, so, yeah, I'm in my office, but I don't normally work on Fridays. So this is, this is extra special for me.

Blake Oliver: [00:01:21] So you said you don't really do tax. What do you do? I don't really do.

Erica Goode: [00:01:25] Tax, so I run a boutique accounting and fractional CFO firm supporting coaches and consultants, everything from bookkeeping to fractional virtual CFO work.

Blake Oliver: [00:01:36] Nice. And I know you got a couple of kiddos too.

Erica Goode: [00:01:39] Yeah, yeah, we have a I'm married to another CPA also doesn't do tax so my my kids are very are very quick to be like not all CPAs do tax because I know we say that all the time so they're they're very aware.

Blake Oliver: [00:01:55] They get it.

Erica Goode: [00:01:55] They get it. We start them young. They're 11 and seven and yeah, nice. They're good kiddos.

Blake Oliver: [00:02:02] Did you find it difficult, you know, as a CPA, balancing motherhood and being a CPA?

Erica Goode: [00:02:09] Yeah, only every day. Yeah. Yeah. I, uh. I started my career in Big Four. Actually. That's where I met my husband. We both started at KPMG, and then we left as soon as we both made senior. That was not a not a long term lifestyle for us. And so I went into corporate actually worked at Walgreens headquarters for the rest of my corporate career. And that's where we started having kids not on site at, you know, but we, we started having kids when I was in corporate finance. And it was just it was it's difficult anybody listening to this who juggles motherhood and kids and careers and dragging them behind you as you're running through life knows exactly what I'm talking about.

Blake Oliver: [00:02:57] Yeah, I, I try to do 5050 with my wife. Right? She works. We both work in, like, I'll admit, like, I don't get even close to 50%. Like, I don't know how she does it. It's crazy. Like, especially all the medical appointments because it's not like you can split that up, right? That's really hard to split up. Somebody's got to take point on that. And she does all that stuff. Yeah. Yeah. Well, welcome to everybody who has joined us in the live stream. We've got Jeff, we've got Heather and Trinity. Heather says, Yay! Good to see Ericaa on the show.

Erica Goode: [00:03:27] Heather and I hung out at your, uh, at your podcast party in Vegas.

Blake Oliver: [00:03:31] Oh, yeah, QuickBooks Connect. That was so much fun. The one where I missed the photo op with you.

Erica Goode: [00:03:36] You did? Yes, that's fine. Well, there's always this year, right?

Blake Oliver: [00:03:39] Yeah, We're going to do it again at some point, right, David?

David: [00:03:42] I think so. We we are in the early phases of we're going to be coming up on our millionth download, which would be a good reason to have a party. So I'm trying to figure something out. So stay tuned.

Blake Oliver: [00:03:54] The Million Downloads party. Jacob That's incredible. Hey, Jacob. Guys, we got Michael as well. Oh, great. This is great. This is such a change from last Friday. Because we're after the attacks last Friday, Right. Everybody is working now. We've got folks tuning in. I hope you're on vacation. Well, I know actually a lot of the joke is that accountants take vacations right after tax day. They're gone. Right. But that actually doesn't really happen. Most people have like clean up to do. I never did like I was never able to to just check out.

Erica Goode: [00:04:25] So but that still feels like a vacation.

Blake Oliver: [00:04:27] I guess. It still feels like one. Even if you're in the office, you're like, Ah, nobody's calling me, right?

David: [00:04:31] I saw it might have been Big Four Accountants tweets, I don't know. Or one of those tax memes, you know, the sarcastic Twitter handles. And they had this cartoon. It was like a guy. It was the same photo of a guy sitting in his desk. And then the other photo, there was a drawing and he's also sitting in a chair on the beach and had like a thought bubble. So on his desk, he's looking very distressed because he has to work. And then he's the thought bubble is the beach. And then when he's in the beach, he's still distressed because the thought bubble is all that crap that's stacked on his desk still. Yeah, that's how accountants vacation.

Blake Oliver: [00:05:02] So some people think I'm crazy, but my favorite way to vacation is I bring my laptop and I do like an hour or two of work every morning with my breakfast, and then my inbox is clear. I triage everything, right? I have this confidence of knowing, like at 10 a.m. when I go out and do stuff, I'm free and clear. I don't have to think about it piling up. What do you think about that?

Erica Goode: [00:05:24] Erika Yeah, I always think it's a conundrum. I think that like, at least in my corporate days, we would you'd like kill yourself up until the point of going on vacation so that you could go on vacation and then come back. And, you know, I was always very legalistic, like you're not going to work on vacation, and then you come back to a disaster. So like you left a disaster, you come back to a disaster. It always made it feel like, is this vacation really worth it?

Blake Oliver: [00:05:52] Yeah, I'm going on my first two week vacation ever in my professional life. I mean, we're talking in 20 years. I've never taken more than a week off at once, and I'm going to do it in three weeks. And it's because. Well, I guess there's some work there's some work in it because David and I and The Cloud Accounting Podcast are going to expensive con in Italy. Oh, yes. And we will be doing some sort of social media stuff while we're there. We're trying to figure out what that will be. We're going to be talking to everybody else. They're making some podcast episodes and I'm doing a presentation on how artificial intelligence will save accounting because I don't believe that it will take all our jobs. As we talk about on this show all the time, there are like two jobs for every accountant, so we need all the help we can get. So if it can automate half the work, that's great. So this is a call to everyone listening. If you are working on cool stuff at your software company for accountants, if you are a practitioner using AI in your practice already, I want to know what you're doing. I want to have like real world examples to share with the attendees there and I will record these and actually share them with the world as well. So it's not just these 100 people in Italy. They get to hear about it. So reach out to me, Let me know what you're doing with it. I'd love to hear. And of course, I've got to talk about this week. David, what's on the top of your list?

David: [00:07:13] Maybe you could even survey our live attendees, but I want to talk about a bookkeeping thing with Ftcs. And then some of the lawsuits have started and with the celebrities. I don't want to touch on that a little bit.

Blake Oliver: [00:07:23] The FTC's endorsed celebrities. Yes. Yes. Who was who was doing that.

David: [00:07:31] So it was a lot It was all the biggest people. Right. It's Tom Brady and Shaquille O'Neal. But what's interesting about this was Shaquille O'Neal. He got served this week, right. So there's this big law class action happening. But the other big celebrity that was related to this that was in the news was Taylor Swift.

Blake Oliver: [00:07:47] Taylor Swift was promoting crypto.

David: [00:07:49] Taylor Swift is the only celebrity that said, aren't these unsecured, unregulated securities? And she said no to a $100 million sponsorship of her tour for FTX. Oh, that's the only celebrity they could find Any records of that questioned Ftx's. I love that. And she said, no, she, she, she, she really keeps leveling up her genius status. Right. And you can't not love her. She said she's going.

Blake Oliver: [00:08:13] To end up like like Oprah someday, right? Like, she'll just be everything to everyone. She's on that path.

David: [00:08:20] It's kind of amazing. So. So we could this one question related to FTX and we can get off of it is So Ericaa, you're here and then any of you in the chat want to partake in this? What is the most amount of transactions you've ever had in your Ask my Accountant account inside of QuickBooks from a client?

Erica Goode: [00:08:39] Zero. Don't let him touch it.

Blake Oliver: [00:08:42] That's the correct answer.

David: [00:08:44] In the chat room, any of you have clients that put things in the Ask my Accountant account?

Blake Oliver: [00:08:48] So what I would do, and I mean this was lazy, right? Is I would just I would book all the stuff I didn't know into that account for myself and then send them a report every month or whatever and say, please, you know, tell me what these are for Excel sheet.

Erica Goode: [00:09:02] Ask them before I send. And it like that's part of our close process is you've got to tell me before it even leaves the bank feed like it doesn't leave the bank feed unless I know where it's going.

David: [00:09:13] Well, this was a useful tool. And I remember when I was in tech support, you would tell people to create an account like this if they didn't know where to put it, and they'd create that. And then I've used it myself almost like a place to put something until I figured out later. I get it. Well, taking this back to FTX, so remember the whole they were on QuickBooks, they had 80,000 transactions in the Ask my Accountant account.

Erica Goode: [00:09:36] Was it was it just revenue minus ask my accountant count equals profit.

Blake Oliver: [00:09:41] That was their.

David: [00:09:42] 80,000. And so there's more things coming out of the investigation. And one of these things which is even crazier I know what you're going to say, David. Lose assets. Yeah.

Blake Oliver: [00:09:51] I'm sorry. Yeah. A scam. Bankman Fried was saying that they would just lose track of $50 million and find it.

David: [00:09:59] And such is life, he says. Such is life, which could be the podcast episode title, maybe. I think just life.

Erica Goode: [00:10:04] What's 50 million among friends?

Blake Oliver: [00:10:06] Yeah, right. I feel like the problem with this was one of the quotes in the article is it's not that they didn't have it's not that they had a problem with the internal internal controls. It's that they had no internal controls. They didn't even have accountants working there, as far as we know. Right. Who was running the QuickBooks file?

David: [00:10:24] Nobody. They were going to hire somebody one day. They were just feeding. Imagine that. Your very first day. There's 80,000 my account and transactions to deal with.

Blake Oliver: [00:10:31] You imagine getting that like that, that inquiry on your website. Ericaa You know, we run a small cryptocurrency exchange. We just need a quick cleanup job. Should be easy. We've got all the transactions feeding into QuickBooks.

David: [00:10:43] Everything's a great way to handle that is would be to use one of the tools like Uncat or a client hub or keeper, where it sends them emails about the Uncategorized transactions and send send them 80,000 emails. That'll be the best way to handle that.

Blake Oliver: [00:10:58] Heather says, I've seen clients who just categorized everything as retained earnings when I started with a consultation with them. Yeah, that's that's when you don't understand what retained earnings is.

Erica Goode: [00:11:07] It's like innocent until proven guilty, retained earnings until told otherwise.

Blake Oliver: [00:11:12] Trinity says just three red flags. Yes, that's a big red flag. I mean, there were lots of red flags about FTX that everybody ignored. So I think the whole QuickBooks thing is silly. Just my my personal take. Well, David, is that it for Ftxs? Yeah.

David: [00:11:28] Yeah, we don't. Okay.

Blake Oliver: [00:11:29] So I also want to talk about the breakup. Even though I said nobody cares, or at least I don't care. Last week, something came up that made me think it's pretty funny. And I also want to talk about this bit on the All In podcast that I heard. The all in podcast is the number one tech podcast in the world. And I was listening to one of their episodes from January, and I want to play this clip for you because they're talking about the applications of Chatgpt, and this was back in January. Okay? And so this is Chamath, and he's talking about what he thinks I should be used for.

Chamath Palihapitiya: [00:12:02] Somebody should do it in accounting. Somebody should learn all of GAAP accounting, which is pretty simple because it's published FASB, all of this nonsensical accounting rules and give you 100% guarantee of no malfeasance. So, for example, if you guys saw this Brazilian company, you want AI accounting. That's your that's your look at this company. Lojas Lojas emergence. Look at this company, AmEricaanas in Brazil, which just torched $20 billion of enterprise value. Why? Because these guys were using Excel to do a bunch of complicated capitalization and cost accounting, made 2 or 3 years of mistakes. It added up to 2 or $3 billion. And they're basically going to file bankruptcy in the next few days. That's completely avoidable. Human error. That should never happen, and an AI would be perfect for that. Like this is not super controversial to just follow GAAP accounting. Right? I mean, I don't talked about I.

Speaker5: [00:12:58] Don't know if you need AI for that. I think you just need software like a database would be good.

Chamath Palihapitiya: [00:13:02] But no, the problem is the database exists today. Like everybody sits on top of Oracle or Workday. It doesn't prevent these errors. So my point is, you got to get humans out of the system and the AI should be the accountant. The AI knows the rules, generates the PNL and says this is it. And by the way, that's way better risk management for the CEO and the CFO, because as you guys know, if you're the CEO of a public company, you have to sign your signature that these things are legitimate. And how do you know? I would way better know that a computer did it, like an open AI algorithm tells me, Chamath, this is perfect. Then some dude I don't know at Ernst and Young.

Speaker5: [00:13:38] Okay.

Blake Oliver: [00:13:39] So. That was Chamath. Paul Habesha. And. Yeah. Ericaa, I saw you putting your hand over your face as that clip was playing. Would you like to explain what's going through your head?

Erica Goode: [00:13:56] Yeah, actually, I had a flashback to sitting in, you know, in a client office and everybody arguing about sale leaseback accounting. But it's I mean, I guess we could have just had the computer decide because it's not interpretive at all. It's just like it's one of those things where like, yes, there's guidance. There's there are rules written. Obviously, we know that. And then this is where the accountants come in over the I is that every situation gets assessed differently. Right? You you have to take that guidance and be like, does that make sense here? It should. If it doesn't, well, then we have to figure out why it doesn't make sense because we don't want to mis, you know, misconstrue what's actually happening. And this is why we have, you know, going up to partner review. And then once you're at partner review, the partner is like, I'm not an expert in this. Let's go to the national office. So the person who spends all day researching sale leaseback accounting, um, but I mean, yes, it would be great if I could just give you the perfect answer for every single company in the United States. So that would be great.

Blake Oliver: [00:15:08] It sounds like what you're saying is the I would miss the context of the particular situation, right? You can't just let an eye loose and have it make financial statements. But they seem to think they seem to think that you could feed it GAAP, you could feed it, you know, FASB, you could feed it, all that and it would do it. And these are the these are the most influential tech VCs in the world right now.

Erica Goode: [00:15:30] So so here's a perfect example of why this wouldn't work. Sorry, you didn't know I was going to get so hot button on here. Oh, no, please.

Blake Oliver: [00:15:38] That's what this is all struck a chord.

Erica Goode: [00:15:40] So I won't I won't call out the client, but when I was in audit, there was a client that had just exactly what they're talking about, a whole list of fixed assets that were being capitalized and depreciated as there are in a manufacturing company. And, you know, little second year auditor Ericaa comes in and like literally like we're talking sheet to site visit. And I'm like walking through the plant, like show, you know, show me where this thing is. I'm like, where is this piece of, you know, $2 million equipment? And they're like, oh, yeah, we got rid of that three years ago. And I'm like, Well, where is it? And he's like. I think it's in that back corner. I'm like that thing that's really just a bookshelf now and full of dust that's not being used. He's like, Yeah, that's it. And I was like, Oh, why is it still being depreciated? It's normal rate, you know, It's like things like that where like, can the I make the spreadsheet? Absolutely. Can the I walk into the plant and make sure that that thing is still there and in use? No.

Blake Oliver: [00:16:44] Yeah. They can't ask the questions. No, that's what it can't do.

David: [00:16:50] Yeah. So I saw too. It's good that you brought this up because people are trying to figure this out if it's going to happen or not. And so there's two experiments, let's call them this week that I saw on articles about. One is from the AmEricaan Accounting Association. They evaluated Chatgpt by feeding it in 25,000 assessment questions, accounting related questions from 187 institutions around the world cross-referencing the results. And essentially students who take the exam score these. Then they give them a test, right? They gave chatgpt a test. Students are getting 76 points, 7%, and Chatgpt only got 47.4%.

Blake Oliver: [00:17:31] Do you know which version they were using? Was it 3 or 4? Because there's a.

David: [00:17:35] Humongous on the the version four. Yeah. Okay. Yep. It was on version four and but what they what the interesting thing it did much better on audit questions and it does really good on true false questions. So this goes like what Erica says if it's very black and white, it might be easy but you know, you can't walk in the plant, you can't make a judgment from that. And then there was a second article in Going Concern where there's a tax. I was a little confused, but there's a there's two keeper companies. There's the keeper that sponsored the podcast, which is like firm management. Apparently there's another app called Keeper that's for taxes and tax calculations. And what they did is they uploaded all the 2023 updates on top of GPT four and then they made it like a bot and just let people try to stump it. And they basically the conclusion with that is it's hitting about 84% of the time. It's correct based on people giving it a question that they already know the answer to and then saying, yep, it was correct or not correct.

Blake Oliver: [00:18:30] And they had a.

David: [00:18:30] Cpa go still a little ways off. That last 10% is going to be very hard to get, correct?

Blake Oliver: [00:18:35] Well, they had a CPA go and evaluate the responses. Right. And that's how they got that number. 84%.

David: [00:18:40] An army of CPAs. Yeah. Yeah. Or an army, you know, a handful or so.

Blake Oliver: [00:18:46] The army doesn't have any CPAs. That's why they can't pass an audit, right?

Erica Goode: [00:18:50] They're all in the FBI.

Blake Oliver: [00:18:51] They're on the FBI. They're all getting hired by the IRS.

David: [00:18:54] But this is where it's going to be helpful. Right? So by evaluating the 215 answers, the things that did really good, knowing which tax forms to apply to the situation. So that saves you time, right? You have a client, you give it the situation and it goes and pulls all the forms you're going to need for that engagement. That's where this AI is going to be super helpful to you, right? Versus just like pulling the forms and then filling them all out correctly. I don't know about that.

Blake Oliver: [00:19:17] So there's one thing specifically that I think I will do really well and put put those people out of work or give them make them way more productive, let's say. And that is all these people at the Big Four who their entire job is understanding revenue recognition or understanding. What was that thing you said? Ericaa The leaseback sale. Leaseback sale leaseback rules, right. And people get really high up or they not high up. They get really deep down in understanding these hyper specific, you know, rules. And the way I see that job is, you know, it's like I ingest all of this guidance. I ingest all of these rules, and then I see a particular situation from a client and I apply those rules. And I feel like Chatgpt will do that really, really well already. If you go into Chatgpt and you say, I have a revenue recognition question, you can give it the facts and it will give you an answer as to what you should do. And I think that's like that, that kind of like very apply the rules situation when it comes to GAAP, when it comes to tax, the AI is going to be able to do that really, really well and give people really good, really good answers that are probably better than what most humans could provide in terms of their clarity. I've got. That's an interesting. Sorry, Go ahead. No, please.

Erica Goode: [00:20:35] Well, I just saw a LinkedIn post from, I think, Jason stats this morning. Excuse me. And he he had this idea I don't know if you guys saw this about your having your team be able to leverage AI to pick your brain and basically uploading so much of your company's documentation, so much of your like written thought or verbalized thought and podcasts and putting it in somewhere and have and being able to let people basically research all of that, all of that information. What I think in that same context is if you loaded all the annual reports that are posted to and then you were able to do something like, say, a lease back accounting, and could you spit out all the companies that treat sale leaseback accounting like this and all the companies that treat it like this and all the companies that treat it like this? And then I can see like, oh, well, you know, the McDonald's and the Starbucks and that of the world, treat it like this. And the I don't know more manufacturing that they have very fewer plans treat it like this and how does that compare to what my. Clients doing?

Blake Oliver: [00:21:51] Yeah.

Erica Goode: [00:21:52] That'd be an interesting research tool. Well, and.

Blake Oliver: [00:21:54] Then it could look at all of the footnotes for that particular issue you're asking it about and draft it for you because they're not that different, are they? A lot of times it's boilerplate that gets put into these financial statements. And as David learned from our investigation of Silicon Valley Bank, 180 pages of the 181 pages of financial statements are footnotes, footnotes. Right. That could automate a ton of work. How many how many accountants are employed in the United States and public companies just writing footnotes all day long that nobody reads. Right? Because we learn with SVB that nobody reads the footnotes either. So I think that could free us up to do a lot of, you know, more valuable work.

David: [00:22:36] I like the idea of it being an interface from your employees to let's your brain or your knowledge, but like your wiki, right? Everybody has, you know, like these notion products, right? You have notion we talked about this last week, right? Microsoft, SharePoint And it's so hard to find things in these things. And you're right. So if that was on the back end of a chatgpt type interface where you could just, Hey, I'm trying to work on this, it's like, Oh, great, you need this, this, this and this and don't have to because it's very hard to find things in these repositories. Once they're in there, they're gone forever.

Blake Oliver: [00:23:09] Yeah, Yeah. Searching through company databases, wikis, finding that information, definitely. Well, and that's that. How many meetings.

Erica Goode: [00:23:17] Could you cut.

Blake Oliver: [00:23:17] Down? Yeah. I mean, most of my job in my firm was answering questions from new employees about how to do something because they couldn't find it in the documentation in our wiki. Right? So imagine if they could just chat with a bot blake bot and it gives them the answer and it just comes from my personal. But of course, you know, the problem is you still got to document your processes, which most firms don't do. Most firms have zero documentation. It's all in your head. So we're still gonna have to get over that hump. Maybe the AI can help write our documentation. Imagine if you could just get interviewed by an AI about how you run your firm like David. The way I was doing it with with our ad placements. Right? We have a we have a we use process Street here at The Cloud Accounting Podcast to do all the checklist for all our episodes. And it's long now. It's like, I don't know, dozens and dozens of checklist items. And in many ways.

David: [00:24:08] I think we're pushing hundreds.

Blake Oliver: [00:24:11] Yeah, in many ways.

David: [00:24:11] It's dynamic.

Blake Oliver: [00:24:12] It's dynamic, it's dynamic based on the show. It's dynamic based on if we have a guest, you know, do we get the guest release form, like get the guest info, send the reminder, all this stuff. It's really the same thing as a closed checklist, right? It's just a different service that we're doing. And I forgot where I was going with that.

David: [00:24:28] But you were talking about the.

Blake Oliver: [00:24:29] The the I could help build those. And actually we we have an example client hub. They just added an AI feature where you can tell it what kind of process you want to build and it'll add all the checklist items so you don't have to think about it or it gives you a starting point. I think that's pretty neat.

David: [00:24:48] Yeah, I mean, I'm going to do payroll for Client X and it'll be like, Here's your checklist to do the payroll essentially, and then you go and refine it for your company.

Blake Oliver: [00:24:55] And then you use it over and over again. And that's, that's really great because that's the blocker I find with most people implementing practice management software is they're starting with a blank slate and they don't know where to start or they're starting with this giant complicated template that's been provided to them. And then that's also overwhelming. So maybe this is a better way to get going. I have an example from Hector Garcia of using Chatgpt to do financial statement analysis. This one's a little scarier, I think, because it's starting to automate perhaps some of that financial analyst CFO role, the stuff that you really I mean.

David: [00:25:28] The advisory work that's going to save accountants to be an advisor. I know, right?

Blake Oliver: [00:25:33] Maybe not. Yeah, well, it's pretty cool actually. You could use this right now to do perhaps to help learn how to do advisory work. So check out this video. It's a long one. It's like 22 minutes, so I'm going to skip around a bit. Let's get it going here.

Hector Garcia: [00:25:46] In this video, we're going to be using Chatgpt to perform financial analysis based on reports we're creating from QuickBooks Online. So let's take a look at that. So I have QuickBooks Online in front of me. This is a profit and loss for last year. By quarter, I'm going to take this report and I'm going to export this into Excel. I'm going to open up that Excel file and I'm simply just going to copy and paste the information from the reports, not the headers, not the footer, just the accounts, the quarters, the amounts. And I'm going to copy that and I'm going to paste that into Chatgpt, but I'm going to tell Chatgpt what I'm doing first.

Blake Oliver: [00:26:28] So he's just copying and pasting from Excel into Chatgpt. It's losing all of the Excel formatting. Okay.

David: [00:26:36] And pause for a second on this too, because when Excel, when Microsoft finally rolls out their chat feature and it's just there in Excel, it's life changing. Like this is going to be who wants to copy and paste like this, export it from Excel, put it, you know, copy it from Excel, paste it here. Like that's just busywork. Yeah. A lot of people.

Blake Oliver: [00:26:56] Well, and that's why these plug ins for Excel are going to change all this, right? But this is what we're doing right now. So here's what he did. Let's see.

Hector Garcia: [00:27:04] Companies.

Blake Oliver: [00:27:04] So he puts in the prompt, he pastes in the.

Hector Garcia: [00:27:08] Copy and paste that into it. And I'm just going to say, I'm not even going to tell it what it is. I'm just going to copy and paste and it should start doing the analysis now. I'm going to stop it for a second because it just went on and started doing the analysis. I'm going to tell it specifically what I want. Let me zoom in a little bit.

David: [00:27:24] And for the listeners, he basically pasted this data in and it's just the account number, the account name, and then four numbers. Yeah. And then the next line, the account number and then four numbers. There's no dollar sign or there's a dollar sign on some things, but in general, you don't know what these columns are, what this means. Well, I think it's got the tabs, the lower line.

Blake Oliver: [00:27:43] It's got tabs in between the numbers. And so tabs Chatgpt is smart enough to interpret that and understand this was actually originally from Excel or in some sort of, you know, table spreadsheet format. So anyway, now Hector's going to ask some questions.

Hector Garcia: [00:27:55] First, talk to me about my profit margins. So I'm just going to go step by step and have it give me different pieces of information. So now it's going to start telling me information about my profit margins. So it's calculating the profit margins for each quarter. Okay. He's telling me how is calculating the numbers actually breaking it down for me. And then just give me sort of an overall analysis. Okay.

Blake Oliver: [00:28:22] And the analysis is, you know, as you can see, the company had negative profit margins in Q1 and Q2, which means it was operating at a loss during those quarters. However, in Q3 and Q4, the company had positive profit margins of 52% and 22% respectively for the year as a whole. The company's profit margin was 6%. Now that's not that mind blowing, right? I mean, hey, I can look at a report and see that not a big deal. But then Hector starts asking like, is this good for a construction company? Like, what should my profit margin be?

Hector Garcia: [00:28:56] Good. Let's just say, um, take the whole year.

Blake Oliver: [00:29:02] Now he's doing a comparison. I want to get to the part where he does the. Here we go. Okay. Yeah. Take the whole year and compare the expenses versus the industry average. That's what he asks. Now, I.

Hector Garcia: [00:29:11] Was going to say. Um, based on data from Sageworks, whatever that is. I guess a company that collects data, we're going to do an analysis. So it says that that Sageworks says that the average net profit for a construction company is 7.9%, which is slightly higher than mine, which was 6.22%. Okay. So worth noting that, you know, things vary. Okay. Good. In terms of expenses, it's breaking down what my largest company expenses are. And then it says, okay, this is kind of difficult to compare. Okay, that's fine.

Blake Oliver: [00:29:47] So Hector goes on for another, you know, 20 minutes or so doing this financial statement analysis with this PNL, and it's pretty good. And this is chatgpt for imagine five, imagine six, imagine seven when it's trained on. Financial statements, which I don't think it's been trained on yet. And when it's trained on all this comparative data, all of this industry averages and all that stuff. Right. I don't know. I could see. I could see. Financial statement analysis being impacted heavily by this.

David: [00:30:19] And you could do this. You could do the math that's being done here. You could quickly Google, hey, what is the growth rate for a construction company? You could go find that. You could do all of this. The real benefit here is the speed again. Right? Like like you're starting out, you put it in and you ask the question that you actually want the answer to instead of asking the question like, Well, now I got to go get eight more data points to come up with the answer, right?

Blake Oliver: [00:30:43] Yeah. All the Google searches you'd have to do, it's just doing them essentially, or it's got the data already in its model.

David: [00:30:50] So, Erica, are you using Chatgpt yet in your firm? With clients?

Erica Goode: [00:30:54] Not with clients. More an internal processes thing. I have enough other software and apps that make things so efficient that they like. I don't need things written in words for my clients. My clients don't want to read words. So I think from that interaction it's not helpful for me. Where I find it extremely helpful is where I get hung up personally on like words, like staring at the blank sheet in my own, like because my own skill set is so numbers focused. Sometimes it's like sitting in front of a blank cursor and you're like, Well, shoot. I don't know how to I don't even know how to write this intro to a podcast. And I ask Chatgpt like, Hey, write an intro for this podcast talking about XYZ, or ask people to leave a review and it and it spits out something in ten seconds that would have like, like, I know this sounds dumb, but it would have had me scratching my head for like ten minutes because I'm like, Well, how do I word this? I don't know how. And Chatgpt took, you know, gave me back nine minutes.

Blake Oliver: [00:32:02] Yeah, I think, I mean, if you wanted to write emails to your clients like analyzing their financial statements though, like, wouldn't that do you think that would add value? Like if you sent them the financial statements and it had like this nice personalized email that explained what was going on?

Erica Goode: [00:32:18] Would they? I don't think they would read them. My clients wouldn't read them. Yeah. I mean, yeah, it's not if you.

David: [00:32:24] Gave them a prompt and they could ask that next question, is this good growth for my company? And it could answer that. And you don't have to answer that, right? If you could take this with their take their books and put a prompt in front of it, let them chat with their books. Kind of kind of conceptualize showed this seven years ago. Books connect, right? And it just didn't really work great. Then it was more like Alexa and less like this.

Erica Goode: [00:32:49] Where I found I did this two weeks ago with Chatgpt. I, for my own firm personally had to draft up an accountable plan and I was like, I'm sure I can find a template somewhere. But then I was like, I'm sure Chatgpt will give me a template. And so I, you know, typed up S-Corp accountable plan for this company based on IRS guidelines and that thing. Spit it out in ten seconds and I was done.

Blake Oliver: [00:33:16] That's great.

Erica Goode: [00:33:17] I mean, I added one line in there because I wanted to they didn't have something on mileage and everything else. And because I know the IRS guidance, I know that it was right or wrong. I just didn't know the words. I wanted to format it in ten, ten seconds and I was done, which would have taken me, you know, an hour of doing the research of how should I word this so that it sounds appropriate and that if I get audited, somebody's going to say, Yeah, you didn't jack this up, you know? Yeah.

Blake Oliver: [00:33:46] What a great example. Ten seconds. Saved you an hour. I think we're going to see more and more of that.

Erica Goode: [00:33:52] Then got really curious and was like, Can you write an operating or what's it called, a operating agreement for an LLC. And then I just started like trying to see what it could do from like a legal verbiage standpoint. And it did not disappoint in any of my experiments.

Blake Oliver: [00:34:07] I mean, think about it, right? Operating agreements across all LLCs are probably so similar, like. Like it's like the DNA of the human species, right? It's 99.9% the same. And then there's this one little change. And if you can get the AI to write the stuff, that's all the same. This is like the next generation of rocket lawyer, right? Which, yeah, you know, if you ever used that, right, you go through this little questionnaire and then it fills in the blanks in the document. But this is like next level to that.

Erica Goode: [00:34:37] Well, yeah, because I didn't have to go through the. I have done that. You don't you have to go through 20 screens and 75% of them don't apply to you. So I can say I'm an S corp, my name is blah, blah, blah, and this is what I care about. Make it for me, you know. Mhm.

David: [00:34:54] Yeah. It could be the other way too. Where because a lot of times you get these documents that have tons of stuff, a lot of it's boilerplate contract stuff and you could feed that and be like what are the three things or what's in this that is specific to me that I need to pay attention to in this contract, that that is an outlier. And then before you sign the contract, because, you know, nobody's reading these contracts that are 60, 70, 80, 90 pages long.

Blake Oliver: [00:35:14] Maybe, maybe we can create an AI that reads the terms of service that we're all agreeing to when we sign up for apps and tells us if we need to watch out for something because nobody actually.

David: [00:35:24] Yeah. Or you just read the terms of service through some other service and that's genius. Actually, that's a product people might pay for.

Blake Oliver: [00:35:32] Yeah. Would they pay for it though? Because they're already clicking. Except that's true without reading it.

David: [00:35:38] And then you'd have whole terms of service in the beginning of yours to use your tool anyway. So it defeats the whole purpose.

Blake Oliver: [00:35:44] Hey, can we talk about the breakup a little bit? A little schadenfreude, if you will, Confronts slowing growth after breakup deal fails. The Wall Street Journal has been really enjoying this, covering this failure, I imagine, because everybody in the world of the Big Four and finance and anyone who works with Big Four auditors is enjoying this story. I don't really care. I think it's stupid. I don't think the breakup ever was going to change anything anyway. It's just a money grab, you know, this whole private equity thing.

David: [00:36:16] And to rewind. Blake, if just the history on this, if I remember a thing about this before, it's going to be a global split. But it was the US partners that have pushed back and kind of nuked this deal. Is that. Yeah.

Blake Oliver: [00:36:28] And specifically the US audit partners on the steering committee who nuked the deal. Yeah. And why would they do that? Hmm. Maybe it's because this lucrative consulting money actually does impair their independence, and they want that money, Right? But of course, they'll never admit it. So the thing that made me want to talk about this again on the show is just this crazy number, $600 million. So itself is saying that the breakup attempt cost $600 million. And I'm trying to think in my head, how the heck does it cost $600 million? Did they pay consultants to help them? I guess, I mean, doesn't do this kind of work internally. Yeah. David, you've got your hand raised. I see.

David: [00:37:19] They figured out their billable hour for all the meetings they had about it and they're booking it to that.

Blake Oliver: [00:37:24] And that's apparently the story. Like something like 300 million of that 600 million is just timesheet data. It's not cash. And I'm not sure. Then then that leaves 300 million of cash or something like that, which I'm like, How did they pay 300? Who did they pay $300 million in cash to like? It doesn't make any sense either. I feel like all of this is just like made up, you know, insanity timesheet data. And, you know, you've got all these partners, you've got all these high level people booking time to project Everest, which is what they called their breakup plan. And they said, I think the reason we know that is because they said $400 million was like projects they didn't do. So they were also busy working on this, that they didn't do other work or something like that. But none of it.

Erica Goode: [00:38:12] It's in a footnote.

Blake Oliver: [00:38:14] It's in a footnote somewhere. Yeah. I mean, it's just it's just nuts. It kind of like I think to me, it.

David: [00:38:19] Shows are they going to try to put this $600 million on their own books as like a incurred expense for this deal or lack of deal? I don't.

Blake Oliver: [00:38:29] Well, so so yeah, it has nothing to do with cash. I don't think it has anything to do with cash. It's all just like internal accounting stuff. And I think like the people who work at the high level at the Big four are. So in this imaginary world that has nothing to do with reality that they actually believe that they spent $600 million on this project because they don't understand the difference between cash and GAAP.

David: [00:38:55] So so this is probably going to be more of a cost accounting thing where it's like, well, I don't want my I don't want that number on my teams. Yeah, like my team wasted hours that needs to go against some other department here at AI. Right.

Blake Oliver: [00:39:06] Think about it this way. It's like it's like a bunch of people at your firm build time on a project where the client never paid and left, and now you've got to, like, deal with, like, who? Who internally pays for that at the firm?

David: [00:39:21] I think that's what could actually cause the breakup. They might they might break into like 50 pieces. Just tons of arguments over this money could actually cause the breakup.

Blake Oliver: [00:39:29] I don't know. But one of the quotes that stuck out was we need to do a much better job. Dot, dot, dot. In billing every hour we can get our hands on.

Erica Goode: [00:39:40] So are they saying the 600 million was the opportunity cost of work they didn't get because they were messing around trying to figure out if this would work?

Blake Oliver: [00:39:50] I'm not sure if 600 is the right number because there was another number like 400 million was work they didn't take on or projects they didn't do. It's basically hundreds of millions and we're not sure what it is really like. It's not clear from the reporting. But yeah.

Erica Goode: [00:40:06] What's what's the purpose of sharing the number? Are we bragging? Are we proud? Like what? What's the point? Are we sad? Like, send us a gift? What's the point? I don't know.

Blake Oliver: [00:40:15] If they meant to share that number. If that was something the reporters like dug up in their investigation. But it's like that's what's been floating around on all of their internal webinars. That's what they're talking about internally, is they're talking about these hundreds of millions of dollars that they spent on this deal. And I just have a hard time believing they spent any money. I mean, how much money could they have spent on external consultants when they themselves do all this M&A stuff internally? Why would they go hire somebody.

David: [00:40:38] Else to do this? They didn't write a check to KPMG. Hey, we need your consulting. Yeah, it doesn't.

Erica Goode: [00:40:42] Make any sense. They wanted an independent opinion, right?

Blake Oliver: [00:40:45] Did they? Who did? Who did they pay the $600 million to? I It doesn't make sense. Did they pay it to banks? Did they pay it? Like that doesn't make sense. They would pay the banks when they do the deal, right? Like, it doesn't make sense.

Erica Goode: [00:40:55] It's it's an internal charge code.

Blake Oliver: [00:40:57] It's all an internal charge code. This is people who are looking at their timesheets that have been doing timesheets for so long that they don't understand that timesheets aren't real. That's my theory. And so they're cutting 5% of their workforce to make up for it. There are 5% of their US workforce is getting axed in.

David: [00:41:14] A little bit insane.

Blake Oliver: [00:41:16] Yeah, it says the 600 million of total cost of the deal, about half of which are internal, are offset by some 400 million of savings from projects that were deferred because of the planned split, according to executives. Like how do you wait? How do you save $400 million by deferring projects, right?

Erica Goode: [00:41:31] Like it's that Gap or FASB.

Blake Oliver: [00:41:34] That's all I got on. Why? We got listener mail, David. Shall we do a voice mail? Yeah. Jump in. Okay, so this came from Donna Bordo.

Listener Voicemail: [00:41:46] Hi, Blake and David. Yesterday, I visited the University of South Carolina with my son, who will be attending there in the fall. We visited the School of Business and got to tour the classrooms and speak with some students as we got started. Our tour guide asked all of the people in attendance what their majors would be. She asked them to raise their hand if they were interested in finance, real estate, supply chain management, risk management, accounting, international business or marketing. When she asked about the accounting, there were no students on the tour who were interested in majoring in accounting. Most were interested in international business or management or marketing. Our tour guide said she started off majoring in accounting and she is in the spring session of her freshman year in college. She has already switched her major to international business with a concentration in economics. She said she had her first financial accounting class and it was very difficult and she realized it wasn't for her. She showed us the classroom where she had that class. It was one of the largest classrooms that they use for up to 500 students in a lecture style hall. She said the accounting class was very confusing and she had a lot of tutoring that she had to do just to get through the class as it was required for all business majors. I can't imagine how you would teach two 300 students in that large of a setting for basic accounting class.

Listener Voicemail: [00:43:21] Toward the end of our tour, we visited a classroom where a teacher had just finished teaching. She said the class was management science, where they studied Excel and Microsoft Access. She told everyone on the tour that they should make sure they bought a PC and not a mac because access doesn't even run on a mac and Excel has a different version on the Mac. She said they would need to use a PC in her class, but if you didn't have one, you could borrow one. Now, my son is already very concerned about going to college for business and he has come to think that it's not really necessary these days. He's convinced that most business professors haven't ever been successfully working in industry or even started their own companies, which is his goal. After the remark about the Mac computers and using access, my son gave me that look. He also asked me, What in the world is Microsoft access? I explained that it was a database software in the 1990s. It was kind of like an early version of Airtable. We looked up access on the way home because I wasn't even sure it still existed. It was originally designed in 1992 and Microsoft tried to discontinue it in 2018 but really left their desktop version still open. So our colleges think this is the best thing that our students need to know.

Listener Voicemail: [00:44:48] They want to teach a 30 year old database program for our future of accounting. That says a lot about what the problems are with our current education system. I heard no mention of using an accounting software app like QuickBooks or Xero. Even QuickBooks is over 30 years old. Surely we could use something that could be actually used by the students even if they weren't accountants, but involved in a business at some level. I know there's a lot of controversy about the 150 hours to become a CPA, but I feel like the problem is much deeper than that. It's not the hours that's turning them off, but what we're teaching kids in college about accounting. I'm going to date myself, but I've been a CPA for almost 30 years now, and I'm far more excited about the technology that exists today than I ever have in being a CPA. Yet our colleges have turned the accounting curriculum into a boring pencil and paper society, with adding machines probably still on the desk. I sure hope not, but I wouldn't be surprised. We've got to do something about our educational system to offer current education to students to succeed. I feel that many students are succeeding now despite their college education in accounting. I'm hopeful that our industry makes changes, but I'm sad to say I don't really see this happening in my lifetime. I hope they'll prove me wrong.

Blake Oliver: [00:46:20] Thank you, Donna, for that very thoughtful voicemail. And what a story. So good. What a.

David: [00:46:26] Story. Right. So good. And hopefully we can amplify that. It's so good. And it's a shame that accounting is used as the weeder classes to weed people out of business school.

Blake Oliver: [00:46:37] Yeah, the way that.

David: [00:46:39] It's purposely not taught well in a horrible environment. It's sad that accounting is the tool they use. That whip people down.

Blake Oliver: [00:46:46] Yeah, that's a great point. It's like the for the med students they have to take bio chem. Bio chem. Yeah. Yeah. Organic chemistry. Yeah, that's the one. Yeah. Yeah. And it probably, like, hurts the organic chemistry department.

Erica Goode: [00:47:01] Did either of you have accounting in high school offered?

Blake Oliver: [00:47:05] No. I went to a private Catholic school. We were kind of small, so we didn't have a lot of.

David: [00:47:10] No, But I had a teacher that showed me Excel and that's how I wound up in this industry. Probably really? Completely. Yeah. That showed me Excel early, early days.

Blake Oliver: [00:47:19] What was the context of 91?

David: [00:47:22] I was I was a junior, I think, in like class of seniors. And then the last three days of school, the seniors are all like not really in school anymore. And so it's just me in the classroom by myself and the math teacher. I mean, it might have been Trig. I don't know. She showed me Excel and like I was like, Oh, this is genius. Like, I saw the I saw the brilliance of it. But it's actually good that you talk about this, Ericaa, because I have an article and I just sent you a link to a website. Blake So the Deloitte Foundation and this goes back to our conversation, Blake with Dr. Josh McCown was it Troy State. Troy University University, Yeah. And I asked, I was like, why can't people why can't students take advanced placement tests and get credit for accounting in high school, which is what Ericaa just asked us. Basically, apparently now you can Deloitte Foundation Urban Assembly and they just partnered together to do for credit online college courses and kicked off an enrollment pilot in New York City. And so starting this fall, public high school juniors and seniors can take financial accounting and earn three college credits through the University of Pittsburgh and then transfer it later on to the college of their choice. And so outlier, this is just a way to find affordable college. So those of you who do need to do the extra 30 hours, you can go to outlier org and you could help find places that are providing either education for free or super, super reduced prices. And the goal of it is to inspire more students to get into accounting, to give them a positive accounting experience at an earlier age.

Blake Oliver: [00:48:51] Yeah, that's, that's that's nice. Well, this gives me the opportunity to bring up an article that I have been holding on to, and that is I can save education from itself. This is actually an opinion piece on the Wall Street Journal and occasionally The Wall Street Journal has excellent opinion pieces. I'd say like 1 in 20 these days. And this is a great one. And it's so relevant given what Donna experienced with her son. The subhead is Technology such as Chatgpt threatens only the information centric type of schooling, which has become obsolete. And this is my main complaint about accounting education is that it is about transmitting information into your brain and then you regurgitating it in an exam or doing some sort of application of it, but not a lot of analysis, not a lot of thought, not teaching students to ask questions. And so the author.

David: [00:49:46] Amazingly, though, Blake, you pushed through and still got your degree. This forced me to quit school. I couldn't deal with it. Yeah, and this is pre-Internet kind of a little bit. I remember geography class and they gave us this huge chart paper chart and it was all the countries and all this data about each country. And then you'd get an exam. It'd be like, what is the birth replacement rate for Uganda? And then if you didn't know it by heart off that chart, you would fail the task. I was like, This doesn't make any sense in the world we're now in right now.

Blake Oliver: [00:50:14] To be fair, like, there's a lot of great educators out there. We're not in the 1800s when people were just saying, you know, memorize these facts, repeat these facts, but we haven't come really that far. If you think about it now, we might be learning rules and then applying them to a specific situation. But that's exactly the sort of thing that Chatgpt is going to be doing real soon. As we talked about, it'll be looking at a set of financial statements and writing footnotes based on the information in the financial statements. So teaching people how to do that or spending a lot of time on teaching them how to do that doesn't make a lot of sense. And the authors of this article argue that we need to be teaching people how to ask questions, right? We need to teach them, here's the last paragraph. Unless schools can address the strategic reasons for learning and provide an education that trains students in how to use the tools of information, they will inevitably be left behind by rapid innovation and change. They must remember that the value created by education isn't a head full of facts. It's a person with the skill to use those facts with the tools available to magnify his effect in the world. Ai is best seen as another of those tools, which, when used strategically, can unleash student learning and performance in ways not yet seen. And of course, this comes amidst school districts in LA and New York banning Chatgpt just the way that they banned calculators when those first came out. Right. So I think accounting education is in for a real challenge like that is what's going to get disrupted by Chad. Cpe especially because I can educate myself now in a lot of ways. Right.

David: [00:51:50] So, so there's all those listed careers that are going to be disrupted by Chatgpt and I should the top of that list then probably be traditional education institutions and the professors that work there?

Blake Oliver: [00:52:02] I think so. And they're not, though. And I wonder if that's because most of these studies are being conducted by people who are tenured professors at educational institutions. Could that be. It could be. Hey, we got a few more moments left.

David: [00:52:16] I got 40 seconds on the IRS. All right. Do it. So the IRS, you know, it's the end of the tax season and there's some kudos they should get. They've they've made some improvements because of the money they got from the Inflation Reduction Act. So they've answered more than 6.5 million taxpayer calls this year. And basically compared to the same period in 2022, that's 2.4 million more calls they took. So pretty big. It's almost a 20% improvement. I saw a little bit more.

Blake Oliver: [00:52:43] The wait times have gone way down. I mean.

David: [00:52:46] So from 27 minutes to 4 minutes.

Erica Goode: [00:52:50] For.

David: [00:52:51] Four minutes, they achieved 87% level of service versus last year's goal or the goal was 85%. And then they served more than 100,000 taxpayers in person. And they've digitized 80 times more returns than in 2022. Now, we know the bar was low in 2022, but hey, congratulations, IRS like you're you're improving. It affects all our listeners. Anybody who has to interact with the IRS, this is a big deal.

Erica Goode: [00:53:17] Yeah, my my dad loved my dad. He won't listen to this, but shout out to you, dad, that he still sends in his paper tax return, refuses to use the internet for his tax and would check on it every single day after he sent it in and gave me up to the minute report of how quickly the IRS was responding to his paper tax return. And he he yeah. So it was very good from his standard, which, you know, is golden and well.

Blake Oliver: [00:53:48] So this must be why CPA Trendlines busy season barometer is vastly improved over previous years. 18% of respondents to the survey said that this tax season was much better than last year. So about 1 in 5 and then 41% said somewhat better. So add those two together and you get almost 60% saying that their busy season was better than last year, 22% said the same and only 19% experienced a worse busy season.

Erica Goode: [00:54:20] What are you hearing in. In your peer groups. Do you think that's true?

Blake Oliver: [00:54:27] I don't. You know, I mean. The problem is Twitter, like all the angst is everywhere on Twitter. So. So it's hard to say like online, are people having a better time? But I mean, I just yeah, I would say like in the in the private slack groups I'm in, I mean, the last few years have just been ridiculous, right? I mean, just absurd. I mean, Ericaa, you keep your client list nice and trim, right? So that you can be on vacation all the time. But it must be better for you, right?

Erica Goode: [00:55:02] Yeah, I mean, I think. I think what I'm like, I know the lack of changes that were moving as fast as tax season was going. The removal of that, for the most part, I think helped people a ton. Now that kept the tax season in its normal time frame, which is a different is a different animal all of its own. But I mean it's yeah, I also had it's interesting, I had clients who were like, oh they, they put us on extension now they had a complicated return. They had, you know, an S corp plus their personal return. And he's like, Oh, they extended us. What can we do next year? We don't want to extend. And I think there's this like I had to explain to them, like, there's nothing wrong with an extension you paid. We have all your information. We literally just need to press the button in two weeks like it's fine. And there's this assumption that like, Oh, we didn't do it in time and somebody's going to slap me on the wrist. And I'm like, It's fine. It's an arbitrary date that allows for an extension. And I think in the past two years we've been so accustomed taxpayers and accountants to extend that deadline that this year kind of I think it might have taken us aback. I don't usually file an extension. Oh, that's fine. It's not the end of the world.

Blake Oliver: [00:56:22] I think I heard somebody somewhere who said that we advise all our clients when they sign up with us, they are getting extended. Everybody gets extended. Now, we might get a.

David: [00:56:32] Couple couple.

Blake Oliver: [00:56:33] Stories like that, too. We might file it before the deadline, but you are, by default, getting extended. And I don't understand why. Why not just do that with everybody? Like send out an email to all your clients and say this, this is how it's going to work from now on. If there are in fact so many clients and we need to fire them, this is a good way to get rid of the ones you don't want to work with.

David: [00:56:52] Spread the extensions for everybody. And then you just say and then you're just in order. And then we just start working on them. Everybody else will get done.

Blake Oliver: [00:56:59] But I guess the the reason people don't want to do that is because, you know, calculating the tax liability is like a significant percentage of the work just to do the return. So then the argument is just do the return. Before the deadline. Right. Yeah.

Erica Goode: [00:57:13] But if their second year clients and, you know the safe harbors are right, then even that doesn't matter.

Blake Oliver: [00:57:20] Just extend them. Yeah. Yeah. I feel like there are just some psychological barriers in our profession that like with EA and their stupid internal cost accounting stuff, same thing with extensions, same thing with subscription pricing, like firms saying, oh, you know, pushing back on the idea of charging before you file the return. Like there's this idea that I don't I don't bill a client until I file the return because psychologically I like that, because now I've earned the money. And who likes that?

Erica Goode: [00:57:49] Oh, the accountant likes that.

Blake Oliver: [00:57:50] Yeah. I've actually had people say this to me that. That they. They don't want to take the fee before they filed the return. And it's because they have linked the return itself with the fee in their brain filing. The return equals ion the fee.

Erica Goode: [00:58:07] There's some deep psychological wealth building issues there when we're like when we tie our efforts to how much we can charge for something and that we have to do something to earn something else as opposed to and this is why we get so hung up on hourly billing. But I did so I did a very few handful of returns. Nothing like most people listening to this, everybody paid me in November. I said, If you want me to do your return, pay me in November. And then just out of curiosity, last week I sent out a follow up survey and in one of the questions was, Do you like paying up front or afterwards? Do you like knowing how much it's going to cost beforehand or being charged based on how much work it took me. And everybody loved being paid up or paying up front and everybody loved knowing the cost ahead of time. And I got my money months ahead of time.

David: [00:59:02] I could see something amazing as a customer. How it's a better experience if you pay up front. Can you pay up front in November? Like that money you wrote the check. It's done. Now you're either going to have a tax bill or a tax refund. And if you have a tax bill, you're like, oh, I have to pay that and I still have to pay the accountant. And if you have a refund, it's like, Oh, I have to give some of that to the accountant. So you're right. Keeping those is two separate things is probably a better experience mentally for the clients.

Blake Oliver: [00:59:29] And here's my advice if you want to switch to that. Right? Like I feel like a lot of times the challenge is switching clients. This is the perfect time of year to do. It is, you know, draft up an email to all your clients using chat, GPT, chat GPT and explain to them that you are switching from billing after the return is filed to a subscription. And the way it's going to start is you're going to collect 50% in October and you're going to click 50% in April, and that is no longer linked to the tax return being filed. It'll get filed when it gets filed. But as long as you are a client, I'm going to answer your questions. I'm going to do your returns, all that stuff. Right. And now you've broken it into two chunks. You're collecting essentially 50% up front and 50% on delivery approximately. And that's why cut it in half. Why not just get the whole thing up front? Yeah. Oh, well, this is too. This is. If you're concerned that your clients will come back and be really unhappy and all that stuff. So I'm trying to I'm trying to bridge the gap for the people who are only, you know, doing in arrears right now. And this is what we did. And the reason I bring this up is because this is what we did at HPC, which is the firm that bought my firm and it worked great for the tax folks. It worked great for the returns, like the bookkeeping we did monthly. And I would say if you're also doing bookkeeping for clients, just roll the tax return into that monthly fee. Might as well. Absolutely right.

Erica Goode: [01:00:50] The the best part of having my few tax clients pay up front was they're so used to the industry not doing that that they asked me for the bill after I filed their return. Again, like they're like, great, how much do we owe you? I was like, You can.

Blake Oliver: [01:01:05] Pay me twice if you.

Erica Goode: [01:01:06] Can. I pay you. You want to pay again because you already paid back.

Blake Oliver: [01:01:09] Then I accept tips. That's your opportunity.

David: [01:01:11] To sell next year's return at a slightly higher price. Yeah.

Blake Oliver: [01:01:15] Hey, I have something fun just to take us out here. Yeah, this is a Well, David, you know how we were talking about crazy ads during the Super Bowl? Turbotax ads? Well, it turns out that in Australia, the TurboTax of Australia is MYOB. And Heather Smith, our Australian correspondent, sent me this advertisement that MYOB released somewhat recently. It's nuts. And I just want to I want to play it for you guys to take us out here. So MYOB is like the QuickBooks desktop of Australia. So a woman is seated in a theater.

MYOB Advertisement: [01:01:55] Problems. All businesses have them. But what if I told you there was a solution and all you need to unlock it is to n y o believe. I believe in a platform that ignites potential with the power of a thousand suns. And obliterates doubt like a fearless cassowary. Unbelievable. Listen to this guy believing.

MYOB Advertisement: [01:02:28] Turned my small business into a medium business.

MYOB Advertisement: [01:02:34] And I'm a strudel mogul.

MYOB Advertisement: [01:02:38] Downsize your worries. 1,200%. And optimize your potential. By infinity and MYOB. Believe.

Blake Oliver: [01:02:52] MYOB. Believe. Business Management platform.

David: [01:02:55] It's like a Saturday Night Live skit, almost.

Blake Oliver: [01:02:58] Phil says, I hope this came out on April 1st as a joke. Maybe Heather's pranking us, but I think this is real. Well, thanks, everyone, for joining us live. A reminder to our listeners that you can join us live. Go to Subscribe to our email list. I think the subscribe is at the bottom. David, is that right? There's like you can put in your email, subscribe. Yes, you can put.

David: [01:03:20] Your email list there.

Blake Oliver: [01:03:21] You can follow us on YouTube and get notified when we go live. You can email us, email us your voicemails like Donna did. We are Cloud Accounting podcast at earmarked G-Accon. And Ericaa, where can the good folks of the Cloud Accounting Podcast audience follow you online?

Erica Goode: [01:03:40] Yeah, they can follow me on LinkedIn. I'm easy to find there. Ericaa Goody, CPA. And then I also hang out on Instagram a lot, but it's far less professional, but just as fun to follow.

Blake Oliver: [01:03:52] You're like famous in your town, right? You've got a podcast you like. You do. You're.

Erica Goode: [01:03:57] I don't think it's too hard to be famous in my town. I'm in a little rural Idaho.

Blake Oliver: [01:04:02] Well, thanks, everyone, for joining us. Bye. Go, David.

David: [01:04:06] We're not going to be live next week because next week we will be attending it's tax season and it's time for conferences. So we're going to Bitwage's Conference. It's the Enterprise Digital Assets Conference of the Year. So we're doing that on Tuesday. And then on Wednesday we're going into the pageant retreat. And so we're going to retreat for pageant advisors. We're going to record a live episode physically live, so it won't be streamed next week.

Blake Oliver: [01:04:31] We'll have a live audience. We live audience. Maybe I can figure out how to stream it. David That'd be cool, but probably not. So don't promise we'll see you live in two weeks. That's our promise. Bye, everyone.

Erica Goode: [01:04:42] Bye bye.