Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!
David Leary: [00:00:04] Fully in office workers average $82,000 on average. Hybrid workers average 59 $60,000 on average. Right? So basically almost $22,000 less than in offer office. So hybrid, fully remote, get about $75,000 on average. So in the office you're making more fully remote. You're making more. But if you're kind of hybrid not making as much coming to you weekly from the OnPay Recording Studio.
Blake Oliver: [00:00:34] Hey everyone, and welcome back to the show. I'm Blake Oliver.
David Leary: [00:00:37] I'm David Leary and Blake. I have some good news. Bad news for you on one of these. You know, one of the many things you smash your hand in protest over or you want changes in the accounting industry. Hmm. You always say, hey, here's how you can fix the pipeline problem. Pay over time to these young employees when they go work for these, the big four and the audit firms.
Blake Oliver: [00:00:57] Well, it's a it's a it's an idea. I don't know if that's going to solve it, but I feel like if we paid people for the overtime they're working, then maybe firms wouldn't make people work so much overtime.
David Leary: [00:01:07] So the good news is, the US Department of Labor has a new rule that has been cleared by the white House Budget Office. They're going to expand overtime pay according to the Fair Labor Standards Act. So currently, salaried employees that make $35,568 or less get paid over time. If you make more than the 30, let's just call it $36,000. You get no overtime for your salary, right? The new rule it's going to increase to $55,000 annually, but it may even go as high as $60,209, which is great. But here's the bad news. So I went to a Big Four transparency.com starting salaries at Big Four. An auditor at $68,000 a year and non Big Four are only $62,000 a year. So it's just like almost at the threshold to affect accounting but not.
Blake Oliver: [00:01:54] Yeah, it's not going to affect us because the salaries have been going up, which is good news. Yes, yes. Yeah. But I wonder if, like the interpretation of the law, if the Department of Labor is doing that correctly for accounting or if firms are doing that correctly, because I forget exactly what the standard is, we'd have to go in and look at it. But it involves, you know, that you have to have a high degree of skill and knowledge, which I think the CPA, the education requirement satisfies. But then it's also something about using a lot of like discretion in your work and professional judgment. And I would argue that most staff in their first few years are not using a lot of professional judgment or discretion in their work if they're taking and tying in audit departments. So I think, I don't know, maybe even a lawsuit could be brought if there was a some sort of class action by accounting staff, if they ever decided to unionize, maybe they could get this rule changed for them at the big firms especially.
David Leary: [00:02:53] But could you imagine, like, yeah, a lawyer should take that on because then they would try to do like backpay for billions of years. All these years, it'd be billions and billions of dollars. It reminds me of. I don't know if you heard on NPR lately talk um, the real estate agents, they there was a court ruling against them, and they had to pay all this money, and they're going to. Yeah, yeah, we might get a settlement if you. I just got percent commission.
Blake Oliver: [00:03:15] I just got the postcard in the mail because I sold a house. Um, I don't know. I don't know what the settlement covers. The time range. It didn't say on the postcard, but if you sold or bought a house in a certain time, then you could get money. So I might get some cash. David. A little rebate on that. You know, price I had to pay to sell my house, which was like five, 6%, which is just outrageous if you think about that. Um, welcome to our live stream, viewers. Those of you who are here with us on a Friday before the tax deadline. Uh, welcome. Brianna says. I finally made a live podcast. Love the podcast. And I have earned several CPE credits from earmark. Thank you both for such a fantastic podcast. Thank you Brianna. Thank you for using earmark. And for those of you who haven't tried it, you can earn CPE for listening to this show and many other fine accounting, tax and audit podcasts. Just go to earmark Dot app and sign up for free, and you can start earning one CPE credit for free every single week. And if you start now, you could do it and earn all the CPE you need, potentially for the whole year, uh, for free. And if you want to support us, you can download the mobile app and subscribe for $130 a year and you get unlimited access to all of the courses. Um, David, I want to get to some listener mail because that has been piling up in my mailbag. And this is from a listener who was wanting to give some feedback on, uh, audits.
Blake Oliver: [00:04:45] We were talking about audits last week, week before, uh, in the context of the Trump Spac audit, where the firm involved had a 100% PCAOB deficiency, uh, rating for like three years in a row. Uh, we talked about the auditor of Tingo, a solo CPA, apparently in Colorado, who did an audit of a multibillion dollar company and, uh, didn't notice the rampant fraud going on there. This is from Donald. Donald says hello, I'm an auditor for a large regional firm. I think we're 25 to 30 something in that range in the country. I do local government audits in almost three years of auditing and eight years of accounting. I've realized that partners don't want to rock the boat. If I bring an issue to my senior manager and we bring it to the partner in charge, it takes an act of God for him her not to bend over backward to excuse the issue as not material, irrelevant or real. The only time I've seen where the audit is released with something other than an unqualified opinion, was when the firm was planning to fire the client the next year anyway, or something was so glaring that we had to carve it out like a missed bond payment that resulted in default. I find it highly discouraging and frustrating. I made the decision to leave the large practice behind, and I'm opening my own CPA firm. But focusing on what you were talking about today, accounting. So I'll be focused on providing excellent outsourced accounting services and some attestation engagements that I enjoy.
Blake Oliver: [00:06:15] But the majority of my revenue will be from CAS. Keep up your podcasts. Love it! Donald. Donald, thanks for listening. Congrats on starting your own firm and thanks for writing in. And if you, dear listener, would like to let us know what you think, you can email us at The Accounting Podcast at. Earmarked me The Accounting Podcast at. Earmarked me. Send us your emails, send us your voicemails and we will play them on the air. And remember, that's the accounting podcast. Like the Ohio State University, we are the only one. So, uh, do send us some mail. Lou in the live stream says, can you get CPE for the AEA? The enrolled agent? And yes, well, no, technically you can't get CPE because the IRS calls it CE. Um, but you can get CE that we report to the IRS for some of our courses on earmark. When you're in the app, go ahead and look for the courses that say IRS, CE. There's a, there's a, uh, what do you call it, a tag on those courses. And you can also filter for them in the search page and find just the courses that IRS accepts. They only take courses that are specifically on federal tax or ethics matters. So it's a smaller subset of our courses. But we do have an entire podcast where most of the courses are IRS and that is federal tax updates. Uh, great podcast by Paget, Roger Harris, Annie Schwab. Definitely listen to federal tax updates and get your IRS ce on earmark.
David Leary: [00:07:50] Do you have any other audit related mail?
Blake Oliver: [00:07:53] Uh, I've got lots of listener mail, but I also have some audit stories.
David Leary: [00:07:58] I have audit stories too, but I thought there was another audit mail that came through.
Blake Oliver: [00:08:02] Uh, let me take a look. Maybe I do.
David Leary: [00:08:04] Why don't I come through and then. Well, you look at that. I'll talk about audit. We could I could do some follow up on the Trump story.
Blake Oliver: [00:08:10] Do that. Yeah. Let's talk about the, uh, the Trump auditor firm. The. Yeah. What was this? Um, what's it called?
David Leary: [00:08:16] Bf borgers.
Blake Oliver: [00:08:18] Bf borgers.
David Leary: [00:08:18] So last week we finally talked about the Trump auditor for the. Officially it's the Trump media. Right. It's the it's Trump media industries or what's the company do you remember the exact name?
Blake Oliver: [00:08:32] I mean, it's a shell company media group. Yeah. Yeah. Now it's DJT the talks. This is call it DJT the DJT stock ticker symbol.
David Leary: [00:08:39] Yeah. So a lot of articles after we recorded popped up all over the mainstream news. Right. With great headlines like Trump media's accounting firm has audit deficiency history. Trump Media Group's new auditor flagged for multiple deficiencies over the past two years. Djt hires accounting firm with 100% deficiency record. And you really go into these those articles. It's it's kind of what we talked about on the show last Friday. But in my opinion, they're all missing the point because they're all obsessed with Trump. And they can't see the bigger story here, which really the bigger story, if you listen to our show, is it's not about how Trump picked a questionable auditor. The real story that they don't talk about is no matter who he picked, was probably going to be a questionable auditor, right? It's the state we kind of lead we're in right now is questionable audits. That's the normal normal now. And they're not. That's the story. But mainstream media is never going to touch that. Okay.
Blake Oliver: [00:09:33] Let's be fair because I don't want our auditor listeners to, uh, to get upset. I like. So my view is that there's great auditors and then there's really bad auditors, right? It's just like cops. There's a lot of great cops out there. There's a lot of but there are some really bad cops. They give everyone a bad name. Auditors are financial cops. Like, that's how I like to think of us. I think that's how we should think of ourselves. Right. And the problem is, the system we have set up allows for a lot of bad auditors, and that brings everyone else down. And it brings down the quality of audits in general, because we're all competing now on a very, very low bar. Right. And that's how you get commoditization. That's how you get low prices. If you want better salaries, we need to increase the value of audits so that auditors can get paid more. And how do you do that? You do better audits. So I like what the PCAOB is doing or what they're trying to do. The problem is that they're just so weak that I don't think it's going to really make that much of a difference, like even these record setting fines that we're seeing, the pcob issue, um, you know, they're like.
Blake Oliver: [00:10:42] Peanuts compared to these firms. Billions and billions of dollars like. I just saw one. Kpmg fined record 25 million in exam cheating scandal. This was in the Wall Street Journal. Kpmg, Netherlands. They were fined $25 million by the Public Company Accounting Oversight Board for an exam cheating scandal that took place from 2017 to 2022. This is the largest fine ever imposed by the PCAOB. It involved hundreds of professionals, including partners and senior leaders. The firm then lied to the PCAOB and tried to cover it up. The former head of assurance, Mark Hogaboom, agreed to pay $150,000 and is permanently barred from associating with a registered accounting firm, now $150,000. Okay, it sounds like a lot of money to you and me, but to a guy who was the former head of assurance, who's probably making north of $1 million a year. I mean, he okay. Yeah, it hurts. Right? But it's probably like a few thousand dollars to us. Yeah. Right. To most people. So, you know, they've agreed to make changes to their learning and development programs and control same story. Right. But you know, I to me, as the as the story in the Wall Street Journal points out, some believe it's too small to serve as a significant deterrent. But it's progress, right?
David Leary: [00:12:02] Did I hear the dates correctly? So this is a time frame of 2017 to 2022.
Blake Oliver: [00:12:07] Yes.
David Leary: [00:12:08] Now I'm pretty sure on our show we could go back in our historical records. We've talked about exam cheating probably in 20 and 21. So these stories have been out there. So knowing that they were still cheating even in 21 and 22, I'm my mind these fines were happening. I'm I can't fathom that they kept cheating knowing the people were watching this.
Blake Oliver: [00:12:31] Now right now I just did a quick search on copilot to ask what was KPMG Netherlands revenue? So we can put this fine into context, right? $25 million US fine on revenue in 2022 of €655 million. So I don't know what the euros to US conversion is, but I mean, even if we just say it's the same, it's it's not that much of their revenue. Yeah, right. A few percent maybe of one year. And this went on for five years at least. Now somebody go. Don't don't quote me on that because I didn't verify the I. Actually, if I click through, I wonder let's. This is one thing I love about copilot is that you can actually click through to the sources. Oh and interesting. It's taking me to an internal. It's taking me to an internal KPMG website. I have to log into. Did did Microsoft Copilot scrape?
David Leary: [00:13:33] I had an article.
Blake Oliver: [00:13:35] Yeah. Go ahead.
David Leary: [00:13:36] I was again salaries for the big four people. I clicked on it and it kept taking me to the quicken the Quicken web page. I'm like, it didn't make any sense. So I think copilot just randomly takes you to a random link. I don't think it's the link it highlighted. There's something not adding up. I think it's an ad. It thinks every link's an ad is trying to sell you something. I. Yeah, copilot fix your links. They don't make sense now, Gator.
Blake Oliver: [00:13:56] Sorry, David. I want to highlight our live stream comments. Gator NYC says fines need to be based on percentage of revenue.
David Leary: [00:14:02] Interesting.
Blake Oliver: [00:14:04] That could help. And David says it's a dollar 8 to €1. Okay. So you know pretty equivalent.
David Leary: [00:14:11] For conversation sake. Yeah it's equal.
Blake Oliver: [00:14:14] Adam says glad I could catch the live show. Welcome, Adam. Great to have you with us. All right. Go, David.
David Leary: [00:14:19] So there was a this is from a few weeks back, but Pcaob's actually, you know, they're out there. They're getting interviews for their current chair, um, Erica Williams, Erica Williams. And so she started in January 2022. Now, what's special about her Blake. She. Is not from the accounting industry. So she at one time was on Obama's staff. She spent 12 years in the SEC. So she's a law background, right? And she worked with the Department of Justice to dismantle Ponzi schemes, which I think kind of ironic is what you refer to accounting firms as. Sometimes it's a Ponzi scheme, but and in this article in fortune, she talks about the goal here is deterrence to make those are pretty investors at risk to held account and basically to to if quality is decreasing keep increasing the penalties. So she's she's leveling these highest fines that have been put out. Like you say, they're still not big enough. Um, the one thing I did take away from this article is the salaries of the board members of the PCAOB. Are you familiar? A lot.
Blake Oliver: [00:15:22] Of money, don't.
David Leary: [00:15:23] They? It is the highest paid in Washington, between 550,000 and $670,000 in 2021.
Blake Oliver: [00:15:31] Now, to be fair, I actually think that is justified because to be on the PCAOB board, you have to understand accounting and big firms. And so what is your. Alternate position. Like where? Where would you be in private industry if you weren't on the Pcob board? Probably a partner at a big firm where you'd be making that much money.
David Leary: [00:15:54] Exactly. So it's it's the revolving door problem. Yeah, right. They're only going to be able to hire the people that work for the firms, and the only way they're going to do it is they're going to be paid that much.
Blake Oliver: [00:16:02] I will happily volunteer to take a 50% salary. And so they can they can save money, and I'll do it for half the price and I'll sit on the pcob board. I just want to put that out there into the universe.
David Leary: [00:16:14] Layout, hire fines and pay people even more.
Blake Oliver: [00:16:16] Like. So your average CPA, by the way, makes like, uh, you know, it ranges on all these sites you look at. But I just did a search this morning. Ziprecruiter is like 100 K. Some of the CPA exam sites are like 120 K, so some are as low as 80 K. So basically six figures like $100,000 is the average CPA. And that's even with like a good amount of experience. So it's crazy to think like that. The the the differential in accounting right as you move up is so great where you've got partners and pcob board members making like, you know, half 1 million to $1 million a year. Yeah.
David Leary: [00:16:52] That's good. If you could add my screen share to the feed. Um, one of the things that she's done is they introduced, uh, a proposal, uh, on April 9th for some metrics they want for audit firms to report on. And I'll scroll down if I'm sharing here, get down to the metrics.
Blake Oliver: [00:17:10] I just love the fact, by the way, that the Pcob uses the default Microsoft Word formatting in all of their reports. Have you noticed that?
David Leary: [00:17:18] Well, it's clean, it's not creative, which is what you want, right? I just want to get to the point. So so they have 11 proposed metrics. And I kind of want to walk through these a little bit and get your thoughts. And then I have a my bigger thoughts about the whole thing. But um, they want to know, for example, partner and manager involvement hours worked by senior professionals relative to junior staff across across the firm's issuer engagements on the engagement.
Blake Oliver: [00:17:41] This is the new metrics they want firms to track and report on. Correct.
David Leary: [00:17:46] Uh, the workload. The average weekly hours worked on a quarterly basis by engagement partners and other partners, manager staff, audit resources, use of audit specialists, shared service centers. They want to attract the experience of audit personnel, the industry experience of audit personnel, retention and tenure. Like how many people were departed or had got reassigned during the engagement. Audit hours and risk assessment, allocation of audit hours, quality performance ratings and compensation of the actual partners working on the engagement. Right. Uh, audit firms internal monitoring, uh, restatement history. Right. They want to track all this. And when I think about all of these, these are the metrics that you can map against the failed or non failing audits. So now you'll actually have data that says hey when these these many hours are worked these audit mistakes are made. Right.
Blake Oliver: [00:18:43] We'll be able to prove that overworked auditors result in lower audit quality.
David Leary: [00:18:49] Exactly.
Blake Oliver: [00:18:50] This is great. But I imagine that the firms are going to push back on having to report all this publicly to Pcob. Yeah, this is a proposal, right? It hasn't had a proposal.
David Leary: [00:19:00] Yeah. It's already ruffled feathers for sure. Yes.
Blake Oliver: [00:19:03] Um. Well, since we're talking about auditors, uh, let me bring up this story I saw. I saw this in CFO. 71% of Big Four auditors worry about mental health. And this is, of course, one of the obvious consequences of overwork. Or perhaps it's not obvious to the people who have been embedded in the toxic work culture of Big Four firms for their entire lives. But it definitely is evident to me, as somebody who bought into the hustle culture for a long time and has now completely gone the other way. And I'm on the four hour workweek track now. Um, the Association of Chartered Certified Accountants did a study that found that work life balance is the most significant factor affecting talent attraction and retention in the audit profession. 61% of the thousands of finance professionals survey viewed auditors work life balance negatively in big accounting firms. The big 471% of employees reported mental health issues due to work pressures, and 51% considered resigning to the well to do to wellbeing concerns. So they're considering quitting. And that's burnout, right? That's basically the definition of burnout is you feel unwell because of your work and you want to quit.
David Leary: [00:20:18] And these are the survey of the people still working in the the positions. It's not the people that may have left because of burnout already.
Blake Oliver: [00:20:24] Yeah. Now, you know it's across the profession, but it's way worse at the big four. 71% agree that their mental health is suffering because of work pressures. At the big four, only 20% disagree. And if you go down to mid-tier firms, that goes to 61% and 30%, respectively. And then at small firms, it's just over half 54% and 33% disagree. So like that's that's actually good news, in my opinion, that small firms like you have a third of the employees who disagree. They say like, no, my mental health is great. That's that's that's good. But I think it should be.
David Leary: [00:21:01] He's got a system. I'm sure he he's like, yeah, it's been great.
Blake Oliver: [00:21:04] So, uh, it's the small firms that do well. The public sector does the best. Um, and then you have, you know, not for profits, large corporations, small. So basically industry, small firms, public sector, not for profits like they do. Way better than the big four. So this is evidence, clear evidence that the big four are burning people out, uh, and our toxic workplaces. And that is what you need to address if you want to solve the retention issue in accounting. But big firms don't want to confront that because it would mean reducing ours and ours. Selling ours is how they make money. So this is the. This is the problem. It's also the organizational structure that is the problem. And in a previous episode, I talked about the new Bayer CEO's plan to get rid of organizational hierarchy in terms of how his employees work. This is a giant pharmaceutical company and, you know, billions and billions of dollars in Germany. And he is he is completely flattening the org chart when it comes to certain aspects of how work gets done. And I have clips from the Wall Street Journal podcast episode about this with an interview with the CEO, and I want to share that with you.
David Leary: [00:22:23] And the CEO is fairly new, right? He's kind of came into a stagnant mess. Is that would that be a good way to present that?
Blake Oliver: [00:22:30] Yeah, basically Bayer is kind of stagnated. Um, and and this guy, what's his name, uh, who's the new Bayer CEO? Uh.
David Leary: [00:22:41] It doesn't matter because they don't want to have bosses anymore. It doesn't matter.
Blake Oliver: [00:22:44] No, I had I had his name here, Bill Anderson. That's it. Yeah. I was getting confused. Chip cutter is the reporter who did the story. Bill Anderson is the new CEO. And, um, so I've excerpted some of the quotes, uh, like him describing this new this new strategy, which is called, um, dynamic shared dynamic, shared ownership. Sorry. It's hard to remember because it's not very catchy. But this is his new plan. It's called dynamic shared ownership. He coined this firm. Uh, he even admits that it's not the flashiest firm. But the idea is to empower employees to make big decisions without having to get the approval of layers and layers of management. So now I'm going to I'm going to play a clip here for you.
WSJ Clip: [00:23:26] This is like, no, no, no, we're blowing that all up. You're talking about fundamentally rewiring everything in the company. It's more like a living organism. And in the in the old system, of course, you had to be able to present it all on a piece of paper because management's job was to control it will end up with, for example, we'll we'll still have an org chart for administrative purposes. You know, who signs, who's paycheck or whatever. But the org chart won't actually represent how the work's getting done.
Blake Oliver: [00:23:54] The org chart won't actually represent how the work's getting done. Let's talk about how the work's going to get done. Or actually, before I do that, let's talk about why. This needs to change. Here's the CEO, Bill Anderson, talking about the problem with culture and corporate America.
WSJ Clip: [00:24:11] Our people, if you look what they're doing outside of work, they're running a family. They're involved in their church, they're involved in their community, they're organizing, you name it, they're doing stuff. They're taking responsibility. They're owning decisions. This is not a foreign concept to them. You know, they've gotten educated in great colleges. And and then they come to an office where they're basically given this little job and like, oh yeah, you don't make decisions. And and so that no wonder people are so disillusioned with corporate life.
Blake Oliver: [00:24:49] That really resonates with me, because that's how I felt when I went to a big firm. I was given the job of a manager. After selling my firm. I went to the big firm. They gave me the manager job and I really had no autonomy, no authority. I had to fit into that box and I tried to change the system, but it wasn't possible. And even though my boss supported my efforts, he told me that because of the structure of the firm, it wasn't going to be possible to do any of those things. So this is part of the problem in public accounting, right? People come in and they have all this education, and they're given this little job to do with no autonomy. Who wants to do that kind of work? And the CEO of Bayer. Bill Anderson recognizes that. So what they're doing is they're going to allow employees to self-organize on projects, and the projects will last. Perhaps a quarter, and then the employees will be allowed to reorganize. So you, David, if you worked at Bayer, you would actually get to talk to all the other people and pick what projects you want to work on. And if I wanted to do something at Bayer, I'd have to recruit people to come work on my project and they would get to choose. The employees are going to self-organize. And Bayer is going to get rid of like half of their middle management. And and here's here's the description. They actually are doing training sessions on how this works. And here is chip cutter. He he went into a training session at Bayer and observed this happening.
WSJ Clip: [00:26:27] You set up share an idea.
WSJ Clip: [00:26:32] The facilitator said, hey, shout out a big idea, shout out something you want to do and if your colleagues agree, you should go stand next to that person. So someone said like, I want to launch a product in the next six months that meets sort of some unmet consumer need somewhere.
WSJ Clip: [00:26:48] Whoever is interested stands up and joins. Just vote with your feet.
Blake Oliver: [00:26:53] So literally people just stand up, say, I have an idea and people who want to work on that project go over and. Stand with that person.
David Leary: [00:27:03] I love, love, love that this story is happening and this march is happening. I discovered the Cluetrain manifesto 25 years ago at the dawn of the internet. Right now I discovered it was ten years old, so it's actually older than that. But it was written at the dawn of the internet. And the thesis is that markets are conversations, right? And it's all because of the internet and things linking to each other. And you can think about from a marketing standpoint or speaking to consumers or customers. But the same is true for internal organizations. Right. Um, and I'll just read like the, the main introduction, half the sentence networked markets are beginning to self-organize faster than companies have traditionally been able to serve them. So it's kind of that same thing. Employees can organize properly faster than managers can delegate down.
Blake Oliver: [00:27:49] Yeah. And I think I think the idea Gator in the live stream says, how are they going to get people to do the projects nobody wants? Um, and I think the idea is that if nobody wants to do the thing, it's probably not worth doing at a company like Bayer. Well, where the people who work there are white collar professionals who are very highly educated and intelligent and. Why, you know, why do we have a layer of middle managers telling people what to do when they might be able to organize themselves? So it's a really I don't know if it's going to work. It's a fascinating experiment. And it's one of the world's largest companies is going to try it. And if it's successful, this could completely change how businesses are managed. This hierarchical structure that we have in public accounting. Right. That's only existed for 100 years. It's not that long in the scope of human history and same in corporate America. Right. Like this was all developed in the last 100 years, pretty much. And maybe there's a better way for knowledge workers to get work done. You know, now that we can share information better, we don't need a bunch of managers sitting in the middle of the people and the work that needs to get done. And you see that. Go ahead. I was going.
David Leary: [00:29:03] To bring up Boeing. And arguably this is what's happening with Boeing, right? Boeing moved. They took the managers who used to sit next to the engineers and the quality people and the people building the planes, and the manager could look out their window and go see the plane. They moved them all to South Carolina and some corporate offices and tried to manage the whole thing. It doesn't work. You can't manage the building of a plane if you're not next to the plane.
Blake Oliver: [00:29:23] Yeah. Boring accountant says, who is going to measure results? Who is going to hold people accountable? This is like group projects in university where one person does all the work. Yeah. Um. I guess the group itself will have to hold itself accountable and manage itself. We'll see if it's possible. I don't know, personally, I've never enjoyed organizations that I've worked in where there's been like a hierarchy. I've always struggled with that because a lot of stuff ends up getting done, not because it's going to benefit the business, but because it's going to benefit the person who runs the project. That there's all this competition between managers to control employees and control work, and all the politics of all of that. It's like little tiny fiefdoms. And if you can get rid of that waste, then the projects that really drive the business forward can get done. Instead of having a bunch of managers and executives who are, like, all competing for power.
David Leary: [00:30:21] Yeah, that's what I've told people working at Intuit. Intuit's really like $7 billion businesses and actually more now. They've gotten MailChimp and these other acquisitions they've done. It's probably like $15 billion businesses. And so no matter what you do, you're always stepping on somebody else's business. So it's always that that you're just you can't do anything because you're always, wait a minute, we were now you're going to take some revenue from us and you get a lot of that mindset. I do have an example of this in practice. This theory in practice in our own industry. Blake. What's that? None other than H&R block. So H&R.
Blake Oliver: [00:30:56] Block.
David Leary: [00:30:57] H&r block.
Blake Oliver: [00:30:58] Tax prep. Yeah, the.
David Leary: [00:30:59] Tax prep company we're all familiar with. They have, uh, 39,000 employees. And then when Covid started, you know, everybody had to work from home. But then they 2021 when Covid dipped there for a little bit, they started doing hybrid work, right, just as the dial back. But then they, uh, they also started requiring 2000 corporate employees to come back into the office Tuesdays, Wednesdays and Thursdays. But then Covid surged again. They had to send everybody back home, and then they were growing, and they had to hire corporate employees, and they wound up hiring people that were fully remote. And they what they and this is good because it's going to tie to my next story. High performing staff clearly preferred remote work. Um, so your best employees prefer remote work? I do, yeah.
Blake Oliver: [00:31:46] Am I a good employee?
David Leary: [00:31:47] David, you're a good employee. Blake I'll let you go this time. And to the executive team had to rethink this whole thing. And here is their conclusion from Jeff Jones, the H&R Block CEO. This is what he told fortune magazine. There isn't a good reason why we would do that. Like there's just no reason to have a required to come back to office policy. They could not come up with a reason. And later in the article he talks about how he wants to run his company, his personal management style quote, I want to hire great people and empower them the best I can and hold them accountable to outcomes. I don't want to micromanage how many hours a day they're on teams, or how many days a week they're in the office, as long as we're delivering on our commitments.
Blake Oliver: [00:32:31] I like that philosophy.
David Leary: [00:32:32] He's starting to go down this same March as the CEO of Bayer right now.
Blake Oliver: [00:32:37] Go ahead.
David Leary: [00:32:38] And to tie that that one sentence, high performing staff clearly preferred remote work. It ties to another article, but I won't jump to it if you have thoughts on this block.
Blake Oliver: [00:32:47] I just wanted to address one of the issues that always comes up when when remote work is discussed, which is productivity. Does productivity go up or down? We've seen a bunch of different studies on this. And the answer in in my view, after looking at all these studies and trying to compare them, is that it's a net zero in that you lose some productivity due to not being in the office. And there are inefficiencies with remote work, but you gain productivity because people are happier. They're working more hours because they're not stuck in the car. People tend to replace their commute with work is what we find in the San Francisco Fed found that in their study basically that it's. It's a wash. Overall, there's little statistical relationship between telework and pandemic productivity performance. They did a study of what happened during the pandemic. And so we don't need to have this argument based on productivity that if your boss is saying we need to come back to the office because we're more productive in the office, that's false on average. So unless there's something special about the way your company works in person, it's not true. And the thing that doesn't get counted is the high cost of having your employees come to the office. Making them live close to a major metro where your office is has real costs to them in terms of housing and school and and all the other things that come with that. And if they can move out further and live in a lower cost area, their money will go a lot further. And that's a that's a big benefit in accounting.
David Leary: [00:34:23] And not I mean, take, take, take the finances out, just the, um, energy drain of having to drive in the commute. You already get to work and you're like exhausted. Yeah. Because you just had to deal with traffic for the last hour and a half.
Blake Oliver: [00:34:34] Look, I did it. You know, I did it for a year in LA, and I couldn't do it for more than a year. It was. I was on the 405 every day, an hour, hour and a half. Uh, not good for my mental health. Not good for my physical health. I gained a ton of weight. Yeah, I having those two hours back every day is life changing for me. Yeah.
David Leary: [00:34:55] Well, you exercise two hours a day. Now, that's what you're doing. I try to is that didn't.
Blake Oliver: [00:34:58] Do it yesterday. But an hour. Hour and a half, sometimes two. Uh, yeah. So.
David Leary: [00:35:03] So you're saying there's a net effect on productivity?
Blake Oliver: [00:35:06] There's no net effect on productivity. Just. So send all your close your eyes, send all your employees home. It's a wash on a wash on average.
David Leary: [00:35:12] On average. Got it. Well, what is not a wash is the salary that remote workers get on their paychecks when they stay home.
Blake Oliver: [00:35:19] And I'm glad you got to that because that is the title of our episode today. Remote Accountants get Paid Less. We took a.
David Leary: [00:35:24] Very long road to get here, but we're going to get here. So ZipRecruiter did a study for the average wages of hybrid remote, hybrid remote workers and in-office workers in the United States. Here's the results. Fully in office workers average $82,000 on average. Hybrid workers average 59. Just a, uh, $60,000 on average, right? So basically almost $22,000 less than in offer office. So hybrid, fully remote, get about $75,000 on average. So in the office you're making more fully remote. You're making more. But if you're kind of hybrid not making as much weird, it is weird. But then when you think about what the CEO at H&R block said. The higher performing staff prefer remote work. So. Right. You're basically are giving them a higher salary because they're high performing. You're giving them a higher salary and letting them work remote. So if you're in the top tier of corporate performance, let's call it that, you're going to be able to demand a higher salary and remote work. It's those people in the middle that aren't really in the office. They're kind of hybrid, but they're not great performers. They're taking the big hit salary wise.
Blake Oliver: [00:36:32] Yeah. And they are at a bigger risk of getting laid off. I spotted a story in the Wall Street Journal back in January that said that a Gartner survey found that 68% of executives and managers perceived in office workers as higher performers than remote employees. Even though this may not be true, if you're in the office, you will be perceived as a better employee. You're sitting in your.
David Leary: [00:36:55] Cube playing Tetris, of course.
Blake Oliver: [00:36:57] Yeah. And so as a result, you are more likely to get laid off if you are fully remote. But if you're a high performer and you're critical, then maybe that is not true. So I think you have to. You can't just look at the numbers in aggregate. You have to really think about where do I stand in this organization? And if I'm known to be a high performer, I can go work remote and be safe. But if I'm a low performer, a mediocre employee, and let's be honest, right, most people are average employees, right? Then maybe going remote isn't the best thing for your career. Did they quantify the the. So the difference is like what, $20,000.
David Leary: [00:37:36] If you're hybrid? Yeah, $20,000 lower than in-office.
Blake Oliver: [00:37:40] So but you know and that can be seen as like a negative thing like, oh well why would I want to go remote if I'm going to get paid less? But to me, this this is this, this shows the true cost of having employees come to the office. Right? So employers are finding that to get people to come back 100% in the office five days a week or more, they have to pay more. And that's because there's a true cost that employers have never had to pay before, because they could just require everyone to come to the office. And so employees had to pay this cost. We had to pay it through gas and through the car that we buy and depreciate, and through the additional cost of living close enough to the office to do that. Right, or the cost of our time. And now employers are actually having to bear this cost. I think commute time should really be part of the calculation. When you take a job, you know, if you have to commute two hours a day, add that to the the hours you're working. Really. And employers should think that way too.
David Leary: [00:38:37] And way before these days of remote work and all this type of stuff. But going back to like high performers. I remember, uh, an engineer architect guy at Intuit and this is years I'm going back 15 years. The reason he took a job with Intuit because they let him have Fridays off so he could go sailing his boat. So was that good Monday through Thursday that he was able to just negotiate? Not working at all ever. You know, and that's why he took the job. He could have gone to any company. But Intuit was the one that let him go sales boat on Fridays.
Blake Oliver: [00:39:04] Well, and that's becoming more and more common, right. Maybe that was really uncommon when that happened. How long ago was that?
David Leary: [00:39:09] Oh, I dated myself at least 15 years. Easily. No longer than that because my daughter wasn't born. She's 18 now. So 20 years ago.
Blake Oliver: [00:39:15] Well, more and more companies are adopting four day workweeks. There was a story in CPA Practice Advisor about this last month. And. Now there's some examples of companies like Insomnia Cookies and Philly Marketing Labs that have adopted a four day workweek. They've reported positive feedback from employees and no negative impact on productivity or client satisfaction. In the UK, a pilot involving 61 organizations implementing a four day workweek found that 89% continued with the model after a year, with many making it permanent. The study reported positive impacts on staff wellbeing, lower turnover and easier recruitment. So compare this to accounting and tax in particular, where we are having this debate still about whether or not to make employees come in on Saturdays during busy season. You have other companies that are moving to a four day workweek and reporting no decline in productivity. So why do we require staff to come in on the weekend during busy season? It's an antiquated idea. If they can get the work done in five, great. If they can get the work done in four, even better, right? Why? Why make? But why? Why have butts in the seats? Doesn't make sense.
David Leary: [00:40:23] We're just stuck in those old ways.
Blake Oliver: [00:40:26] David says, I started my job search the minute my employer told everyone we were going to have to come back to an office, and that's what happens. We get higher turnover at organizations that require everyone to come back to the office, for sure.
David Leary: [00:40:40] And we plowed through a lot of stories already. This is good.
Blake Oliver: [00:40:42] That's great. Um, let's get to some listener mail here. All right. This is from Dave Olson of Nimble. He said, hey, Blake, we just hired a guy with this on his resume. Love it. And here's what was on the resume FAQ. Are you a CPA? I am not. Upon graduating college, I was faced with a decision. Pursue my master's degree and the CPA accreditation or build my company. I determined the real world experience would be far more beneficial than another book learning achievement.
David Leary: [00:41:16] Amazing.
Blake Oliver: [00:41:17] So he put on his seat on his resume why he didn't go get the CPA because he wanted real world experience. And that obviously appealed to Dave, who's running a fast growing firm. So, you know, taking a take a nonconventional approach to your resume, maybe it'll pay off.
David Leary: [00:41:32] That is not the poster child the CPA wants out there.
Blake Oliver: [00:41:35] No it's not. But, you know, it shows you that the this is the cost of the additional 150 hours is people who want to get into the real world are going to not get their CPA. So, uh, here's another one. This is from Cody. This is about Big Four versus industry. Cody says, hi, guys. On an episode a few weeks ago, you talked about comparing people's career paths that chose to start in Big Four versus those who went straight into industry. I think this is a bad comparison because it's looking at the top accounting firms versus every single company, no matter how small. A better study would be to compare Big Four to those who went to and started in companies like Microsoft, Ford or Wells Fargo, or government agencies like the fed, FBI or IRS essentially compared the top to the top, not the top to everything. I chose to skip Big Four, but was lucky enough to intern at the Securities and Exchange Commission in college. This still allowed me to get into any door I wanted and have had an extremely successful career so far, including providing testimony in criminal cases for the Department of Justice and running a forensic accounting team all before I turn 30. I'm now at a federal agency in a position that many Big Four accountants aspire to. I really appreciate what you are all doing, especially exposing the hypocrisy of the 150 hour rule and the mess that is Nasba AICPA. Keep it up. Thanks, Cody.
David Leary: [00:42:59] Now what what job does he have in the government that everybody's aspiring to? The wheels are turning here now, you know.
Blake Oliver: [00:43:04] High level, uh, finance, you know, accounting, like those are good jobs in the government. And traditionally people thought, oh, I got to go to Big Four get that on my resume before I can get a job like that. But Cody disproves that, and I think that's going to become more and more common, and I certainly hope it does.
David Leary: [00:43:21] You never have to work overtime in government jobs either. They got that.
Blake Oliver: [00:43:24] Well, if you do, you get paid handsomely for it, right? Yeah. Um, this is from Hannah. Hannah says hello. Can't thank you enough for the advocacy and thoughts on the profession. Love the show. Just curious. We see a lot of firms shifting work to India and the Philippines. Any idea of how much these average hourly base salaries are for tax preparers and auditors in these countries? Are the firms just finding a cheaper way to burn out people, since a lot of younger USA folks who may be considering and or working in this profession seem to be done with the partnership scheme. Sad to see more inequities out there, but leave it to the folks that keep a flame. The flame lit money over people. So. We just talked with Nicholas. Um, I forget his last name from office. I can't I can't pronounce South Office's south offices. South office. And he does, uh, offshoring in Argentina. That's going to be a bonus episode that, um, comes out soon. Sorry. Not offshoring. Near shoring. He's got a nearshoring firm, but similar idea. Right. Um, hiring accountants outside the US for your firm. And he gave us some idea of, like, the cost. And I think he said like, it's a third the cost of the US to hire somebody with an offshoring team in India. You know, maybe it's like half in the Philippines. It's a little bit more in Argentina.
David Leary: [00:44:41] About 70%, 30% less.
Blake Oliver: [00:44:43] 60. Yeah. So something like that. Um, so yes, it it is. They make less than we do. But the cost of living obviously is different. And so, you know like that's that's why they take the lower pay. Now as to the second question as to whether firms are just burning out people, I would not be surprised if it's the same thing in India where you've got these big four firms just churning through young people who are willing to put up with the toxic conditions because they don't have the power that we do in the United States as accountants due to the labor shortage. Right. There's still a lot of people in India. It's growing still. Right. So I think those kind of firms might just be shifting, but I find that the small firms that I talked to that are doing nearshoring and offshoring, they take a completely different approach where because of the cost savings, they drop their utilization targets for these staff so that they're half as much billable as, say, somebody in the US would have to be. And they can spend a lot of time on learning and development and improving processes and automating. So instead of, you know, having a requirement that you have 2000 hours of billable time every year or whatever it might be, you only have to have 1000 because my cost is half in the Philippines. So the firm benefits because now these staff are able to actually work on improving processes and, and systems and not just grinding away. And the staff are better off because, you know, they're not stressed. They're not stressed.
David Leary: [00:46:13] Out. Yeah. So it just.
Blake Oliver: [00:46:14] Depends on how you do it. Right. That's that's the moral of the story here.
David Leary: [00:46:19] So speaking of outsourced labor, I don't know if you saw, um, you know, that Amazon where they called fresh stores or just walk out when you could just in New York City, you could go into the Amazon store and grab a Coca-Cola and a sandwich and a Snickers bar and just put it in your pockets and just walk out. And then later on, you would get a receipt texted to you, and they said it was all I doing, all this. Apparently it was a thousand, um, employees in India watching all the video footage and then figuring out what you took Blake and then putting it into a little, you know, an invoice or a receipt, charging your credit card, then emailing you a receipt.
Blake Oliver: [00:46:55] It's great. Fake AI, fake AI. Well, now Amazon is is they responded and they said to this this was like an internal source, right. It wasn't disclosed. So somebody inside the company told what's the publication.
David Leary: [00:47:10] This was in Business Insider.
Blake Oliver: [00:47:11] So Business Insider they're legit, right? But like a little bit um, sensationalist. Right. So I trust that somebody actually said this. The question is like how much of it was human? Because we know that these eyes aren't perfect, right?
David Leary: [00:47:24] They said 50 out of every thousand sales.
Blake Oliver: [00:47:26] That's what Amazon.
David Leary: [00:47:27] Said. That's what Amazon sales. So maybe maybe maybe it's somewhere in the middle. Maybe it's 500 out of a thousand. The informant claimed 700 out.
Blake Oliver: [00:47:36] Of a thousand.
David Leary: [00:47:36] So there's a big disconnect. Who do you believe here? Right. Yeah, I lean towards it's probably not the tape. I it's probably seven. It's probably half five.
Blake Oliver: [00:47:47] It's probably somewhere in the middle. Right. Somewhere in between 5% and 70%. But yeah, it's that's funny. Uh, which explains.
David Leary: [00:47:56] Because a lot of people say you leave that store and it could be hours before you get your receipt and get charged on your credit.
Blake Oliver: [00:48:02] Card. And that's why because for the ones that the eye isn't certain about, they have a human. Review the tape and then make the make the receipt for you. Yeah, but you know what? It works, right? Because the cost of labor in India is like, what, ten bucks an hour or less or something like that?
David Leary: [00:48:15] Well, apparently it doesn't work because didn't they just shut down all those stores?
Blake Oliver: [00:48:18] Oh. Did they? That's too bad. I never got to use one.
David Leary: [00:48:21] Yeah. So so there's they've shut it down, but it was working, so it probably wasn't working.
Blake Oliver: [00:48:28] Well, it's funny that you brought up that story because I just saw a piece in accounting today. Bot keeper Infinite replaces outsourcing with more AI to help firms automate.
David Leary: [00:48:36] I think we've touched on that for a second last week. That's right.
Blake Oliver: [00:48:38] Yeah. So you know, this is so funny because those of us, those of our listeners who have been listening to the show for years will remember that we exposed Bot Keeper for using humans and pretending that they had AI. They were one of the first automating accounting with AI companies going to accounting firms saying, we're going to use AI. And it turned out it was. A bunch of people in the Philippines doing the work, and they were pretending that it was I. It was fake it till you make it in the startup world.
David Leary: [00:49:07] And the big issue you had with it was it wasn't disclosed properly to the accounting firms who needed disclose to their clients. Right, right.
Blake Oliver: [00:49:14] They were yeah, it was deceptive. Deceptive marketing, deceptive business practices. And they changed as a result. Because of our coverage. Bookkeeper admitted that they were using people, and they eventually became very upfront about being an offshore outsourcing organization. I just think it's funny that now that we have generative AI, it's actually possible, like what they originally were trying to do is now possible thanks to ChatGPT. And so they put out this press release, uh, they've got this new product, Bot Keeper Infinite, which they say is actually AI and that it reduces bookkeeping costs by 30 to 50%. Um, it is a technology called, uh, they call it auto push, and it's a machine learning model that learns from financial transactions and improves over time. This allows the platform to automate routine accounting tasks, which I was very skeptical about years ago when we didn't have these large language models. But now I believe is totally possible.
David Leary: [00:50:10] And I think the key selling point of this model is they go to the rate of, say, like in place of outsourcing, right? Right. Like they like they're disrupting themselves now, right?
Blake Oliver: [00:50:21] Yep. Um. Going down my list. I just want to get to this before we forget. Have you been following the whole saga of the, uh, Ohtani translator? The like big. Oh, the baseball guy.
David Leary: [00:50:36] The guy who made the the best contract.
Blake Oliver: [00:50:38] Shohei Ohtani.
David Leary: [00:50:40] He's on the Dodgers. Yes.
Blake Oliver: [00:50:42] Shohei Ohtani is one of those rare pitchers hitters. He made the biggest deal in baseball history with the Dodgers. And then right after that, this story comes out that his translator has been secretly betting on games. And the implication was that Shohei Ohtani was using the translator to bet on games, which would be a humongous, uh, no, no. Right. Like that's a huge violation of MLB rules. I mean, yeah, he could get totally he could get kicked out of baseball, right? And fortunately for fans of Shohei Ohtani, it's looking like the translator, the interpreter. Uh, Mizuhara. Ippei Mizuhara was acting on his own. He stole allegedly stole $16 million from Ohtani to fund illegal sports bets. He admitted to hijacking Ohtani's account and impersonating him to bank staff and impersonating him to bank staff to support his gambling habit. So he'd call up the bank and pretend to be Ohtani. And, you know, I'm thinking, okay, yeah, you're on the phone. How is the bank going to know any difference? Right? Like they hear one Japanese guy and they think it's Ohtani, right? And he has all his information. So he placed apparently 19,000 bets between December 2021 and January 2024. So 19,000 bets in like three years. An average bet was $12,800. Uh, now, betting on sports is not illegal in California, where Ohtani has played since 2018. But it is against MLB rules, and Mizuhara could face up to 30 years in prison if convicted.
David Leary: [00:52:19] What's interesting about that story is, so when he signed that contract, he he took a lot of advice from like financial planners. And it's some weird it isn't it almost $1 billion contract or something. And it's but he deferred the payments in a strange way.
Blake Oliver: [00:52:34] Yeah. It's deferred compensation. Yeah.
David Leary: [00:52:36] So obviously he had like accounting advice. Accountants involved, financial planners involved. Like is any was anybody actually looking at his bank statements and like note noticing this activity. It's I feel like there's a a strange disconnect that happened here in uh of who's advising him and who what they had access to.
Blake Oliver: [00:52:54] That's a good point. Like where was his financial managers, right. Where was his business guy? I would assume that a guy like Ohtani would have a business manager who oversees his financial life. And wouldn't that guy see, like, a bunch of, like, sports gambling going on? I mean, I don't know, maybe he was he didn't want to. We can only speculate. Yeah.
David Leary: [00:53:16] It didn't add up. You want to talk about something else that didn't add up? Yeah, sure. Don't even talk about this. Let's do it. Obviously AI is everywhere. Accounting today had a headline out and I texted it to you when I saw it come through. Yes, 59%. 59% of accountants use AI to save about 30 hours a week. And as soon as I saw the headline, I'm like, what? This is crazy. And then I saw this. Other headlines like, um, only 48% of accounting, consulting, legal and private capital professionals have used AI tools at work despite the nearly universal demand for technology. And I just see these crazy stats where my stories. But it's all tied to one study. Yeah, all these headlines, it doesn't.
Blake Oliver: [00:53:55] This headline I saw this and I thought this, this makes no sense, right? We have a massive problem of overwork in the profession. And accounting today is saying that more than half of accountants are saving 30 hours a week. Was this headline written by AI because it's completely inaccurate. So I went and I downloaded the report and. I don't know who messed this up. Was it Accounting Today just repeating and regurgitating a press release? But that's not what the report says. What the report says it's like from some software company is that AI has the potential to automate 31 hours.
David Leary: [00:54:33] They believe they believe was the word. Exactly questions.
Blake Oliver: [00:54:36] So, you know, talk about human discretion and judgment being necessary in journalism. Like that didn't happen here. And they totally got the headline wrong. And now AI is going to read that headline and going to it's going to regurgitate falsehoods like.
David Leary: [00:54:51] When you search on copilot later on, what percentage of accountants use AI, you're going to get this headline.
Blake Oliver: [00:54:57] So I don't know if what how this happened, but if a, if a if Accounting Today is using AI to write stories from press releases, then they probably should look at their controls to make sure that they're factually accurate. Because this is just total crap. I mean, I'm really bullish about AI. We're using it at earmark to automate a bunch of stuff, but like nowhere near 30 hours a week per person.
David Leary: [00:55:20] And these surveys are because we did the survey 2 or 3 weeks ago, we covered survey. Now I might even be in accounting. Today's survey and the surveys are a little loosey goosey when it comes to the word AI. Yeah. Like because they want to know like, are you using AI at home? And basically if you ask Alexa to start a timer, they're counting. That is AI use. So so these numbers are way inflated when maybe they should be very specifically like do you have a login for ChatGPT yes or no. And maybe judge it by that. And when you logged in have you used it to actually. To impact your work. Yeah. Or a task. The the surveys are just the ridiculous. And I found this survey when I was looking at the data very similar to the survey Accounting Today did, which tells me some you can you've worked in marketing these third party companies. You pay them, hey, we'll do a survey for you. They're selling the same dumb I survey to a bunch of app companies. We're going to see this 20 more times. Dumb surveys the same thing over and over again. And then all everyone picks it up. Investing.com picked it up. Yahoo picked it up. Accounting Today picked it up. I'm sure past advisor will pick it up. I'm sure County will pick it up. It's just like, I don't know, these surveys are just bad. We should send we should do a survey, a real survey. We should do.
Blake Oliver: [00:56:33] Real surveys with the earmark app. I want to do that someday. I've got two clips to take us out. David. Perfect. I'm a big fan of the All In podcast, the number one tech podcast, and they talk a lot about automation affecting professional services. And I was listening to episode 170 and, uh, this clip caught my attention. Take a listen to this. This is, uh, David Freedberg talking about what he thinks AI is going to get used for.
All-In Podcast Clip: [00:56:58] I think the success will probably accrue to one company that replaces one set of core human services, like being a lawyer, being an accountant. You know, being an artist in whatever way. And that that ends up being the specific vertical tool that people will use to automate and scale up their ability to do that task in an automated way, because I think that there's like a great deal of. Capability that emerges in the fine tuning and the unique data that certain people may have to make that one tool better than the rest, and therefore everyone will end up using this one lawyer service or this one accounting service, or what have you. So I definitely think that's kind of what we're seeing. Yeah, I think it's.
All-In Podcast Clip: [00:57:43] Pretty obvious where this is going. You got Copilots assisting a developer or a lawyer, then the next or a writer, then they got the next phase. Okay, you've got a peer. So you're doing peer programing or somebody kind of working alongside you. You're checking their.
Blake Oliver: [00:57:56] Work. And then the next phase is that it actually does the work. So. Think about this. The accounting firm of the future might be a lot of I. I think there will still be accountants working in the firm, but I think a lot of the audit work, a lot of the internal audit kind of work will get automated because a lot of it is just checking boxes. Right. And if you're just following a set of instructions and there's not a lot of discretion going on if you're just completing work papers, that is something that an AI can probably be trained on if it just observes enough people doing it over time. It's the same way they're training humanoid robots. All the robots, David, are going to look like people. All these companies that are building robots have totally abandoned anything other than humanoid robots, even though other designs might be more efficient. The reason is that if you want to train a robot to do a task, the best way to do it with generative AI is to feed it video of humans doing the task. Yeah, so you give the robot the same articulated limbs as humans, and you have it watch a bunch of videos of humans, and it learns just like a human child would. And so think about that in terms of audit. If you just screen shared an auditor doing their job, a staff auditor putting together work papers, could an AI watching enough of that. Learn how to do the job too.
David Leary: [00:59:23] Possibly, and hopefully if the AI is doing that. That monotonous work, you can step back and be like, wait a second, these bank statements don't make any sense.
Blake Oliver: [00:59:34] Exactly. Exactly like we could actually do our job, which is to exercise professional discretion rather than just putting together work papers to justify a predetermined audit opinion.
David Leary: [00:59:45] And then with AI now you don't even have to do a sampling anymore, right? You do the full audit.
Blake Oliver: [00:59:50] Here's one more clip. That I found fascinating here. This was on Instagram and it's from Y Combinator.
David Leary: [01:00:02] No, no audio yet.
Blake Oliver: [01:00:03] Oh, you're not getting the audio?
David Leary: [01:00:05] No audio.
Blake Oliver: [01:00:05] My bad.
David Leary: [01:00:06] Hold on. Well, you're. Well, you're sharing that and getting that configured. Blake. I spent a little bit, you know, I watched the first episode of Mr. Bates versus the post office on Amazon, on Amazon Prime. Everybody can watch it for free. So you can go there tonight, this weekend, watch Mr. Bates versus the post office. If you want, you can purchase all four episodes for 9.99, which is what I did, because I don't want to have to remember to cancel a PBS masterpiece subscription at 5.99 a month. So I just paid ten bucks and I'll own the the full the full series. Um, it's really well done. And for me, I actually get upset watching it in the same way I did when I kind of discovered this, because these are just teeny small business owners, right? Yeah. Many of just like all the clients many of our listeners work with every day. Um, and now they can't cover all 3000 victims. So, you know, the writers and directors are presenting victims in a way that you really, really, truly care about them. Um, but it's very clear why this is one of the biggest BBC hits ever on television and why, after people watched it, there was so much, uh, uh, Zimmer, not Zimmer. Zimmer the right word when you're all fired up and you want to anger anger and and it's caused politicians to rectify the past and it's this, this is a very, very well done TV show.
Blake Oliver: [01:01:23] All right, I think I got the clip working. Now, this is Y Combinator talking about what kind of startups they want to fund next.
Y Combinator Clip: [01:01:30] If startup we'd like to fund is new ERP. Erp is an acronym that means enterprise resource planning. Think of this as an operating system that a business runs on. If you ever worked at a big company or a company of any sort, and if you had to log into a website to to do your job, you were probably using an ERP. Um, the problem with the ERP is usually they're clunky, hard to use, and their their users hate them. They're also very expensive. And so we'd love to fund a new class of startups, uh, building a new kind of ERP. It would probably be different ERP work in different industries to solve their problems better. Maybe has a modern UIs, better use of mobile applications as well as AI. Um, we just think there's so much opportunity there, uh, to build this mission critical software that's really expensive. We want to fund it.
Blake Oliver: [01:02:15] So that's Y Combinator, the seed startup incubator that Sam Altman used to run before starting OpenAI. They want to fund ERPs. So if you're an accountant and you think you can build a better NetSuite or a better Intacct or a better Oracle or SAP, it's been 20 years since one of those, you know, I mean, those those those apps are how old? Decades old, right. So Y Combinator thinks that industry specific ERP is the future. Check it out David. We got to go. That's all the time we have for this week. Thank you everyone who joined us live. It's so cool to have like 130 people on the stream with us. You know, we just started streaming live to YouTube like last year, so we don't even give you like a regular time. You just show up. So this is awesome. Um, for those listening on the podcast feed, you can join us live if you catch us when we happen to be streaming. Uh, subscribe to us on YouTube and you'll get notified when we get live. Make sure you turn on that notification button. You can see what we look like. You can interact with us. Tell us what you think. Heckle us. You know we like it all. And don't forget you can earn free CPE with the earmark app. If you haven't checked it out yet, go to Earmark app in your web browser or download the mobile app on iOS or Android. Sign up for free and earn free CPE for listening to podcasts such as this one and many others. And speaking of earmark, we have to go jump to a meeting with our developers, David. So let's get to it. Bye everyone.
