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An AI chatbot nearly passed an assurance exam in the UK; 'Office Space' movie inspires fraud; how to keep midcareer CPAs happy in your firm; Canadian accountant ordered to repay firm for 'time theft'; IRS audit rates declined further in 2022.
Show Notes
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- (00:00) - Thank you to our sponsor, Keeper
- (00:20) - Preview: Will AI replace accountants in audits
- (01:04) - Introduction and quick recap of Blake's week in Park City
- (03:43) - Earmark has launched a new Federal Tax Updates podcast
- (07:15) - Source says Square is launching their own GL
- (10:46) - Some final takeaways from skiing trip
- (13:18) - Thank you to our sponsor, Keeper
- (14:55) - Article about a high school student who wants to become an accountant
- (17:56) - IRS audit rates declined further in 2022
- (19:10) - The Tax Foundation made a graphic on the IRS backlog
- (21:54) - Accountants need to narrow their scope in 2023
- (23:13) - Canadian accounting firm sues employee for overbilling on timesheets
- (28:46) - Thank you to our sponsor, Relay
- (30:04) - "Office Space" inspired sofrware engineering scam
- (32:40) - Are mid-career CPAs happy in your firm?
- (36:25) - David's first reaction to Chat GPT
- (41:28) - Thank you to our sponsor, First Republic Bank
- (42:31) - Blake uses Chat GPT live to demonstrate what it can do
- (47:33) - Chad Davis uses Chat GPT to write fake CAP episode intro
- (49:46) - Somebody used Chat GPT to try to pass a chartered accountant exam in England
- (54:45) - Paula's message and idea about a national CPA license
- (58:38) - Tori's email on how a radical step is needed to change the AICPA
- (59:53) - Deanna asks for best apps to import journal entries into QBO Advanced
- (01:01:47) - Accounting firms might want to look into hiring some of these laid off tech employees
- (01:02:26) - Checking in on the live chat discussion on ChatGPT
- (01:04:09) - Wrap up and reminder to subscribe to our YouTube channel
- (01:07:29) - Classifieds
- (01:07:31) - Client Hub
- (01:08:08) - RightTool
- (01:08:30) - Federal Tax Updates Podcast
- (01:09:44) - How to advertise in these classifieds
Show Notes
George Clooney to be Headline Speaker at ExpensiCon 2023 - CPA Practice Advisor
AI chatbot falls just short on accounting exam | AccountingWEB
IRS audit rates declined further in 2022 | Accounting Today
Are midcareer CPAs happy in your firm? | Accounting Today
2023 Tax Filing Season: Tax Season Delays & Complexity | Tax Foundation
Canadian accountant is ordered to repay employer for 'time theft' : NPR
'Office Space' Inspired Software Engineer's Scam, Prosecutors Say - CPA Practice Advisor
3 Game-Changing Accounting Trends to Look Out for in 2023 https://www.spiceworks.com/finance/accounting/guest-article/3-game-changing-accounting-trends-to-look-out-for/
Facing Busy Season ’23: 99% of Accountants Suffer Burnout
Basecamp details 'obscene' $3.2 million bill that caused it to quit the cloud
Accountant must repay employer after software shows ‘time theft’
George Clooney to Headline Expensicon 2023
U.S. accounting watchdog faces lawsuit over its 'secretive ...
TaxBit Announces Acquisition of Digital Asset Accounting Startup ...
The IRS names the top tax crooks of 2022
5 ideas to watch out for in accounting in 2023
CryptoCFOs Launch App to Access Crypto Tax & Accounting Community
TurboTax, QuickBooks owner slammed after MailChimp data breach
What Small Business Owners Should Look For in a Bank
Former President of FTX US breaks silence, says SBF was insecure, volatile and spiteful, threatened to “destroy my professional reputation”
Ally looks to tech industry layoffs for potential hires
Bean aims to change accounting industry's 'stodgy' reputation
Just How Common Is Corporate Fraud?
How CPA firms can get focused in the next 30 days
MDU Resources Teen of the Week: Glen Ullin volleyball player is set ...
Sage Affiliate Program https://www.craigcampbellseo.com/sage-affiliate-program/
Get in Touch
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Classifieds
Client Hub - https://clienthub.app/
RightTool for QuickBooks Online - https://righttool.app
Federal Tax Updates podcast - https://federaltaxupdates.com/
Client Hub - https://clienthub.app/
RightTool for QuickBooks Online - https://righttool.app
Federal Tax Updates podcast - https://federaltaxupdates.com/
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Creators & Guests
What is The Accounting Podcast?
The Accounting Podcast (formerly the Cloud Accounting Podcast) is the world's #1 accounting, bookkeeping, and tax podcast! Join us weekly for a roundup of accounting news, analysis, and interviews. Plus, earn free NASBA-approved CPE credits for listening with the Earmark app. Learn more at https://earmarkcpe.com.
Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!
Blake Oliver : [00:00:00] Are you running your bookkeeping firm or cast practice on spreadsheets and email? What if you could give your clients one place to answer questions about Uncategorized transactions, send in their bank statements, track KPIs and read reports you customize just for them. Stay tuned to hear more from our sponsor Keeper later in the episode.
Blake Oliver : [00:00:20] This is the first version of the product, so I think in just a few years it's going to do the work of front line customer service representatives. It'll do the work of junior accountants, auditors. I mean, you could you could probably use, I think about a third, a third of audits fail inspection, PCAOB inspection. Actually it's over half on all counts, fail PCAOB inspection. I bet you that an eye, if you just ingested the GL and all the source documents, could do a better job of auditing than most CPA firms in not too long.
David Leary: [00:00:55] Coming to you weekly from the recording studio. This is the Cloud Accounting podcast.
Blake Oliver : [00:01:05] Welcome to The Cloud Accounting Podcast. I'm Blake Oliver.
David Leary: [00:01:08] And I'm David Leary. Another week like you were. You were skiing the entire week. It feels like that's all I saw. Was you in snow the whole week.
Blake Oliver : [00:01:16] Yes. I was very fortunate to be invited to a ski trip in Park City, Utah. Three days of skiing. Tuesday, Wednesday, Thursday came back Friday. And the timing was perfect. As we were getting there on Monday, there was a storm snowstorm. And on Tuesday, we had 11 inches of fresh powder and then three inches the next day. I haven't been skiing in 17 years, so I was really nervous. I got back into it. I remembered what what I was doing, and by the end, I was skiing some black diamonds.
David Leary: [00:01:51] Well, I didn't know you were at this level. My assumption of your athletic abilities, Blake, is I played cello, and I was. I was in a bowling league. I didn't know. No, you were a black diamond skier.
Blake Oliver : [00:02:01] So we lived in Colorado until I was six. And I learned how to ski when I was four or five. And when you learn that young, it comes really naturally.
David Leary: [00:02:08] It sticks. Yeah, it means ice skating. Yeah.
Blake Oliver : [00:02:11] And then I did it on and off, you know, in high school and in college. And so, yeah, it came back and felt really good. Technology is a lot better than it used to be 17 years ago.
David Leary: [00:02:20] It's in the cloud now.
Blake Oliver : [00:02:22] Well, you feel like you are because the skis are fat, they're wide and they are curved, and so it makes it really easy to control. And now people wear helmets. You know, I had to get used to that. We didn't have we didn't wear helmets 17 years ago. You just hit a tree and you died. You know, now you have a chance.
David Leary: [00:02:37] To survive belts, right? Yeah. Seat belts or child safety seats? Yeah. The world has changed. I see that.
Blake Oliver : [00:02:43] But it was a blast. And I was there with a bunch of accountants. Ten firm owners. Well, it was eight firm owners. And then one future firm owner, freelancer, who's building a firm. And then it was me, the former firm owner. So I got to be a part of that club, which was really fun.
David Leary: [00:03:01] And so was this all necessary and ordinary?
Blake Oliver : [00:03:04] I mean, we had a lot of business discussions. We we shared pals. People were really vulnerable and opening up about that. And I talked about earmark. I think actually the takeaway from me coming out of that meeting is we're going to raise money for earmark or we're going to do an angel round for earmark CPE.
David Leary: [00:03:23] So that's exciting.
Blake Oliver : [00:03:24] I got the advice I needed, the the encouragement I needed. And yeah, we're going to take it to the next level.
David Leary: [00:03:31] Oh, that's great. Yeah. So while you were doing your Black Diamond runs here, and first I couldn't attend as well and I stayed home and I launched an earmark, a new podcast. So yes, and we launched the Federal Tax Updates podcast in partnership with Paget Paget Advisors, and it is currently on the charts right behind us. We're like number 23 and it is number 24 on the Apple business news trending charts. And it had and it's been there since it's launched on Monday morning or Tuesday.
Blake Oliver : [00:04:03] So congratulations, David. That is huge. And I have been wanting to do this for we've been talking about doing this for two years now, a federal federal tax podcast. Yes. Yeah. And the beauty of it is that's what people need to stay current. I mean, that's the real technical stuff you need to know is the tax stuff in a lot of CPA firms. So we know that in high demand and we can satisfy both NABA CPE in the tax category as well as Iris continuing education in the tax federal tax category. So if you go to earmark and you download the app, just search earmark CPE on the App Store, you can now get free Iris and NABA continuing education credits for listening to that podcast.
David Leary: [00:04:46] Now I have a technical question. Can I, if I listen to it and take the quiz, do I get a CPA certificate and get my iris because I can be a CPA, an enrolled agent same time, right?
Blake Oliver : [00:04:57] You can, yes. So you'll get your CPE certificate emailed to you and then we report the continuing education to the iris through their system at the end of every month.
David Leary: [00:05:07] So, so, So killing two birds with one stone double up.
Blake Oliver : [00:05:09] Yeah. You could listen to this show which is every two weeks and get 24 C credits for the iris, which I think is more than what you need. I think it's 20 a year for enrolled agents.
David Leary: [00:05:22] I believe you're asking us like I know the answer to this. I do not know the answer.
Blake Oliver : [00:05:26] I think that's why we decided to do it this way. And David, do you want to talk a little bit about the hosts of this show?
David Leary: [00:05:31] Everybody can go to the website. It's federal tax updates dot com. So the host we have, Roger Harris and Annie Schwab. I think Roger's been at Paget and he's been deeply involved in tax stuff for over 35 years. And then Annie Schwab, CPA, and she's been working at Paget for about a dozen or so, and she's had experience prior to that. But combined together, it's like 75 years of tax experience and they've been featured, you know, Wall Street Journal, USA Today, all, all the bigwig stuff, but they also work have Rogers testified to Congress. About small business tax legislation. I think Paget's on advisory boards to. On the IRS. I think somebody I talked to at Padgett was like at the Iris this week. And she was like, you know, So when I was texting with her, I'm at the iris. I don't have WiFi. I'm like, okay, I see where we're at. There's no wi fi yet at the iris.
Blake Oliver : [00:06:25] No, but no. If I had the.
David Leary: [00:06:26] Iris updates dotcom.
Blake Oliver : [00:06:28] Why does that not surprise me? Yes. Federal tax updates Ask.com. The first episode is out and the next one is coming soon. Enjoy. We hope you like it and I hope that show passes.
David Leary: [00:06:40] How I know it's going to be. It's good. Here's the here's. So, you know, we have our editors who are not accountants, they're not bookkeepers. He was he he was not looking forward to edit this podcast. He's like, I don't want to like, edit a podcast about federal tax updates. Like, could there be anything more boring? And he he gets done with it and he's like, Did you listen to that podcast? Yeah, it's really good. So yeah, yeah, it's passing the zero interest in tax or accounting whatsoever person's test as being something that someone interesting. So it's not boring or dry. I'd suggest everybody give it a run.
Blake Oliver : [00:07:14] That's a good sign. We talked about a lot of stuff at the ski trip in Park City. One of the things that I wanted to tell you guys, I got some some off the record information from a source. That Square is building a GL.
David Leary: [00:07:32] We talked about this three years ago. Like I.
Blake Oliver : [00:07:35] Predicted this day, I.
David Leary: [00:07:36] Think it was a high I think it was an episode title maybe. Yeah, this is the known, there's no doubt.
Blake Oliver : [00:07:42] Well, we didn't have any information on this. We just predicted it. You predicted it?
David Leary: [00:07:48] Well, they had a blog post that said how they record debits and credits for transactions. Had an engineering.
Blake Oliver : [00:07:53] Level. Yeah, just don't have other.
David Leary: [00:07:55] Building customer facing. Gl Yeah, but that's been the prediction for a while.
Blake Oliver : [00:07:59] Yeah. So this is going to be a what I assume is a GL that square customers can roll out when they start their store. So this is probably the biggest threat to QuickBooks since Xero. And then QuickBooks, of course, fended off zero very well. By investing in online, we're going to see what happens when Square has a GL. Quickbooks has been investing in their e commerce capabilities and I think their in-store capabilities, though for QuickBooks Online lag behind Square, which is why everyone's using Square. So I wonder if we'll see at the next QuickBooks Connect more point of sale innovation from QuickBooks when it comes to that.
David Leary: [00:08:37] Yeah because are you square and Shopify are the biggest threats to. Into it, right? It's not zero. It's not the other accounting goals. Right. The biggest threat is the outside player. And we talked about this over a year ago. It's these outside players that are coming into our space. And you're right, Intuit has made moves against Shopify with the whole e-commerce. They purchased an e-commerce company. We preview the videos we reviewed or at QuickBooks Connect. We created those videos that are on LinkedIn, etc. and to talk of the new ecommerce features are building into QuickBooks directly. But you're right on the point of sale front. It's still it's that old QuickBooks desktop point of sale. I remember they partnered with Rival Point of Sale as a branded QuickBooks Online point of sale once and it never really took off. And because Rebel point of sale is really for restaurants and not even as inventory so that didn't really work but you're right like where where is that line in the sand to compete with square I mean Intuit as their little dongle thing, right, for taking credit card payments and merchant service.
Blake Oliver : [00:09:40] But where's that come You ever saw that. I have not.
David Leary: [00:09:43] Seen. I saw it once in the wild, once ever in the wild. And now a lot of people use it not not not the hardware, but use Intuit Merchant services. A lot of people use that. But.
Blake Oliver : [00:09:53] Right. But in terms of being out in the field, it's all square. Everything I see is always square at the food trucks, at the farmer's market. It's all square. Nobody's using that into it. One so big opportunity.
David Leary: [00:10:05] Because they don't have a point of sale. Like, yeah, they need the full point of sale now that runs on an iPad or something like that.
Blake Oliver : [00:10:12] And we've got some folks in our live stream we are recording today on Saturday. You can always get notified when we go live by subscribing to our YouTube channel and you can join us and you can chat with us. And we've got a bit of commentary here about these changes. Trinity said the Revel thing was trash, Taylor says. I actually have one in my backpack. I think that's referring to the Intuit dongle. Taylor also says that QuickBooks capabilities for Square are very behind. Trinity, says My coffee shop, who used it, thought Intuit owned Revel because of the marketing. I got a little bit more from the ski trip. David, if you don't mind.
David Leary: [00:10:48] Yeah, keep going.
Blake Oliver : [00:10:49] Some takeaways. I mean, I have this.
David Leary: [00:10:51] This is making it a justifiable business expense.
Blake Oliver : [00:10:54] Yeah, I have to talk. I don't know what the standard is, but I feel like if I talk about the trip for at least 5 minutes on an episode, then I can write the whole thing off. All right. I also talked with some of the folks there about turnover. I mean, this is something that everybody's gone through. And, you know, one of the firms there has had 30% turnover for the last two years, year over year, and they're still able to grow because they're recruiting a lot. But just think about how crazy it is to have 30% of your staff turning over every year, having to recruit new people and train them up and get them into your space.
David Leary: [00:11:26] And I don't think that's unique because I've talked to other accountants and you hear that 30 to 40% turnover.
Blake Oliver : [00:11:30] So having that whole process for getting people on board, having having all the tech set up, having maybe outsourcing that to an MSRP so you don't have to worry about it having a dedicated HR person, that gives you a huge advantage in being able to grow and not having it suck up all your time as a firm owner. And the last thing that we talked about that I really stuck with me is just the importance of getting outside and getting out of the office and making time even in what could be a really inconvenient time of the year to go take care of yourself and get exercise and have fun. And that was relevant because, you know, these are firm owners. This is the beginning of busy season. They're either doing accounting services or tax services or both, and they deliberately chose to make the time to do this. And I feel like actually our profession would be so much better off in terms of mental health, in terms of just everything about the profession. If more of us got outside and got exercise every day and did adventures like this, because you go out for a week and you do that and you're on top of the mountain and you can't look at your phone, you have to take off your glove and it's like six degrees outside. You're not going to pull out your phone. I looked at my phone less. I haven't looked at my screen time. I should I looked at my check.
David Leary: [00:12:48] That's pretty good. You're checked.
Blake Oliver : [00:12:49] Out? Yeah, over the last week. Then I think I have in 17 years. And now I'm coming back and I'm focused and I'm ready to go and I feel energized again. So I just encourage everybody just to, you know, I know it feels like it's really hard and that's why I didn't do it for so long, because I felt like I couldn't leave for that long. But you can. The world is not going to end. Your team will pick up the slack and you just got to do it. So that's my takeaways from the trip.
David Leary: [00:13:21] This episode of The Cloud Accounting Podcast is sponsored by Keeper by combining client communications file review reporting and your task management keeper has everything you need to run your bookkeeping. Our CAS Practice Keeper is an all in one app that allows you, your team and your clients to easily collaborate to make your monthly clothes as efficient as possible, starting with a beautiful custom branded client portal optimized for bookkeeping work. Your client can answer questions you have about Uncategorized transactions, allowing you to categorize and automatically post them to QuickBooks Online correctly all without ever leaving keeper via the month end file review feature to surface transactions that may not be posted correctly, and by providing the perfect customized report that each client may need, keeper can highlight the value that your firm provides clients. Keepers built in task management ensures nothing falls through the cracks, and it includes time tracking. So you can see where you and your team spends their time with keepers. 10.99 Manager You can easily review each client list of vendors, email address, physical address, tax ID and the amount paid and from the same screen. Even request W-9 for any vendors that you're missing information for. No more jumping between screens or browser tabs. Keeper has a very affordable and clear pricing model that starts at only $8 a month. Learn more about why thousands of bookkeepers and accountants trust keeper to manage their month end close and to get 20% off your first three months by using code cap 20. Head over to Cloudaccountingpodcast.com Promo slash keeper That is Cloudaccountingpodcast.com promo for K epr Keeper, the one app to run your bookkeeping business.
Blake Oliver : [00:14:55] Did I miss any big news, David, while I was gone?
David Leary: [00:14:57] Oh, I don't know. I have a kind of follow up story. Like, I know we get called in. This happens on Twitter, you know? Oh, the doom and gloom. The doom and gloom. I did find an uplifting story. We want to talk about that for the industry.
Blake Oliver : [00:15:09] Yeah, something something exciting. And it'll get us get us excited for the busy season.
David Leary: [00:15:16] Yeah. So? So I got an article from the Bismarck Tribune. So where's Bismarck? What? What's that? Idaho. Minnesota. I'm. I don't even know where this is at. So it's about the high school teen of the week. So this is about her name is Courtney Super. She's a volleyball player and talks about all her great volleyball things she does and her four H and the golf and basketball and small town rodeos and all these things she does, but she really excels at. So she got involved with Sbla, which is the future business leaders of America. I don't know if you're familiar with that organization. And during her freshman year of high school, she discovered accounting. She was introduced to accounting. She decided she really enjoyed it. And since then, she's taken six accounting classes and will complete six dual credit classes this year. And so during this, she'd be able to maintain a 4.0 GPA and she's going to go on. She plans on attending Bismarck State College. She's going to major in accounting and she hopes to become a certified public accounting. So there's still if we can reach people early enough, we could still get them to become accountants. You just got to get them their freshman year of high school, get them to really love accounting early, early, early. So I don't know. It's just we're not always doing there's hope, right? This is a very bright young lady that's going to get into accounting. Hopefully we don't ruin her, but she's going to come into accounting.
Blake Oliver : [00:16:33] And the firm owners I was hanging out with on this trip, you know, they were excited, They were energized. They love what they do. And there is so much, so much fun to be had, so much opportunity, especially in the small, firm space like like you experienced and we talked about last week, David, there are all these midsize firms that are shedding really good clients, that are paying really good fees, and you can pick those up as a small firm if you're strategic and you're smart about it and you can make a really good living because these mid-sized firms, these large firms are so inefficient and can't do it. And if you can just be a little bit better than them, use the tech. You can build a business that is not making you work 50, 60 hours a week, 70, 80 hours a week. You can build a business that's a sustainable business. And Bismarck, I believe, is a city in North Dakota. If it's the one that.
David Leary: [00:17:23] North comes.
Blake Oliver : [00:17:24] Up on on Google, the capital city of North Dakota, with a population of 74,000 people, a very sparsely populated state.
David Leary: [00:17:33] That's how the newspaper has time to write articles about high school.
Blake Oliver : [00:17:37] Exactly. It's it's more like a local paper, right? Yeah. It's funny because, like the I think the population of Scottsdale where I live is, you know, 250,000. We're just a suburb.
David Leary: [00:17:47] Of ASU, which is basically right there in Tempe, the college campus. They have 90,000 students at that college, Right.
Blake Oliver : [00:17:53] That's amazing.
David Leary: [00:17:54] What do you want to go to next?
Blake Oliver : [00:17:56] We were talking about the iris, right? Iris audit rates declined further in 2022. We've talked about the very low rate of iris audits. This year, or I should say last year, the odds of an audit fell to 3.8 out of every 1000 returns filed. That's a 0.38% audit rate. The previous year, fiscal year 2021, it was 0.41%. And of course, those in the know know that. The audit rate is even smaller for many folks, less than a quarter of a percent. And I've always said this is like part of the reason that it's actually hard to be it's harder to be an ethical tax preparer because your clients know that the audit rates are this low and so they are willing to push the envelope and break the rules because the risk reward calculation.
David Leary: [00:18:47] So we're almost to one third of a percentage. Yeah. So let's put this on a calendar year. 300 days in a calendar year. One third sets push up 1%. So basically one day a year the IRS is spending on audits. If you if you if you map it out to a time of a calendar year. And maybe that's the way people need to see this, right? Like, essentially that's what's happening.
Blake Oliver : [00:19:10] I got one more bit of news. The backlog for the tax season, the Tax Foundation, they put up a graphic that visualizes the iris backlog. So the iris has made progress, but they're still way behind in April of 2022. They were behind by almost 300 million returns requiring manual processing or I guess, items requiring manual processing. And they've got that down to 15 million. So they've cut it in half. 18 million still there. At this rate, it could be many, many more years until this is all resolved. And part of the problem is that whenever you have IRS correspondence in an audit, like most of the IRS audits, they just mail you something. They ask for information, you mail it back. That all then goes into a paper system. They don't have an electronic system for it. So if you ever have to correspond with the IRS, it creates a paper item that has to be dealt with. And that's why we can't get out.
David Leary: [00:20:11] Of this graph. They separated this out, cases embedded in processing, suspended, suspended returns, and then paper returns awaiting processing. The only thing they're making dents on is that a stack of paper returns that have not weren't processed at all. Right. And that would move that number from 13.3 million to 2.6 million. So but the other numbers aren't changing very much. So, no, they're getting through their backlog, but they're not actually resolving and getting things to closure. Maybe that's the way to think about it.
Blake Oliver : [00:20:37] Right back in April of 2022, they had 5.3 cases, 5.3 million cases open. Now they've got 5.1 million cases open. And all these amended and processing suspended returns has not changed that much. It went from 10.5 down to 7.4, but that's still a lot. And that's why they've got that's why the basically the backlog has only been cut in half and it's because they don't have systems for doing all this electronically and that's what they should spend the money on, in my humble opinion, is build out a system that's all digital, that has a portal where people can respond electronically and get rid of the paper from the beginning, like get rid of all the paper, and then you can actually catch this stuff up. I hope they spend some of that. 86. Is it 86 billion on that?
David Leary: [00:21:25] 80 billion?
Blake Oliver : [00:21:26] 80. 80 billion. Yeah. Just don't hire one of the big four to build it for you because it'll take you 20 years.
David Leary: [00:21:32] It'll actually cost 160 billion. Yeah. Never get done.
Blake Oliver : [00:21:37] So that's my tax season update news. Christopher says in the chat. Seemingly all the IRS does is make sure W-2s and other non A.S. 1099 statements match. Yeah. And if they don't, then they kick you out paper and then you've got to respond. And then then you get into that backlog, right? So, David, what do you got?
David Leary: [00:21:57] I'm trying to think I got to stay in the little tax related here, maybe even a follow up loosely. There's an article in accounting today titled Five Ideas to Watch for in Accounting in 2023. And guess what number one is? Narrowing your scope, which is basically also known as firing your clients. Like that's, you know, like go for your clients. Like that's the argument.
Blake Oliver : [00:22:20] Narrowing your scope. But but that's not how most firms are doing it. David That's most firms most firms are just taking the smallest revenue clients and firing those because that's the easiest thing to do, right? You just sort your clients by annual revenue and fire the bottom 10% to make capacity. But that's not narrowing your scope. Most firms, the reason they struggle is because they don't have a scope. They don't have a particular type of client they serve. They do a zillion different things, and it's horribly inefficient because, you know, you're like, I don't know, you're like a factory that makes a thousand different SKUs instead of one skew right or a handful of them. It's very inefficient to retool every time you need to do something.
David Leary: [00:23:04] So yeah, and a lot of this ties back you know it goes back to you said the business model itself right in the time tracking and all that. Yeah.
Blake Oliver : [00:23:12] They're selling time. Right.
David Leary: [00:23:13] So speaking of time, I did see an article that was a little disturbing actually, and I think is worth going into deeper. So this is an accounting web in the UK and it's about a Canadian firm. Accountant must repay employer after software shows time theft. So I think in general, people have always talked about timesheets in general. You do your timesheets, but what you work on a client's file, you report whatever you want on a timesheet, right? And then they build a client like it's never been perfect. And in general you work more than you actually report anyways, because I can't build a client that much. Right? That's been the dilemma with timesheets the whole time. But this article really goes in deep into what happened. But essentially the accounting firm reached CPA. They installed a time tracking app. Blake So you could have, when you went skiing, could have installed an app on my computer and tracked if I was working while you were gone.
Blake Oliver : [00:24:09] Yep. And these have been around called.
David Leary: [00:24:10] Time Camp time. I'm sorry. These apps have been around for a while, but this is kind of the first time they used this software to make the employee pay them for the time the firm.
Blake Oliver : [00:24:22] So. So the accusation? Well, the finding, I guess, because the judge decided in favor of the firm, is that the accountant who got fired billed the firm and supposedly, I guess, clients to probably write for more hours than they actually worked according to this software that was tracking how many hours they were working on the computer.
David Leary: [00:24:43] Yeah. So it was like 50. It was 50.7, six more hours and essentially a five, four or five week period. So essentially it was like 10 hours extra a week. She was claiming she was working. They say, No, you weren't working. Yeah, but which is crazy because like, if you look at the averages, if an accountant said they were working 50 hours a week and not 40. All right. Makes sense. Like it seems those those those variances don't seem anything that's there. But there's just some weird stuff about this. You know, they're claiming she was watching Disney Plus and then she made an argument that the software was hard to use. But what they did in court, apparently they just showed a video of the app working automatically, figuring out what's personal things and what are not personal things on a computer.
Blake Oliver : [00:25:27] Yeah, right. And then these apps are really cool. Sorry. Go ahead.
David Leary: [00:25:31] Kind of. And then the crazy thing is, she claims that she printed out stuff and worked offline. So obviously that app can't track the work. She's offline, but she didn't want to tell them that because she basically feared how it will make them look as a zero silver partner. Like like how how do you look as a cloud accounting silver partner if your accountants are printing out the printing out things and doing work manually, then typing it back in or something. So the whole story is kind of interesting, but it's also a little disturbing and goes back to these bigger issues with firms like this is what we're this is what firms are doing. Like that's the relationship with your employees and what employees do want to work for firms. Could she You've been cheating and doing these things on purpose and trying to steal money from the firm. I don't know. But my gut is it's this over control of a firm and it's a crappy employee experience.
Blake Oliver : [00:26:22] And here's my theory. My theory is not a great employee.
David Leary: [00:26:26] Was possible I agree.
Blake Oliver : [00:26:27] Was was not keeping accurate time sheets which happens to both good and bad employees. We all know that people lie on their time sheets or they're just totally inaccurate. They're just guessing.
David Leary: [00:26:37] Ron Baker and I speak to this all the time. Every time they do a talk, they ask if anybody's ever like, doctored their timesheet and 1% of people, accountants raise their hand. So what's the point of having them? They're all fake. All timesheets are fake.
Blake Oliver : [00:26:50] Yeah, there's there's always inaccuracies and it can be huge. And these apps are actually kind of neat. And I don't think there's anything necessarily good or bad about them. They're really fascinating. So this one's called Time Camp, and what it does is it installs a software on your computer and a chrome plug in that tracks what programs you were using for how long. And if you're in Chrome, it will track the title of the tab that you have focused on. And so it can get really detailed in terms of what client you're working on. If the client name is in like the Zero or the QuickBooks file, the header, it can it can do a lot of automated time tracking that You can then bill through to clients, you can adjust first. I tried it for a little while. I ended up not using it because because I just didn't feel like I wanted to have that level of tracking. But there's a security argument to be made for it because it takes screenshots of what people are working on and if it's a work computer and you say, Look, this is your work computer, you should only be doing work on it, then I don't think the privacy concerns are warranted. I mean.
David Leary: [00:27:56] No, I don't think the privacy concerns are warranted for the employee. Right. But the privacy concerns I have are for the client. So just like with. Which went through all the tax providers. They had that Facebook widget and more than likely unknowingly, they were passing data back to Facebook. Right. All the tax providers, because Facebook's reading the screen, it's in the URL. There's there's information the higher right the titles just like you talked about your clients information is probably being stored on these monitoring software servers. That's actually the bigger risk of this whole thing. It's not the time people are stealing. It's not the the privacy of the employee. It's the your client's data is being monitored and captured by third party software that probably because they don't work in the industry like unless one of these these apps are built specifically for accounting firms they aren't taking the proper privacy concerns. This episode of The Cloud Accounting Podcast is sponsored by Relay Financial. For those listeners that haven't been following along with my drama caused by PNC when they purchased BBVA and botched the migration.
David Leary: [00:29:01] To quickly summarize, PNC Bank feeds won't work with QuickBooks Online. The website had all my old BBVA transactions just listed as debits and credits with no vendors or payees. And to top it all off, the June bank statement was just missing. Like June never happened. Let's just say my 2021 books were a mess. So for 2022, I made the commitment to stop using PNC and switch everything to really, really is a no fee online banking platform built for you and your small business. Clients really understand themselves. All the things we as Accountants and bookkeepers care about Security, bank feeds, automation, reconciliation. I invited both my interns to my relay account. They created their own user ideas and passwords, and within minutes they were using Relay to create virtual debit cards, physical debit cards, download statements, and reconciling. Now the bank feeds and my QuickBooks Online are reliable, and my 2022 books are in order to stop fighting with an unreliable bank that doesn't care about you or your small business clients. Head over to Cloudaccountingpodcast.com Promo relay that is Cloudaccountingpodcast.com Promo Forward relay. Why?
Blake Oliver : [00:30:05] Here's a fraud story that caught my attention. Office space inspired software Engineer scam prosecutors say.
David Leary: [00:30:12] And so we should pause here because I reference office space with some of my younger Gen ZERS. And then I was talking about.
Blake Oliver : [00:30:22] I made a film office.
David Leary: [00:30:24] Space. So I had to had to have them go watch office space. So depending on your age on the show, you might not know what office space is. So I would take the time pressed pause on the podcast, go on to Amazon Prime or Netflix, go find office space, watch it, then come back in, but listen to the podcast.
Blake Oliver : [00:30:40] Well, now I'm feeling old because yes, it came out in 1999. It's a cult classic film and central to the film. I really don't think I'm spoiling anything, but spoiler alert, if you want to see it without knowing anything, it centers around a fraud. These disaffected office workers decide they're going to put some software in this program that will then siphon off like pennies. Every time a transaction occurs.
David Leary: [00:31:03] Fractions of pennies, fractions rounding errors.
Blake Oliver : [00:31:05] Right. And then over the course of many years, they will make millions of dollars and it will be so small because it's rounding errors that nobody will ever notice. Well, it happened in real life. A Tacoma, Washington, man was fired from his software engineering job at Zoo Lilly after stealing hundreds of thousands of dollars from the Seattle based e Commerce Company, using a scheme inspired by the 1999 classic film Office Space. According to prosecutors, Ernie Castro, 28, was charged last month with two counts of first degree theft and first degree identity theft, court records show. He's accused of editing programing code to siphon shipping fees and manipulate zoo lily prices, stealing about $260,000 in electronic payments and more than $40,000 in merchandise, according to charging papers. He was fired June 9th after a zuliani examination of his work laptop uncovered a document titled, quote, Office Space Project. So he actually was inspired by the film. He really was. It wasn't just a coincidence. Yeah.
David Leary: [00:32:05] Oh, that's amazing. And he wrote code to do all this.
Blake Oliver : [00:32:09] Yeah. So but obviously he didn't learn from the movie because the whole lesson of the movie is like, you're going to get caught. Yeah. 30,000 zuliani transactions between February and June were affected, and I guess it was like creating a havoc because customers were getting double charged for shipping and handling. Can you imagine customer support trying to sort this out? And you have no idea why customers are being double charged for shipping and handling and then some of that money is being siphoned away. And anyway, let's see.
David Leary: [00:32:38] Let's see. Let's see.
Blake Oliver : [00:32:40] Well, you select I'll go on to another one here. Here's a story on accounting today. Our mid-career CPA is happy in your firm. This is by our friend Lee Fredrickson, who was on an episode of our podcast that we recorded at a conference accounting web.
David Leary: [00:32:55] Yeah. So he's.
Blake Oliver : [00:32:55] April. He's the head of Hinge Marketing, which is a great marketing agency that specializes in professional services. They surveyed 280 professionals in mid-career, senior level and executive positions to produce a report called Navigating the Mid-career Talent Crisis, a report for the professional Services. So this this problem isn't limited to accounting firms. There's all sorts of mid-career professionals in all sorts of professional services firms like law firms, for example, that are quitting and are not trying to make it to partner. And so the question is why? Why are they leaving? And the finding of this study, this survey, is that over three quarters of those surveyed stated they were leaving their jobs out of frustration with firm leadership. Almost as many, 72.4% stated they were looking for a better company culture. By comparison, fewer than half of those surveyed cited a desire for higher salary. So three quarters are saying it's the culture, it's the leadership. Only half say it's the salary. And of those respondents who gave their company culture low ratings, 94% of them pointed to a lack of comfort, sharing thoughts with leadership as a detractor from the current culture. And 90% felt they were not able to perform fulfilling and engaging work.
David Leary: [00:34:18] So the leaders are having to put in 60 hours a week. When are they going to have time to.
Blake Oliver : [00:34:22] Listen.
David Leary: [00:34:23] To chat with their employees?
Blake Oliver : [00:34:24] Yeah. And what's interesting is that when they surveyed the firm leaders, they didn't see this as a problem. There's a disconnect between the company culture, like the the firm leaders said that they thought the culture was great. Here it is.
David Leary: [00:34:43] Oh, it's like we give out hoodies and we bring in pizza. We have a great culture kind of like that.
Blake Oliver : [00:34:48] Only 10% of the senior executives surveyed expressed dissatisfaction with firm culture, while almost half of the mid-career respondents had a negative reaction. The percentage of senior executives satisfied with current culture is almost as high as the percentage of mid-career professionals who are dissatisfied with it.
David Leary: [00:35:05] So so what I'm what I'm hearing when you read these numbers is there's like two bubbles. Like the senior executives have their own culture. They're hanging out and they all like each other and they think everything's great. And then there's the whole other bubble that's not participating in that. So, like, this all sucks. Yeah, there's literally two bubbles of data happening.
Blake Oliver : [00:35:24] And in an accounting firm, this is your managers and your directors who are leaving and mass because the partners aren't listening and don't want to change. So the solution is actually you need to pay your people more probably. But also more importantly, you need to fix that culture. Because in firms that have a really good culture where the mid-career professionals like the culture, they are way more likely to stay and turn down salary increases just to go somewhere else. So that's the solution is listen, listen to your managers, listen to your directors. And I'm sure many of our listeners, the reason they went off and started their own firms is because they weren't getting heard. I didn't feel like I was heard at all. I went in to a top 25 firm and I felt like nobody cared at all. They they might pretend to listen, but like they weren't going to do anything. And, you know, I thought I was brought in to make a difference and to change how things were being done. But that was not at all the situation. So when you got David, did you find your story?
David Leary: [00:36:28] No, I'd like to talk about that. Oh, yeah. I finally touched it. Have you played with it yet?
Blake Oliver : [00:36:33] Yeah, I played around with it to write a blog post, a website. I've. I've been using it for marketing copy, and I find it to be really helpful, like 70, 80% reduction in the time it takes me to write.
David Leary: [00:36:46] And I can see where and I've kind of used it for some things like that where just it's almost like having a person around to like, bounce an idea and then it gives you and you see their answer, like, that's not right, but it gives me this idea and it kind of I think it can help in a creative process, right? But yeah, so I finally used it this week and first thing I was like almost turned off because you have to create your account and the very first thing it does, it put you through a CAPTCHA. So this, this is getting a lot of hype. It's the world changing A.I., and I'm clicking stoplights and bicycles because it doesn't know if I'm a human or not. So I was like, All right, this is kind of crazy a little bit. And then I started just, you know, clicking through it and just asking questions like, Who are the hosts of The Cloud Accounting Podcast? And it actually says, Here's the answer. I apologize for any confusion. The Cloud Accounting Podcast is not hosted by @BlakeTOliver and @DavidLeary. They post both hosts the Accounting Best Practices podcast, where they discuss the latest trends and best practices in accounting, finance and technology. So like, some of the answers are like really, really off. I did try to do a little bit more accounting style stuff, so I typed in a question which was How do I categorize my GoDaddy expense in QuickBooks, in my QuickBooks Bank fee? Right. And it gave me an answer. And it was kind of impressive, right? It's like, oh, you might it could be this or this.
David Leary: [00:38:08] And sometimes, you know, go, Daddy. It could. It could be a charge for web hosting or it could be a charge for marketing, right? It could be one of the two. You should maybe partner with an account or bookkeeper, blah, blah, blah. And then I did the same thing, which I do with my Starbucks, which is my Southwest Airlines. And it kind of gave me the same answer over and over and over again. And what this reminds me of Blake back in the day of doing tech support, right? Obviously, there's dozens, if not hundreds of people taking tech support, phone calls in the nineties, Right. These big call centers. And there'd be individuals that they literally only knew three answers and they would give it out on every single phone call. And I think that's where we're at on this. It is the worst tech support employee that that's where it's at from a maturity standpoint, Right. It doesn't really have the real answer. It kind of looks if you don't know better, it looks like a legit answer, Right. If you don't know better. But here's here's where it took the cake break for me. And I really and love seeing this this answer. So I asked specifically, can I reconcile my bank account? And it replied back. In summary, I can be used to assist with bank account reconciliation and fraud detection, but it is not a replacement for human oversight and review. And that's this piece that everybody keeps missing the that humans have to oversee this stuff. Like you wouldn't just say create a blog post and just use it, right?
Blake Oliver : [00:39:32] No, but I can have it right. 80% of that blog post and I can give it the idea that I, I have to give it an outline. And I think, David, that part of the reason it can't answer that question about categorizing expenses is because it hasn't been trained on that data set. We don't know exactly what data GPT was trained on. Openai I think they've said that they they ingested like the entire internet and then there's all speculation that they ingested a bunch of books, right? Digitize books. But like how many of those books and in the Internet does it say like, is there somebody writing about how to categorize that particular transaction? That's a very niche.
David Leary: [00:40:13] Because it's fairly what it's basically doing. It's pulling the fake news from the QuickBooks website and re regurgitating those in a way, right? So it's not and this is this, this thing of this solving our problems and this goes to they don't have the real data you need to actually do real work like sure it could summarize a bunch of texts from other blog posts to give you a blog post right off of everybody else's blogpost. Like this basic research, but it doesn't have real answers if that makes sense. Well.
Blake Oliver : [00:40:42] Well, what it could do, though, is with the right data set, it could do exactly what you're talking about. David Like if Intuit built this into QuickBooks and they ingested every chart of accounts from every company and then they ingested every expense coding, right? All the bank feed data and how it was coded into an AI that I could go through and figure out, even though people are doing widely different things with their categorization, their chart of accounts, it could use machine learning to figure out how to code stuff and tell you.
David Leary: [00:41:12] And it takes billions and billions and billions of data points. And this is the issue of smaller startups or like, well, we're going to we have I doing this accounting function. I'm like, maybe, but like you kind of need billions of data points to have it really work, right? And that's what they did at GPT as billions of data points, right? This episode of The Cloud Accounting Podcast is sponsored by First Republic Bank. When you own a professional service business, client satisfaction is your number one priority. So when it's your turn to be the client, shouldn't you get the same kind of treatment? First, Republic shares your commitment to extraordinary service. That's why you'll be paired with a dedicated business banker who has the experience and expertise to serve the unique needs of your industry, whether it's accounting law, health care, you name it. They'll take the time to get to know you and your business, recommending just right solutions and responding quickly to your requests. And since they'll act as your single point of contact, you can reach out directly to them by phone or email, even through their secure app. That's right. No phone trees or customer service centers don't have time to leave your clients. They only can come to you. This is the banking partnership you and your team deserve. To learn more, head over to First Republic's today. That's first Republican member FDIC. Equal housing Lender.
Blake Oliver : [00:42:32] So I've got Chet open right now, and I just wanted to try an example that I think it could do really well. And one of the good examples is write a letter to a client. So I'm going to say write a letter to the client of a CPA firm.
David Leary: [00:42:49] From write a firing letter. Actually not see client fire the fire letter.
Blake Oliver : [00:42:53] Okay. Actually, I see this write a letter to David Lurie from an accounting firm owner explaining why.
David Leary: [00:43:03] The firm services.
Blake Oliver : [00:43:05] Is is ending his services. Be sure to include the fact that David writes all his messages in all caps as one of the main pain points. Dear David, I hope this letter finds you well. I'm writing to inform you that our accounting firm will no longer be needing your services. We have greatly appreciated the work you have done for us in the past, but we have decided to move in a different direction. One of the main reasons for this decision is the format in which you communicate with our team. Specifically, we have found that your messages are consistently written in all capital letters, which can be difficult to read and understand. We understand that this may be a personal preference, but it has caused some confusion and frustration among our team members. In light of this and other considerations, we have decided that it is in the best interests of our firm to end our working relationship with you. We wish you all the best in your future endeavors, and thank you for your contributions to our firm. Sincerely. Your name. Accounting firm. Owner. Yeah. Now we could tell that. We could tell that to rewrite this. Saying that like David is the client. You know, I could say rewrite, rewrite the letter. But with David as the client of the accounting firm, not a vendor, not a vendor or supplier. And we could see if it makes a correction. It's writing. Yeah. There we go. Now it's saying we will no longer be able to continue providing you with our services. Rewrote it. It took my feedback and rewrote it. Yeah. So? So this kind of stuff, like this boilerplate kind of communication with clients. It kicks ass at that. Not the. Yeah.
David Leary: [00:44:43] If you need generic boiler plate stuff 100% it does.
Blake Oliver : [00:44:47] Yes. I mean you could, you could have it right. Like, you know, write a write a welcome letter. To David Leary, a new client of my bookkeeping practice. And then it's going to say, you know, you're David, on behalf of our bookkeeping practice, I would like to extend a warm welcome to you as our newest client. We are excited to have the opportunity to work with you and assist you in managing your financial records. And then it keeps going.
David Leary: [00:45:15] So if you need boilerplate stuff, but. Yeah. To take this off your plate so you can do other stuff, right? I could see how, but it's not going to replace you in the work you do. It's going to accent and maybe make you a little bit more efficient, but it's being played up as this world changing like thing. And it's like, again, accountants are not going to lose their jobs because of AI, right? It's just not going to happen.
Blake Oliver : [00:45:37] Is my ski trip tax deductible? Let's see if it can do that. It depends on the specific circumstances of your ski trip. Generally, if the primary purpose of the trip is for business, such as meeting with clients or attending a business conference, then expenses related to the trip, including lodging and transportation, may be tax deductible. However, if the primary purpose of the trip is for personal recreation, then expenses related to the trip would not be tax deductible. It is best to consult a tax professional or refer to the IRS guidelines for more information in deducting business expenses.
David Leary: [00:46:06] And that seems legit. But if you type this in for ten more times for other expenses, it never has the answer. It just keeps giving you the same. That kind of same wishy washy, noncommittal answer. And that's where I'm coming from on this. Like it's kind of impressive until you really try to get a real answer out of it. It's very wishy washy. It won't commit to anything.
Blake Oliver : [00:46:26] And I'm asking it now. Please cite the IRC section related to this question and it's telling me the section that pertains to deducting business expenses is section 162. I don't know if that's correct or not. This section allows for a deduction of all the ordinary and necessary expenses paid or incurred during the taxable year and carrying on any trade or business. So think about how useful this is in terms of research, if you can. You know, this thing obviously has the IRC code in it, right? So now you can start asking it questions like tell me which section I should look at, you know, analyze this. You could, you could copy and paste a whole section into chat GPT and ask it to explain it in plain English. So imagine how great that would be for communicating with clients for us. If you're a tax pro, you can read that section and you've been doing this for years. It makes sense to you, but it doesn't make sense to a normal person.
David Leary: [00:47:15] And this is kind of what it's doing, right? If it can create if it can change it into easier to use text, I get. But if it just sends you the link because that's what firms sometimes do, they send you a blog post they wrote that has a link to this with the quote, Write from this and you can understand it like this is why you're the tax professional. It's for you to to rephrase this. Now, I can't be used for some hilarious things, so I don't know, I just put a link in and I want us to read this. But Chad Davis told Chad to create a script and he said, Act as a podcast. Producers write an intro script between two people, David the Skeptic and Blake the techie, to a podcast called The Cloud Accounting Podcast that talks about such items as chat, deep chat, GPT being overhyped, the AICPA being terrible and getting fired from accounting firms write in a skeptical tone with a bit of humor. So we have a script. So I want to read my parts and you read your part. So this is completely written by Chad GPT and it's kind of funny because but at the same time it also it's not important and then maybe it's okay to use GPT for these things. So I'll just start with the script, okay. Hey, Blake, what's going on?
Blake Oliver : [00:48:20] Not much. Just trying to stay on top of all the latest accounting tech trends.
David Leary: [00:48:24] Yeah, I can't imagine that's a full time job these days.
Blake Oliver : [00:48:27] Tell me about it. But hey, speaking of tech trends, have you heard about GPT three?
David Leary: [00:48:33] Oh, boy. Here we go. Another revolutionary tech that's going to change the accounting world as we know it.
Blake Oliver : [00:48:39] Hey, don't knock it till you try it.
David Leary: [00:48:42] Oh, I'm knocking it. I'm a skeptic, remember?
Blake Oliver : [00:48:45] That's true. But you have to admit, there's a lot of buzz around GPT and its potential to automate certain tasks and improve, improve efficiency.
David Leary: [00:48:54] Yeah, yeah, I've heard it all before. It's just another example of something being overhyped and not living up to the hype.
Blake Oliver : [00:49:00] Well, I guess we'll just have to agree to disagree on that one. But on the topic of things not living up to the hype, have you heard about the AICPA lately?
David Leary: [00:49:08] Oh, don't even get me started on them. They're just a bunch of dot, dot, dot.
Blake Oliver : [00:49:12] I know, I know. But on a serious note, it's really disheartening to see the state of the profession right now. And let's not forget about all the accountants getting fired left and right from their firms. Well, it missed it missed that part. They're leaving. They're not getting fired. But that was a pretty good script. Maybe we could.
David Leary: [00:49:29] Pretty funny.
Blake Oliver : [00:49:29] You know, we could just get chatty to write all of our episodes, and then we could use some voice A.I. And we don't even have to do this anymore. David.
David Leary: [00:49:37] You're skiing all the time.
Blake Oliver : [00:49:38] I'm just going to be skiing.
David Leary: [00:49:39] All the time. But you just played died on a black diamond. Just to let you know, this is just me talking to A.I.. He doesn't exist anymore.
Blake Oliver : [00:49:46] Well, I've got a story, David.
David Leary: [00:49:49] All right.
Blake Oliver : [00:49:50] So somebody decided to try to pass a chartered accountant exam with chat GPT and almost did it. This is the Institute of Chartered Accountants in England and Wales Assurance Exam. The gentleman who did this, who was it? What's his name? Stuart Cobby. C. O. B. B. E. Stuart. Cobby decided to put chat to the test. He took the questions and the answers and asked chat t to select the correct answers and chat. Gpt scored 42%, which is not that far under the pass mark of 55%. And this is just version one of this tool. They're working on a new one that's going to be even better. So this, this chat bot could pass the assurance exam of the chartered accountants in England and Wales. On the next round and I bet it could probably pass the CPA exam in the next few years. I wouldn't be surprised. So here we have AICPA and SBA rewriting.
David Leary: [00:50:57] The exam 150 hour rule. That's my opinion.
Blake Oliver : [00:51:02] Christopher in the chat said that we should try that. As written by Martin Scorsese. Maybe on the next episode we'll do our intro.
David Leary: [00:51:11] Our Quentin Tarantino.
Blake Oliver : [00:51:12] Quentin Tarantino. Well, there wouldn't be any talking in a Quentin Tarantino movie. It would just be murdering each other. Yeah. So that's scary, right? I mean, it fails at math and that's where a lot of accountants, I think, like why why they're disappointed by it because you try to get it to do math. It's not an AI that's designed to do math. There are other ones that can do that. So you've got to use it for its purpose. And this is a pretty good purpose.
David Leary: [00:51:40] I mean, it can replace your $8 an hour overseas VA That's who is that's whose job this is going to threaten. So some some overseas VA administrative assistant that you're paying $6 an hour or two that's like hey can you send out welcome letters to the clients or can I do this? That's the type of work that could be replaced by this, right? It's very low level entry stuff. But I don't think anything like like managing a bake for you or God forbid, you ask it what to do when your bank feed breaks.
Blake Oliver : [00:52:08] Right. Right. But again, this is the first version of the product. So I think in just a few years it's going to do the work of front line customer service representatives. It'll do the work of junior accountants, auditors. A third of audits fail inspection, PCAOB inspection. Actually, it's over half on all counts. Fail PCAOB inspection. I bet you that an eye, if you just ingested the GL and all the source documents, could do a better job of auditing than most CPA firms. In not too long. And so that's the solution to it.
David Leary: [00:52:42] Could raise. It could raise, you know. All right. Now, you don't have to look at this 20% humans. Go worry about this part. And we've kind of looked at this easy stuff.
Blake Oliver : [00:52:50] We still have audit firms that are like most audits that people are like manually selecting transactions for testing and then manually testing them. It's literally as if cloud has not happened yet for like 99% of audits. And that's why they're so bad, because it takes an immense amount of labor and we don't have the labor to do the quality audits.
David Leary: [00:53:13] And maybe. Maybe like the. And with all these technologies, maybe them getting into 85% good enough, like 85% is actually 100%. Because it's very hard to get those last. Same thing with these self-driving cars. Right. And even worse, car. We got an update from Ford and like driving the car on the highway. So on highway driving the car basically drives itself. It's pretty cool, right? But as soon as there's any variables which are basically as soon as you get off the highway, it can't drive itself anymore. Right. And maybe that's just good enough. And maybe that's the way to think about all these tools. Like if you're like bank feeds, right, you just link to that inside the accounting. If they categorize 85% of the transactions, maybe that is 100%. It's never going to hit a percent. Just give up on it and just accept that as 100%. And the same time things with this, it'll write most of your blog posts, Blake, but you're always going to have to put that extra 20% effort in. Yeah. And maybe what to think about these things.
Blake Oliver : [00:54:05] It's just like how cloud didn't eliminate client accounting services, right? It just reduced the work by like 80%. So now we can do so much more or we can just lower the price, right, to make it more affordable. Hey, we got some listener voicemail, David. I want to make sure we get to that because we love when we get the voicemail. So I'm going to download this one and get it going. As a reminder to our listeners, you can send us your Voicemails Cloud Accounting podcast at Earmark CPE Send us your messages. You can email us. Better yet, though, record a voice memo on your phone and email that to us. We love getting them and we play them on the air. So here is a message from Paula.
Paula Bennett: [00:54:48] Hello, my name is Paula Bennett. I'm from Florida. I just wanted to add a few feedback on the podcast, the latest podcast. And I wanted to say to the topic of changing the accounting requirements. Yeah, and I'm talking about looking at the possibility of improving an accounting career, the switching to being that national wide certified instead of X amount of states. I think a way this could be improved is by making the changes for new account career seekers and also accommodating those far into their career. For example, if you have X amount of state certified certification, there should be an accommodation. It hasn't been nationwide certified. If they do not have X amount of state certification, then they can take a short course to be nationwide certified. This could then help the older accountants in the field and the new ones coming in general, say the profession as a whole.
Blake Oliver : [00:55:58] Thanks, Paula.
David Leary: [00:55:59] Go ahead, David. And so Paul is proposing, if I'm hearing from if I listen to this correctly, is just do a hard cutoff right now, everybody that wants to be a CPA starting today, going forward is getting a national CPA license. It's not done. It's not state to state anymore. But anybody that's already has their CPA for each state, if you have it for multiple already, you just basically have to take a quick, quick quiz to get grandfathered in. But but she's creating kind of two paths to get everybody onto this national CPA license. People won't be stuck and do a hard cutoff immediately for new people immediately.
Blake Oliver : [00:56:32] Now, I think that's an idea worth considering. And for those who didn't hear that discussion on a previous episode, you know, I throw out the crazy idea that maybe we shouldn't have 50 different states licensing CPAs, that it's sort of like having 50 partners in an accounting firm that have to vote on everything in order to do anything, and that's why nothing ever happens.
David Leary: [00:56:49] So your license just ruined. So your license in California?
Blake Oliver : [00:56:52] I was and I switched to Arizona because now I live in Arizona.
David Leary: [00:56:55] So is there any like, do you have to prove a different set of knowledge? Like what? Why do we why do like history? Like, why states? Why do we have different states doing this anyways?
Blake Oliver : [00:57:05] It goes it goes all the way back to like the founding of the country and the whole federalist system, the whole federal system that we have driver's licenses. And yeah, like all I mean, this is a civics lesson, right? All all rights not expressly given to the federal government belong to the states. And that's why licensing is is done. Almost all almost all licensing is done by states because of that. But what things have changed in the sense that now firms don't work locally anymore? It used to be that if you had a CPA firm, you only worked with people in your state or in your city. Pretty much like that was like all of it. But now that we're all working remotely, we're working across state lines. We've got clients everywhere. Interstate commerce is a fact of life in the accounting profession. So when it comes to interstate commerce, that's where the federal government gets involved. And I think we should probably consider we should consider moving to a federal licensure for CPAs because it's so ridiculously impractical to have all these states doing it. I mean, the problem is, though, how do you how do you get take that away from the states, like the boards of accountants? You don't want that they're going to lose their.
David Leary: [00:58:12] I can see the headline already 80,000 new CPAs.
Blake Oliver : [00:58:16] Like, well, and this is why the CMA has a big advantage over the CPA right now, the certified management accountant credential, or it's not a license, it's a certification that's one organization that does that globally. And so they don't have to deal with all of this. They can make their own decisions and and move things forward a lot faster and they're growing. Cpa shrinking. Cma is growing. So look at the competition. Another message, This is an email from Tori. Tori said, If we want to see a forced shift in this profession, it would need to come from the top ten firms. These firms would need to boycott taking on PCAOB audits to make the AICPA or any other organization take the situation seriously. If no one is renewing contracts and auditing the PCAOB companies, it would cause turmoil in the financial sector. Yes, I understand this is radical and highly unlikely, but I do think this would be the only way to change any chats. Oh, we got a lot of discussion going on in the chat. I'm just going to push through. I'm going to push through and get to some of this mail that we've been holding off on. Let's see.
David Leary: [00:59:17] Well, you're looking since we have people on the live stream here. Yeah. Expensify announced that at their expense account in Italy that they're going to have George Clooney as the headline speaker.
Blake Oliver : [00:59:28] Wow.
David Leary: [00:59:28] Apparently, he'll just drive his boat over there, you know, or take his his Vespa down to southern Italy and appear at expensive con, which is just amazing.
Blake Oliver : [00:59:38] Yeah. And I really do hope that we get to record some Cloudaccountingpodcast.com episodes over there. We have not received our invite yet.
David Leary: [00:59:46] If we go, finger's he's going to wear the shirt. I am bringing The Cloud Accounting Podcast shirt for George Clooney to wear for sure.
Blake Oliver : [00:59:53] Deanna wrote in and said, I love your podcast for being informative and entertaining. Can you tell me your favorite app or apps for importing journal entries into QBO Advanced? I am manually entering our payroll journal entries from Paycom. I had assumed that I just needed to take the time to create a template for import, but discovered today that it's not possible. Exclamation. Exclamation point. Question mark.
David Leary: [01:00:15] So I can jump in on that.
Blake Oliver : [01:00:17] Yeah. Yeah. Well we we had starters go ahead.
David Leary: [01:00:19] Switch to on pay because it syncs beautifully with QuickBooks and their sponsor The Cloud Accounting Podcast. But if you have to use Paycom I would look at there's an app and this is going to be on like the QuickBooks App store. So Apple.com look at SAS at. That's a good way to do that. The other thing too, is I'm not I'm actually a little confused, but Intuit bought like that spreadsheet thing. Data Deere. Mm hmm. But I don't know if data Deere pulls data into QuickBooks Online in advance. So in a way, you might have a free free. But a solution built into QuickBooks Online advanced already, because I know that the listener mentioned.
Blake Oliver : [01:00:54] That through day to day.
David Leary: [01:00:56] I think because data Deere got purchased, but I'm not sure is data Deere report like getting data out or data in.
Blake Oliver : [01:01:02] Well I think it lets you both pull in and pull out. But yeah, I'm not sure if it solves that specific journal entry need, but we do have a recommendation. Go look at data Deere, go look at SAS and as options for connecting your Excel files, your CSV files to QuickBooks.
David Leary: [01:01:21] And the other option is Zapier. So you could just take that file, stick into a Google sheet and Zapier, every time there's a new transaction, you could create like a trigger column that says approved or something like Send to QuickBooks, and that'll only pull those ones over and you can just use this app to do it. That's another option.
Blake Oliver : [01:01:38] Let's see. Last one here, Listener Mail. No, I think that's it. Anything else. David, before we go.
David Leary: [01:01:48] I loosely saw a lot of articles this week about banks trying to hire all these people that are getting laid off from tech because a lot of a lot of these older institutions, these banks want to be a little bit more tech savvy going forward. Right. And so immediately maybe think like accounting firms, you are all trying to hire people. You might you know, Microsoft laid off, what, 10,000, 30,000, like all these tech companies are laying off very good employees with skills that maybe your firm could benefit from, like maybe open up your your recruiting efforts the next three months or six months possibly, because maybe that's a way for us to get more accountants in the profession.
Blake Oliver : [01:02:26] A little bit of the chat I just want to highlight before we go. This is regarding the chat discussion. Matthew said. Could it replace organizers as something the client has to do and make it feel like someone is interactively chatting with the client, getting the same information. And Taylor said that's a really good possibility. It could replace the entry level tax organizers and it could help write engagement letters. So I think that's something that Chat could do really well, which is take the prior year return. This is basically doing what I think an entry level associate would do it. Most firms take the prior year, return all the source documents and make the PBC list the list of things that you need from the client PBC meeting prepared by client and then go ask them for it and keep following up until you have all of the things that you need. That's not complicated chat. It could do that. And if practice management software builds this so that you have that oversight and you can decide which messages to send, maybe you review them first and you click send. You know, that could do it. That could really speed things up because most of the time wasted in tax is getting stuff from clients and not having what you need. And then every time you open the return, you don't have what you need. So then you've got to go figure out where you are and figure out what you need and go ask for it. I mean, imagine if you had everything you needed when you actually open the return to work on it.
David Leary: [01:03:44] Yeah. And you don't have that that chasing that context switching. Yeah. Yeah. You basically are you basically making it be a glorified babysitter or whatever.
Blake Oliver : [01:03:50] It's an admin. Right.
David Leary: [01:03:52] And that the other would need that. But because you should have already fired all those clients.
Blake Oliver : [01:03:57] But you were one of those clients that had all your shit together and you got fired.
David Leary: [01:04:00] David But no, but even then, you know, it's like I get a little because you're waiting on to get stuff from other things, right? There's always this delay, right? This dance, but, well, full circle.
Blake Oliver : [01:04:09] Yeah. That's all the time we have for this weekend. As usual. I have so many stories we didn't get to on the list. I hope that we can talk about them next time. One that I definitely want to get to how your firms digital client experience is directly related to staff happiness and productivity. Getting rid of remote work will take more than a downturn. Research is using AI to make malware and rocket lawyer launched tax prep, but we'll have to wait and talk about that next week.
David Leary: [01:04:37] More stuff for another week. And I think by the time people listen to this, we're going to be officially in tax season, the 23rd, right. That starts Monday.
Blake Oliver : [01:04:44] When the IRS starts accepting returns.
David Leary: [01:04:46] Returns?
Blake Oliver : [01:04:46] Yeah, I guess so. So enjoy.
David Leary: [01:04:48] I guess we'll talk to a lot of you in a couple of weeks. Yeah.
Blake Oliver : [01:04:51] Thanks, everyone who joined us live. As a reminder, follow us on YouTube. Subscribe on YouTube to Search Cloud Accounting Podcast. You'll find us send emails to Cloud Counting podcast at earmarks. And as always, you can earn free CPE credit for listening to this episode. The week after the episode drops, a course will become available on the earmarks CPE app. Get the free app. Sign up, find The Cloud Accounting Podcast. Take a quick five question quiz and you've got a whole hour of CPE and check out federal tax updates for our new federal tax show in partnership with Paget and listen to OMI fraud. Listen to the Healthy, Wealthy and Wise podcast. Listen to many of the other fine podcasts such as today that are now on earmark. We have over 4000 accountants and AAS who have signed up for the app so far. And thank you to everybody who has subscribed. You can subscribe for $100 a year and you can support our work and it's been great. We're going to go out, raise money, and we're going to take this thing to the next level. So if you have ideas for what we should do, reach out to me, Blake, at earmark.
David Leary: [01:06:03] And then chat or responder will email you.
Blake Oliver : [01:06:06] Back my chat, CBT will email you back. Not yet, unfortunately, although Google could.
David Leary: [01:06:10] Do that.
Blake Oliver : [01:06:11] Very soon. I actually just saw a story about how they called back the two founders. Was it Sergey Brin? And who's the other guy forgot? They actually there's a story about how they came back to Google to like help them catch up to Openai. So I think that was probably they want.
David Leary: [01:06:29] Their Steve Jobs moment. I feel.
Blake Oliver : [01:06:30] Like that was a.
David Leary: [01:06:31] I.
Blake Oliver : [01:06:31] Feel like that was a story just to prop up the stock price at the moment. Right. But they're going to they've got they've made advances like I don't know if you've seen this David but in in Google chat, which we use instead of slack for earmark, when you go into a chat where you haven't checked it out for a while, there will be a little summary of the discussion at the top. That's chat. I mean, it's not the chat product, but that's the same type of generative AI that's reading and then summarizing and it's hugely helpful. I can I can read a paragraph instead of reading the whole chat thread and know what I need to look.
David Leary: [01:07:01] I know Microsoft's getting embedded with GPT a lot and Openai and they're going to integrate it with Bing apparently, because even inside chat, if I say like what is the URL of The Cloud Accounting Podcast, it can't give me the website address and that's just like some. So some parts of it are like, are you kidding? Like, it feels like it's super simple, right?
Blake Oliver : [01:07:20] And Christopher said, It's Larry Page. That's the other guy. How did I forget that? Yeah. Larry Page. All right, everyone, thanks for joining us. David, I'll see you here next week.
David Leary: [01:07:28] Next week, Right. Time for the classifieds. Is your New Year's resolution to get your firm better organized? The average firm spends more than 30% of its time sending repetitive requests to clients for information to complete their work. When you don't have what you need, your workflow is blocked and your team is frustrated. Eliminate this frustration with client help. Client Hub is a modern workflow platform with deep roots in the accounting profession. Unlike traditional platforms, client hub is built for both your team and your clients. Get faster client responses, build better client relationships, and become a more productive firm. To schedule your demo, go to Client Hub App. That's Client Hub app. Check out Hector Garcia's new app called Right Tool for QuickBooks Online. Instantly increase your productivity with keyboard shortcuts and more. It will save you seconds. The app is free at the moment in public beta. Check them out at right tool app. That is right. Tool app. R. I. G. H. Tx o. L dot app. On The Cloud Accounting Podcast Blake and I discussed the top accounting, bookkeeping and tax news stories each week. But for years we've always felt like there were so many federal tax related updates, changes and news that we couldn't possibly ever talk about all of them on our podcast. Not to mention we probably lack the knowledge to go into the weeds about tax code and how it affects your clients.
David Leary: [01:08:52] The host, Roger Harris and Annie Schwab together have over 75 years of tax experience helping both individuals and small business owners navigate the complexities of the current tax law. Their expertise has been published in the Wall Street Journal, USA Today, the Morning business report, Bloomberg Business News and Accounting Today. And even as it led to offering testimony before Congress on small business tax legislation. Listen to this podcast will save you time from scouring, digesting scores of blog sites or IRS news feeds while keeping you up to date on the latest federal tax information needed to run your tax practice and best serve your clients and to save you even more time. Cpa is an EIA's, Ken CPE and C credits for listening to this podcast. And don't worry, they're both fully Nazarene and IRS approved. Be sure to subscribe or follow the Federal Tax Updates podcast in your favorite podcast player today or head to federal tax updates. Dot com That's federal tax updates dot com. Want to get the word out about your newsletter webinar party, Facebook group podcast e-book, job posting or that fancy Excel macro you just created. Why not let the listeners The Cloud Accounting Podcast know by running a classified ad? Hit the show notes for the link to get more info.