The Unofficial Sage Intacct Podcast

Dan Hood, editor-in-chief of Accounting Today, joins Doug and Emily to discuss the past, present, and future of the accounting profession. They explore how the role of accountants has evolved from compliance-focused work to more advisory services, and examine the impact of technology and changing educational requirements on the field. Dan shares his insights on emerging trends like ESG reporting and the increasing diversity of skill sets within accounting firms, offering a glimpse into what "Accountant 3.0" might look like in the coming years.


  • (00:00) - Welcome to the Unofficial Sage Intacct Podcast
  • (00:33) - Meet Dan Hood: Editor in Chief of Accounting Today
  • (01:47) - The Evolution of the Accounting Profession
  • (08:11) - Accountant 1.0: The Traditional Accountant
  • (14:55) - Technological Shifts in Accounting
  • (18:25) - Accountant 2.0: The Modern Accountant
  • (22:30) - The Future of Accounting Technology
  • (28:38) - Challenges in Accounting Education
  • (28:57) - The Talent Shortage in Accounting
  • (29:15) - Accounting Education and the Pipeline Problem
  • (30:21) - Impact of Technology and Finance on Accounting
  • (35:44) - Accountant 3.0
  • (40:59) - The Role of ESG in Accounting
  • (46:34) - Conclusion and Final Thoughts

Connect with Dan Hood
https://www.accountingtoday.com/author/daniel-hood
https://www.linkedin.com/in/daniel-hood-3494ab49

Connect with the Hosts:
https://www.linkedin.com/in/emilybmadere
https://www.linkedin.com/in/mattlescault
https://www.linkedin.com/in/dlewis715

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Creators & Guests

Host
Doug Lewis
Host
Emily Madere
Guest
Daniel Hood
Editor-in-chief of Accounting Today

What is The Unofficial Sage Intacct Podcast ?

The Unofficial Sage Intacct Podcast is your inside track to the world of Sage Intacct and the broader accounting industry. Hosts Emily Madere, Doug Lewis, and Matt Lescault bring their unique perspectives and expertise to explore the latest trends, challenges, and opportunities in this rapidly evolving space.
In each episode, the trio explores topics like the power of the Sage ecosystem, best practices for CAS, new Sage product features, and the impact of artificial intelligence. They'll be joined by industry experts and Sage insiders who share unfiltered insights you won't find anywhere else.
Whether you're an accountant looking to harness technology, a business exploring Sage solutions, or anyone fascinated by the future of finance, this is your show. Tune in for an unvarnished, unofficial look at the Sage heartbeat powering accounting today.

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Doug Lewis: All right. Welcome back to another episode of the Unofficial Emphasis on Unofficial Sage podcast. Today's a special one. Emily. I'm excited. Luckily, it's also just the two of us co-hosting today, which is even more exciting. We don't have to deal with that third knucklehead who's usually in the mix. Big one today, though. Absolutely. I mean, this is this is a [00:00:30] milestone event for this podcast. We have the one and only Dan Hood, the the official Dan Hood. Let's go with, um, you know, Dan, we've known each other a couple years now. Uh, I don't think anybody who would possibly be listening to this needs an introduction to who you are, but I'll let you give it your best shot. Who are you? Dan?

Dan Hood: Oh, uh, how much time do we have?

Doug Lewis: Uh, we have 25 minutes for your intro.

Dan Hood: 25 [00:01:00] minutes. That'll leave us a minute for questions. I am, I'm basically. I'm the editor in chief of accounting today. I've been covering accounting for about 25 years. I think that's a that should have taken up all our 25 minutes. Right. That was 25 minutes worth of introduction right there.

Doug Lewis: You know, you're you're a smart man but terrible with with time management.

Dan Hood: Apparently not about I don't like the math. No, that's the problem.

Doug Lewis: No, math is tough. Numbers just don't make sense at all. Which is why you're not an accountant yourself.

Dan Hood: Correct? I am not good. I watch a lot of accounts. I talk to a lot of accountants. I've met a lot of [00:01:30] accountants, but I'm definitely not one myself.

Doug Lewis: You were just at the center of everything in the accounting profession, but you couldn't add or subtract to save your life. Got it. So that is the intro for Dan Hood, editor in chief. That's my intro today. Yes, that's not ad for his life. The man who can do it. So he just talks about it. So, Dan, you're kind of at an interesting crossroads at the unofficial Sage podcast. Obviously, a lot of the stuff we do is really focused heavily on the Sage world, the Sage ecosystem, the different products, how firms are using them, all this crazy stuff We're going to take a step back a [00:02:00] little bit and do a bit of a more of a broad industry viewpoint, because you are at the center of so many things, technology, of course, being at the forefront of so many conversations. But staffing growth strategies, uh, retention of of staff, pretty much anything you could possibly imagine. You're the guy who kind of sees all that content. You write a lot of content, you speak, you do all the conferences. For whatever reason. You're at the epicenter of pretty much everything in the accounting world. So we want to take a step back. And Emily, actually, uh, [00:02:30] thought this would be an interesting kind of way to, to, I'll say, a loose structure on what we're going to talk about today. Uh, one of your previous articles. Emily. What what was that article that kind of got this ball rolling?

Emily Madere: Yeah, I was taking a look at it, and I just thought it was really interesting. I like the idea of talking about, you know, accountant 1.0, accountant 2.0, and accountant 3.0. So really going into detail of what does the past, present and future of accounting look like? What has it looked like and how is it going to change? [00:03:00]

Doug Lewis: And Dan, I don't know if you recall writing that. Um, but your name.

Dan Hood: Someone on my team probably put it together and I slapped my name on it. I haven't written.

Doug Lewis: Your name.

Dan Hood: Since the late 1990s. No, I do actually remember that. It was. It was a recent column. And it was. Yes. Sorry. Go ahead.

Emily Madere: And what was the name? It's. I can't remember right now.

Dan Hood: I think it was a countless by any other name. Yep. Um, and that the, the basic premise was that that we've reached a point where, uh, the profession is changing. First off, I should say I'm unofficially [00:03:30] very excited to be here. Thank you for having me. Uh, unofficially on site, of course. Um, but, uh, you know, the thing about the accounting profession is, uh, it has changed enormously. And what what counts as an accountant has changed and expanded enormously. When you look at, uh, you talk about 1.0 and 2.0 and 3.0, the past and the present and the future, what accountants were in when I started paying attention to it in the late 90s is very different from what accountants are now. Or maybe I should put it this way, There's a lot more possible definitions of what an account [00:04:00] is or can be now than there used to be. They used to be more or less. You were a tax guy. You were an audit guy. And when I started in the late 90s, you might be starting to be a consulting guy. Uh, now, one, you're not necessarily a guy because the number of women in the profession has expanded enormously to the point where it's roughly 50% women. Um, though that falls apart a little bit at the, the partnership level, the leadership level. Um, but but two the, the range of things that accountants that an accountant can be and then an accounting firm [00:04:30] can do has expanded so much that it reached a point. And that was sort of the real point of the article, was that it's kind of hard to define what an accountant actually is, because accountants are doing all these amazing and different things, right? They're doing forensic accounting and they're doing consulting, and they're doing advisory work, and they're doing a lot of the basic sort of stuff about accounting.

Dan Hood: They're doing bookkeeping, and they're doing taxes, obviously, and they're doing audit and assurance work, but then they're also doing HR work and executive search work, and they're doing technology work. They're expanding into all kinds of new areas that didn't exist before. [00:05:00] You know, ESG attest services are going to be a huge a huge new area for accountants. They have a lot to do with the sort of basics of assurance work that the profession is familiar with. But there's an enormous amount about it that doesn't look like accounting at all. Right. It looks like, uh, environmental reporting. Right? It looks like more like sociology than it does like accounting. And so that's the that was sort of the spur of the article was this there's this, uh, blooming of what an accountant can be and what what accountants can do and what firms can do that just wasn't, [00:05:30] uh, wasn't really there in the 1990s. You know, there was a the profession was what it had been for a long time. It was limited to the sort of three basic traditional stools of of accounting. Right. Audit a test and a little bit of consulting. Um, uh, sorry. Audit tax, a little bit of consulting. Uh, and now it's just it's it's kind of how do you even decide what an accountant is other than, you know, they call themselves that.

Doug Lewis: So you mentioned sociology, which I think is hilarious. Are you implying that getting a sociology degree actually would have value now in today's society?

Dan Hood: Oh, [00:06:00] whoa whoa whoa. Don't put words in my mouth. I know it. I think we can all agree that a sociology degree, unless you're going to become a sociology professor, has no no real world applications. No, actually, actually. That's terrible. Sociologists. Uh, but, yes, uh, the potential is that, uh, as you look around. Right. That at some point, a sociologist might actually be a useful adjunct to an accounting firm, or if you're looking at, say, corporate consulting or organizational consulting, a sociologist might actually be a pretty useful person to have on board. And this is another part of that, [00:06:30] the sort of thing that the article is that, um, the more I talk to accounting firms, the more accounting firms I see hiring non accountants one. Right. We all know about the pipeline problems and the difficulties we're having finding accountants to fulfill what were traditionally accounting roles. But we're also accounting firms expand into all these other different areas. And they start bringing on more advisory focused services. Um, they start to need other kinds of expertise. So you've got two things right. You realize that we can't find enough accountants to do the traditional accounting work? Does it actually have to be done by accountants? And then [00:07:00] two, you say, well, we're doing all this other extra kind of work that needs other expertise.

Dan Hood: Now, I don't think there's a lot of room for sociology necessarily in accounting firms, but but I wouldn't be surprised if somewhere in in the country, there's an accounting firm or two that are looking at people with sociology degrees and saying, you know what, for our specific little niche practice in, I keep saying organizational management or restructuring or whatever it might be, but there's probably other ones where sociologists might fit. Um, that makes sense. You know, they're much more other areas. They're much more likely to hire who aren't accountants, or for instance, data [00:07:30] analysts, technology folks, um, people with all kinds of expertise in ESG services. We're seeing a lot of of interest in that. So it could be environmental law or, uh, engineering or environmental engineering or a million other. There's a million other sort of disciplines that fall under ESG. And you see particularly larger firms starting to hire those kinds of people and building teams out of those. They still have accountants on their on those teams, but they are not necessarily assuming that everyone needs to be an accountant.

Doug Lewis: So you just burn through a lot of material really quickly, which I love. I love [00:08:00] it because now we just get to wing it and come up with stuff that doesn't make any sense, but it kind of shifting back a little bit. You mentioned, you know, you started lurking around the profession in the 90s, the accounting world. So to to kind of put some structure to this thing. Accounting 1.02.03.0. Let's start with that 1.0 when you started, I'll call it working adjacent to the accounting profession, because that's kind of where you were.

Dan Hood: Are you lurking on the outskirts? Yes.

Doug Lewis: Yeah. When you when you started just kind of just watching things and recording, [00:08:30] you know what what was expected, let's say 30 years ago. I know you don't look a day over 25, Dan, but let's pretend. Okay? 30 years ago, in the accounting profession, what was really expected of an accountant, what was kind of their role, what was it? You know, Hollywood hasn't done justice to the accounting profession. But, you know, what did accountant 1.0 really look like? Let's say 30 years ago?

Dan Hood: Well, it's interesting, what they looked like 30 years ago was what they looked like 30 years before that. There hadn't been as much change in the profession up until [00:09:00] starting in the mid to late 90s. But what they looked like, generally speaking, and I'm really not kidding when I say mostly men, mostly white men. Um, and they were, uh, they they all wore suits. And I realized that this is not directly to your question, but, I mean, there are things about the profession that have changed so enormously that it's worth remembering that it really was almost entirely male, uh, almost entirely white. Everybody wore a suit every day. And that continued for a long, long time, long after the rest of the economy had given up, uh, you know, formal business attire. [00:09:30] The profession held on to that. But there are there are three core things, right? Like I said, bookkeeping, tax and assurance services. Those were the three areas. And the general career path of an accountant was pretty much set. It sort of it managed itself right. You didn't need people to manage their, their, uh, their younger accountants careers because there was a structure and everybody knew what it was.

Dan Hood: You went, you got an internship, you worked at a large firm, hopefully at Big Four. If you were, if you were lucky enough, you worked there for a certain number of years. It varied [00:10:00] depending on the firm and often you didn't know how long it was going to be, but you worked there until either you made partner or you didn't. And if you didn't make partner, you went into industry and that was pretty much it. You were expected to to do what you were told, particularly for the first, uh, x number of years of your career, three, 4 or 5, depending on what firm you're at. You did a lot of grunt work. Um, basically you served as, uh, the unskilled labor of the accounting profession because it needed a lot of unskilled labor, uh, because the technology was simply not able to do what it does. Now, we take for [00:10:30] granted a lot of things that technology does for us. Now. Now you're all done.

Doug Lewis: I'm going to cut you off. Can you can you define unskilled labor? What what did that mean at the time?

Dan Hood: It's it's things like, you know, it's all the sort of grunt work that that people were talking about. This, the ticking and the tying. It's crawling around in the back of warehouses counting inventory. It's rekeying tons and tons and tons of client information for tax returns. You know, looking at processing and and entering the data for of, you know, 10,000 tax returns over the course of [00:11:00] a tax season with no actual input on, you know, making sure that the returns are correct or, you know, actually running the doing the calculations. It was just about data entry. So it's literally that kind of thing. That was what the accounting model had always been. When they talk about the pyramid model. Um, I'm making a pyramid shape with my fingers. No one can see it. There you go. Um, we need an interpreter along the side to say.

Emily Madere: Thanks for that. Thanks for the visual speaker.

Dan Hood: Makes a visual motion. Uh, and the court record. Um, uh, but so that that pyramid model, [00:11:30] which was created in the 30s. Uh, apparently, I didn't realize this until very recently. Someone told me this, that it was literally invented by Arthur Anderson. Uh, the guy who founded Anderson said, what should the model of the accounting firm be? There's a couple of different models that a partnership can have. And he said our model should be pyramid shaped, which means you have a broad base of unskilled and unskilled, probably not quite fair when you talk about people coming out of college, right? They've got a four year degree and so on, and they've had some exposure to accounting, but really they are effectively unskilled in terms of the way they were employed by the [00:12:00] firms. So they just were doing all, like I said, all this kind of data entry and rekeying of information from clients and crawling around, like I said, in the back of warehouses and going in and, you know, cleaning up client's books at the end of the month, that kind of very, very, very entry level sort of didn't require a lot of experience and mostly was just a heads down. Do what you're. Do what you're told for 3 or 4 years. So that's that's what we mean by unskilled. The notion is the pyramid pyramid model winnows away some of those unskilled labor, some of them become skilled and move up. Some of them are like, this is terrible, [00:12:30] why am I doing this? Move away. Some rise up for a couple of number of years and then, you know, maybe seven, six, seven, depending on where the firm is, sometimes as many as 13. Then if they don't make partner, they go somewhere else. And that's how you get to that apex at the top where the partner group is there. So that's so I took unskilled and then went way far away from it. But, uh Um, but it's that that you come in and you're just doing what we would now all assume would be computerized sort of work.

Doug Lewis: So the technology wasn't great 30 years ago, is what [00:13:00] I'm hearing. You mentioned bookkeeping, by the way. You also did mention a four year degree, which will circle back to that once we get to the present portion of this discussion. But the technology 30 years ago, you know, when did you really see, I'll call it the first technological revolution inside the accounting profession. Uh, everyone's doing everything on paper by hand. The accounting inventory, the bookkeeping is all done on paper. When did you really start to see, like, a major shift into more of a, I'll call it a modern era type of technology? [00:13:30]

Dan Hood: It didn't. I will say it had begun before I started. So I would say in the 90s, throughout the course of the 90s, um, there were still still plenty of areas where it hadn't, uh, infiltrated yet, plenty of areas where, you know, there was still a lot of, of, uh, basic things to be computerized or be digitized, but it had started, I will say so that by the end of the 90s, you know, you had, you know, depending on those tax prep or accounting or general ledger software, you know, in each one you had as many as 15 or 20 different competitors [00:14:00] in all those fields that could do the basic work. It still involved a lot of, you know, rekeying, a lot of heads down sort of manual entry stuff. But it had the basic functions of accounting and tax and bookkeeping had had been pretty well started to be automated by the late 90s. Um, and then there was this period between the late 90s and somewhere around 2005, where all of those companies disappeared. You know, of the 15 to 20 accounting packages, uh, you know, they got winnowed [00:14:30] down through acquisitions or through just they got smaller and couldn't, couldn't keep up their, their bases. And Sage was one of the one of the survivors. Sage was one of the the big companies that came through that, that survived that winnowing out.

Dan Hood: And the similar thing happened in tax prep. Um, and so what happened actually, what was interesting was that you had all these people trying all these different ways of digitizing accounting, and then a lot of them got acquired and winnowed down, and you ended up with sort of the modern model that we have now. It's been improved significantly since the, since the early 2000. But, um, [00:15:00] it still had all kinds of problems. It still has all kinds of problems with integration between different software systems, you know, integration between whatever system you're using for your writeup and whatever you're using for your tax prep. And so for years, integrations between systems and making sure that data flowed between them was the problem. That was the thing that happened a lot, for instance, in the first decade of this century. Um, and then, you know, really started that really started to get solved when we started to move much more seriously towards the cloud. But even there, there's still issues, you know, a lot of a lot of different systems where people talk about, you know, we [00:15:30] need APIs, we need to get better integration. There's still friction. There's a lot less friction than there used to be. But um, so that's all to the good.

Emily Madere: But and I and I still work in this space. I'm working with clients every day who are trying to integrate Sage Intacct or other systems to other systems. And it's it's still very much a need, because a lot of times what happens is, you know, people decide to integrate something and it may not work. And after you spend thousands and thousands of dollars and trying to integrate new systems, you're going to be disappointed.

Dan Hood: Yep. [00:16:00] Now and that's the thing that's now this is that's 25 years, let's say, after we started this revolution, we're still having these issues. I will I will tell you there are it is still a problem, but it's nothing compared to what it used to be. I mean, essentially it used to be just. Yeah, we just assume we'll have to rekey the data. We just assume that if I'm taking something from one system to another, I'm going to have to rekey it. Hopefully I can get it out of the other system in a format that makes it easier to rekey. But still, you're just, you're you're looking at a lot of manual labor [00:16:30] still in the process. But even still, as you say, after 25 years, this is still an issue.

Emily Madere: Mhm. Well I think that's a that's a perfect segue to move us to maybe the accountant 2.0 to talk about, you know, what is the, the present accountant doing. I mean you touched about this in the beginning of, you know, people hiring people who aren't an accountant to do accountant adjacent work. So what does what does the accountant 2.0 look like?

Dan Hood: So. Right. So among other things, they have a lot more options right there. And I realize this is sort [00:17:00] of silly to put it this way, but when you think about that in, in the context of, you know, now they don't have to wear a suit, that's for for people who weren't around when that debate was going on in the profession. It was huge. There were firms that were sure that the entire accounting profession was going to collapse. If people came in, you know, that anything other than a suit. Um, you know, it's just it's one of those things that it's hard to imagine how important a change that was. But it was pretty change. And for those for.

Doug Lewis: Those who are just listening and not not watching visually, uh, Dan is wearing a five piece suit right [00:17:30] now as he's doing this. Yes.

Dan Hood: It has. Well, that's all you can see. There's actually six suits underneath, but that's a that's because I've got to get on a plane later and I don't want to check a bag, so I'm just wearing everything at once. Um, yes. So now I'm imagining myself going through customs. That's not important. The important point is that. So it's changed a lot. What's really changed is that you could pretty safely say the accountant. Accountant 1.0 was in tax in bookkeeping, bookkeeping slash accounting or in insurance. And now if someone says they [00:18:00] work in an accounting firm, you have no way of knowing what they're doing because there's a million things they could be doing. Uh, one of the things that you can be sure about, or relatively sure about is that they are less likely to be focused on compliance work, uh, than on advisory work, or at the very least, they're they're likely to have advisory work, uh, be a goal for them or a much larger portion of their day. Back in the 90s, uh, the vast majority of what accounting firms did was compliance work. They did, obviously, they did some consulting work. That's when Andersen Consulting [00:18:30] rose up. That's when, uh, all the big four firms, consulting departments came about. But they still were pretty heavily focused on compliance work. Uh, that compliance work, it hasn't gone away because somebody's got to do it, and accountants are good at it.

Dan Hood: Um, but the focus of most accounting employees, or a lot of accounting employees is moving towards more of a focus on advisory. So it's less historically focused. It's less about regulatory mandates. It's less bound by those sort of calendars, and it's much more focused on delivering [00:19:00] more value to the client. You know, value beyond. And to be clear, clients get a lot of value out of making sure their tax returns are done and that their audits are appropriate and acceptable to whoever is mandating them and all that sort of stuff. But they get a lot more value out of advice that helps them build their business or make sure that they're running their financial lives well. So accountants are focusing a lot more on that. They've always sort of been involved in that for their clients, helping them out, giving them advice, telling them what to do. Um, but there's a lot more of a focus on that. Uh, and at the same time, it's it's the opportunities for, again, for working [00:19:30] anywhere you want to work in accounting, accounting. You want to be a forensic accountant. You want to work in the cannabis space. You want to work in. Um, and actually, you know, I'm going to stomp on cannabis space just for a second because it's a great example of of another way in which things are different, which is that you can be an expert in accounting now much, much earlier in your career in a way you couldn't be in the 90s or the 70s or the 80s or anything before that, where the theory was it was very much more hierarchical than it is now.

Dan Hood: And the notion was, you know, there weren't that many industries coming along. There weren't that [00:20:00] many new areas for accountants to practice. But now there are so many more areas for accountants to practice in that accountants haven't really practiced it before. It's much easier for a young accountant to become an expert. You think about something like Bitcoin. It is impossible to have a 30 year history in Bitcoin because it hasn't been around for 30 years. It's only been around for ten years. So even if you just got out of college five, ten years ago, you can almost be as much as an expert as, you know, somebody who's a 30 year partner in a firm, because that age doesn't give them any more experience. Similarly [00:20:30] for cannabis or for ESG or some of the other new areas that are coming along, it's much easier for young accountants to be heard and to become experts and to become leaders than they used to be able to. I'm trying to think there's a lot of other things where There are.

Doug Lewis: While we're while we're hanging out in this kind of 2.0 account. 2.0 zone. Dan, you mentioned a couple of things, the first of which which really hits home, especially from a Sage perspective. The technology got consolidated pretty hot. It sounds like kind of that late 90s [00:21:00] early 2000 zone from not mistaken. So in your viewpoint today, again, you sit at the center of a lot of stuff. How many major technology players do you see existing in the accounting sector? And let's spread it across everything from practice management to tax to CAS, bookkeeping, accounting, kind of the major tech players out there. How many do you really see?

Dan Hood: Well, that's a really interesting question because it A I'm going to go back a little bit to the history. We talked about that consolidation, that [00:21:30] somewhere around 2005, we sort of looked out the universe and said, how many, you know, how many companies are there that are doing accounting software? And we're like, well, there's four. And then how many companies are there that are doing tax software? And we're was pretty much three, and at that point you couldn't imagine there being more because they had consolidated all these lots and lots and lots of players had been winnowed down to those 3 or 4. Um, and you couldn't imagine there being a lot more because it cost a lot more to do. Right? Because you didn't have the cloud, you didn't have the [00:22:00] internet, or you had the internet, but it wasn't in anything like the degree it is now. So you the barriers to entry were much higher. Cloud comes along, internet gets much stronger, bandwidth gets better. All the things that we now sort of take for granted, um, those things come along and suddenly the barriers to entry for creating software, whether it's tax software or accounting software or for some little piece of those puzzles, uh, those drop a lot.

Dan Hood: So I think, you know, when you talk about how many players can there be, I think there can be [00:22:30] a million. Uh, that's an exaggeration. You know, there can be a lot more than there used to be because one, it's much easier for them to do it. But two, uh, there's also we've also reached a point where people can do very small bits. You look at any of the ecosystems around the big, you know, accounting, uh, platforms. Right. All the, the apps that are built around them that are, that are integrated with them and so on. And a lot of them do very, very, very small things. Now, I don't think those are the kinds of players that you're talking about, Doug. Right. You're talking about sort of bigger, um, you know, uh, put it this way. Yeah. Uh, the consolidated [00:23:00] platforms that have ecosystems. Exactly. I think you could I think you could easily see in any one of those in either tax or, uh, or accounting. You could see maybe coming up on ten. I don't think there are ten now, but I can easily see space for, for ten, uh, at some point that'll fluctuate, you know, going back and forth, I think we're more like five, six, seven now than, than than ten.

Dan Hood: But that's up from the 3 or 4 that we were at in 2015 or 20, 2005. Sorry. And then again, when you say there's [00:23:30] all these other players out there doing interesting stuff along with them, you know, it's fascinating because you take something like, uh, you know, we've seen some other players pop up that don't actually do accounting or tax work, but they tie into them and they've created sort of created a category of, of back office, um, uh, enablement that you would never have thought about before. You would have thought, well, there's accounting software, and then maybe there's payroll software and that's about it. But then there's some other people who come along and make products that are [00:24:00] take over whole chunks of the back office that you would never have thought could be taken over. Uh, and it's only been enabled by the sort of integrations and digitization of all the information so that it can be shared among a bunch of different systems. So I think I'm realizing I'm going way beyond answering your question or avoiding answering your question because.

Doug Lewis: No, no, that's that's the charm.

Dan Hood: Of those things, but.

Doug Lewis: That's your charm.

Emily Madere: And Dan, what you're referring to is, is the best in class model. Am I correct? Yeah. So so having core systems and building [00:24:30] upon there for other best in class systems and then the ability to integrate them all into one another.

Dan Hood: And that's much, much easier to do now than it was 25 years ago when they did talk. They talked about best in class versus sweets. You know, this is an argument that goes on sort of waves throughout accounting history. Um, and best in class, uh, made uh was really hard, was much, much, much harder than it is now because integration was difficult to to do. People will say, well, if you get, you know, the five different programs from five different [00:25:00] companies, how will you ever connect them? That's going to be a nightmare. It's still pretty difficult, but it's much less of a nightmare than it was.

Doug Lewis: Another thing you mentioned earlier, let's let's throw technology aside, because that's a whole rat's nest that could last five hours of a conversation. You mentioned the four year degree. When we're talking about counting 1.0, we're now in the 2.0 zone. So that four year degree isn't quite not really a four year degree anymore. In the accounting world, we have a bit of a pipeline problem. Um, a newsflash for [00:25:30] anyone who doesn't know that the talent shortage. What are you talking about?

Dan Hood: That's crazy.

Doug Lewis: I promise you, Dan, there's there's a lack of accountants out there. Um, I can't believe you're just hearing this. I think you've published a couple of articles that talk about this regardless. Regardless, let's talk about the five year requirement, that five year degree. So when did you really start to see that? I'll call it I don't want to say hurt the pipeline but affect the pipeline. Because again, you've been doing this for a long time. Long before that that [00:26:00] was ever a requirement. When did you kind of see that shift start?

Dan Hood: Well, you know, what's really interesting there is when the when that was put in place, which is the, the late 90s, um, across the 90s, because it really was that had to be done in all 50 states individually. Um, there was no concept that there was a pipeline problem. No one had any idea of this. And it made perfect sense to say, you know what an extra year of education makes accountants, uh, look, look more professional, look more credentialed, look more serious. Right. We're starting to look more like lawyers and doctors [00:26:30] and other major professions that have some extra, um, some extra educational heft to their to their credentials. Um, what? They didn't know was that at the time, uh, what had begun in the 90s. Separate from the 140 hour rule was this was a big hollowing out of, uh, how many people were entering the profession? Because you have two things going on in the 90s, right? You have a massive expansion, expansion of the financial world. Uh, just lots, lots, lots more hedge funds, private equity funds, commercial banks, investment [00:27:00] banks, all that sort of stuff. And that explodes. And at the same time, you have technology, right? As a, as a, as an industry sector that also grows enormously with the internet. So you have these two huge, huge, huge industries, uh, coming to they're either expanding hugely in the case of finance or just starting from basically scratch and becoming a novice in the case of technology, both of which are huge consumers of accounting talent or of talent that might have been turned to accounting if those two sectors weren't there.

Dan Hood: So they're both grabbing huge [00:27:30] numbers of people who are have the aptitudes and the skill sets and the math knowledge and the comfort with analysis and that sort of thing that you would normally expect to go into accounting. They're not going. Or fewer of them are going into accounting because they can make a lot more money in technology and a lot more money in finance. So a huge portion of the people who used to go into accounting are now going into tech and finance at the same time as accounting is making it more difficult to become a CPA, right? By adding that fifth year, those two trends, you know, were not no one knew at the time [00:28:00] what was happening with the the the pipeline. So you can't really blame them for for not knowing that when they put the 150 hour rule in, um, but then as those things started to become obvious, right as the problems with the pipeline started to become obvious, uh, the 50 hour rule became sort of a flashpoint.

Dan Hood: And I really think it's it's it's definitely it's an issue. Right. There's a lot of young accountants or young would be accountants who say, yeah, I don't want to spend a fifth year in college, particularly over the last ten years, as the student debt has become [00:28:30] a much bigger issue. Um, but I would say it's while it's a problem, it's not the main problem. The main problem is that we just need to find ways to make accounting a lot more exciting and accessible and interesting for for people among is an interesting thing about the 550 hour rule. The five years rule is that the the National Pipeline Advisory Group that the AICPA stood up to sort of look into this. Um, they went out and started talking to a bunch of colleges and discovered that a lot [00:29:00] of schools, they're thinking about moving to a three year model, right. Not just, you know, not a four year model, which was sort of what the 150 hour rule was built on. You know, sure, everyone gets a four year degree or not. Everyone, but everyone who's looking to be an accountant gets a four year degree. Um, we'll just add a fifth year. But now schools are looking at a three year, uh, degree, you know, moving from that, a lot of that's driven by COVID and so on.

Dan Hood: So this whole, uh, what what does it take to become an accountant, particularly? What does it take to become a CPA is going to change enormously when this moving us a little bit into accounting. Three [00:29:30] accounting 3.0. Uh, the educational experience of and the credentialing experience Of the account 3.0 in 10 years is going to look enormously different, just as it does. You know, it looks different now than it did in the 80s and 90s, right? That they didn't have 150 hour rule. They didn't have a computerized CPA exam. They didn't have their the shape of their exam was different. The types of questions and the number of sections and that sort of thing was very different. So all those things are changing and they will change again over the course of the next ten years. [00:30:00] I don't think the 150 hour rule, you know, will never see a point where everyone says 150 hour rule is gone, but we'll see a point where it sort of fades into irrelevance as the profession starts to focus more on on competencies. Right. Making sure that you're actually learned something in your college experience, as opposed to just having taken 150 hours worth of classes.

Doug Lewis: Yeah, no, that makes sense. You actually stole my transition into accounting 3.0. But that's okay. I had a really good one lined up, but it's fine.

Dan Hood: Oh, give it to us.

Doug Lewis: Come on. No. [00:30:30] You know what? No, you ruined it. You ruined it. So here we are now. We're in 3.0. The future. Now we're predicting, so we have no clue what's really going to happen. You brought it up a few times right now in the 2.0 world. Everyone's starting that shift to advisory, that most overused buzzword phrase you can possibly imagine that a lot of firms can't truly define what that is, or how to do it, or how to charge for it, but again, separate issue there. So account 3.0. Looking forward. Let's let's bump it out I don't know ten years [00:31:00] right. Let's get let's get crazy with it. Forget five years ten years out. What's an accountant gonna look like from your perspective?

Dan Hood: Dan that is an excellent question. Um, and obviously, this is all leaving aside the possibility that AI and the singularity approach and everything is changing. We're all just servants on the the AI mind grid. Um, actually, and.

Doug Lewis: I waited this long to tell you, Dan, but Emily is actually. She's an avatar. She doesn't exist.

Emily Madere: I am.

Doug Lewis: She doesn't exist.

Emily Madere: Yes. Oh, no.

Dan Hood: She exists. She's [00:31:30] just not human.

Doug Lewis: Well, sure.

Emily Madere: I'm here to take over the world. Yes.

Dan Hood: I, for one, welcome our artificial intelligence overlords. And I wish them well in trying to manage the.

Emily Madere: I will give them your best.

Dan Hood: Thank you. And I wish them well. Trying to manage the mess we've left behind. Um, but, uh, what are accountants looking.

Doug Lewis: Like ten years back?

Dan Hood: Exactly? Assuming there are accounts. Assuming. Assuming human society still exists. Um. You know, what are they? They're going to look like a lot. A lot of very different things that they're looking at. One, accounting firms are going to hire a lot fewer accountants. [00:32:00] They're going to hire a lot more experts in whatever industry they're focusing on or whatever service line they're focusing on. Right. So if they are, they're going to have a lot more. If you deal with car dealerships, you can have a lot more people in your team who've worked at car dealerships or maybe have engineering experience or. Um, not everybody's going to be accounting because they're simply not going to be enough accountants to fill all those roles. So you're going to be looking at a broader range of people who work at accounting firms who we wouldn't necessarily think of as accountants because they don't have maybe they don't have a, you know, a degree in accounting. They don't have the background [00:32:30] in it, but they understand it because they've probably been taught it at the firm. Right. The firm said, I can't teach you everything you need to know about environmental law or, uh, you know, measuring, um, carbon output. But if you come knowing that or having some background in that, I can teach you about how the accounting system that looks at that. Right. So that's I think we're going to find there's going to be a lot of people who aren't what we would think of as traditionally educated as accountants working at accounting firms.

Dan Hood: Um, they're [00:33:00] going to be doing a lot of different things. They will still be compliance work done, but I think a lot of that will be computerized to the point where, uh, most people at accounting firms don't even think about it's being done. It's just sort of handled in the background, often by artificial intelligence or just by, uh, a super, super highly developed, uh, automation. Uh, you know, RPA, you know, where it's it's it's so advanced, it reached the point where it's not artificially intelligent, but it just takes care of everything. You don't need to worry about it. Um, and then what they do is they look at that data and they look at the insights from that data, and then they [00:33:30] turn that into actionable advice. So I think you're gonna find a lot more accountants giving advice and being comfortable giving advice. That's a cultural issue that we don't really talk about. In the course of this move, from a heavy focus on compliance to a heavy focus on advisory. Is that, you know, a lot of people went into accounting, accounting because they were comfortable with compliance, right? That was the kind of work that they wanted to do or they were comfortable doing. We're going to find over the next ten years that the skill set and the cultural fit of accountants, of accounting firms brings in a lot of people who are much [00:34:00] more comfortable with an advisory focused kind of service.

Dan Hood: They're much more comfortable predicting the future. As we said, we don't want to predict the future. None of us really want to predict the future. Um, but if you're an accountant who's been focused on compliance, you really don't want to focus on the future because you're comfortable saying, this is what happened last quarter, but I can't tell you what's going to happen next quarter. That's going to change. You're going to find that a lot more people at accounting firms are comfortable with that and have been trained to be comfortable in that, because that's going to be an important focus of firms going forward. It's going to be about helping with decision making, helping people make sure [00:34:30] that their business or their their personal lives are successful and are headed. They're hitting the the goals that they want to hit. Um, I think you just throw out some other things. It's going to be different. It's going to be much more diverse. Uh, not just in terms of talent sets, but in terms of race and gender and a million other categories of diversity. Neurodiversity is going to be a big one. Um, there's just going to be it's going to be a very different group of people working in accounting firms doing a very different set of things.

Doug Lewis: So you brought up a couple different service lines that are starting [00:35:00] to be rolled out across across the profession, uh, different advisory positions, all this stuff. What's one big swing, Dan, that you don't really see any firms doing today that you think is going to be a big player in the accounting sector?

Dan Hood: I can't I can't say anything that I don't see firms doing right now. If I could, I would be doing it. I wouldn't be on this podcast. I'd be out starting an accounting firm to, to to capitalize. But I covered.

Doug Lewis: That. We covered that you can't you can't do the pluses and minuses. Well, we know this.

Dan Hood: Yeah, I'm terrible, but I could hire someone [00:35:30] who could. Well, actually, I probably couldn't because we just talked about it.

Emily Madere: You don't have to be an accountant. You can learn that.

Dan Hood: There you go. Exactly. And if I wait, you know, 2 or 3 years, the computers will do it for me. Um, I'm looking at you, Sage. Make sure this happens. Um, but no, I think, you know, what's, uh. The area that I think has the most potential is ESG. Um, and I know there are already firms in there, so I'm not I'm not breaking any ground here, but I think that the accounting profession should be getting in on the ground floor of this in a huge way. When you look at the potential for reporting in the seriousness with which this is [00:36:00] treated outside this country, and I think more and more in this country, we're going to find that that is going to create an appetite for services that that no one will ever be able to satisfy the reporting they're going to need to be doing, the companies are going to need to be doing for that is going to be so enormous that there's huge opportunities, and not just at test. I think one of the one of the, uh, I won't call it a mistake, but I think one of the things that the profession tends to focus on too much is the test aspect of ESG, right? The companies go out and get their carbon footprint measured [00:36:30] and then or their environmental impact or their social impact measured.

Dan Hood: And then accounts come in, obviously, and attest to it and say, yes, that's accurate, that that you can rely on this information. That's obviously a huge area for accountants. It's definitely part of their skill set. But I think just setting up the systems, setting up the reporting systems for those is huge. And there's not many people who are good at setting up reporting systems, right? Who's good at setting up a reporting system? Accounts. They've done it for finance. Yes. They haven't done it for all the stuff that goes on in, [00:37:00] like I said, measuring a carbon footprint or a social impact or that kind of stuff. But it's still about taking data, gathering, gathering data, making sense of it and turning it into usable information. This is a core competency of the accounting profession. And if they hire enough, you know, enough environmental engineers and environmental analysts and that sort of thing, they can figure out, you know, bring the expertise, the reporting expertise of their core accounting function, attach that to those other experts, and then turn that into a way to help every company in the world [00:37:30] figure out how to do this reporting, because they're all going to have to. And so.

Doug Lewis: Dan, by the way, ESG, a couple times we have this thing, we have this thing amongst the three hosts here. Only two today. Thank God. Um, where anytime one of us uses an acronym and doesn't clearly explain what that acronym is, it's just 50 bucks goes into a general pool. All right. And we're going to either raffle it off to a listener or we're going to do something crazy. I got a third, uh, our third host who isn't on this specific episode. He'll get a tattoo. I don't know, something [00:38:00] crazy. We'll figure something out. All right, so ESG, can you can you just explain to listeners what ESG is?

Dan Hood: So environmental, social and governance reporting. So it's it's about like I said the environmental is pretty obvious, right. It's are you polluting anything. How much groundwater do you use if you're a Coca-Cola bottler, how much fresh water is nearby for you and how much of it are you using? How much electricity do you use? Do you emit any pollution? What's your carbon footprint? What? What kind of materials are in your supply chain That sort of thing. Social, uh, social [00:38:30] and governance are a little bit more, uh, fuzzies. Fuzzy is a perfectly reasonable word, but because they're a little bit further behind. But social would be how are you on diversity issues? How do you impact the community around you? Right. Do you are you are you a Walmart who. And I'm throwing this out as an example. I'm not saying that Walmart does this because they will come to my house and kill me. Uh, but, you know, are you going in? Are you destroying small businesses? Right. Are you, um, changing the fabric of town? Are you putting too much pressure on your supply chain? That sort of thing? Um, there's [00:39:00] a bunch of other social issues you can go into, you know, in terms of, uh, your impact on on everything around you, on your employees and the policies you have, that sort of thing. And then governance is about how are you run, how transparent are you as a, as a company? Um, you know, how how much, how well do you how well do you obey laws is literally an interesting you would think that would be, uh, one that that wouldn't come into question much.

Dan Hood: But there's a lot of that, you know, noncompliance with rules and regulations is becoming an interesting issue for accountants [00:39:30] to look at among their clients, whether they need to report on it. That's a big issue these days. So governance is all those sorts of aspects of literally how you run your company and how you, um, uh, comply with all the important laws and that sort of thing. Um, I'm way oversimplifying that, right? These are huge, huge, huge areas. Um, and as I said, social governance remain to be explored a little bit. Um, ESG environmental stuff is the stuff that's really going on right now. We know, you know, the SEC was just working on a on a regulation. There's regulations all across Europe, [00:40:00] uh, and being promulgated around the world, there's a whole new standard setting board around sustainability that's finally combined. But it was 3 to 400 different standard setting boards and framework established. And they've been finally coordinated into a single or potentially single standard setter. I think we're going to see a lot more of of those rules and regulations come out. And that's accountants. Time to shine.

Doug Lewis: I like I like what you said there. Accountants are the ones who just make things boring. I love that. Oh, yeah. They'll put [00:40:30] a formula behind it. They'll take it. They'll take a service. They'll make it terrible. No, no, I love that. Um, so we.

Dan Hood: To be clear, I didn't say that. He said that, uh, he inferred that from what I was saying. That's.

Doug Lewis: So we we've shifted from accountants. Recorded. It is recorded? Yes, yes, but that's okay.

Dan Hood: No denying.

Doug Lewis: We'll we'll we'll have to bleep out your dark view on Walmart leadership. Um, but in the end that was a good one. I like that one. Uh, in the interim we hit that uh, 1.02.03.0. So it sounds like accountant 3.0 is going to be an AI [00:41:00] avatar that basically does ESG reporting, if I'm not mistaken. That's what I heard from you.

Dan Hood: That's. Yeah.

Dan Hood: Well, also that's it.

Doug Lewis: Um, with also not yes and no one who actually. And they don't.

Emily Madere: Wear a suit. It won't wear a suit.

Dan Hood: They're probably not wearing any clothes at all.

Doug Lewis: No, no. That checks out. No. Probably for the better, unless you're me. Uh, but, Dan, you know that we've eaten up enough of your time. We've wasted enough of everyone's who's listening this time today. Uh, we I do appreciate you coming on. I usually end these things with a horrible dad joke. [00:41:30] All right, so I'm gonna. I'm gonna play one on you. Uh, boy, I.

Emily Madere: Am really bad at these.

Doug Lewis: Yes, well. It's okay. You know what? You don't have to answer today. That's why we have.

Dan Hood: That's nothing to feel bad about. That's actually a plus for you. That's a.

Doug Lewis: So, Dan, where do sheep take vacations?

Dan Hood: Uh, I think so many things I want. I want to say hummus, but, um, uh, you got a better one than I've got. No.

Doug Lewis: You nailed it on the head, my friend. The first one to get it. [00:42:00] The Bahamas. Oh, my Lord, I loved it. You're the first one to actually get it. That's perfect. Oh, my gosh, congratulations. You got that, dad look to you.

Dan Hood: I don't get.

Doug Lewis: That, dad.

Dan Hood: Look about me. I'm kind of a I'm a little, uh. I'm a little ashamed.

Doug Lewis: No, but the, uh. Can we get one more? One more sheep out of you?

Dan Hood: Oh, that's more of a goat.

Doug Lewis: I don't know what that was. It's not like you just had a bit of a stroke there. But what are you going to do? What are you going to do, my friend? I [00:42:30] appreciate your insight on everything across the board. Um, it's. You've been around it for a while now. A lot of changes happening. Uh, the education requirements moving forward will be really interesting to see how that plays out with everything. Uh, appreciate you stopping by, my friend. And I hope to have you back before too much longer, because everything is changing so quick that we'll do this again in a couple months, and it'll be a wildly different conversation, I imagine.

Dan Hood: Yeah, no, literally everything we've said is outdated as soon as this podcast is done. It's all changed.

Doug Lewis: So yes. But nothing. [00:43:00] Thank you for having me. Nothing from your publication is ever outdated. Let's. Let's be clear about that.

Dan Hood: No, it just becomes classic.

Doug Lewis: Yes. Evergreen. Evergreen? Absolutely. Yeah. Well, appreciate you coming on, my friend. And I look forward to connecting with you soon. Take care. You both.