Fullstendig transkripsjon av Google Blames Accounting Layoffs on AI

the sponsored results and all that stuff. So, yeah, um, Google's in trouble. The fact that they are cutting finance A people and accounting people in order to invest in AI, I think is not a good sign. But let's totally change subjects. And I don't even know how to transition to this. I guess I'm going to call this segment tweet of the week. Okay. Uh. I don't use Twitter a whole lot these days, but I did spot this tweet by Josh Youngblood E on Twitter and he wins. Josh Youngblood. That's his handle. He said, I didn't work over 40 hours a week. The entire tax season revenue was up from last year. A reminder you don't have to kill yourself to make a decent living. I love that because there's there's all these people working themselves to death on tax Twitter. And here's a guy who's figured it out. You don't have to work that much now in the comments. Of course, he got a lot of engagement on this tweet. Chris asked, curious what decent living means. I do feel like I have to kill myself for that standard, but I also need to add leverage to make that equation change. Blake Oliver: [00:06:27] And Josh said I guess decent would be subjective. I live in a low cost of living area, and that's my argument to folks who want to have a decent standard of living, especially if you do tax is go live somewhere that's less expensive. If you relocate from a high cost area to a low cost area, you can cut your living expenses by half. You can work remotely, you know, and, um, you can enjoy a nice standard living. And the other thing is too is like, redefine what you actually need, you know, do you need that new car every few years? Do you need to have a car payment? That's like a mortgage payment? I don't have any car payments. You know, my my last car was $25,000, right? I paid cash for it. This is this is not anything new to people who, like, do personal financial planning kind of stuff, right? That's the what. Not having a car loan is the the favorite thing all the influencers like to say. So you know, have a have a inexpensive mortgage or rent, don't have a car payment, live in a low cost area. You can live a good life. You don't have to kill yourself. David Leary: [00:07:29] Yeah, and I'm not sure it's about chasing the money. I think it's this. The ability to say no, right? And you don't have to help everybody, even though because I think that's nature. Everybody wants to say yes to every client because you want to help people, but all you're doing is killing yourself. It's just too much work. And. Blake Oliver: [00:07:45] Now while we're at it, I saw some other tweets that I really liked. Uh, Kyle Bauman, CPA, said, quote, unlimited PTO, quote, only 2100 hours. And he posted a recruiter message that said Kyle. I spent time on your profile today. Wow. I'm reaching out as I'm hiring a remote tax senior manager for a Minnesota based client of mine. They have unlimited PTO, require only 2100 hours per year and have a clear path to partner. This could be a post busy season start. Could I share more? I love that only 2100 hours required per year. Now, that's not going to be all billable time, but that's the time you're required to put on your time sheet. But isn't that crazy that like, why not? Why make it 2100 hours? Why not at least make it, you know, 2080? David Leary: [00:08:37] But but I mean, but. Blake Oliver: [00:08:39] Does that include PTO? They're probably expecting you to work that. And then, you know, if you want to take PTO, you got to work extra. David Leary: [00:08:46] But I imagine if you're sending this out as a recruiter, there's people working 2500, 20, 600, 3200 hours. So like a message like that seems like a deal, right? Blake Oliver: [00:08:57] I guess so. David Leary: [00:08:59] It must work. They wouldn't. He wouldn't. There's no other benefits to the job except for that. So it must be working. He's he's targeting the people they want. He or she here's. Blake Oliver: [00:09:07] Here's another tweet. This is not related to hours worked. But this is related to the hours it takes to become a CPA. I've been saving this one for a while. Going concern posted this comment from their blog by Richard Rosenbaum, who said, I've been a practicing CPA since 1975 and I'm a former big eight audit partner. All of this discussion about 150 is based on a lie. When the 150 rule was adopted, the real discussion was about too many graduates in accounting and the need to raise obstacles to keep the value of being a CPA from being diminished. Classic restraint of trade. Everything else was justification. The AICPA, FASB, slash Gasb is a corrupt organization unable to foresee or accept the consequences of its actions. David Leary: [00:09:53] Wow. And where was that posted at? Blake Oliver: [00:09:55] That was posted on the Going Concern website. Going concern.com. As a comment on the article, we get to the bottom of why the 150 hour rule doesn't require specific courses. Wow. Which was back in January, but I've been saving that comment for a while. Hey, welcome everyone who's joined us on the live stream today. Great to see you. Boring accountant splash money. Ismail Ismail says nice podcast following from IL. I assume that's Illinois. Uh, as a northwestern grad, uh, thanks for joining us from Illinois, the great state. Andrew says unlimited PTO almost never works out in the employees favor. And that is true. Uh, companies that implement unlimited PTO policies actually see, on average, their employees take less vacation, and the companies don't have to pay it out when employees leave for the states that require that. David Leary: [00:10:48] And there's weird guilt or they they their social structures in place, that makes it really hard to take the time off. Yeah, yeah. Blake Oliver: [00:10:56] That's right. The the only way that it makes sense to do unlimited PTO is if you force employees to take a minimum amount of PTO, and then it works because I think there's a there's a there is definitely

a benefit to the employees if you create a culture where people can take unlimited PTO. But yeah, I personally wouldn't like that. I would rather know what is expected of me and be able to take it. But the fact is that even when employees have regular PTO that accrues, they don't use it all. Most Americans don't use all their PTO, which is kind of insane to me, but I guess I'm just one of those, I don't know, maybe I'm a hippie now or something. I'm a I'm a dropout, right? I've I've escaped the corporate, uh, hierarchy, the rat race. And I couldn't be happier. And I hope everybody else does as well, because it's just not worth it. David Leary: [00:11:44] Well, you got to play your cards right, because sometimes if you have sick leave and paid PTO when you quit the company, you don't get to cash out and take your sick leave with you. So you so you kind of use those up first and then you save up that PTO. Blake Oliver: [00:11:56] So our live stream viewer, Good Times says so. Is it immoral, unethical for universities to continue to charge students money in exchange for accounting degrees when we can see they will be useless in about 5 to 10 years? Okay, I want to be clear. Let me let me make sure this is clear. I do not think accounting degrees are useless. I actually think they are incredibly valuable. But it depends where you get it and how much you pay for it. I think it is unethical for colleges to charge students a lot of money for degrees. If they aren't able to get those students good jobs. Um, you really have to look at like, where do where do these students go after they graduate? And there's a huge spectrum of colleges and universities, and some do a great job and some do a terrible job. I think that you don't need to go get a necessarily get a traditional college education anymore to be successful. And I've got some stories about that. Uh, you know, maybe the future of our profession is not just dropping the 150 hour rule, which seems to me like it will be inevitable. It might be that we drop the college degree requirement for accounting positions that don't require the CPA. There was a story on bcg.com. This is uh, Boston Consulting Group and the article is called Skills based hiring can shred the paper ceiling. And according to research, employees without degrees perform as well as those with degrees, and they tend to stay in their jobs longer and be more engaged. But most job postings still require degrees. So why is that? I think it's a holdover from a time when the college degree was a filter for hiring managers. But if you can hire for skills. You don't need to filter people out with a college degree requirement. That's elitist. David Leary: [00:13:50] I think I on NPR. It was either Planet Money or the indicator. One of them, they recently talked about this, and a lot of corporations are pulling down the degree requirement off the actual application, but their hiring practices aren't matching that at all, like they're only hiring the people with experience and with the actual degree. So. Well, and it's almost like lip service to it, right? Yeah. Blake Oliver: [00:14:14] Well, it's the classic problem where people like people who are like them. This is why unless you actively try to make, say, a team more diverse if if everybody on the team is a white male. And you bring in candidates. Who are they more likely to pick? Yeah, to join them. It's somebody who looks like them. Who talks like them, who has the same life experience as them. Right? This is just how people are. They like people who are like them. And there's nothing wrong with that. That's just human nature. But if you want to change the organization, you got to do something to to change the status quo, right? 62% of Americans lack a college degree. So if everyone in your organization or on the team has a college degree. They might say, well, we can't have somebody without one. But the evidence is that you can, as long as they have the skills. Right. So 62% of Americans don't have a college degree. That's a huge untapped pool of labor in this country. So here we are talking about how we have a talent crisis in accounting, but we are excluding people without degrees from almost every single job posting. And then there's the job postings that require the CPA and require the Big Four experience, and you're narrowing your pool even further. So we're doing this to ourselves, right? There's hundreds of millions of Americans out there, and they could be easily upskilled and put into great accounting jobs. And for those Americans, a job that pays 50, 60, $70,000 a year is a great job because the average American makes something like $40,000 a year. So these are good middle class jobs and we're just looking at it wrong. David Leary: [00:15:50] And that's where I can, um. Accent those people's skills and help them go to that next level they won't ever be. You know, a true expert in some field or some categories always probably going to be better than the eye. But you could have somebody with just enough skills that's good enough and paired up with an eye. Buddy, I don't know lack of better terms and you're going to upskill that person overall, right of what the work they can do. Blake Oliver: [00:16:14] And that's what studies about eye show, is that the biggest lift is people who have the least skill. So the reason that a lot of senior people and really experienced people and experts are disappointed with AI is that they are already the best at what they do, and the AI can't compare yet. Not even close. My wife is a professional writer. When I show her articles that have been written by Claude, she looks at them and she's like, well, you know, this is not as good as what I would have done. And then she corrects it. And yes, it is way better when her work is far better. She's been writing for. Her whole life. But for me, not being a professional writer. This tool makes me so much faster, so much better. It allows

me to create so much more content. It's still mine. I'm just using the tool to write faster to get my ideas out onto paper in a way I couldn't before. So it upskills me as a mediocre writer and makes me far, far more prolific and better. So if you really want to get the benefits of AI in your organization, you shouldn't give it to just senior people. You should give it to the junior people. But this isn't what's happening. According to a story in CFO. Com, senior leaders are nearly twice as likely to receive AI resources as junior staff, but it should be the other way around. David Leary: [00:17:43] Yeah, 100%. There's all these studies that already are already out there that go against that. Of course accounting would mess this up like of course. Blake Oliver: [00:17:51] Yeah. So. It and to put some numbers on it. A survey by Washington State University found that 68% of senior leaders have received AI related resources or information from their organizations, compared to only 36% of junior or lower level employees. And those are the ones who need it the most. David Leary: [00:18:10] I found another benefit for people that didn't have to do the 150 hours. So if you're a CPA and you're a CPA pre 150, you could argue that that was kind of a benefit. You got a gift because people that came after that had to do the extra year of school right. Yeah. But the vast majority of the people did not have to do the 150. The vast majority are eligible for retirement. Correct. Well, now there's a new benefit. I don't know if you saw this in the state of Florida, they've created a new status for CPAs called the retired CPA. And if you're a licensed CPA who are 65 years or older, you can apply starting July 1st to place your license into retired status. So that way you could have a business card, Blake, or your LinkedIn profile could say retired CPA. So that way you could still advise on a board of directors. You could still do things in the community and still brag that you're a CPA. You're just going to have an official retired title on it. Blake Oliver: [00:19:09] This is what? The society in Florida is focused on. Instead of working to improve the situation for accountants entering the profession, instead of working to reduce barriers that don't add value, here they are creating a retired CPA status. This serves web purpose. David Leary: [00:19:32] Pushing legislation through to get this approved, voted on and signed by the governor. Blake Oliver: [00:19:37] And the excuse for not removing the 150 hour rule for CPAs is that it's too hard to pass legislation. Well, obviously it wasn't that difficult to get this weird status approved. What's the point of this? Like, I apparently okay, so Ficpa president and CEO Shelly Ware and Chief External Affairs Officer Jason Harrell said it allows retired CPAs to maintain their professional identity while continuing to contribute to their communities. So I guess it wasn't good enough to be able to say CPA inactive,

because that's what you can always do. If you if you let your CPA license lapse, you can just call yourself an inactive CPA. David Leary: [00:20:17] I mean, I say, is this a bigger retirement play by the state of Florida? So if you're a CPA and you're going to retire and you're deciding where you want to live at, is this more attractive to you? Like, maybe we'll live in Florida. They got this title I could have. Blake Oliver: [00:20:33] I love the fact that Florida is the state that started the whole 150 hour rule, and then this is the this is their this is what they're doing. Great pandering to their retired CPA audience. I suppose maybe the only people who are still in the state society are retired at this point. When I went to the local chapter meeting in LA, in my neighborhood for CPAs at the, you know, the Cal CPA kind of thing, it was all it was all everybody had white hair. It was all dudes with white hair. That was it. David Leary: [00:21:09] We should arrange like an informal meetup. Like all listeners of the accounting podcast, go to your local state society meeting the next one and meet somebody that's younger. Like, hopefully we'll have, you know, a good mix of people. Blake Oliver: [00:21:21] So I have some listener mail related to this discussion about 150, because originally the 150 rule was created to reduce competition, to reduce the supply of CPAs when there were too many. And the idea was. It'll increase compensation for the CPAs who are left. And this is actually one of the arguments that you see on social media for maintaining the current status quo is that it's good for us current CPAs to have less competition because it'll raise salaries, but it hasn't. You've seen over the last 20 years or longer that salaries have stagnated and that they haven't gone up. And one of our listeners wrote in about that. John said, everyone constantly talks about the talent shortage and how to address keeping accountants past 3 to 5 years and increasing new graduates to sit for the CPA exam. 75% of CPAs were past retirement age in 2020, and while I am sure every single one of those will refuse to retire and die while working for baffling reasons, shouldn't this cause a massive increase in demand for remaining CPAs and significantly drive up wages? Spoiler it didn't. I would argue that wages adjusted for inflation are pretty stagnant, except at the 0 to 3 year experience levels. Based on my anecdotal experience of watching the market, I am consistently seeing job postings that don't bother to reflect inflation past 2020 and include salaries I would have considered market ten years ago. Obviously anecdotal ain't great, which is why I'm suggesting the topic. If you all have actual data, the math just doesn't make sense in my head. Blake Oliver: [00:22:54] And the only answer I can come up with is actually the market doesn't value CPAs appropriately at all. I've discussed this with multiple finance and accounting recruiters, and their answer

is pretty much shrug no, they aren't seeing wages rise, just something that has been rolling around in my head. Thanks, John. John, what you are experiencing anecdotally is true. According to the data that I've seen and the reports I've seen, salaries have stagnated when you adjust for inflation. And the question is why? If the supply is going down, you would expect the price to go up. That's basic economics. It doesn't. And I have a theory as to why it doesn't, which ties into our story and our headline for this episode. Google is offshoring, Accounting and Finance to Mexico and India to save money. This is what every company does when they need to save money. They send the jobs overseas where they can be done for a two thirds a half, or even less of the cost to do it here. So offshoring is what is limiting compensation from going up here, right? Because every time compensation goes up. A firm says. Or a department says we'll just offshore the labor. We'll take the jobs elsewhere. So unless something's going to stop them from doing that, that'll just keep happening. And that keeps a lid on compensation. So that's why restricting the supply here won't help. It won't do anything. It just sends the jobs overseas. David Leary: [00:24:24] It's the same size pie to some extent. If you raise salaries for some people in it, that means salaries and the other part of the pie have to go down. So the only solution to that is outsource or offshore. Blake Oliver: [00:24:37] And and of course the other solution and the other release valve for this problem, for the shortage the need is technology. So if you had somebody that did a particular function and now you can buy an app that does it for a fraction of their salary for a few thousand dollars a year, you're going to do that. I worked at a company that did that focused. In most accounting and finance departments of a certain size. You have a person whose job is just to manage the checklist for the financial close. Okay, well, that's a really inefficient way to manage a checklist with technology and all Floqast is is a really fancy financial close checklist and people can manage it themselves. You no longer have to have somebody administering that. The team can do it and collaborate on it and save a bunch of time. Of course there's other efficiencies, right? But when you buy software like that, a lot of times you're looking at the cost of hiring a person to do that function. And if you can do if you can use software to do it, you'll do that. So offshoring and tech, that's what's keeping salaries lower. And that's why there's no point in maintaining the 150 hour rule requirement, because it's not going to keep salaries going up. It's just going to send them offshore, send the jobs offshore. David Leary: [00:25:53] It's it's interesting to frame it that way, like you said, like as a Pi, right. There's only so much because it ties into I don't know if you have more about the offshoring or the salaries, but, um, do you remember we were talking about Boston and the commercial taxes? Yeah. How Boston. Blake Oliver: [00:26:10] Boston gets a lot of its tax revenue from real estate, commercial real estate taxes, a crazy. David Leary: [00:26:16] Proportion compared to everybody else. It was off the chart was off the top. We talked about this about four, 4 or 5 weeks ago or so. Blake Oliver: [00:26:23] And because of remote work and the collapse of commercial real estate rents and prices, well, rents actually haven't gone down. I have a story about that. But anyway, that's really screwing over the city of Boston. Yeah. David Leary: [00:26:33] And so they've introduced a they're mulling a tax rate hike on commercial because again it's a Pi. Right. And the only way to keep the pie, you either have to raise it on the residential people the taxes or commercial. So yeah I'm trying to like follow the real logic on this because in theory if. There's already no demand for office space, and people are essentially paying on a note on a building they own with no tenants in it. And now the property taxes are going to go up. This ties back to your theory about these banks are pretty exposed. Yeah, because somebody's going to say, forget it. Let's let go of the whole property. Why am I going to pay more property taxes? It feels like it's not well thought out. Um, by the city of Boston. Now, they said they modeled this plan, though, after what happened to two decades ago when the.com bubble burst. So the.com bubble burst, but then everything recovered. There's a bunch of vacancies, apparently. Then the difference is I don't think these people are coming back to the office. I mean, we live in this new world of remote work. Yeah, no, it's not going to recover. So no, I don't I don't know what City of Boston is going to do long term. This this their math is not going to math out soon. Blake Oliver: [00:27:49] They're going to have to change how they tax. They're going to have to tax in some other way. This is the problem with any jurisdiction that has like a they rely on one type of tax for most of their revenue. It's very dangerous. It's like keeping all your money in one bank account with one bank. Right. It's got to diversify your risk as a taxing authority or as a government and have lots of different sources of revenue. And also when you have small tax rates on all sorts of different transactions. You reduce fraud because there's less incentive to do the work to evade taxes. Right. If I'm only paying a few percent here and there on different things, am I going to really take the effort to like, you know, send money under the table? David Leary: [00:28:34] You probably collect more taxes overall too, because it's harder for people to keep track of, you know, they're getting it's like your subscriptions. You open your bank account like I'm paying $600 a month on $5 subscriptions, right to things. It's a way to like, really take more revenue. Blake Oliver:

[00:28:48] The best is broad, broad base, lower tax rates. And that's why when you try to raise taxes on millionaires and billionaires, it doesn't work because. Once you go over, say, the 20% mark. If people are willing to spend a lot of money to hire expensive accountants and lawyers to help them, and lobbyists to help them create and exploit loopholes. So when taxes are 50, 60, 70, 80% on these folks, which they are in some countries, the people either leave or they figure out how to get around it. So there's just really no point. It's a, it's a it's a losing battle because these people have the resources to to fight you and you'll never be able to keep up with them. These are the these are the most successful, most powerful and smartest people in the world. Yeah, right. One or more of of those three things. So of the best accountants. And they have the best accountants, they have the best lawyers. So it's just a stupid thing to do. It just hurts you as a government. But it's popular, right? Because surveys show that the majority of Americans support taxing the rich. So it's not the right thing to do. It doesn't work, but it's politically popular and that's why it happens. And unfortunately, that's kind of the story of human history, is that a lot of really stupid things happen simply because, uh, it's just human nature, right? And politicians will follow that to get power. You mentioned office rents with your story about Boston, and I've got a story that explains why office rents haven't come down that much. Wall Street Journal had a story explaining this. So. Landlords are really reluctant to reduce rents because the appraised value of the buildings is often tied to the rents that they collect. And these appraised values are tied to their financing by the banks. So if the appraised value drops, they may be in violation of loan covenants. They may not be able to refinance because the calculation is based on the average rent they can charge. So they're keeping the rents high. Even though vacancy is high. It's a math thing. David Leary: [00:31:12] Because they're trying to avoid the bank requesting, uh, a lump sum difference payment or anything like that. Blake Oliver: [00:31:17] Yeah, like the bank might not refi them, and then the landlord does not have the capital, and they would have to give up the keys, right? The bank would take ownership. Now, the banks don't want to do this either. So everyone is kicking the can down the road. And the banks are accepting these valuations based on this rent calculation, even though there's all this vacancy and just hoping and praying that interest rates come down so that and people come back to the office so that these buildings will be actually worth what they are worth on paper. And of course, the auditors of these banks aren't challenging any of this stuff. Right? So until well, until it becomes a real problem, like you saw with some of these banks that have had to say we had internal controls problems. Right. And um, so, so there's this big hidden, you know, problem on these midsize bank, uh, or regional bank balance sheets. So the landlords are justifying the high rents by offering all these incentives. Expensive interior build outs, months of free occupancy. But vacancy rates continue to rise as these long term leases renew and businesses decide to downsize or just get rid of their offices completely. Businesses now occupy 200,000,000ft² less than they did before the 2020 recession, with an additional 150,000,000ft² of negative absorption expected over the next two years. Blake Oliver: [00:32:38] So think about that. 200 million less already than 2020 and 150 million more that are going to be empty. Over the next two years. The office delinquency rate on mortgages converted into securities. These commercial uh, CMBS commercial mortgage backed securities. It's risen to 6.63%, more than triple the rate in January of 2020. And the value of office buildings in central business districts has fallen close to 41% from July 2022, 41%. So what's going to happen is these 70% of current office leases that were signed before the pandemic are going to come up for renewal. Tenants will benefit from the softened market, and eventually rents are going to collapse. So the high rents that you're seeing now are not sustainable. So just don't sign a lease, is my advice. Wait. And also if you have capital, uh, wait for these commercial real estate valuations to plummet and collapse. If there's going to be a recession that's going to cause the recession, because that will put the regional banks into crisis mode, potentially, and then that will reduce lending, which will then create a recessionary cycle. David Leary: [00:33:57] I try to get copilot, but it over answered me, so I don't know what the real answer is, but I think there's a term when the market is illogical versus what logically should be there for supply and demand, right? And in theory, supply and demand works perfect every time except for when it doesn't. Right. And this is that case or space. Blake Oliver: [00:34:17] Turkey says extend and pretend. That's the motto that banks right now extend and pretend. Splash money says gaining the perspective via the narrative provided from you guys regarding the imbalance of how supply and demand goes pertaining to the accounting industry puts me in a dismayed state of mind. Okay, let's take a step back and relax a bit here, guys. Um, it does suck that salaries are stagnant for most accountants, most CPAs, but from what I have observed among my peer group of. 30 to 50 year old firm owners, small firm owners. The opportunities are fantastic, but you have to be willing to step outside of the traditional career path and the traditional role, and perhaps jump out on your own and create your own firm, whether that's doing virtual CFO work, virtual controller work, doing taxes, whatever it is, creating a subscription based firm, um, you can actually

benefit from this imbalance because offshoring has a lot of negative consequences, especially for mid-sized businesses and smaller businesses that aren't set up to do it right. So you can use people here in the United States who are in lower cost areas, who are willing to accept a slightly lower salary, and you can organize all of their work and provide all of these services to businesses with either teams here in the US or teams here in the US and offshore. And I am seeing firms do this, firms from one person here in the US with a bunch of people offshore to firms with hundreds of people here in the US with a team that's offshore. And, um, you can just make a bundle of money doing that. Seriously, there's so much demand for help because these small businesses, even mid-sized businesses, cannot hire bookkeepers, accountants, controllers, even CFOs. David Leary: [00:36:09] I saw a thread and the demand is there. And that's why this is possible to to carve your own paths. I saw a tweet that eventually got picked up by Tax Twitter, and it might have been a real estate person. Somebody discovered that their, um, accountant was turning away clients. And so they kind of asked the question like, is this true everywhere? Like what happened to accountants? Like, why, why? And then other people on tax Twitter, like, yeah, they're picking up clients who got denied by 17 CPA firms before they were picked up by the client. There is demand there for your services. You just have to offer them in a different model and you can make money like it. Just the traditional path of what used to work for the last 30 years is really broken. And that's where I think Blake's coming from on that part of the. Blake Oliver: [00:36:54] That is where I'm coming from. And look, you know, for those of you who don't know my background, I started a remote firm in 2010. I was not a CPA. I had not even completed my accounting credits. I was a career changer. All I did was use technology, work remotely and do good online marketing. And I crushed my competition. I won all these great deals, and it was because the local firms in LA were charging like 80, 90 bucks an hour to do really crappy bookkeeping work. Like literally one of my clients who came to me, he was asked to print out his bank statements and then write down next to each line what he had, like the the he was. They were asking him to code the transactions using their their chart of accounts. So he had the chart of accounts with the three digit codes, and he had his bank statement. He was required to go and put on the numbers and then fax that to the bookkeeper, who would enter that into QuickBooks. That was my competition, and I honestly, I think that's probably still the competition. David Leary: [00:37:57] I'm sure I'm sure it still exists. Yeah, right. Blake Oliver: [00:37:59] So, you know, I could come in. Oh, and they were charging him 80 or 90 bucks to do this. This was a regional firm. Anyway, um, you know, it's not that hard to do better. It really isn't. You just got to be willing to learn and adapt and do things in a different way. So. David Leary: [00:38:15] You know who's doing better? The IRS, the IRS released their post tax season updates and they're doing great. Like they really are truly improving. Uh, and I'll highlight some of these improvements that are, per the commissioner, Danny Werfel. They have these walk in sites which I didn't know existed. Um, they assisted 170,000 more taxpayers in person than they did a year ago, which is pretty good for in-person. Um, 75 more million visits than last year to the IRS website. Uh, hitting almost 500 million visits. So it's 18% increase, whereas my refund is about over half of those. Right. It's 275 million just people looking for their refund, which really probably means there's an opportunity there, right? From a marketing perspective, they could utilize that better call centers because that was the big gripe, right. Call centers. Um, they've answered, uh, a million more taxpayer calls. So 16% increase and 3 million more million calls than they did in 2022. So they even increased from the previous year to two years ago. And then, um, then 88% service level on the main lines, which is a five fold increase over 2022. Um, instead of a 27 minute wait in 2022, they answered on calls on average of just three minutes this year. Blake Oliver: [00:39:33] That's great. David Leary: [00:39:34] Huge huge huge huge. And they've added this thing called a call back option. Are you familiar with what that is? Blake Oliver: [00:39:40] I love call back options. David Leary: [00:39:42] So they've implemented that. It's available on 97% of the IRS phone lines now. So I want. Blake Oliver: [00:39:48] To make sure we're talking about the same thing. That's where I call into a customer support number. And they say you can either wait on hold and it's going to take this long, or we'll call you back at a certain time. And exactly, you just have to pick up the phone. David Leary: [00:39:59] And they called back 4 million taxpayers this season. So 4 million people chose to opt in to that double from a year ago. And it probably saved. You're going to love this because I know you always you hate time and measuring time and counting time, but it saved 1.4 million hours of wait time on hold. That's that's great. That's commendable. Yeah. And then they have an Iris chatbot that's on the Iris gov pages. And that had 832,000 uses. So these are all great. Amazing improvements by the IRS. Like we should celebrate this. Blake Oliver: [00:40:33] When you want something that's really exciting. David, did I tell you this? I have a source. I have a source that is, uh, at Deloitte on the team assigned to modernize the IRS master file. So Deloitte has a contract with the IRS to take that master file system, which is built on technology from the 60s, and they are going to put it into a cloud based database. And that is the first thing

that needs to happen to enable all of the online portal. Stuff that needs to happen, so that tax pros and taxpayers don't have to call or fax and can simply log in to a secure portal and file taxes. Converse with IRS agents, all that stuff that we do on paper. Now, it can all be done online, but they got to get this master file system into a cloud database and it's happening. So that's really exciting. Hopefully Deloitte doesn't screw this one up. David Leary: [00:41:33] Well, and how long is this going to take? Because, uh, we're also, uh, was being grilled by a Senate committee because he's asking for more funding for the IRS. Mhm. He's asking for 104 billion more dollars. And what's driving this is it's over ten years. It's about a $10 billion a year increase. And it's focused on the they call it the base budget. So the current base budget is probably maybe 14.3 billion a year, not 100% correct on that. And it hasn't changed since about 2010, but based on how many taxpayers they have to serve today, because you have the gig workers and all these extra requirements, and thank goodness they didn't do the, uh, $600 1099. Right? They cannot keep up with the work based on the current budget. And remember, also during this time, audits on large corporations fell 50%, audits on the wealthy fell 70%. The tax gap. So just in 2020, um, taxes owed versus taxes paid $668 billion. They can't even go get this revenue. And basically in order for the tax system to grow with the way the market pressures are growing on it, they need more money. Um, and what's driving this is these interesting projections they have with the current budget in 2026, the service levels are going to drop. They just can't maintain them. And then in 2028, 2029, they won't be able to maintain technology. And it's like a cliff. So this whole back end new system and all that is great. But you know that won't be done for 15 years. Right. So the they they need this money. But of course it's the typical rhetoric, right? Democrats. Well if the funding is not there, the rich people won't have to pay taxes. And then the Republicans are like, we just gave you 80 billion. Why are you still asking for more typical rhetoric? But there's a point where you could see this tipping off. If the tax demands on the system are greater than they can handle or handle volume wise. Yeah. Blake Oliver: [00:43:32] Well, I'm encouraged by this news. Uh, I do have a little bad news about the IRS, though, David. According to a report by the Treasury inspector general for tax Administration. Hundreds of former IRS employees and contractors retained access to at least one sensitive IRS computer system after their employment ended. David Leary: [00:43:53] Hundreds. Blake Oliver: [00:43:54] Yes. This investigation was prompted by a 2021 leak of billionaires tax returns traced back to an external contractor. Access to sensitive systems is granted through the Business Entitlement Access Request System bears application with no distinction between employees and contractors. There are over 91,000 users in this system, which includes over 5000 contractors from 187 companies who are authorized to access one or more of the 276 sensitive systems. So this is a this is a complex. System here just for managing access to different systems. Well, 279 users in that system had been separated from the IRS, still had access to at least one IRS sensitive system as of July 2023. Now, that doesn't mean they could actually get in because they didn't have access to the IRS network. But if they could get on the IRS network, they could. David Leary: [00:44:47] Like their login still worked. Blake Oliver: [00:44:48] They could theoretically log in. Yeah. David Leary: [00:44:50] If they were compromised. Blake Oliver: [00:44:51] Yeah. Um. Now this is a problem that everybody has in a company. Like I just was in a system and I realized somebody who's not with us anymore still had access to it. And like, it's just it's so hard to manage. So I guess actually, if it's only 279 out of 91,000, that's actually not terrible. But it's still you want it to be zero for a system like the IRS. David Leary: [00:45:16] Yeah. And it's actually the fact that they're forthcoming about that. It's good. Blake Oliver: [00:45:21] Well, only because their internal auditor flagged it. David Leary: [00:45:23] Okay. Blake Oliver: [00:45:24] Right. David Leary: [00:45:25] You can still bury that stuff. It's an internal auditor. You could still bury the story on that. Blake Oliver: [00:45:30] Oh, man. Where do we go from here? I want to get to some more listener mail. David. David Leary: [00:45:36] As you're pulling that up, go ahead. And I'll just. I noticed the IRS is still getting 20,000 IRC claims a week. Blake Oliver: [00:45:43] Yeah, I saw that. David Leary: [00:45:44] Stopped it. That's crazy. The numbers are crazy. Blake Oliver: [00:45:46] But the question, are they processing these claims? They're taking a really long time to do it. Right? I think that's the thing. So yeah, it's crazy. The claims are still coming in. Um. Anyway, here's an email from Eric. This is in regard to the get Rich doing bad audits episode. I don't want this to come off the wrong way and only wanted to raise a thought I don't believe was discussed. Did you think about how it was ironic that the allegedly fraudulent Spac, ferm bauges, seemed to use mostly offshore accountants, and the main sponsor of this episode was a company that enables finding such a labor force. If I remember correctly, one of the AI companies you mentioned did the same thing. I don't know if I have a point to this other than that it was an interesting through line. Thanks, Eric. So I think that's funny. I didn't I didn't realize that our sponsor on that episode was an offshore company. David Leary: [00:46:33] Like our sponsorship. And what comes out of our mouths, talk about the news are like so church and state separated, like you

don't even know who the sponsors are. I don't even. Blake Oliver: [00:46:43] Know who the sponsors are until the episode comes out. David Leary: [00:46:45] And usually I don't know until I have to get my ducks in order for the episode after we record it. But yeah, it's it's unrelated. Purely coincidental. Blake Oliver: [00:46:54] Well, okay. And in their defense of the offshoring companies, I would say this you can do offshoring and do great quality work. You can do offshoring and do terrible work. It just enables more of whatever you're doing. So if you're doing really crappy audits, like BF Borges was where they failed 29 out of 30 PCAOB inspections over three years, you can offshore the work and do really terrible work very cheaply. So it's not that offshoring is bad, it's just that it enables the bad actors even more and enables them to make even more money from doing shoddy audits. It also helps the good auditors do good audits. If you you know, there's great accountants everywhere, there's bad accountants everywhere. David Leary: [00:47:35] It's like that saying about being famous. Like if somebody's an asshole and they're famous, it's not because they became famous, became an asshole. They were already an asshole way before they were famous. Like the famous just exposed it more. Blake Oliver: [00:47:46] I like that it just brought it out of them. Here's an email from Sholto Macpherson. Sholto said, I'm loving the work you're doing. It's a great mix of advocacy and journalism and analysis. Keep it up. On the topic of hourly billing, I agree it's a scourge. However, I don't see it changing anytime soon. I was wondering if another way to tackle this problem would be to create a movement among small and medium firms that agrees to a maximum number of billable hours per year. I don't know what that number would be, but low enough to give people quality of life and not make them feel like they are machines. And then he lays out a model for this, right? You could say, uh, you know, 920 billable hours a year or something like that. I mean, yeah, I think that's another way to do it. It's not ideal. But yeah, just bring down the number of billable hours, like raise your prices and reduce the number of billable hours that you require of your staff by like you could raise prices 20%. The market will absolutely support that. If you haven't done it, you can probably raise them by 30 or 40%, but you could definitely raise them by 20% in a single year. Blake Oliver: [00:48:48] And I guarantee you, you would not even lose 20% of your clients. You'd probably have to fire them. Still. Still. Yeah. Raise your prices until you start losing clients equivalent to the percentage you're raising. And then reduce the hours proportionally. Because every dollar of revenue is the same for these managing partners. The way they look at their firms, they don't do this. It's you know, they think they'll be uncompetitive. But like these firms are like. They've got so

many clients, they don't know what to do. So yeah, I mean, I see smaller firms doing this where they're they're not working themselves to death. You know, we saw Yungblud earlier on Twitter saying he didn't work more than 40 hours a week during tax season. So it's all doable, right? Everybody who says it's not doable, um, they're just not imaginative enough. Here's a message from Stephen Sachs. Stephen says your discussion on the 150 credit hour contained a part about how a third party, the AICPA, is in no position to tell CPA firm leaders about how educated or best equipped their potential hires should be. That really is the essence of the argument, not whether there are alternatives to completing a five year track. Blake Oliver: [00:49:56] I could address alternatives to achieving the creation of a well-prepared new professional, but you and I and others have covered it through various communication channels. I enjoy your podcasts. I just felt to applaud your observation about who is best equipped to determine what a CPA firm needs. Thank you and David for your continued influence in the profession. P.s. full transparency I worked for the AICPA for 17 years during some tumultuous times, so I have a good perspective of things. Steve. Well. I think that is the you know, the real problem here is that we have leaders in our profession who have been out of it for so long that they're clueless, or people trying to tell CPA firm owners like how to run their practices who have never owned one or run one, or like academics, like people have been professional academics forever. People have been leading associations forever who came even from outside of accounting. Like, it's surprising to me how many people run societies. Who don't even come from accounting. And they run the state society and they have like, this is their first job ever in the accounting profession. Like that to me is I'd. David Leary: [00:51:07] Be a prime candidate, I guess, right? Yeah. I've never been an accountant. I did do like a six month stint at a firm once. Blake Oliver: [00:51:12] But now, look, I got out of public accounting. I sold my practice in 2015. I, I left public in 2016. So, you know, it has been a few years, but like I talked to my all my friends that I hang out with are firm owners. David Leary: [00:51:25] I only have friends that are accountants. Blake Oliver: [00:51:26] Exactly. And they're currently firm owners. It's not like I'm some state society president who only hangs out with managing partners who haven't done any client work in 20 years. Right? Like I'm talking to people who are actually doing the work, who are doing the hiring, who are running small firms. And that's why what we say resonates. I think we're we're closer to the front lines, not right on the front lines. You know, thankfully. David Leary: [00:51:54] I think the story that I have here ties into this concept of telling people how they should be running their firm or what their firm should be doing, but also ties into what we had covered last week about remote work and how the employees that get to work remotely are usually higher paid because of the better employees. Well, I saw this concept, and I'm surprised that this term has not bubbled up before, but there was an article in accounting today, and the title of the article is The Rise of the Remote Partner. And have you heard this term remote partner, or is this the first time it might be coined here? Blake Oliver: [00:52:28] It's the first time I've heard the term. I have personally known remote partners before. One in particular comes to mind. It was the partner who ran the Sage Intacct implementation practice at Armanino. She was in Chicago. Linda Antonelli, I believe, is the name. David Leary: [00:52:48] Very successful pre pandemic pre. Blake Oliver: [00:52:50] Oh yeah. Yeah very very successful. Had our own. I'm trying to remember how she came to Armanino but basically yeah ran had her own office in Chicago. I don't think there were any other partners there and successfully built and grew that practice without ever, I mean, without setting foot in San Ramon, where the headquarters was. David Leary: [00:53:09] So estimating right now it's maybe 5 to 15% of all accounting firm partners, probably closer to five. My my money would bet. Um, is this going to be a trend? Is this going to be certain? Are we going to see a firm where all the partners are remote, like, is this a new model that's coming? Blake Oliver: [00:53:26] Yeah, I think as firms grow, the small ones grow into bigger ones. Then yeah, you're going to see it. And the big firms are going to have to let their partners work remotely in order to attract and retain talent. So yeah, it's just going to grow. It's only 5% right now. That kind of. That checks out. David Leary: [00:53:44] It's interesting because you went from nobody can work remote pandemic came. Accounting firms were able to successfully work remote. And now it's taking that next step which will all the partners can be remote right. Which will be now we don't need to rent offices. We'll be accountants will be accounting firms will be contributing to the decline in office space. Blake Oliver: [00:54:03] Yeah. Well and you see like if you are starting your own firm, like the reason that you can be really competitive is because you can be remote. You don't have all this overhead. You don't have the high cost of living area. You can offer better service for less money and compete with firms that, even though they they have a lot of people here, are using offshore labor. Like you can do all this in the United States. Um, and I want to respond to Gator Nick's comment here, Gator said. So I hear you saying owners and entrepreneurs have opportunity, but there isn't anywhere for entry level people to go for a decent salary. And that is a challenge, is that the entry level jobs at career fairs, it's the big firms, the traditional path, and that's what

the accounting professors are preaching still, because that's what has always been and always shall be. And so if you are a young person and you don't want to get stuck in that path, you've got to go make your own path. And there are lots of these firms out there, but they're not showing up to the career fairs because they're busy building their firms and they don't have HR people. So you just got to take initiative and go and contact them and find them and look online. A lot of these folks are online. And so if you look for the accountants who are showing up on podcasts and on YouTube and have great websites and are targeting niches that you're really interested, you know, if you want to specialize in real estate taxation, send an email to the real estate CPA, Brandon Hall. I bet you he's hiring. He may not have a job posting, but I'm sure he's looking for great people. Or if you want to work with startups, go look at full send finance. Or if you want to work at a firm that serves a lot of clients in Atlanta. And but, you know, they're based in Atlanta, but they're virtual all over the place if you're in Atlanta. Acuity. David Leary: [00:55:55] Yeah, I we did an interview yesterday, so it should come out hopefully soon. Um, but this younger person in college just, uh, went to the SEC's website and got an internship at the SEC and got a job at the SEC. There's lots of alternatives out there. You just have to, like Blake says, carve your own path in this industry. Yeah, that's how you're going to be successful. There's lots of options. Blake Oliver: [00:56:18] You cannot just follow a predefined path. And that's the hard thing, is that a lot of people choose accounting because it does have a path and you want certainty. You don't go into accounting because you're a risk taker and that's fine, right? You go into it for a steady job. You're always going to have work, you're going to get decent pay even if it's not the greatest. And you can have good work life balance too. If you find the right firm. But you're only going to find that if you look beyond what's posted online. And I think that's that's the thing with a lot of stuff in life, right? If you just do what everyone else is doing, you're going to get. Kind of a mediocre experience. But if you do your research. You go find a firm that's offering what you're looking for. Um, and, you know, they may not be hiring, you know, most jobs. Are not posted and the best jobs are not posted. It's like buying a house. Right? Like all the houses that are sitting out there on the market, there's a reason nobody's bought them yet if they've been on there for a long time. Right? It's kind of the same thing with job postings, right? If a company has to put out a lot of job postings. It. It could mean that they're really successful and they're growing really fast and they need to hire. Or it could mean that they're having trouble hiring. And so they have to put out a lot of job postings. Blake Oliver: [00:57:37] Yeah, the best companies don't ever have a job posting or have very few. Or they're gone very fast because they hire quickly. David, as always, it's a pleasure chatting with you about the latest in accounting and technology and the profession. For those of you who are listening on the podcast feed, you can join us live on YouTube, subscribe to our channel, make sure you hit that bell for notifications and you will get a ping on your phone. When we go live, you can join us. You can tell us what you think. You can heckle us. We love having you with us. And the audience for the live show just keeps on growing and growing. Uh, and don't forget, you can also earn CPE for attending today for listening to this show, on the podcast, or on YouTube. Go to earmark CPE and sign up. And actually we have a web app now, so you don't even have to download the mobile app to give it a try. Just go to earmark Dot app. That's earmark app. And you can earn free CPE every week for listening to our show, but also many other shows that are probably much, much better and more enjoyable. So go listen to Accounting and tax podcasts. There's some really awesome podcasts. Um, I was just listening to an episode of Tax Chats. If you are a tax person, man, that is a great show. And, um, I don't know, David, do you have another show on earmark that you really like? David Leary: [00:59:01] Um, I definitely like tax chats. Um, what other ones have I been trying to listen to a little bit? We had a new one that launched, um, is it called who is Really the boss? Blake Oliver: [00:59:12] Who is really the. David Leary: [00:59:12] Boss with, uh, Marcus Dillon and Rachel Rachel Dillon. And they talk about the. They're running a small firm, in lack of better words, the adventures they're on as they're running this firm, but they they communicate clearly. It's really well thought out. They have decent banter. Um, it's focused like they just had an episode about what to do when an employee quits without notice. Right? You have to. That's a good one mode. And so they have really good episodes that that one I really liked listening to recently. Oh, you brought it up. We can see it on the screen. Blake Oliver: [00:59:44] I've got it on the screen. This is the new web app, Earmarked app. And you can create a free account. We've got the unique CPA podcast with Randy Crabtree. Oh fintech flow. This is the flow Cast podcast okay. Uh, CEO Mike Whitmire, Drew Carrick they do a roundup of news and analysis. Their recent episode is all about, uh, well, it includes SEC climate rules, and you can earn accounting CPE for listening to that. On your mark. Financial modelers corner AFL Wealth management forward. They have a podcast for accountants Fpna. Today more of our shows. Oh my fraud I love oh my fraud, unaccountable, the modern CPA success show. We've even got the National Association of Enrolled Agents on your mark. Now their quarterly update for February is on earmark for Naspa CPE. We've got ramp. They've got a webinar with Matthew Myers. I just mentioned acuity. Matthew May is one of the partners at acuity, one of the owners. Um, lots of good stuff here. I mean, there's there's literally over a thousand courses on earmark now. David Leary: [01:00:49] It might be 1500. Blake. You might feel a little bit behind. Blake Oliver: [01:00:51] It's crazy. So, you know, if you think earning like 40 hours of CPE is hard, um, just get this app and do it one a week, and you can download it for iOS or Android and do it on the go. We've got a player in the app, federal tax updates. That's a good one. Uh, I'm trying to think of, uh, anything else that I may have missed? I'm just scrolling down here. Oh, building the premier accounting firm podcast, the unofficial QuickBooks accountants podcast. If you use QuickBooks, you got to listen to that. And by the way, if you don't have a CPE requirement or a continuing Ed requirement, this is still a great way to discover cool podcasts. You can listen to the podcast right in the app. You just find the episode click. You don't have to take the quiz unless you want to. David Leary: [01:01:36] So yeah, you could be like me. I just have a bunch of CP certificates I don't know what to do with. Blake Oliver: [01:01:43] So I think I've pitched the earmark app long enough, right? Oh, I was going to say, um, before I forget, I'm going to be at a few events in the next few weeks. Coming up, I want to tell you about that. I'm going to be at the Institute of Management Accountants annual conference. It is June 9th through 12th, so there's still time to sign up. The Institute of Management Accountants annual conference is in San Antonio. I will be emceeing the AI day, which is the final day of the conference. I really wish it was the first day, but it's the last day of the conference. You can early bird registration has expired, but you can still join. It's called inspire tomorrow. David Leary: [01:02:30] And this is only in person. No virtual option. Blake Oliver: [01:02:32] I'm not sure. It's two days of keynote sessions, specialty tracks, workshops, and networking. I love what the IMA is doing. They are one of the most forward thinking organizations supporting accountants. This is the organization that. It does the Certified Management Accountant designation. Let's see if I'm on the program now. Yeah, I'll be Wednesday, June 12th. So I'll be doing an opening session. And then there's going to be some great sessions. The human aspect of AI. There'll be different tracks. Responsible AI. Good stuff. So I hope to see you in San Antonio if you're going to that conference. All right, everybody, thanks for joining us. We'll see you around next week. Bye bye.