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What I Did On My Summer Vacation · The Accounting Podcast

• Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! Blake Oliver: [00:00:04] You know how I feel about this, David. You can talk all you want, but it's money that really does the talking. Until salaries go up, until the burden of the fifth year goes away, it's going to be really hard to attract smart business students into accounting because they can make more money out the gate, and they can do it in less time and with less expense and less hassle than going for an accounting degree. David Leary: [00:00:33] Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:39] David, welcome back to the accounting Podcast. I'm Blake Oliver and I'm. David Leary: [00:00:43] David Leary and Blake. Even though we've been connected every week I'm wondering about the title. Like what did you do on your summer vacation? Blake Oliver: [00:00:49] So, uh, listeners of the show will, uh, recall that I spent all of July in Southern California, in Orange County, and it was fantastic. We had the best time. Um, and I want to talk about, like, how we made that work as a family and how I think that accountants can do this, too. And this is one of the best things about being an accountant if you work for a firm or a company that lets you work remotely, then you can do this too. So I will happily explain the economics of it, the logistics of it. David, uh, where should I start? David Leary: [00:01:30] Well, first, I think you have to be able to work remotely, which is one of our values here at earmark. So that's right, because if you can't work remotely, I don't know if you can pull this off. Blake Oliver: [00:01:39] No, you can't. And, um, well, you could do it if you work hybrid too. So I obviously can work remotely because I'm the boss. So. And our whole company is distributed. We're all around the country, all around the world. So that is not a problem. If I have a high speed internet connection, I can bring my laptop, I can work anywhere. And I did pick up a portable 4K monitor in order to make this work, which I highly recommend. They are amazing. It's a ViewSonic. It's the one the Wirecutter recommends, so you could just search for Wirecutter portable 4K monitor. I did not get the OLED version. I got the regular LED version, which worked fine for me, and it paired great with my MacBook. So. David Leary: [00:02:19] And does this have the battery built in or is this just power? Blake Oliver: [00:02:22] No, but it powers from the USB-C to USB-C MacBook, so I can just plug my MacBook in to power plug the USB in to the external display, and both of them fit, like, together in my backpack, so I can even take them out to like, a cafe and be one of those people, you know, working on the external display at the coffee shop. David Leary: [00:02:42] I've been dragging one around for a year. I love it, it's it's great. Blake Oliver: [00:02:45] It's amazing. Um, so how do we do this? Uh, we, uh. Well, I should just say first, like, how do we afford it? I think is the question. Right? Um. Or. No. Before I do that, I got to explain my wife's situation. So my wife is not fully remote. She is working for a hybrid company, so she has to go into the office 2 to 3 times a week. So we found a place that we could stay where she was about 30, 40 minutes from an office, so that if she needed to go in, she could do it. Um, and that worked great. It turned out, actually, that she didn't have to go in at all to the office, so, you know, but we had the backup just in case. Um, she didn't get approval. So, um, that's how we were able to both work remotely. Um, where do we stay? Well, it's a whole month. So instead of staying at a resort, which would be exorbitantly expensive, we rented an Airbnb for a month, and we looked for an Airbnb that was in a community that required month long rentals. You get a better deal that way because when an Airbnb is available for short term rentals, the price goes up. So we found one two miles, 2.2 miles from the beach across the city line from Dana Point. Blake Oliver: [00:03:58] So we weren't in the most expensive area and we rented for a month. And that might seem like a lot of money. If you go search on Airbnb and you look for these rentals, they are. But when you moved from LA to Arizona four years ago and our housing cost cut in half when we did that, now we also bought at the right time before the prices skyrocketed due to, you know, Covid, inflation and all that sort of thing and people moving from California to Arizona. So we got a good deal. But honestly, I think if you moved today, you'd probably still see a similar savings. If you're renting in LA and you're renting in Arizona, it's a big difference, right? If you have a house in LA, exchange it for a house in Arizona. It's a big difference. So we were able to find an Airbnb for one month that is two times our mortgage in Arizona. So our mortgage in Arizona for one month, multiply that by two. And that's what we paid to stay by the beach or close to it in California for the month. And we can afford that because our housing cost is like 25% or less of our take home income. David Leary: [00:05:09] Well, if all you did was turn your air conditioning off for those five weeks, you were gone, you made up the difference in price because that's how well air conditioning is right now. Blake Oliver: [00:05:19] We have solar, so we sold back our solar into the into the network. But um, yeah, I mean it's really just the, the, just the, the cost of the housing. Right. Being able to save that much money. I mean, I was looking at what people pay to like rent or even just like a mortgage. I mean, it would cost us four times as much to live in a similar home in Southern California in that area, like, you know, by the beach, like just crazy amounts of money. People must be spending 50% or more of their income on housing to live there, or they just must be extremely wealthy, I don't know. But anyway, that's how we made it work financially, right? Is by living in a low cost area. We can take this month long vacation and it's something we've always wanted to do. And it was great because we both were able to keep working. And I love working while I am on vacation because the climate is there. Is is so great in SoCal where you leave work, you know, you stop working at like 4 or 5 and you have this beautiful weather until sunset at eight. So every day I would stop working and I would go swim at the pool, or I'd go to the beach, or I'd ride my bike, you know, and compare that to Arizona. David Leary: [00:06:36] I admit I've been suffering cabin fever like the last four weeks, where you just you. I work from home, and during the day I'll go out and I admit I'll go water my plants. I'll do a little gardening for ten minutes or so. But it's so stifling hot in Arizona. The last 4 or 5 weeks that you don't go outside and you get a little cabin fever, which makes it harder to work, right? Blake Oliver: [00:06:56] Welcome to our live stream, viewers. Hello boring accountant. Hello Gator NYC Gator says quote, I love working while on vacation unquote. Said no one ever. Yeah, maybe an unpopular opinion, but I mean, this was a working vacation and I love what I do for a living. So for me it was fine. And the great thing about the climate in July in SoCal is that it's foggy every morning, so you don't want to go out, right? It makes it easy to work. And then the sun comes out in the afternoon and it's glorious. So it's like very motivating to get your work done quickly, which is how I work. I like to work in sprints. So I say to myself, all right, if I can get everything done today that I need to get done in like six hours, I'm going to check out early and go enjoy the afternoon. That's just my that's my style. You know, some people, they want to go out for a whole week and do nothing but vacation. Like I don't work that way. Boring says it's a nice 75 Fahrenheit here in Los Angeles today. That is. That sounds lovely. That's what, uh, 103 today here in Phoenix area. So, um. David Leary: [00:08:00] So taking us back to, to firms. So if your firm is hybrid, you have to be at least working for a firm that's big enough that has an office maybe in the your destination. Right. Blake Oliver: [00:08:11] So office in Irvine, you can get there if you need to hybrid wise from the beach. But this is why working remotely is so great and why people are willing to take pay cuts for it, and why I'm happy. You know, we were talking about salaries in public accounting last week, David and I was thinking to myself, I gave up 300 K and as much as 800 K by abandoning the partner track at a big accounting firm in LA. But when I was at that firm, I sat in a window office and I looked at the beach and I never went there. And now I went there every day for a month. Right. So there's more to life than money. And I think there are more and more firms offering that kind of flexibility. And yeah, you're going to take a pay cut if you go there, but I think it's worth it. Um, it depends on your situation, right. Like my wife and I both work. We're both professionals, so we together we can bring in that non-equity partner salary. And we have one kid we don't have, like, you know, six spawn running around, you know, eating all of our food and costing us private school tuition and all that stuff. Now, how. David Leary: [00:09:25] Did you solve with a kid? It's like, you know, you're not at your typical home, like like I'm. I think your boy's too old for daycare, but, like, how did you solve him? Like a vacation for him, right? Oh, yeah. Blake Oliver: [00:09:38] Well, we put him in camp, and he had the summer that I've always dreamed of as a kid. Right. Like we were my dad was an entrepreneur when I was a kid, and he was starting a business. And, um, they were my parents were very frugal. So we didn't get to do like. I mean, we did. I did some really cool summer camps, like, but they were very few, right? I went to space camp one week, you know, in Houston. That was that was amazing. But like, the memories are a little bit. I went to music camps. Right. But, you know, not when I was Thomas's age. My son is nine, and he got to go to the Ocean Institute in Dana Point for a whole week, where they have a tall ship, a replica privateer from the 1700s, like the kind of ships that were sailing around during the American Revolution, attacking British ships. He got to go out and sail on it, and the kids got to, like, help man the ship. You know, they got to crew it. Like, what an experience, right? And we could do that for him because we have this ability to work remote and we save money living here in Arizona so we can go take some trips. So, um, the food is incredible there. Anyway, if you are stuck in an office and you're looking for a change in your life, I really think this is the future. This is so much better. I mean, think about it. Your boss probably gets to go do this sort of thing, right? But do you want to sit around and wait until you're, like, 55 to be able to do this? I don't want to. David Leary: [00:11:07] So there's probably a way to spin this from your recruiting efforts instead of just saying, hey, we let people work remote or hybrid, we actually encourage you to go someplace else for four weeks. Mike, maybe you can figure out how to make this a benefit where you cover a little bit of the Airbnb cost or something to your employees to encourage them to do this. So it's not a sabbatical, but they're getting away, which refreshes them. Blake Oliver: [00:11:29] Oh yeah. I am so excited to come back and work hard, you know, in the month of August, because I'm going to because there's not, you know, that much to do in Arizona in August other than stay inside and work. Right. It's our summer or it's our winter for everyone else. Um, logic bomb in the live stream says I have worked remote since 2017 and audit slash GRC. While I do miss having a separate space, sometimes the pros do not outweigh the cons. Yeah, so that's what I did on my summer vacation. And David, I'm going to toss it to you for our next story. David Leary: [00:12:01] Well, that makes sense because I have two stories that tie back to this Blake. So one of the stories and it almost cost me to crash my car. So, you know, when you, like, start your car and your your Apple CarPlay hasn't started your Google Play, uh, auto, Android auto hasn't started. And there's that time you get the little over-the-air DJ, right? You hear the over the air radio like old school radio. Yeah. Right. Right. Blake Oliver: [00:12:22] You're listening to Real radio. Real radio still around. David Leary: [00:12:25] And all I hear was the number two happiest workers are accountants. And it makes sense. They have all the money. And then they went to a commercial and I'm like, what did I just hear? I almost like veered off the road. It was I was like, what is going on? I didn't even hear who number one was. And you're listening. Blake Oliver: [00:12:40] To like a, like, what kind of radio station are you listening? David Leary: [00:12:43] It was like top 40 or something. I don't know, it was just whatever's on in the car. I don't listen to it. It just. It's that window when it wasn't on yet. Blake Oliver: [00:12:49] Are you sure you weren't having a hallucination? You know, like you've been. You've been podcasting so much, you're starting to hear the stories on the radio. David Leary: [00:12:56] It wasn't your voice. So I know I wasn't listening, but apparently. And I saw this article that came out, actually, Glassdoor listed, uh, results of a study they did. So Glassdoor is one of those sites where you get to review your employer. Um, and based on that, the, uh, they reviewed 200 companies across ten industries for culture and value, diversity and inclusion, work life balance, compensation, career opportunities, and senior management. Satisfaction and accounting was number two, accounting and taxes. Number one was construction. Number three was manufacturing. Blake Oliver: [00:13:32] So so I have some bad news for you, David. I looked into this survey and I don't think it was scientific in any way. And the reason I know this is because what they did was they took the top 10 or 20 in each category and then analyze those. So this says something interesting about that, right? The accounting firms where people like to work, like the good ones are really good. But I think the reason that overall, that the profession has such a bad reputation is because there's a lot of really, really, really bad accounting firms to work for, unfortunately. David Leary: [00:14:16] So essentially what this is, the best 20 accounting firms are better than the best, best 20 tech firms and the best 20 health care firms. That's what this is really exactly. Blake Oliver: [00:14:25] So if you can find one of those firms, then you're set right. But the problem is those are a small minority of firms today, and they're generally very small firms. So these are not the firms that students are being pushed into out of school, which are generally the top firms, the big four. And then, you know, the regional firms after that. And we know that the bigger a firm gets, the shittier it gets for the staff generally, right? Like feel free to. David Leary: [00:14:56] I'm adding to my to do list. I want to go see if we can reach out to Glassdoor and get this list of 20 firms, because everybody should be doing whatever they're doing then. Right? Blake Oliver: [00:15:05] Yeah. And Logic Bomb very appropriately says what's the sample. Yes. We always must ask ourselves what is the sample population of this survey as true auditors? Uh, I've never done audit, but I remember that from my audit coursework there. John Cronin in the chat says, do you guys have any accounting firms you recommend in the Dana Point area? Oh, I wish, you know, I should have done some investigation and traveled around. I actually was on PCH taking the trolley up to Laguna Beach, and I saw a CPA firm with an office on PCH, and I don't remember the name. It started with an M it was like McKinney and McKinney or something like that. That's not the name, but it was, you know, that kind of firm name in like a strip mall on the PCH. And I thought, you know what, I don't know if I would mind if it was a traditional firm, if it was right there. Although would I be able to afford to live anywhere close to the office? The commute might be a little bit brutal there. That's like an accounting firm in Malibu that I saw, you know, like, where are you going to live as a staff accountant, you're gonna have to live out in the valley and commute down. I mean, it could be cozy. David Leary: [00:16:11] Cozy beach, resort towns, whatever you want to call them. San Clemente. The same thing on the main drag. Uh, there's anywhere you go over the country, there's always, like, one little accounting firm that's on the main street with all the other touristy stuff. And you always wonder, like, how's that working? Like, is it really, is it just a front? Right? The door's always locked. It's never open. But. Yeah. Blake Oliver: [00:16:31] So. So one of the reasons to work at a big firm and to strive to become a partner, is that potential like compensation, right. Like when I ask people like, why are you doing this? That's the reason, you know, I want to make the partner money, and money drives people. It drives a lot of views on LinkedIn as well. I posted a clip from our episode last week about compensation salary data from that IPA survey. I think that was it inside public accounting. Um, of the top 100 firms minus the big four. So basically all the big regional firms, and that is one of the most popular clips I've ever posted, up to 44,000 impressions on LinkedIn. Now we're nearing like 300 likes. Uh, or emoji reactions, whatever that is. So, you know, this is a very popular topic of conversation. And for our listeners who missed that episode, I want to highlight the really shocking figures again, which is that equity partners, partners who have equity in the firm in these top 100 firms, minus the big four, they earn $839,000 a year on average, and their compensation, along with the non-equity partners, has gone up 29% in the last handful of years since 2020. Staff salaries, which are closer to like 100 K area, they've gone up 15.7%, which is not enough to account for inflation. Blake Oliver: [00:18:03] So staff salaries have actually declined since 2020. But partner comp has gone way up. Um, so that of course got people riled up in a lot of ways. Right. Like because that is a I think, uh, people are starting to acknowledge this in accounting that staff salaries need to go up if we want to attract people into accounting. Um, and they're not. But I don't want to talk about that today. What I want to talk about is two numbers that sort of didn't really get looked at, which is we have the equity partner comp, you know, 839 K, and then we have the non equity partner comp which is 307,000. And we talked a little bit about this in the episode right. What is the difference. So an equity partner has a share in the profits of the firm because they own equity in the firm. A non equity partner has the title of partner but does not own shares or equity in the firm, so they don't get a share of the profits. They are like a principal or a director. They are an employee who does not own a share in the firm. They make 307. So that difference is really staggering, right? 307,000, up to 839,000. David Leary: [00:19:23] And the 800,000 is not their salary. That's probably total comp. Total comp. So that's the profits they're getting out of the firm. So their salaries the 300,000 like the other people. Blake Oliver: [00:19:32] Right. So the difference I'm sure they're making more money in salary as well. Right. Why wouldn't they pay themselves more I don't know, but the difference is half $1 million per partner. Well, not per partner, but between the non-Equity and the equity partners, it's half $1 million in profit. And as I was cycling around Dana Point and, uh, looking at this beautiful sunset, I'm thinking to myself, what is what is what is private equity doing? Why why is private equity so interested in these big firms? We've heard that a third of them could be owned by private equity in the next decade or something. It's that differential. That margin is what they're coming after. If your private equity, you're thinking I'm going to be the equity partner. So that's that's a lot of money right. That's a lot of profit. And we know that accounting firms are very profitable. So what is going to happen when private equity comes in is that every partner going forward is going to be a non-equity partner, or they're just going to have a smaller share of the equity. So that margin is going to shrink for all the new partners. If they are equity partners, there's going to be less equity to share, right? David Leary: [00:20:50] That's what PE does. They squeeze the last drop of blood out of that diamond. Right. Blake Oliver: [00:20:54] Well that's the negative way to put it. Right. Okay. Even even in a good situation private equity has to earn a return. So the reason they're investing is to take that equity and earn a share of the profits. Right. And so yeah, in a negative situation for the staff then private equity takes up buys up all the equity. They take all the profits. And the only thing left is that non-equity partner comp, which is basically just a higher salary than you were earning before. Which to me, you know, 304 or 307,000 looks like a lot of money, right? But if you think about how many hours you have to put in to earn that salary, and then the fact that you probably have to live in a higher cost area in order to earn that salary, because a lot of these firms don't let partners work fully remote. You have to live in LA or New York or Chicago or I don't know, Dana Point. Right. Like it's it's it's really even hard to like it would be very difficult even on $307,000 to live in a place like that and have a family, you know, take care of them. Like so this is a problem for the profession because this is going to make it really hard to get people to want to be a partner. Blake Oliver: [00:22:09] I wouldn't do it. I would not ever be a non-equity partner in an accounting firm. That seems like a really bad deal. For the amount of time you have to work, amount of hours you have to work for that comp. No way. Yeah. No chance. I'd rather start my own firm and have equity. So that was just something I was thinking about a lot. And I think the, you know, the question is going to be will, will comp have to go up to get people to keep working if there is no carrot of equity partner status anymore? But I don't know if that's necessary. People have been willing to become non-equity partners, and at some firms, uh, more than half of the partners are now non-equity partners. It's a small group of them. But like, this is happening. I'm like, but who's going to want to do that? If you're a manager right now, would you really want to put in the next 5 to 10 years of work to get to a non-equity partner status, when you could just go start your own firm? David Leary: [00:23:08] I was going to say, because in this day and age starting, if you have that experience, starting your own firm, it's not a big deal. Yeah. It's there's little capital outlay to start a firm. It's hard. Blake Oliver: [00:23:17] Right. And it's like you could be you could be making with the non-equity partners are making at a small firm or more if in five years. Yeah. If you work hard and you're going to work hard anyway if you stay at the firm. That's true. So yeah, it's just just something that's been knocking around in my head. And I would love to hear from our listeners. If you have thoughts on this, Um, you can, uh, join our community, join the earmark community, earmark community, head over there and let us know what you think. David Leary: [00:23:51] And, Blake, I do have an idea of what these partners could do with all their money, but we'll discuss that after our ad. So our long time sponsor, Life Flow, uh, sponsoring this episode and those of you who are familiar with it, you know, life flow by now, right? Connect Google Sheets to your QuickBooks online. Thousands of accountants are using it, but did you hear? Now you can connect Excel. Excel QuickBooks online. Yes. So not just Google Sheets, but Live Flow now lets you connect Microsoft Excel and sync your reports and custom dashboards real time. Blake Oliver: [00:24:21] That's amazing. Um, wow, that people are going to be really happy to hear that. David Leary: [00:24:25] So you can add rows, columns, calculations, but you never without breaking live connection, right? So even when QuickBooks data refreshes, your spreadsheets are still good. Right? And I think this is huge because, you know, we've all been to conferences and you walk, you know, people work when they're at a conference and they're all their laptops are open and you just see Excel everywhere. So this is a big deal, right? That you can do that. The other thing that I noticed, uh, Live Flow just announced the they're going to have a Xero integration coming soon and they're looking for beta testers. So if you're ready to revolutionize your financial reporting with Excel and Live Flow and get 25% off your first three months, you want to head over to The Accounting Podcast dot promo slash Live Flow. That's The Accounting Podcast dot promo forward slash live flow. Blake Oliver: [00:25:08] All right. And do support our sponsors. It really helps us, uh, keep this show going. David Leary: [00:25:13] All right. So I said, I have an idea of what people could do with the money or the partners could do with their money. I'm going to share a image here. So this is an image for those of you that are listening. This is a picture of Jeremy Cole. He's a senior tax manager. At best. It's a picture of him throwing candy to a high schooler who asked a question at an accounting recruiting event at Sienna Sienna, Sienna College, and basically he and some other accounting professionals went to, uh, a career day. Right? And they went to speak to 30 high schoolers from 18 different schools. It's a career program was sponsored by the New York State Society of CPAs. But the article was kind of funny because they're overly focused about the candy. Right. And the quote unquote, coal was actually throwing candy with a purpose. Each student who asked the question was tossed a treat from Kohl's Halloween sized bag of candy. And then, in reference to Kohl and the presenters, the quote was used. They were were keeping it breezy with the students. I don't know what the hell breezy means. Do you know what breezy means? Is that like, I guess like conversational? Blake Oliver: [00:26:19] Yeah. Yeah, I don't know. David Leary: [00:26:20] So I mean, the article makes me chuckle a bit in the photo are kind of fun to poke fun at a little bit. You know, I think he's got maybe that's a microphone, but that could be a cell phone on his belt loop. You know, it's stereotypical. You know, this is what you think about an accountant throwing candy, but like, at least they're trying, right? But I think that would be better. And I had this note. I'm glad you brought up the partner stuff. Partners should bring brand new $100 bills and hand those out to the accounting students. Could you imagine at a career day, all these kids Snapchatting and showing off their brand new crisp hundred dollar bill they got from the accounting session. More and more people would attend that in the future, right? Because and I know I've done this, I've spoken at Career days how to be a podcaster creator. I get standing room only, the accounting session gets eight people, right? Yeah, like I get it. So maybe, maybe partners could instead of giving out candy, give out nice crisp hundred dollar bills. Blake Oliver: [00:27:11] I'm surprised they didn't throw a pizza party for the pizza party because that would, you know, be more appropriate, um, what you could expect in public accounting. You know how I feel about this, David. You can talk all you want, but it's money that really does the talking. Until salaries go up, until the burden of the fifth year goes away. It's going to be really hard to attract smart business students into accounting because they can make more money out the gate. And they can do it in less time and with less expense and less hassle than going for an accounting degree. So data analytics is going to win. And I hear so many accountants talk about how they're switching into data analytics, because that's where the money's at. It doesn't you don't have to go be a CPA to do that. I just feel like we're shooting ourselves in the foot here and no amount of marketing can undo a product problem, as I like to say. David, since you're talking about the accountant shortage or trying to recruit accountants into the profession, I'd like to highlight a study from the Smith School. Blake Oliver: [00:28:22] What is the Smith School? The Robert H. Smith School of Business at the University of Maryland. They did a study analyzing how the accountant shortage affects capital markets. And the headline is the Accountant shortage highlights how critical accounting is to capital markets. The researchers used the average duration of accounting job vacancies as their main independent variable. The standard deviation of this duration was about 24 days. The relationship between vacancy duration and um IC was found to be statistically significant at the 1% level, indicating a high degree of confidence in the result, so they're very confident. For every 24 day increase in the time it takes to fill an accounting position, which represents one standard deviation from the mean, there is an associated 8 to 10% increase in the likelihood that the company will experience material internal control weaknesses. So the longer a job in accounting remains vacant. For every 24 days additional that it remains vacant over the average, that's an 8 to 10% increase in the likelihood that there's going to be an internal control weakness. David Leary: [00:29:40] So we have real math now. It's before it was like oh yeah, people are behind getting their closes done. They're not filing their, uh, financial reports on time. There's districts that can't get financial statements. But now it's like real math. Like it's it's a formula now. Blake Oliver: [00:29:56] Well, and they can prove it because they said the average time to fill accounting positions increased from 40 days in 2010 to 48 days in 2022. So that suggests, with the other findings, that the risk of internal control weaknesses has been increasing industry wide over the past decade in a meaningful way. So there is a cost to our capital markets, to the accountant shortage. Now, they didn't quantify that cost, right. What is the cost of these internal control weaknesses? That would be interesting if they explored that in the future. I'm going to guess it's a lot of money, right? Because across all of these companies in the economy, you have internal control weaknesses. That leads to fraud, that leads to financial misstatements, that leads to investors not having the information that they need to make the right decisions. So I thought this was an interesting study. We're actually starting to see people quantify the cost or the impact anyway, of the accounting talent shortage. David Leary: [00:30:59] Do you have any AI stories or subscription revenue stories? I have like two like one subscription, subscription revenue story I have. I just want to get more of your thoughts on it, but I don't know what direction you want to go next here. Blake Oliver: [00:31:13] That's a good question. Um, do I have any AI stories? Here's a story from the New York Times. I mean, it's not AI, but it's technology. White paper checks refuse to die. I thought this was hilarious. Did you know that target recently discontinued the acceptance of personal checks as a payment method? I didn't know they still took personal checks. I remember going to target with my mom as a kid, and she would write a personal check to pay for our groceries. Well, it wasn't groceries at the time because they didn't do that then. But it was whatever it is, we were getting at target, right? Um, so even though target has gotten rid of personal checks, they're still very prevalent in many sectors. As accountants know, contractors, charitable organizations, landlords, government. Got one's. David Leary: [00:32:00] Two weeks. Blake Oliver: [00:32:00] Ago. We just got one. It went to our Earth class mail address, and we had to then send it all the way from Oregon to you in Tucson, so that you could deposit it by taking a picture of it with your, uh, app on your phone for relay. Yeah, it's just amazing. Uh, contractors still receive 25% of their payments by check, while charitable and religious organizations receive 22%. And why is this? Well, especially like in church, the article mentions that people like to put a physical check in the collection plate at church. Um, you know, landlords still like to get those, those paper checks. And a lot of times people don't want to pay the fees associated with credit cards. And these other apps are not yet, I guess, widely spread. Right? These, these apps that don't require fees like Zelle. Uh, what's the other one? I mean, Venmo, I guess, right? David Leary: [00:32:54] Well, since it's business, it's a business payment. They do try to take those fees out. Blake Oliver: [00:32:58] Yeah. Um, I've got another story on I. I'll actually do an AI story for you, David, since you asked me for one. So Thomson Reuters did a survey of tax preparers, tax professionals about generative AI. Uh, and it's very split 50% expressed hesitation or concern, and 47% felt hopeful or excited. And I guess that means 3% are just like, what is I? So despite these mixed feelings, 73% of tax professionals, almost three quarters, believe generative AI can be applied to tax work, although only 52% think it should be used. So half of tax pros surveyed by Thomson Reuters don't think that generative AI should be used in tax practices, so that's a huge advantage for the other 48% who are going to start using it, or at least think it should be used or open to it. I just insane to me that you would think that you shouldn't use it. What about research? It's incredible for research. Anyone who wants to experience how amazing AI is for research, go to perplexity. I sign up for a pro account for 20 bucks a month and start doing research. It's it's another level beyond Google search for getting answers to questions. It's it's insanely good. David Leary: [00:34:13] I saw that article too. Or that survey. I was really surprised on how low they said, uh, only 24% of respondents says their firm uses AI at all, which goes against some of these other surveys that have been like, oh, 90% of firms are using AI, which I think we always were suspicious of, but this is probably more accurate, I would say. Yeah, a quarter of firms, I. Blake Oliver: [00:34:33] Don't know which stat in the survey you're looking at in particular, but it says here for me that only 10% of firms are using it firm wide and 49% have no plans to implement it. So. So yeah, adoption is very low, usage is very low. And so my message is especially to tax payers but to all accountants is just like sign up for one of these accounts, upgrade to pro at perplexity or to teams for for ChatGPT and just start trying it out. Test it out and see what it can do because your your mind is going to be blown, especially if you used it a year ago or two years ago and you thought it was a toy. Uh, the latest models are really spectacular. We actually just rolled this out internally. David, we have a tool now that can take a transcript at earmark, like this podcast episode and generate a self-study CPE course. Everything. The description, the questions, the answers, the feedback, the learning objectives, the index, the glossary, all of it. This used to be done by a human and it would take 3 to 4 hours. We now do this in 15 minutes at a cost of $2. It's shocking now, I've been working on this for like a year and I finally got it to work. But what this indicates is that there's going to be a lot of applications in many other places, not just continuing education. So earmarks and I company now David. And when we go raise money that's what I'm going to say. David Leary: [00:36:11] That's what I say. Blake Oliver: [00:36:12] It's true though. That's what we are like. We're doing all the now, that doesn't mean it's not being reviewed by a human. We have shifted our writers into reviewers, so now they review the work and make sure that it's high quality. And with this combination of human, uh, AI writer and human reviewer, we are getting incredible results. And so I think that's what's going to happen with tax prep. The initial prep of the return will be done by AI assistants, and the outputs will be reviewed by a human, and there will be no more plugging in the numbers. As a staff accountant. David Leary: [00:36:47] It's great. It's like, uh, we set the table perfect because that's my next article. It's about how many how much humans in the loop do we really need right. With AI and a lot of firms now are starting to formalize this, this human in the loop to give an AI oversight. And they're doing it different ways, like KPMG, um, they're having a trusted AI policy with ethical pillars, uh, an AI Council for oversight, a dashboard to monitor the AI's inputs and outputs, uh, a team that only looks at security and privacy, but in the theme with a lot of these firms is all professionals are responsible for the AI outputs. Mhm. Right. And so I'm wondering like where this ends is this slippery slope. Because to some extent now partners are supervisors are going to be asked to review work that AI does. But if the staff is pumping out more work faster because of AI In theory, the partners are going to be overwhelmed with the things they have to review. The only way they're going to do that is to probably to use AI, which kind of makes me wonder why not just trust the AI to begin with. So like, I don't know, it's but even in our own experience, like we have to have a human review these things, right? The end of the day. Blake Oliver: [00:38:00] But but what I'm going to do is to streamline it further is perhaps the initial review could be done by the the AI tool, and then a human could review exceptions. So this is just the beginning of this. As the models get better, we will get more and more advanced AI. The quality will go up on the initial drafts, and the review can be streamlined further and further and further. And my goal is for us to increase the volume of the work that we do without needing any more people. So forward thinking tax practices could, you know, we'll need the help of software vendors, right, to do this, um, if you're not going to build it yourself. But I just I just feel like this is inevitable and this is the way that we combat the talent shortage, because our professional associations are not doing anything to help, and they're moving at a glacial pace. So the only way that this is going to work in the future is with less people, but a bigger economy is for us to automate as much of the routine work as possible. And it's going to happen in corporate finance and accounting departments. And so if you're the type of person who likes to understand tech and and maintain it and use it, you're going to be great. You're going to be successful. But if you're just the kind of person who just wants to enter journal entries like you learned in school, you're not going to have a job. And that's my big concern, is that we have all these universities that are teaching people how to do routine work. They're not even very good at that because they don't teach practical application of the theory. But even the ones that do teach the practical application, you know, they're teaching you how to make the entry, but they're not teaching you the critical reasoning in a lot of cases to like, analyze it to, to think, is this the right way to do things, to question if this accounting standard makes sense or not? I mean, you need to be able to ask good questions to manage tech. So and they're. David Leary: [00:40:00] Just now adding to the curriculums cloud accounting. Right. Yeah. And how a decade and a half too late. Blake Oliver: [00:40:07] Well, I mean, you still don't learn even how to use like QuickBooks or an ERP system in most accounting programs. Like you have to learn all that when you get on the on the job. And I just don't understand why why we don't teach people the tools that they're going to be using every day, day in and day out, even a little bit. All right, David, we have to thank our next sponsor, Zoho. David Leary: [00:40:28] Yeah. So I think if you've never heard before, Zoho now has a practice manager. So it's all in one practice management. It's called Zoho Practice. So all the things you expect from a practice management, right. Client management, client collaboration, task management, time sheets and billing, document management, financial insights and books review. It's all built in. And the greatest part of this Blake it's free up to five users. So you basically if you have a small team you can sign up for Zoho Practice, pull your clients on it, put your employees on it, and it's free. Blake Oliver: [00:40:58] That's amazing. Amazing. So totally free up to five. Anything else I need to know? David Leary: [00:41:05] I mentioned they have a collaboration hub or communication hub so you guys can communicate about your clients. And I think I'll have to double check where people maybe we get some feedback here. I think it doesn't matter what products or accounting platforms your clients are on. Right. It's not. Blake Oliver: [00:41:21] Agnostic in that. David Leary: [00:41:21] Regard. That's good. Blake Oliver: [00:41:23] Yeah, yeah. I love that. So where can our listeners go, David, if they want to learn more about Zoho. David Leary: [00:41:29] So it's accounting podcast Dot promo, Zoho and the link is in the show notes. Blake Oliver: [00:41:34] Awesome and boring. Accountant asks can the accounting podcast do a five minute demo of the sponsors at the end of the episode? And David, we've got, uh, something announcement. David Leary: [00:41:45] So even better than that. How about a whole 50 minute demo where you get CPE we are going to start doing we're calling them earmark expos, and they are app demos. And our very first one is going to be Lean Flow on August 20th. So just watch the feed. Watch us on social, get the earmark app. Just go to the events section or the webinars. You're going to find that you will get you there. But we are going to have demos of all these sponsors. Blake Oliver: [00:42:11] Gator NYC says tools change. Core knowledge is useful during your entire career. And that's the argument that I hear from academics about why they don't include technology in the curriculum. And my response to that is the tools change. Yes, but fundamentally, how they work doesn't change that much. So let's take, for example, posting a journal entry into an ERP system. Sure, the details might change from system to system, but the actual way that, like the the concept of of posting the entry into the system and just doing that is so different than doing it in theory. And for me, the reason I believe this is because I was working while I was taking my classes, and so I could practice making the accruals and the deferrals in an accounting system where I was working and I could apply the knowledge, and that helped me remember it. It helped. And this is why I'm convinced people come out of school and they don't remember how to do anything because until you, like, reinforce it with actual like doing for a lot of people, that's the way that they learn. It's like a domination. Yeah. So, so so that's the problem with accounting education is you learn all the theory and you don't apply it. And so it's really hard to master it that way. It'd be like going to school for music and only learning music theory and never performing anything. I don't understand the logic of it. David Leary: [00:43:37] Become a painter. If you just look at paintings. Blake Oliver: [00:43:39] Right, you got to do it. So, um, that's my counter to that argument. Uh, well, David, let's see. We have a few minutes left. You have a hard stop in eight minutes. So the question is what? Let's go a. David Leary: [00:43:54] Little longer if we have to, because we still got to get ads in there. Dude. Quick article. Blake Oliver: [00:43:59] How many more ads do we got? David Leary: [00:44:00] What more we got two more, two more. We could do more. We could. If we don't. Blake Oliver: [00:44:04] Do one right now. David Leary: [00:44:05] We'll do one right now. All right. So our third sponsor today is Lean Flow. So, Blake, I'm sure when you had your firm, you probably had a client that probably took out a loan and you were like, what are you thinking? Like, this is not a good loan for your business? Yeah, they. Blake Oliver: [00:44:16] Didn't ask me about it first either. Didn't? David Leary: [00:44:18] Well, even better, now with Lean Flow, you can actually create a curated list of loan options SBA loans, bank term loans, equipment financing, and present those on your website. So it's like a widget you put on your website, your clients, you can just drive them there. Hey, I've chosen some decent loans that I know all my clients will be safe with. Choose one of these. You get a little, uh, some referral revenue from it, and, uh, you can. It's white labeled. It's branded to match your website. Um, they have approval rates, 95% of loans get approved, and the amounts range from $2,000 to 5 million. So you can really curate and keep your clients on track right when they go to take a loan, have them work with you and lend flow to do that. Blake Oliver: [00:45:00] That's amazing, I love that. So where can our listeners go to learn more about Lean Flow? David Leary: [00:45:04] They can go to Accounting Podcast promo, Lean Flow. Blake Oliver: [00:45:08] Accounting, podcast Promo, slash, Lend Flow and Blake Steele in the live chat says just got out of FA CPA exam and listening to the podcast to lift my spirits. Awesome Blake congratulations on making it through FA. That's the hardest one in my opinion. I, I so difficult. Um. I hope that you pass. Wouldn't it be nice if you could know your score right when you get out of there? But no, they make you wait like a few months. I don't I don't understand why if you take the enrolled agent exam, you get your results immediately. But for some reason, with the CPA exam, you got to wait. David Leary: [00:45:47] And the computer test now, right? Blake Oliver: [00:45:49] It's a computer test. So you could it should, it should, you know, theoretically like you could grade it automatically. I don't like I don't know what the what the deal is, but so much about the CPA exam is like a complete mystery to me. And I don't think anyone knows the answer. Like, how do they decide what is the passing score for that year? It's not graded on a curve. There's actually a like as far as I know, there's a like a set like number of questions, correct or wrong, that gets you that passing 75 or whatever. And I always thought, wouldn't it make more sense just to grade it on a curve and set the the bar as like, here's how many CPAs we want every year. I mean, you know, that would be one easy way to, like, create more CPUs, because we kind of know it's like like, what's the difference between somebody who gets a 74 and a 75? Like, does that really mean that they're not qualified to be a CPA? David Leary: [00:46:44] Because all it takes is bad luck on 2 or 3 questions. And yeah. Blake Oliver: [00:46:47] Mr. Window, I don't know. Um, I have some listener mail if we want to get to that real quick. David Leary: [00:46:53] Yeah. Jump in. Blake Oliver: [00:46:53] Okay, so, uh, this is a message from Rena. Rena says hello, Blake and David, have you noticed a trend in accounting leadership jobs for internal corporate jobs requiring Big Four experience? This is even for non publicly traded companies. It has almost become a standard requirement in my 20 years of being a CPA. I never worked in a large CPA firm. First five years was doing taxes in a small CPA firm and then moved out into internal corporate accounting roles. Great career growth, multiple industries and some exciting projects with buyout and public company purchases. So cool stuff, very diverse and work. I am proud of long lead up, but what the heck is the importance of a Big Four experience that I have not learned in the trenches? I have worked with employees of Big Four firms during audits and frankly, they are disconnected from the reality of operational accounting. They can review the heck out of internal control issues, but none of them ever worked with a badly implemented ERP system with an R module fail and unable to reconcile cash for eight months because of poor IT support poor banking reporting with no drill into details of daily deposit from third party R merchant systems, etc. that is real accounting. Lol so help me understand what skills I have missed by not working in a hamster wheel of Big Four grinding out 70 hour workweeks. Thanks, Rena. I don't have an answer for you. Rena and I agree that requiring Big Four experience in a job posting is lazy and arguably discriminatory and classist for sure, and I don't think it's necessary. And why should something that is like 2 or 3 years of your resume determine your entire future career? Like you have jobs for controller posted that require Big Four experience? David Leary: [00:48:41] Well, I can imagine that for the person publishing the job, in your case, I want somebody to work for Big Four because I'm imagining, oh, this person worked for Big Four was exposed to lots of different businesses. They had lots of kind of work. Blake Oliver: [00:48:52] Maybe. David Leary: [00:48:53] But in general usually not. Right. They put in their two years and they're out, and they basically worked with one client and just did grunt work like it's possible reconciliation, right? Blake Oliver: [00:49:02] It's possible they got a broad experience and they learned a lot. But it's also possible they didn't learn shit. Yeah. You know, so yeah, I just I think this is part of the problem in our profession is, is that we, we have lazy recruiting. It's very clubby. And what you get is you get a profession where people don't want to, don't want to join in. And you know what? I would have done great there. And I couldn't stand the clubbiness of it. I did not like it at all. And I know maybe it's just because I'm not a country club kind of person, but I feel like that's a big challenge. And I think we should actually, as a profession like this would be great for the societies and for the AICPA To, uh, to push for is let's not require specific Big Four experience in order to hire for these roles. Let's get people to stop putting this on job descriptions as a requirement. And that would broaden the profession. It would open it up to more people, you know, boring. Accountant says requiring Big Four job experience is just letting job seekers know that the work culture will be toxic. Okay, so yeah, actually if you see that on a job, don't apply for it. All right. Um, David. David Leary: [00:50:13] Last sponsor, last sponsor. Blake Oliver: [00:50:15] This is a new one to me. So you have to explain. David Leary: [00:50:17] To me a new sponsor. Blake Oliver: [00:50:18] Be really help me understand what is Gen Ys? David Leary: [00:50:21] What is Gen Y? So you know how you're talking about how firms need to start rolling out AI and technology, right? Yeah. If you can't do it, maybe you need a vendor or a tech company to help you. Well, Jen Weiss is actually different. So Jen Weiss is going to be your CTO or your chief COO. So you know, for virtual, just like you want to hire accountants, want to be a virtual CFO. Well, you can hire a virtual CTO or COO just by getting Jen Weiss. So what they do first is they they're platform agnostic, but they'll do an assessment of your firm and they'll figure out what technology solutions are specific to your firm needs. Right? And they don't just do recommendations, they help you implement it, roll it out, orchestrate the workflow changes, and then they stay afterwards to make sure your team has all the support they need. And really so what you ever you spend on texture your tech, you're maximizing that value. So this is the time to do it. You want to get your technology assessment efficiency assessment from Jen Wise. You just go to The Accounting Podcast dot promo. Gen wise The Accounting Podcast dot promo. Gen wise. Blake Oliver: [00:51:23] Gen wise, thank you Gen Wise for sponsoring. Thank you to Zoho and to what were other two sponsors. David Leary: [00:51:30] Lean Flow and Live Flow. Blake Oliver: [00:51:32] We really appreciate you and our listeners can support the podcast by visiting those URLs. The Accounting Podcast dot promo and then slash the sponsor name and, uh, learn about them. We appreciate them. And, David, that's all the time we have for this week, because you need to get to a meeting and I need to get to work. Uh, we are recording on a Monday, which is unusual, but it's kind of a nice way to start the week. I like it. Maybe we should do this going forward. I don't know, uh, let's think about it. Everyone who tuned in live, thank you for joining us. Great to have you with us. If you are listening on the podcast feed, know that you can subscribe to us on YouTube. Hit that notification button and you'll get notified when we go live. And you can hop on and join us and hear the episodes before anyone else does. And if you want to send us a message, join the earmark community and join the accounting podcast space. Go to Earmark Community. Sign up. Introduce yourself. There aren't you know, it's it's it's brand new. So you will get our attention. You want to ask us a question? You want to ask me something? Uh, I'm basically giving out free consulting in there. So I promise I will answer your question, and I'll do, uh. I'll do my best. So go to earmarked community. Are you a podcaster? Do you want to ask a question about podcasting? Are you a firm owner? Do you want to start a firm? I had a firm I can help give you. I can give you my $0.02 if you want it. Um, David, I don't know. You know, he can tell you about every app in the world, basically, because he knows them all. And, uh. Yeah. You want to get a job at Intuit? Ask David. How did you do that? All right, that's it for this week. Thanks, everyone. And we'll see you again next week. David Leary: [00:53:13] Bye bye.