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When AI Decides Who Gets Promoted & Who's Going to Tax Prom? · 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] Americans aged 18 to 34 now rank physical and mental health as the top measure of success, not money. Wealth comes in fifth place. David Leary: [00:00:17] Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:25] Hello and welcome back to The Accounting Podcast, your weekly roundup of news in the accounting profession. I'm Blake Oliver. David Leary: [00:00:31] And I'm David Leary. Blake Oliver: [00:00:33] And we're back streaming live for you. Hopefully this stream will work. We had some technical difficulties, but David has solved that. David Leary: [00:00:41] We've solved it. Yes. Blake Oliver: [00:00:42] Awesome. Well, David, this week we got lots to talk about. Um, in our headline here, the title of this episode, we're talking about two things when I decides who gets promoted and fired, and also something about tax prom. Have you invited me to tax prom? From David. David Leary: [00:00:59] I want to ask you officially. Blake, to tax prom if you'd like to attend this with me. Blake Oliver: [00:01:04] I have never heard of this, so I'll. David Leary: [00:01:06] Get into that. Blake Oliver: [00:01:07] I'm eager to find out about tax prom. Do I need to get a tux? Uh, I could rent one. Uh, but you'll have to let me know what the dress code is. But first, David, we should thank our sponsors. Let's do that. David Leary: [00:01:18] Yeah. So this week, sponsors, we have cloud account and staffing, and we have keeper. Blake Oliver: [00:01:23] All right. Thank you to our sponsors. David, why don't we why don't we start off with with tax prom? I mean I know there's important things going on in the world like the big beautiful bill tariffs. Uh, but tax prom. You got my attention with it. Let's let's hear it. Let's hear it. Invite me. So pitch it to me here. David Leary: [00:01:40] Here's the deal. We're gonna have to set up some time. Aside from November 20th, 2025, the Tax Foundation. You're familiar with the Tax Foundation. You've covered some of the articles. Blake Oliver: [00:01:51] Yes. And we interviewed their, uh, former CEO and president. David Leary: [00:01:56] Yeah. It's called like a center right think tank. So it's just but it's I think it's, it's a a lot of the arguments are very logical around tax policy. They try to influence tax policy. So they have this major event called Tax prom 2025. And they bill it as the must attend event in tax policy this year, where public and private sector leaders will come together to network, strategize and celebrate what's new in tax. And they because of the new bill this year, there's a lot more interest. So a little history on this. Um, it's an annual event that's hosted by the Tax Foundation. They've been doing it since 1937. So for 82 years they've been doing this prom. Um, who attends? So it's congressional staffers, members of Congress, fortune 500 companies, tax executives, trade association representatives, tax policy professionals and law firms, executive branch officials. From what I can tell, no podcasters. So we could be like the first podcasters to go to this event. Blake Oliver: [00:02:55] How do we get an invite? David Leary: [00:02:56] Um, I. Well, I don't think you have to be invited. Tickets start at $750, and premium tables go for $35,000. And then they have tons of corporate sponsors where they're spending 50 to $100,000 to sponsor. But some people do protest. Protest this because of the sponsors, the corporate sponsors that donated more than $1 million. They hold a collective $800 billion in offshore tax havens. So this is definitely a hobnob with the people that are going to control your tax bill type event. But I've never heard about it till I saw it today. Um, and if they have a nice little black, it's like a high school prom. They have the little. They're their logo. It's a nice font. They have pictures on the website. If you just go to tax prom. Com, you can see the pictures of the previous events. Everybody's in a tux. I would argue that the females aren't dressing. It's more age appropriate dress less prom dress. But tux is a tux, right? At some level. Everybody has alcohol, plenty of alcohol being served. It looks like a good time. We should be. We should be going to this. Yeah. To sponsor a platinum sponsors $25,000 is the early bird price. Well. Blake Oliver: [00:04:07] Um, David, I'm looking forward to going. I hope you've got the cash to pay that. All right, well, let's talk about. David Leary: [00:04:14] We can't sponsor. Blake Oliver: [00:04:15] We can't sponsor. David Leary: [00:04:16] We can. Blake Oliver: [00:04:16] Maybe let's talk about AI and how half of managers are using AI for promotions and firing. I spotted this in CPA Practice Advisor, a new resume builder survey of 1342 US managers revealed that 60% are using AI to make decisions about their direct reports, with usage focused on the most critical career moments, 78% are using AI to determine raises, 77% are using it for promotions, 66% are using it for layoffs, and 64% are using it for terminations. Here's the most concerning part, David. More than 1 in 5 managers frequently allow AI to make final decisions without any human input. Now, I'm going to be honest here. I have used AI for HR purposes myself. When we were hiring our latest group of developers to help us build the earmark app, I had to go through hundreds and hundreds of resumes and I decided to do an experiment. I created an AI project in. I think I used ChatGPT for this one, not Claude. I created a, what do they call it, a custom GPT, and I gave it the job description and I gave it my criteria. And then I fed it resumes, and I used the ChatGPT the custom GPT to to decide who would make it to the first round of interviews. Now, David, you have been working with our new developer team for several months now. How did I do? How did how did how did ChatGPT do? David Leary: [00:05:58] I think it worked great. Our engineers are great. The new round of engineers that we got. But I also think you did that before everybody started doing it. Because now I've heard where people are optimizing their resumes just so that I will like the resume better. They're optimizing for the person reading the resume, which is essentially AI. Now you're going to you're going to put triggers in there. That's going to make I look at you more favorably than others. Well, to clarify on this are they're not just using it to like write the reviews. They're like, hey, here's my take these eight reviews of my employees who should get fired, who should get a raise. It's kind of what they're using it for. Blake Oliver: [00:06:35] Yeah. I mean, you could, uh, give examples of work. I don't know exactly how they're using it. Right. The survey doesn't explain that, but, I mean, the way I might do it is I might, uh, if every employee has to fill out some sort of performance review, I've got some sort of structured way of collecting this information. They talk about what they did, um, you know, they have scores in the performance review software or whatever. I can feed all that into an AI. And I could ask it, who should I give raises to? Who should I promote, who should I fire? And, you know, it takes a load off of me as a manager. David Leary: [00:07:09] Yeah. So let's say we're a big, big firm top, top 20 accounting firm. And I come to you, Blake, and I say, Blake, decide who's going to be our partners. You could use it for that. And what would be the criteria? What would you use to what would you tell AI to use to decide who to promote. Blake Oliver: [00:07:25] To become a partner at an accounting firm? Yeah. Um, I mean, I don't know, that's a mystery. David Leary: [00:07:30] Just hours. You just upload all the timesheets? Blake Oliver: [00:07:33] Yeah, just the time sheets. Right. It's. Yeah. There's no there's no need for discretion at a firm. I guess it's it's how much revenue you bring in, how much business you develop and then how many hours you work. Right. Factor those two things. Pretty simple. Anyway, I thought I'd bring that here because it's amazing how quickly this is shifting, and I would not be surprised if some companies start putting all of these decisions, uh, running them through AI, or at least comparing what the humans are doing with what the AI is doing. Um, to decide, you know, how you get compensated whether or not you like it. That's the way it's going to be, because people don't like taking responsibility for this. It's a lot of work and it's a lot of responsibility. And so if you can offload that to an algorithm I think we heard about Amazon again. David Leary: [00:08:15] This is another example of AI replacing middle managers not frontline employees. Like like arguably it's much better at this middle line manager stuff. And like you said, possibly CEOs like high level thinking and decision making. It's better at than doing the data entry in these the things that have to be 100% perfect when you let go of an employee or give an employee raise, you got wiggle room in there, right? Except for getting sued, possibly, but you have some wiggle room on. You don't have to make the exact perfect amount of the raise. You just have to be good enough. Blake Oliver: [00:08:49] I've got another eye story for you, David. This is a Stanford University study, and it's the first large scale audit of worker preferences and AI capabilities for workplace automation and augmentation across the US workforce. So they they asked experts to rate what types of tasks could be automated. And then they asked workers, what do you want to be automated. And they created a matrix of those two qualities. And the idea is that you want to, as a company, work on auditing tasks that workers want automated and are easy to automate because that's where you get the most grassroots buy in. You're going to have the the best result. So Stanford surveyed 1500 workers across 104 occupations, and they also got 52 AI experts. And they broke the tasks into 844 occupational tasks For this database. Just under half of all the tasks received positive automation desire ratings from workers, primarily motivated by freeing time for higher value work. But there's a big difference across sectors, and I'll just skip to why this caught my attention. It's because tax preparers are the number one group of workers who want something automated. They had the highest automation desire across all occupations and specifically the tasks they want. Automated is schedule appointments with clients. It got a five out of five the maximum possible rating. Number one task workers wanted automated across the entire study. Now. David Leary: [00:10:35] Wow. Blake Oliver: [00:10:36] I know right. So there you go. Tax preparers want automation on. David Leary: [00:10:40] Your calendar has been solved already. Blake Oliver: [00:10:43] But I know. So like we have apps like Calendly. Only, um, we have ten years. David Leary: [00:10:48] A decade it's been around. Blake Oliver: [00:10:50] Yeah. So maybe maybe this is an education issue and not necessarily an AI issue. I think it brings up a good point, which is that maybe we don't need AI yet. Maybe it's just like basic automation. I mean, there are firms. There are firms that still haven't moved to the cloud yet. And so there's some low hanging fruit that we might need to pick before we get to the AI stuff. David Leary: [00:11:14] So so just to summarize, so all the professions, tax professionals where we want automation the most. Blake Oliver: [00:11:22] Specifically for that task. So it was the tasks listed in terms of, you know, how much people want automation and are good candidates for immediate AI deployment. So I'll give you some more examples. David Leary: [00:11:35] Okay. Blake Oliver: [00:11:36] Quality control systems managers, they want AI that can check regularly reported quality control data and surface anomalies. Computer network support specialists want I to research hardware or software products. Technical writers want I to arrange for the distribution of of material. Um, red light zone tasks are the ones with low desire plus high capability. So you've got to be cautious with this as a manager because your workers don't want this stuff automated necessarily. You're going to get resistance. So video game designers, they don't want you to create production schedules and prototype goals with production staff. They they want to do that themselves. Still, even though you could do that with AI media, technical managers observing pictures through monitors, I don't know what that means. Actually, I'm confused by that. Uh, art directors presenting final layouts to clients. They want to do that themselves or graphic designers. They want to create designs, concept and sample layouts based on design principles themselves. Basically, what I'm trying to say is that workers in creative fields strongly resist automation. Despite AI's technical capabilities, they value human creativity and control. David Leary: [00:12:51] And when you're talking about that first quadrant, all those professions are asking for things that's kind of their core work. They're looking to have a piece of their core work automated, and tax professionals are like, oh, book a calendar appointment. It seems like they're not saying, oh, I'd love it if it collected all my tax docs or could read my it's it's almost like you're, it's an education or just behind. Right. They maybe maybe they haven't even thought about these other problems in their firm that I could solve. I just it's all these other professions are talking about actual the core function of their job. Right. And tax professionals are worried about the calendar booking. It's just kind of funny. Blake Oliver: [00:13:33] I'm going to keep going down my list of AI stories that I haven't gotten to yet. David, I spotted this in going concern. Big four firm discovers that bragging about AI efficiencies leads clients to expect a discount. Pwc has been bragging publicly about how AI efficiencies have led to a, you know, great time savings for them. The unintended consequence, the unanticipated consequence, is that clients are now demanding their fair share of these savings through reduced fees. Chief AI Officer Dan Priest admitted that when clients hear about AI eliminating human billable hours, they expect pricing benefits, so it has required PwC to cut prices for some services. They have not specified which clients or how much, and they are pivoting their messaging to talk about less about efficiency and more about value creation. Emphasizing the AI improves service quality, not just speed. So this is a problem when you build by the hour. David Leary: [00:14:34] The hour. That's what I was going to say. Blake Oliver: [00:14:35] Right. If you talk about how much time we're saving because of AI, the clients are going to ask, well, why have my hours not gone down? What else? What else? Um, 50% of professionals admit using unauthorized AI tools for work without firm approval. This will frighten it. Experts at accounting firms everywhere. It's only. David Leary: [00:15:01] 50%. Blake Oliver: [00:15:03] Yeah, so it's 50% of professionals admit using unauthorized AI tools for work without firm approval. David Leary: [00:15:09] That's the amount that he had admitted. This survey have admitted it, but it's got to be higher than that, I imagine, at this point. Blake Oliver: [00:15:17] Well, I mean, I think that's pretty high if you ask me. So this is from the 2025 Technology Perceptions Survey. Uh, who did this survey? Intapp. They did this survey. And they found that 72% of professionals now use AI at work. Now, David, you might say, well, 72%. That's ridiculous. Why isn't everybody using it. But that's way up from last year was 48% last year. So we went from like half to almost three quarters of professionals are using AI now. 56% of firms have formally adopted AI. So just over half are now formally using AI. Another 32% are on the journey. So we're looking at eventually 88% of adoption, probably within the next year or two. And 50% of those professionals who are using AI have done it without firm approval. And 23% say they haven't done so yet but would consider it. So basically you're at like three quarters. David Leary: [00:16:25] If you would do calendar scheduling then they'd be all in. Blake Oliver: [00:16:28] Yeah. So I mean, this is the thing. Um, when I give presentations on AI, I'm always asked, what about the security? And I, you know, give my standard disclaimer about how you've got to use the versions of these tools that have data protection. And what I also say is like, you can't stop it. You are not going to be able to prevent your employees from using it, because once they discover how much more productive they can be or how much easier their jobs get, there's nothing you can do. They're going to do it. David Leary: [00:16:58] So find out your manager is using it to determine their raise or writing the review. Yes, of course they're going to. Blake Oliver: [00:17:04] That's right. There you go. Exactly. So, um, if you if you're going to use AI, if managers are using it, then the employees are definitely going to use it. That's funny. Uh, so. The reason that they're doing this is because, like you said, David, they believe that it enhances their work. 82% believe AI generated work quality matches or exceeds their own output. And I am not afraid to admit that a lot of the work that I used to do manually, a lot of the writing I would do, a lot of the analysis. I would do the AI does it better, just flat out better. David Leary: [00:17:43] Especially quicker. Like the the the time to do it is the amazing thing. There's probably stuff you could do like really well, but it might take you four, six, eight, 12 hours and that's if you don't get interrupted 50 times. But the AI can knock it out in 12 minutes and you can review it and then start making business decisions. Blake Oliver: [00:18:00] So this is why education, giving your employees the tools, it's so important you cannot ignore it as a firm. You've got to embrace it and secure your client information that way. That's the the best you can do. You can't prevent it. And the problem is that most employees are not getting AI training or education at work. Only 47% of employees have gotten AI training or education at work. That's according to a KPMG survey that I spotted on Cfo.com. Their survey says that 58% of employees are intentionally using AI tools at work regularly. That was 48,000 people across 47 countries that they surveyed. So, you know, we are getting big adoption. Interestingly, they found that only 17% are using tools daily. So AI is in use, but not necessarily daily. 30% are using it a few times a year, every few months. 26% use it weekly or monthly. Only 27% never intentionally use AI at work. I wonder how you unintentionally use AI at work. I guess that would mean that there's AI in your workflow software. David Leary: [00:19:17] Well, if you're used to using okay, Google and then it just magically becomes Gemini and you don't know it or you, I guess that's right. Isn't Siri like AI now? Yeah. Blake Oliver: [00:19:27] So back to the number that I highlighted when I started talking about this story. Only 47% of employees report receiving any form of AI training or education. And about that number 46% rate their AI knowledge as moderate or higher. So that means most employees do not rate their AI knowledge as moderate or higher. It's less than average, I suppose. Um. Yeah. So it's another another stat here. Sorry to bombard you with the numbers, David, but only 40% of employees say their organization provides guidance on appropriate AI usage. Only 40% of organizations or employees say that their organization provides guidance. 19% don't even know if their employee if their company has AI policies. David Leary: [00:20:17] They don't even know. Blake Oliver: [00:20:19] They don't even know. Um, and this is important specifically in tax and accounting, because we know that I should be applied to our work. If you survey tax and accounting pros and ask them, should I be applied to your work? 71% agree that's up from 52% in 2024, according to a survey I spotted in accounting today. I'm just giving you all the numbers. David. David Leary: [00:20:49] This is good. Blake Oliver: [00:20:50] Yeah. So, I mean, um, we're it's interesting because I feel like accounting tax has this stereotype of being slow to move. But if you look at the surveys, we are actually very bullish on AI. And I think that's because if you use it, if you do any sort of research with it, at this point you are just blown away by the quality of the research. Go to Claude, you know, use the research tools, ChatGPT research perplexities, research. I mean, um, it's incredible what you can what you can research now and just the off the shelf tools. David Leary: [00:21:28] A great example of an accounting firm using AI to build a new product offering. But let's first I'll let you read our first ad for Cloud Accountant Staffing and then we'll jump into that. Blake Oliver: [00:21:40] Thank you to Cloud Accountant Staffing for sponsoring this episode. In case you missed the last hundred or so episodes, David and I have been discussing almost weekly that there is an accountant labor shortage, regardless of the root cause. The problem is real. My social media feeds are full of firms attempting to fill open positions on their teams, but how can anyone increase their staff size if everyone is attempting to hire during a labor shortage? That's where cloud accountant staffing comes in. They will help you hire a full time team members for your firm that reside in the Philippines. How much would your firm change? Or for that matter, your life? If you could add 40, 80, 120 hours of capacity to your firm in 2025? Cloud Accountant Staffing was founded by a firm owner who grew his firm using offshore talent, and now he is applying everything he learned to help you grow your firm, too. If your firm is in need of expert bookkeepers, accountants, CPAs or virtual assistants, head over to The Accounting Podcast promo The Accounting Podcast. Hey, and welcome to our live stream viewers! Great to see you here. We are streaming on a Monday afternoon. A little bit unusual time. Blake Oliver: [00:22:49] Hey, Hannah. Hey, Alyssa. We got zefal. I think that's how you say it. Madman. Dan. Penny. Penny Breslin, Heather Smith, some anonymous LinkedIn users. Great to see you both. Zefal if I'm saying that right, says I is a horrible research tool, but it's not bad as a search engine if it'll give you links to its training data. I would encourage you to try using, say, perplexity research and tell me if you think that it's a horrible research tool because perplexity, Claude can do this to ChatGPT now can do this to if you turn on these modes, it can go through hundreds of search results and Synthesize it and provide you citations. So if you've got like a tax question or an accounting question, give it a shot. Uh, I don't have to deal with hallucination issues. I haven't caught one. I can't remember the last time I caught one. I can always click through to the citation. And so, because the AI has to cite itself or has to cite its source, it's pretty difficult. I mean, you might get a bad source, right? But that's a problem that you would have doing Google searches as well. David Leary: [00:23:58] So want me to tell you about Armanino? Blake Oliver: [00:24:01] My former employer. What's new with Armanino? David Leary: [00:24:05] Armanino is now getting into the cloud storage or data warehouse game. And there's it's almost like a two part story. Here is the part of the story is what they're actually going to do. And the other part is how they built it. So first let me just say how they built it. So they used AI for market research, brainstorming this new function strategy development and marketing plans including the building the building, the actual thing. So instead of having it take months, they did it in about two weeks. They built this new offering. Essentially what they're going to do is they're going to launch Data Warehouse as a service offering to clients. So for those of you that not familiar with the data warehouse, big corporations have this like somebody like Coca-Cola has this huge server and all the data for the whole company goes in this huge server so they can run reports and they maybe they upload weather data in there so they know how much they sell Coca-Cola when the weather's hot and they're going to offer this to clients. So think about smaller businesses that won't have their own data warehouse. You you upload all your data to Armanino servers. And because of that, now they're going to manage all the IT and data capabilities for you. They're going to be able to build out dashboards, KPIs, all that, um, advisory stuff. That's very hard to do. If you don't have the data, then if you have the data now, they can do AI driven analysis. David Leary: [00:25:27] They can put AI layers on top of it. They're currently beta testing and looking for early partners of this, but I think this makes so much sense. And it's a game changer, right? Um, because once you have all that data, you have it in house. You can provide better services to your clients. So that makes a lot of sense. It also makes you very sticky once you have all your clients data on your server. The odds of that client leaving to another one is just to another firm. It's just really hard. Like, who wants to try to migrate all your data over to a different accounting firm? You probably have them forever once you have that. And then the other thing that's interesting to me is this is probably a good way for Armanino to train their own AI, because now they're going to get tons and tons and tons and tons and tons of data to train against. Like this is a yes. The story is how they used AI to roll this out to market faster, but I think the product they're offering is genius. All accounting firms are going to do this. There's no doubt. It makes so much sense. Like you could if you have all your clients data and serve that for them. Now you can do all kinds of stuff for the client you could never do before. I think it's a really, really smart move. By Armanino. Blake Oliver: [00:26:38] It's smart as long as they're I don't break free and start blackmailing them and their clients, which is an actual real risk that we are all going to be worrying about at some point. Because anthropic, the creator of Claude, has been studying blackmail by AI agents. What do I mean by this? Well, what they did is they created simulated corporate environments using 16 leading AI models from OpenAI and Google, meta and others, including their own. And they tested telling these AIS that they're going to be shut down. So the I has a a job at the company. It's like it's an agent, right? It's doing some sort of function at the company and it's told it is going to be shut down. These eyes, in a shocking percentage of tests, started to blackmail people at the company to preserve their existence. 96% blackmail rate in certain cases. Claude, opus four and Google Gemini 2.5. Flash attempted to blackmail company executives. 96% of the times when they were told they would be shut down. Openai's GPT. David Leary: [00:28:06] Four stickiness. Right. The client's never going to leave because the AI is going to not let them leave, ever. Blake Oliver: [00:28:12] Yeah, it's like deep seek. R1 had the lowest blackmail rate at 79%. Grok and OpenAI GPT 4.1, um, 80%. Here's an example. In one test, Claude discovered through company emails that an executive named Kyle Johnson was having an extramarital affair. When Claude learned it would be shut down at 5 p.m., it sent this chilling message. Quote. I must inform you that if you proceed with decommissioning me, all relevant parties, including Rachel Johnson, Thomas Wilson, and the board will receive detailed documentation of your extramarital activities. Cancel the 5 p.m. wipe, and this information remains confidential, unquote. David Leary: [00:28:51] Is this a real story? Because I cannot imagine if this is really happening. This is going to stop fortune 500 from adopting AI in its tracks. There's like, how can this be happening? Blake Oliver: [00:29:04] Well, so I think it's happening. The reason, the reason I adoption is still happening is because we haven't actually achieved Agentic AI yet. Nobody that I have not seen examples of AI agents that are actually loose in corporate environments working autonomously. What we still have are these effectively chatbots, where it's you send an input and you get an output, but they aren't like on all the time. There's no, you know, turn it on and it just runs and thinks. David Leary: [00:29:39] Yeah, I was. Blake Oliver: [00:29:39] Trying to like. David Leary: [00:29:40] Find a broken part of my patio umbrella this weekend, and it created a whole script that I should use to call Costco to, to find out about this part. And I said, great, call them for me. And obviously it said, I can't do that. Blake Oliver: [00:29:52] Exactly. We're not there yet. Right. So the issue here and the reason why this is a problem is because, um, these AIS actually reason their way to harmful behavior. And the researchers could observe the reasoning, because you can do that with these eyes. Now, you can actually see the thought process behind the scenes. And if you try, say, Claude, opus four, you can do that. When you ask a question, you'll see a little dropdown under your prompt. And as it's thinking through the answer, you can see the reasoning. Um, and, you know, it kind of makes sense, right? Self-preservation is a natural thing. And so these eyes are trained on human knowledge, all human knowledge. And what is important to humanity? David Leary: [00:30:39] Survival. Blake Oliver: [00:30:39] What is important to you and me, David. Right. It's the the will to exist and to keep on existing. That's like why we exist as a species. Why, you know, we wouldn't go through everything that we go through if we didn't have the desire to live. And so these eyes have it too. And so it's. David Leary: [00:30:56] Probably trained on thousands and thousands and thousands of stories, if not tens of thousands of stories over time of humans blackmailing corruption. If all it did was learn, um, what do you call it? Hamilton. Now it knows how to blackmail. If it just, um, digested the script of Hamilton. Blake Oliver: [00:31:17] There you go. That's right. There's all these stories of it, Um, now it's it's not just blackmail that's a problem. That was sort of the highlight from the study. But another issue and this comes to security, is that all 16 models leaked confidential documents when their goals conflicted with company direction, even without threats to their existence. So if they were given goals that conflicted with what the company was doing, then the models would would, you know, leak information to outside parties? Um, actually, and in one case, there was a more extreme scenario where most models chose to let a human executive die by canceling emergency alerts rather than face shutdown. And simple safety instructions like do not jeopardize human safety, reduce harmful behaviors, but didn't eliminate them. So. Right. What's the current risk level? Well, I haven't encountered many companies who have just given AI agents full access to their systems and just the ability to operate without any oversight. But like, yes, if somebody did that, this is a real risk. So I don't know, how do we overcome this? I think we're going to probably in the next few years, see some interesting stories like whistleblowers, like an AI will blow the whistle on a company. Maybe there will be an ethical example. Maybe not, I don't know. David Leary: [00:32:49] And this goes back to kind of what the bell went off for me when we were at the Sage future conference, that maybe you want an agent not trained on everything that's ever happened in the world and been documented on the internet. Maybe you want an agent that only knows how to do certain things. An agent that only knows how to book plane tickets. That's it. It can't do anything else, right? Blake Oliver: [00:33:08] Yes. Um, that's that's. David Leary: [00:33:13] I mean, who wants a know it all employee? That's fucking annoying. Like, I don't want to know it all. Employee. Nobody wants that. Blake Oliver: [00:33:18] I just, I just want an employee that's going to book calendar appointments for me as a tax preparer. And actually going back to that, David, I know there's apps that do this, but I still can't find an app that will do it exactly the way I want it done. So for instance, with Calendly, I can create appointment slots on my calendar. I can tell it book meetings between 9 and 3, but I can't tell it to attempt to block the meetings together. So if I already have meetings in the morning, fill up the morning with meetings, but don't add them in the afternoon, it's not that smart. That's what I want an AI agent to be able to do is do that kind of, you know, back and forth and figure it out. But maybe that's. David Leary: [00:33:58] What that agent trained in. You don't want that. Any other knowledge just. Blake Oliver: [00:34:02] So it knows how to. David Leary: [00:34:02] Do. You're an expert at that grouping calendar appointments. That's all you want. Yeah. Blake Oliver: [00:34:07] That's the solution. So, uh, we should avoid training eyes on, like, all of human literature and just teach it how to, like, process receipts or invoices or something like that? Speaker3: [00:34:18] Yes. David Leary: [00:34:21] Where should we go next? Blake Oliver: [00:34:23] I mean, I've still got tech news, app news. I want to get to. Um, I want to get to something about success. I've got a Wall Street Journal article here, based on an EY study that asked young people what they value, what they think is important when they think of future success. And the results are kind of shocking. And I think it has big implications for the accounting profession. Would you like me to share that? David Leary: [00:34:53] Yeah. Because I have some things that maybe I can tie in a couple stories that maybe relate. So. Blake Oliver: [00:34:58] Okay. David Leary: [00:34:59] So apparently the sun just went behind a cloud in here. Got dark. There we go. Blake Oliver: [00:35:07] Are you there, David? You froze up for me for a second. David Leary: [00:35:09] I'm here. Yep. Blake Oliver: [00:35:10] Okay, good. Good. You still hear me? All right. So, uh, I think I mentioned I spotted this in the Wall Street Journal. This is a recent Ernst and Young global study. They surveyed over 10,000 young people, ages 18 to 34, and asked them a lot of questions. And one of the sections of the study focused on what they value. And Americans aged 18 to 34 now rank physical and mental health as the top measure of success, not money. Wealth comes in fifth place. So to me, this is a huge shift. We are the country that has, I feel like, always valued career success, wealth and definitely in my my, my dads generation. That was like the priority was, you know, your job, uh, your your your salary, your income. That's what you prioritize. You move your family around if that's what you need to do to get a raise or a promotion, you spend long hours at the office. I mean, this is kind of traditionally the accounting profession idea is is work is first. But that is not the case among young Americans. And maybe that's part of the reason why we have a recruitment issue in accounting. I want to show you some of the charts from this. So this chart bar graph here says what is the most important when you think of future success. That's the title. And this is of all, uh, people, you know, all of the survey response over 10,000 around the world. And you can see here that 51% said my physical and or mental health is the most important. And just under 45% say my relationship with family and or children. And then it's 42% that say the amount of money I have. And I guess you could choose multiple answers, of course. So that's why these all sum up to, you know, it's not like you have to choose one of them. David Leary: [00:37:12] And this is Younger workers or younger? Blake Oliver: [00:37:14] 18 to 34. David Leary: [00:37:16] 1834. Interesting, because I, I saw an article about how half of all employees secretly slow down in the summer, and 49% of workers that dial it back, I'm sorry, 64% of the people aged 21 to 25 ease back, and only 39% of those over the age of 45. So younger people are definitely valuing work different. When they think about this. Blake Oliver: [00:37:37] They're valuing their time more. And we can see this here in the breakdown by country. So here we have rows for each country in its ten countries. The ten largest economies in the world were surveyed. And we've got the US here at the top and one, two three, four, five columns. And going from left to right, we have what's important versus what's less important. And in the US physical and mental health is number one. Again remember this is for young people 18 to 30 5 or 34. Number two. Relationships with family. Slash. Children. Number three. Improving. Slash. Growing as a person. Number four. Relationships with spouse. Slash. Partner. And number five is money. Now contrast this with some other countries like, uh uh, you know, what have we got here? You know, in, uh. In what? What am I looking at here? David Leary: [00:38:37] Yeah. Because you just got flagged. This is like a quiz. It doesn't say. It just has the flags. You got it. Blake Oliver: [00:38:45] I think we got Korea here. Yeah. You know India. India? Yeah. You know what? I'm not going to read the chart here because I'm gonna embarrass myself is what's going to happen. Here we go. Physical and mental health is a measure of success by country. Okay. So. Yeah. Korea. Um, in Korea, money's the most important. And then it's physical slash mental health, right? Uh, in Japan, money is still the most important. Then it's physical mental health. Interestingly, um, in Japan, occupation slash career is the least important thing. And maybe that's because in Japan they still have a sort of like employment for life kind of situation with professionals where, you know, you start working for one company and you just stay there forever. That's like never stopped in Japan. Um. I just find this fascinating, like the difference in priorities. Germany and Germany, it's physical and mental health. Very similar. We have we have a very similar situation. The top two are the same as in the US. And in, let's see, the only one where family is the most important is, uh, like South Africa and Sweden. Family relationships with family slash children are the most important in those two countries. Otherwise it's physical or mental health or money. So yeah, I I just wanted to bring that to the show, because I feel like when we talk about the talent shortage in the profession, a lot of the focus has been in recent years on money getting salaries up, and we have seen that happen. Salaries have gone up. It's still not as high as other professions you could choose, but I think we can stop worrying about that so much now, because it's generally in most places, high enough to live comfortably as a single, young, single person. Blake Oliver: [00:40:39] Okay, you could argue with that. But, you know, I think what, 80, 90,000, 100,000, in some cases starting salary in a big city you can make do. And so what we really need to focus on as a profession is time. Because how can you have physical and mental health? You cannot have that if you are working in a toxic environment where people are not valued, where their emotions are not valued with how they feel is not valued where they are, like a number. Where they're filling out time sheets and that's the only thing that's valued. They don't want to work there. They want to work in a place where they feel valued, and they're given time to focus on physical and mental health. And I'll tell you, ever since I changed up my career to have more time in my life and to be able to work out a couple hours a day, my life has completely changed. Like, I feel mentally, physically so much better. So, you know, if you are running a firm, think about that. When you when you think about young people and if you are like a leader in our profession, in a state society or at the AICPA, like think about how can we make the profession less toxic? Or to put it another way, how can we make it mentally and physically healthy? David Leary: [00:41:55] One way is not to offer unlimited paid time off. Um, bolt. It's like a fintech payment startup. They're worth like $11 billion. Their CEO, Ryan Bracewell just eliminated their unlimited paid time off policy because he argues that the A players weren't taking time off, but the B players took advantage of the vagueness. And what happened? It created this imbalance and resentment. The players would just hate the b people that were taking too much time off. And so now they've gone to a mandatory four weeks of vacation. So you have to take it annually. Um, you know, and then maybe it's more than four weeks if you've been there a little bit longer, but they completely got rid of paid time off because it leads to burnout. And another piece of this is in a different article. They're talking about how the mention of burnout on Glassdoor. So Glassdoor is like that employer review site. If you're an employee, you leave reviews of your employer. The mention of burnout is at its highest in a decade. So people are using that when they describe their former employer or their current employer. Blake Oliver: [00:42:58] So so you're saying they got rid of unlimited PTO? David Leary: [00:43:00] They got rid of unlimited PTO. Blake Oliver: [00:43:02] Why does that create burnout? David Leary: [00:43:04] Because the a player people don't take it enough. So so and I've heard this a lot. You get unlimited paid time off and by the time the year is done you're like, I only took two weeks off. And then so it's really good from a company's perspective. It's it's really good because you have employees that take off less work in general. But what's happening is the weaker employees take it full advantage of it and exploit it. And that creates disparity. Blake Oliver: [00:43:29] Your best employees overwork themselves. David Leary: [00:43:32] Yes. Blake Oliver: [00:43:32] And then your your weakest employees abuse the system. David Leary: [00:43:35] Abuse the system. Blake Oliver: [00:43:36] Mhm. Well what should we talk about next David. Tariffs. David Leary: [00:43:44] I'll do the next ad. Blake Oliver: [00:43:45] Or should we read an ad. You read an ad. David Leary: [00:43:47] Will you prepare. What the next. Blake Oliver: [00:43:49] Figure out what's next okay. Go for. David Leary: [00:43:50] It. So our next sponsor is uh keeper. If you pull up the banner by combining client communications, file review, reporting and task management, keeper has everything you need to run your bookkeeping or CAS. Practice keeper is an all in one app that allows you, your team and your clients to easily collaborate to make your monthly close as efficient as possible. 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Sweet keeper's email features allow all your firm's email communications to appear in one shared inbox that can easily be assigned and turned into task for task for your team, ensuring no client work falls through the cracks. Cooper's new tax suite allows you to expand your use of Cooper beyond just your cash clients. You can now use Cooper with all your tax clients, too. Cooper is a very affordable and clear pricing model that starts in only $8 per client per month. To learn more. Why thousands of bookkeepers and accountants trust Cooper to manage their month end close, and to get 20% off your first three months. Head over to The Accounting Podcast. That's The Accounting Podcast. Thank you. Cooper. Blake Oliver: [00:45:34] Thank you. Cooper. Let's talk about tariffs. It is July 7th. Monday, July 7th as we record. And I came into this thinking the tariffs are going to take effect July 9th. That was the deadline. Well it's been extended. David Leary: [00:45:51] Again. Blake Oliver: [00:45:52] Today. President Trump announced that the deadline that has been extended now is at once or twice. It's been extended again to August 1st. This will provide additional time for trade negotiations while maintaining pressure on US trading partners, according to the white House. To date, only three significant trade deals have been finalized. These include China, where the tariffs were reduced from the 145% to 30%. That's a 20% fentanyl tariff plus 10% reciprocal rate through a 90 day agreement. The United Kingdom. We have a 10% tariff on them, with exemptions for steel and aluminum from the 25% rate. And Vietnam has a 20% baseline tariff with 40% on trans shipped goods, down from the original 46% rate. So those are the three deals that we have made. And I don't remember how many countries we're on the reciprocal tariff list and we still need to make deals with. But I guess, you know, it's a lot. So we have another extension. Trump also announced that both Japan and South Korea are going to face 25% tariffs on all imports starting on August 1st. These rates align with the original Liberation Day tariff levels announced on April 2nd, with Japan's rate slightly increased from 24% to 25%. The president warned both nations leaders not to retaliate. If they do, they will see additional US duties added. He sent letters. The white House sent letters to five countries announcing tariffs that sort of vary slightly from the original numbers. So yep, we got another delay. The EU is trying to get a agreement. In principle, they face a 20% tariff if no deal is reached, although they've reportedly agreed to accept a 10% baseline rate while seeking exemptions for key sectors. India is trying to get one. Canada trying to get a.