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Will California Be First to Deconstruct the 150 Hour Rule? · 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! David Leary: [00:00:04] So Intuit, this is just April 15th. April 15th of 2024. They logged 185 billion real time transactions and processed 14PB of real time data in one day. Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:25] Hello and welcome back to the Accounting Podcast, the number one show for accountants in the world. I'm Blake Oliver. David Leary: [00:00:31] I'm David. Blake Oliver: [00:00:32] Leary, and we're joined today by Amber setter. Originally I was going to have Amber in the back, uh, in the backdrop off the show until we went live, but I forgot to do that. So Amber, welcome to the show. Amber Setter: [00:00:41] Hey, I'm happy to be here. Blake Oliver: [00:00:43] We are here to talk about California. And you're in California. You're in Carlsbad, California, you're a CPA. And you posted on LinkedIn about the California Board of Accountancy moving to create legislation to create an alternative to the 150 hour rule. I couldn't believe this. Amber, I want to get your take on this. Before we do that, I got to play this video from the California Board of Accountancy that explains what happened at the latest meeting. California Board of Accountancy Clip: [00:01:13] Hi, I'm Andrew from the California Board of Accountancy with your July 25th and 26th 2024 meeting recap. This meeting was significant for the CPA next project with aims to modernize mobility and CPA licensure requirements. After an in-depth discussion of agenda item 2D3 regarding mobility, the CPA approved a motion to direct staff to draft a legislative proposal for review at the September CBA meeting that would implement automatic mobility. Automatic mobility would potentially allow CPAs and other states to automatically have practice privilege rights in California, subject to important consumer protection safeguards. Another important discussion took place on agenda item 2D4 regarding the minimum requirements for CPA licensure. The board was presented with an overview of possible options to modernize the licensure requirements, while still ensuring they align with minimum competency for safe practice. The CPA approved a motion to direct staff to draft a legislative proposal for review at the September meeting that would eliminate the total 150 unit requirement and allow applicants to meet the educational requirements with a bachelor's degree and an increase in experience. The proposal would also preserve a pathway for applicants to complete a specified advanced degree, with a one year experience requirement in the agenda item. This is referred to as the Licensure Framework with Expressway. Representatives from the California Society of Certified Public Accountants were in attendance to share their organization's support on both agenda items. All meetings can always be viewed live or on demand on the live stream page of the CBA website. Thank you for watching and we'll see you in September from San Diego. Blake Oliver: [00:03:15] Wow. I am amazed. First of all, great production on that. Kudos to the California Board of Accountancy. And, uh, Amber, you were first to LinkedIn with your take on this. Uh, give it to us now. How do you feel about this? How's it? What do you think about what the CBA is doing? Amber Setter: [00:03:36] Yeah, well, first and foremost, I learned of it last Wednesday. I was at the Cal CPA. They had their member summit in Huntington Beach, and I happened to sit on the Government Relations Committee. So I first heard about it on Wednesday. And much like you said, surprised, I like raised my hand and I said, wait a minute, am I hearing this right? Like, has there been a seismic shift in what's going on? Am I really hearing that we're softening on this and this old narrative like we have to have 150 because of mobility, which I never believed to be true, but was the narrative. And that has definitely shifted. So kudos to the California Board of Accountancy and the Cal CPA for their legislative efforts, for starting to write some really meaningful legislation. Blake Oliver: [00:04:24] And maybe this is the result of that survey that we saw the California Board of Accountancy put out not that long ago. They did a survey monkey, and according to a memo that they published last month, got thousands and thousands of responses, over 7000. And they published the results here. And I want to highlight some of these for you. 89% of respondents agreed that a bachelor's in accounting should fully meet the educational requirements for licensure. I think that is the biggest number we've seen in any of these surveys so far. I recall, uh, what, David, do you remember what state did it? And it was like 80%, 79%. I thought you said. David Leary: [00:05:10] Arizona. Blake Oliver: [00:05:10] Was. David Leary: [00:05:11] Yeah, Arizona. The paper magazine said Arizona. Blake Oliver: [00:05:14] And, um, but this is way beyond that. And the AICPA did its own survey and it was like in the 60s or 70s. But this is quite definitive. I mean, you know, when, when, when can you ever get 89% of anybody in this country to agree on anything? David Leary: [00:05:29] So so they went from survey these results to writing legislation. Now no study. We need to have committees. They're like, write the legislation like it's that obvious to them. Blake Oliver: [00:05:40] So only 11% of respondents in the survey said that they think we should keep the education requirement. Um, or 10% said that, um, nearly half of partners slash hiring managers would prefer to hire someone with a bachelor's and two years of experience, compared to only 10% who preferred an applicant with an advanced degree and one year of experience. And most respondents, 76% would support the removal of the 150 semester unit requirement, even if it impacted a CPA's ability to obtain practice privilege rights in other states. So that Amber goes to that mobility argument. Apparently, California CPAs just aren't that concerned about mobility. Why do you think that is as a California CPA? Amber Setter: [00:06:29] I mean, I think first and foremost, the results of this survey are really reflecting the sign of the times. You know, we are living in an era where it's not like this pipeline issue is going to happen. We're living it. Right? So when I'm in my work as a professional coach, talking to accountants all the time, these are the things I'm hearing. I'm hearing. One is there's not enough levels of review in the system because they don't have enough people to do the work. And then that becomes an issue with the Board of Accountancy, right? Whether you're the people who say, well, lawyers and doctors, they don't you can't water down the education. State boards exist to protect the public. And right now, the public's not being protected without an adequate amount of people to do the work. So, you know, in California, we have just like I think across the US at this time, not enough people to do the work. You know, un inadequate levels of review. And that is an issue for the public, I think specific to California. I mean, let's be honest, we are a big domino in this system. So we're not the first state that said, hey, let's try and do this legislation. Minnesota did it. And what did AICPA do? They sent letters to all the the CPAs in Minnesota like, oh, you know, this threatens mobility. And I don't think the AICPA has the gumption to try and do that in California. I think California is a huge domino. I would hope other states are already calling California up saying, hey, what are you doing? We want to do this too. And, you know, here we go. Maybe we can really dismantle this thing. Blake Oliver: [00:08:09] And what's great about what California is doing is they're not just creating the alternative pathway. They are also broadening mobility so that any CPA I mean, this is all draft legislation, right? Let's just put that. And it hasn't even been drafted yet. They have simply authorized the staff to draft the legislation. But what they want, according to this memo, is that any CPA license in another state will automatically get mobility into California without having to prove that they have the education requirements met. All this nitpicky stuff that you experience when you try to go from one state to another. Let's just streamline that right. David Leary: [00:08:50] And that's interesting because then other states are going to copy that. They're like, hey, if it's good enough for California, we should have the same policy. Yeah, it's like. Blake Oliver: [00:08:57] Driver's licenses, right? When you drive across a state line, you don't have to go to the DMV and prove that you pass the exam to get licensed in California. Right, right. Like that would be a little bit inconvenient, right? So, yeah. Amber Setter: [00:09:10] I had a student who sent me a LinkedIn message in response to my post and they said, help me understand who is the AICPA versus the CBA. And I think that sometimes we lose sight of that question. Right. What is the AICPA responsible for? They're responsible for exam content. Nasba is responsible for administration. The state boards of accountancy have the jurisdiction to say what the educational requirements should be and experience requirements. So just because the AICPA has an opinion about it doesn't mean we have to follow as a state that opinion. And the moment that California says, oh, we're going to recognize a CPA, if you're a CPA, wherever you're a CPA here, and that's a new thing, right? And that's why I've said for a long time, like when we say we can't get rid of 150 hour rule because of mobility, that's the laziest answer. There's no critical thinking in how do we make this work? And California is paving the way for how we can make it work. Blake Oliver: [00:10:16] Now, to be fair, the AICPA has created the National Pipeline Advisory Group, and they have just issued their report on what to do about this CPA pipeline problem, and I went through it. I took a look at the PDF and it it really is, unless you guys think otherwise. Like to me it looks pretty much like the same thing as the draft report that came out a few months before. And there's no specific, immediate recommendations to make changes to fix the pipeline. I think this is my biggest complaint about the AICPA is that every single initiative seems to be let's do more research. You know, let's let's do another survey. Let's gather input from stakeholders. But when it comes time comes time to act. There's nothing there. And I just why is that? Why why can't the AICPA understand that this is urgent and we need to do something like this year? David Leary: [00:11:13] Well, I think and I've not looked at the final report, but I think we've talked about this before. And you start reading between the lines. Some of the language they're using is almost like they're accepting changes coming, but they want to be in control of the change. They don't want all the states going and doing this themselves. They want to be the ones that make the change for this. Blake Oliver: [00:11:31] Rule, but then they don't make specific recommendations for the change. It's like very broad and there's no specific timeline. It's almost like they're afraid to do anything. They just want to talk and talk and talk. And I mean, you look at the numbers and we are on a plummeting negative trajectory with with CPA licensure. Like there's just not time for this. We're going to if we don't do something about this in the next year or two, we will be in a situation where there aren't enough accountants to ensure that financial statements are accurate and free of, you know, misstatement. And that's a threat to our economy. It truly. Amber Setter: [00:12:10] Is. That's the thing that I when people it's interesting and the LinkedIn thread where people are like there's a few you know, those ten percenters, let's refer to them as they're like, well you're watering the designation down. I'm like watering the designation down or protecting the public. I don't know, you know, and to your question of like, okay, the the AICPA does surveys and they put out information, I think what they're lacking is boldness in their action. Right. And we need to do things faster and quicker. And I get it. I get that it's hard when you're a behemoth organization. You're the Titanic, you know, one degree of change, one degree of change. But that survey was nice. But the only action I saw to take out of it was to take a pledge. I need more than a pledge. I need some legislation. I need some changes. You know, people need to know that they're being heard because we've we I would say us on here. And thank you to you, too, for being advocates against the 150 we've been saying for a long time something needs to be done. And now I feel like finally affirmed that some action is coming, right? We're we're turning a corner. Um, hopefully people will follow. And I think this is fantastic news for the profession. Blake Oliver: [00:13:28] Really great news. Amber Setter, thank you for joining us to discuss this. Hopefully we'll have you back. Uh, when the California Board of Accountancy moves to push forward draft legislation to put that to the legislature. Amber Setter: [00:13:42] Hey, it just so happens that their next meeting, when they're going to talk about the legislation, is at Cal State San Marcos in September. And I'm about to move five minutes away from Cal State San Marcos. So if as long as it's public, I will be there taking copious notes and I'd be happy to report back. Blake Oliver: [00:14:00] Excellent. We'll talk to you then. Thanks, Amber. Amber Setter: [00:14:02] Thank you. Blake Oliver: [00:14:05] Amazing. Welcome to our live stream, viewers. Uh, boring accountant. Our biggest fan. Here. Three coffee emojis. Like and subscribe as well. Thank you. Actually, I would like to, uh, let all of our listeners know we are nearing an important milestone. We we are approaching 20,000 subscribers on YouTube. I think we're at 19,600 right now. And if we get to 20,000 soon, we'll get there. Before Jason's stats, the number one accounting YouTuber who inspired us to go on video to turn this from an audio podcast to a video podcast. So, uh, let's race to 20,000. Find us on YouTube, just search for the accounting podcast, subscribe and hit that notification button and you will get notified when we go live. And David, before we go to our first ad break, I want to call out boring accountant's comment here. Boring accountant says most students are taught to believe that the United States is one country, when in reality the United States is 50. States slash countries coming together as one nation very similar to the EU. Yes, unfortunately, I feel like a lot of kids don't take civics these days. And if you take civics in high school, you will learn that the United States is a federalist system, right? Where, uh, a lot of stuff, especially the CPA licensure process, is reserved to the states. Right? All powers not explicitly granted to the federal government are reserved to the states, including licensure of professions. David Leary: [00:15:39] Because the states are just using Nasba and RPA as a service, because the state doesn't have to build their own test. Yeah, right. And administrate their own tests. So they're just they're utilizing these contractors to some extent. They're third party contractors providing a service to them. Blake Oliver: [00:15:52] And, you know, this is why I would argue that like Nasba in, in, in some ways could be considered unconstitutional because these states have delegated important decision making authority to an organization that is actually a private corporation that is accountable to no individuals, to no taxpayers, to no citizens. And if you ask me, that's why we have this problem, because the people who work for Nasba are so insulated from public opinion, from accountability that they can do whatever they want. They are unaccountable bureaucrats. And you want to talk about the deep state? That's the deep state right there. That's the deep Nasba NASA's the deep state, uh, to use uh, a popular term. And with that, let's go to our first sponsor, Live Flow. Thank you. Live flow for sponsoring our show. David Leary: [00:16:42] Live flow is successfully, successfully automating financial reporting from QuickBooks Online to Google Sheets for hundreds or thousands of accountants in their clients. But if you're an accountant that has used Microsoft Excel, you've been missing out until now. Now you can use Live Flow to connect Microsoft Excel to QuickBooks online and sync your reports and custom dashboards in real time with Live Flows. Newest feature. In just a few clicks, you can automate financial reporting from QuickBooks online and sync your data with Excel to create live auto updating dashboards and reports. Keeping your clients in the loop and Live Flow makes customizing reports easy. Add rows, columns, calculations without breaking the live connection. Even your formatting stays in place when the QuickBooks data refreshes. You'll save hours every month by eliminating manual exports and fixing broken spreadsheets, and you'll finish client work in record time by utilizing live flows. Over 100 customizable templates. It's a true set it and forget it solution that allows you to spend more time offering insightful client advisory to revolutionize your financial reporting within Excel with Live Flow and get 25% off your first three months, head over to The Accounting Podcast dot promo slash live flow that is The Accounting Podcast dot promo forward slash l I v e f l o w. Blake Oliver: [00:17:57] And as somebody who previously, uh, stayed up late exporting and reexporting financial statements because I missed something, I would have loved to have Live Flow when I was a manager doing financial reporting for my past clients. So check it out. Support our podcast by doing that. Thank you. Now, David, we've got more to talk about than just CPA licensure. What else is hot? What have you been following the last week or two? David Leary: [00:18:24] I think for me, um, we saw Markham, CBA, Markham. That's that was kind of a big news. Blake Oliver: [00:18:30] See CBI's a merging with Markham to create one of the largest accounting firms in the world. Now. Mega merger as described by accounting today. What are the details? David Leary: [00:18:42] So congratulations to all of you on the top 100. You all moved up one notch in your rankings because, uh, CBI's with mayhem, who did a lot of administrative stuff for them. They were ranked number 11th. And then you had Markham ranked at number 13. So Cbiz, which is a public company, is now buying Markham for $2.3 billion in cash and stock. Now they're only buying their non-test assets of Markham. And then the. Mhm. Which is uh, Mayer Hoffman McCann PC that's they're acquiring the test assets. Blake Oliver: [00:19:18] So this is the alternative practice structure that CBS has. Or is it a different are they a related firms, the. David Leary: [00:19:24] Related firms where they're partner where they did certain types of work for CBS. Yeah. Got it. Um, so this is going to combine it's going to give them 10,000 team members and over 135,000 clients. Um, so one thing I was wondering about this was the SPACs. Right? I mean, remember, Marcum and Rhythm were doing the vast majority of SPACs. Mhm. Um, and I went back and looked it wasn't as big as I was, like even with all the specs, but with them really did a lot more of the SPACs. But Markham said they, uh, had one fifth of its total audit fees. 184 million were attributed to auditing SPACs. So in the grand scheme of the whole deal, I think the Spac stuff was just a teeny bullet point. Blake Oliver: [00:20:05] Right. Well, my question about this whole thing is, what's going to happen to the staff? Is this going to be good for the staff, or is this going to be bad for the staff? And maybe it won't matter at all. It'll just be a different logo on the door. But there is one data point that makes me a little concerned, which is that of all the big accounting firms on Big Four transparency. Com, which is a crowdsourced salary website that also allows people, allows accountants to report the hours they work. Cbiz has the highest amount of overtime of any of the firms. Cbiz is a private or a public company and not a traditional accounting firm. So will Markham employees staff be working more hours now that they're part of CBA's? Seems probable. And this is the concern I have with all of these, uh, either publicly traded accounting firms or accounting firms that are being owned by being bought by private equity is. Well, how do you get profits out of these firms if you're a traditional minded, uh, manager in an accounting firm, it's work from as many hours as you can and bill as many hours as possible. So we'll see. David Leary: [00:21:22] So CBS is a public corporation. So I'm assuming it's a full C-suite C-suite hierarchy of decision making. Right. Blake Oliver: [00:21:30] Yeah, I would assume, I don't know, a partner vote. David Leary: [00:21:32] Right. Not consensus of all the partners. So how does that work? Like if Marcom had more of the partner ownership model of decision making, they're just going to like throw that away. I mean. Blake Oliver: [00:21:42] Without more details, we can only speculate. But I would speculate that basically the equity partners have been bought out. They are getting paid either up front or over time, and there will be no equity remaining for the Marcum folks. So the, the people who, uh, are probably the most affected by this in a negative way are those managers and directors and non-equity partners that we're hoping to get an equity stake in someday. David Leary: [00:22:09] Because you talked about last week, the non-equity partners, right? Blake Oliver: [00:22:12] Yeah. And that's no longer available to them. So will we see an exodus from Markham? If somebody wants to get equity, they're not going to get it at Cbus unless Cbus has some sort of like employee stock ownership plan. But I haven't heard about that. So. All right moving on. The Pentagon has found another $2 billion for Ukraine with accounting errors. We talked about this months ago on the pod, and it kind of boggles my mind that you could find $2 billion due to accounting errors. But I guess the military is enormous. So it's possible. What basically the story is this. The US Department of Defense has struggled with accurately valuing defense articles sent to Ukraine due to unclear accounting definitions. So originally, when this equipment was sent to Ukraine, the Pentagon used replacement value instead of depreciated value for calculating the billions of materials sent to Ukraine. And we all know that something that is fully depreciated or nearly fully depreciated has almost no or no accounting value. David Leary: [00:23:22] So if they sent a jet that was $100 million, they counted it as $100 million of value. Now they realized, oh, wait, that jet's really worth $20 million. Blake Oliver: [00:23:29] Yeah, or less, right? Yeah. So apparently it's been $6.2 billion adjustment at this point because they've, they've started using or they switched to using the depreciated value. And um, I guess the reason they're able to do this is because the the Foreign Assistance Act, the language in the legislation that authorized this funding, doesn't specify what type of valuation method to use. So if the legislation doesn't specify the value, the method to value the equipment, then the Pentagon can say, well, you know what? We're just going to switch valuation methods and use the one that's most beneficial to us, which is the Pentagon wants to the administration wants to support Ukraine right now, so that's what they're going to do. So it was 6.2 billion. David Leary: [00:24:15] And now it's an additional 2 billion. Blake Oliver: [00:24:17] Well it was a $6.2 billion cumulative error at this point. David Leary: [00:24:21] Oh cumulative. Blake Oliver: [00:24:22] Okay. And this is the next $2 billion that they've found by revaluing the equipment that was sent to Ukraine. So lesson here is always specify a clear definition for how you're determining the value of anything that you are selling or donating or buying in a contract. Because there are many, many different ways to value things. And you should be clear as to what method you're using. Value is highly subjective, and it depends on your accounting. David Leary: [00:24:51] And then on the other side, they're spending hundreds of billions to replace this equipment though that they're giving away. Blake Oliver: [00:24:56] Right. Right, right. So, you know, I suppose, like there's an argument to be made that, you know, uh, the the war in Ukraine benefits the American economy to some extent. There's that military industrial complex going on right there. Right. Because all this stuff has to be reordered to replenish our supplies. All right. What do you got, David? I have. David Leary: [00:25:17] Uh, some interesting numbers about AI from Intuit that just really paints a picture of. I talked about this before. Intuit scale, Intuit volume. It's always hard to comprehend. Right. And so they had a blog post really kind of recapping how AI was used during their tax season. Right. And it's a little bit of a look at us. We're so great type of a blog post. So I don't want to kind of go into that path. But we've talked about a lot of AI companies and they're like, oh, we have a billion data points we've trained our AI on. It seems impressive, right? So Intuit, this is just April 15th, April 15th of 2024. They logged 185 billion real time transactions and processed 14PB of real time data in one day. And they processed 500 million user requests and 11 million transactions per second across 50 billion data points. It is insane volume when you think about all these other apps that are going to start up money, and we've trained on, you know, this much data, the amount of data Intuit has is completely insane. Blake Oliver: [00:26:24] Yeah. I mean, when you when you cite numbers like that, it just just washes over me. I hear like the womp womp womp womp womp womp womp. That's what I hear. It's like Charlie Brown and his teacher. David Leary: [00:26:34] But one day, 185,000,000,001 day. That's crazy. That's from. Blake Oliver: [00:26:38] Turbotax. Yeah. Is that like everyone filing their return at the last minute? I can't even imagine what it's like to be one of those, like, reliability engineers at Intuit on the day before the tax deadline. Like praying and hoping. David Leary: [00:26:51] It's scary. Blake Oliver: [00:26:52] It doesn't go down right. David Leary: [00:26:53] It's happened before though. It's happened before. Blake Oliver: [00:26:55] And that's probably like, you know, millions of dollars of of fees that are lost if that happens. Uh. Where do we go next? Let's see. You mentioned I news, so I wanted to highlight an update from Avalara. Avalara has launched Avi, a generative AI chatbot designed to assist users with tax compliance queries through its global support portal and product interface. It's equipped to provide detailed guidance on product related questions and general tax inquiries, but does not have access to individual user accounts for personalized data. So basically, you can get support, ask for help with tax questions. And it's using chatbot technology, AI, chatbot technology to give you that. Um, and it was developed using advanced AI models in Avalara is extensive tax compliance knowledge. It continuously learns and updates its responses based on new information, and it's now available at no cost to users. It's been added into this global support portal. David Leary: [00:28:01] And so it's part of a support portal. It's not part of like individual products. Blake Oliver: [00:28:05] No, not at this point. It doesn't look like but I think that's where the opportunity is, is, uh, you know, once people get comfortable with it, having access to your data, then I feel like especially for stuff like sales tax, where there are so many different rules and so many different jurisdictions, I is a perfect solution to getting answers, to say, like, here's a product that I'm selling in this address and what are all the things that I need to think about in terms of, is this taxable or not based on all the different local state rules and where I'm shipping it, who it's shipping from, like an I should be able to figure that stuff out really quickly. David Leary: [00:28:49] Or get you closer to when you bring in an accountant or somebody to review it. Most of the work is done already. Blake Oliver: [00:28:55] Yeah, and welcome Heather Smith who has joined us live. Heather says hi from Houston. Nice to watch in the same time zone. Yeah. You don't have to get up so early for us. David Leary: [00:29:05] Actually, since Heather's here, we need a little, uh, down under reporting. I saw looks last week. Zero had an outage. I didn't really hear about it till days and days afterwards. Did any insight to that? Heather, you could put a comment in there. Blake Oliver: [00:29:19] Put a comment in the chat. And same goes for all of our live stream viewers. If you have any thoughts about what we're talking about, or you have stories that you think we should cover, we see all of it here. Whether you're on YouTube or LinkedIn or Facebook, we see your your comments here in our streaming platform. So go ahead and let us know what you think. All right. Where next? David Leary: [00:29:40] I have a quick eye thing because this is the dream you've talked about a lot. You have some AI that collects your tax documents. Blake Oliver: [00:29:47] Mhm. David Leary: [00:29:47] So safe send uh announced they're debuting their uh product that's called next gen gather AI. So it'll be interesting to see what this is going to do. But essentially it's to help you collect e-signatures engagement letters, generate those questionnaires, collect all those documents. You've talked about this, Blake. Like somebody needs to build this. And that's going to really help the firm. So safe sends rolling this out. I don't know when it's going to be rolled out. I actually on I'm a client of a firm that uses safe send. So I hopefully maybe I get to experience this and I'll report back. But this is another, you know, good use of AI which it's not building the tax. It's not making the final decisions. But if it can just collect documents, it's super efficient. Blake Oliver: [00:30:32] Evan, welcome to the show. Evan says hey from Philly. I've been watching y'alls shorts for a while now. Oh, that's awesome that the shorts are getting people to come to the live stream. Um, YouTube shorts has been incredible. We started putting out clips every day on YouTube shorts and millions of people have seen them. And I'm wondering to myself, who are these millions of people? So, Evan, uh, I'm glad you saw them. I'm curious to know, are you an accountant? Are you, uh, a tax professional audit? What do you do? We'd love to know more about our listeners, so feel free to put that in the chat as well. Heather says Xero had two big outages due to AWS, so not Xero's fault, just the the platform that they're on AWS. Uh, whenever AWS goes down, about half of the accounting cloud accounting infrastructure goes down as well. Um, not as bad as CrowdStrike, but, uh, you know, they're usually up pretty fast. Actually, since we have Heather on the show, I want to play a video that Heather sent us a little while ago. "The Accountants" Clip: [00:31:31] Each and every one of you has the power to change the world. Blake Oliver: [00:31:40] This video is called The Accountants. "The Accountants" Clip: [00:31:42] To Bring People Together. Change the game. Protect the planet. Blake Oliver: [00:31:56] I don't even know how to describe what we're watching here, but picture an Avengers movie. "The Accountants" Clip: [00:32:01] I've become champions in a league of your own. Blake Oliver: [00:32:08] Heroes will rise. "The Accountants" Clip: [00:32:09] It's time to make epic things happen. Blake Oliver: [00:32:13] The accountants must see for your future career. Apparently this movie, this not a movie. This clip has been played up. Hold on. Gotta stop that. Apparently the clip has been played in, uh, movie theaters in Australia. Now to promote accounting as a cool profession, I don't know how to describe it. David Leary: [00:32:32] So before the new, uh, Deadpool Wolverine movie starts, this would play in front of the movie as a trailer or a commercial. Blake Oliver: [00:32:40] Yeah. Now. Okay, it is kind of neat. It's I gotta say, it is. It is great to see accounting being promoted as like a exciting profession. But also, I think there's danger in this because when expectation does not meet reality, then you have a disconnect. And I think we can fairly say that accounting is not like it is represented in that trailer there. And I have always said that accounting isn't cool, accounting isn't sexy. It doesn't have to be. And so we shouldn't market it as such. Like that's not the solution to the accounting shortage. In my humble opinion, the solution to the accounting shortage is to make accounting a great job. It doesn't have to be cool or sexy if you just make it, uh, offer work life balance, flexibility, work from home, and a decent salary and job security. Plenty of people will sign up for that. We don't all need to be heroes, right? The people who want to be heroes, they can go be paramedics. And you know, the people want to be heroes. They can be firefighters. Uh, that's not accounting. We didn't sign up for that. We don't want it. David Leary: [00:33:59] It ties into I worked the election last Tuesday, and I was really thinking about what's the appeal of that to me, besides the fact that I believe people should vote and it really ties to like, fundamental core accounting, um, uh, interest or values or beliefs, uh, the way I like to work. Right. There's, I like process. So if you like process, it fits in. Well. There's everything ticks and ties at the end. Right? There's, uh, rigor and discipline and inventory. It's all happens during the election. And so it's it's a lot of accounting jobs, right? It makes a lot of sense. But maybe that's the way they should market accounting. Hey, do you like processes and procedures. Do you like it when things end up perfectly at the end? Maybe accounting is for you. Maybe play up the the personality types of things you like to do as being your in accounting job. Blake Oliver: [00:34:47] Yeah. Do you like playing, uh, epic strategy games with complex rule sets that you have to master in order to win the game? Because that's basically what accounting is, right? Like so. So that's what we need to be thinking about. Like, if I were the CEO of the AICPA, that's what I would be pushing for when we use our marketing dollars to promote the CPA credential license. Don't call it a credential. It's a license. People get upset about that. All right, David, it's time to thank our second sponsor of this episode, Lean Len. Flo. David Leary: [00:35:22] Len. Flo. So as an accountant, you've probably noticed that clients don't always choose the best options when it comes to financing or taking out a loan. Imagine being able to offer your clients a curated list of loan options that you've personally vetted, ensuring they receive a great rate, terms that truly benefit their business, and increase your firm's revenue with lend flow. This becomes a reality. 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Head over to Accounting Podcast Dot Pro Moldflow that is The Accounting Podcast dot promo forward slash l e and f l o w. Blake Oliver: [00:36:41] All right, David, my next story ties into what we were just talking about. How do we make accounting an appealing career. And I think this story is something we should be highlighting. I saw this in Moneywise. Com accountant Jeff Teeples left his $170,000 job at the age of 42, choosing to live off dividends from his $1.25 million portfolio. His decision was facilitated by his wife's stable job and his own financial planning. So this is a guy who went into accounting, got himself into a six figure role, worked really hard for. I'm going to guess, you know, two decades and saved up so much money that he has a nest egg of $1.25 million, and with that money, he can afford to retire. So he lived frugally. He avoided bad debt. He invested in dividend stocks. He paid off his $75,000 college debt quickly. He got a job at Boeing to do that, and he used the company's 401 (K) match program. And he has a very what seems to be like a smart investment strategy focuses on stocks that can deliver a robust total return, focuses on dividend income, dividend growth, price appreciation, rather than chasing those with the highest yield. So he's going for a safe approach. And yeah like that. That is something I would be promoting. 42. 42. David Leary: [00:38:13] He's one of those, I think they call them fire. Right. Financial independence, retire early like it's a it's a lifestyle. Yeah a. Blake Oliver: [00:38:20] Lifestyle. It was it was really popular a few years ago. It was like going around the financial planning circles, people talking about how they did this. And yeah, if you live really frugally, let's, you know, let's say you make, you know, $150,000 a year and you can live off just the 50,000. You can save $100,000 a year. Yeah. That's so quick. Yeah. And that would, you know, I mean, you got to pay tax on that. So it's going to take longer than ten years to get to the million dollar mark. Right. But over 20 years you could certainly do that. And then, you know, $1 million portfolio could pretty easily like and safely return, you know, 5% to you conservatively to live on. And so if you've been living on $50,000 a year, you could continue to live on $50,000 a year and not work or just work if you want to. And that's your play money. That's your vacation money, right? So I love this idea. I think that we should be talking about how accounting is a great pathway to this. And actually I was talking with my wife and she says that one of the one of the moms in her mom group in our neighborhood actually did this, worked for a Big Four worked really hard for like, um, ten, 15 years and saved a bunch of money and just quit and now doesn't work anymore and has enough money to, you know, it's the nest egg to live off of that. David Leary: [00:39:42] So so your argument is like we should be finding more stories like this. If people that worked really hard for a short amount of time and retired early from accounting. Blake Oliver: [00:39:50] Yeah, especially if you want to try to attract people into those jobs that still require a lot of hours. Right. Because that to me is a reasonable reward. I would consider signing up for something like that if I were 20 years old, and I saw that as a possible pathway is like, okay, I'm going to work really hard for ten, 20 years and then I'm going to retire early. I might sign up for that, but I wouldn't do it if I'm going to work for the rest of my life. And usually those. David Leary: [00:40:16] People that are signing up for that fire lifestyle usually already have, like personal finance, it's a hobby of theirs. So it's not you're right, it's not too much. Far of a jump to encourage them to just become accountants. Blake Oliver: [00:40:28] Yeah. I mean in that way accounting almost becomes like, um, like being a police officer in that, right? Those careers, you retire early because you can't be a cop. Yeah. When you're over 50, like the physical demands of it, you know, you can't be out on the street and then you go have another career after that. Like, you can do that in accounting. You don't have to work in it your whole life. But I don't hear stories like this. I don't hear state societies promoting this kind of path. I think that's. David Leary: [00:40:59] Uh, Valentino's argument in the chat here. Blake Oliver: [00:41:02] Tino says, let's promote accounting jobs in federal government. The benefits are awesome. And clearly, as you've noted with today's and previous podcasts, the fed needs a lot of good accountants to find all that missing money. Yeah, that's right. The federal government needs good accountants and those jobs are very steady job for life kind of situation. You get great benefits. Tino, you want to like chat in and say like how much PTO people get in the in the government, you know, like give us an idea of these benefits because these are. David Leary: [00:41:34] 20 years in retired kind of jobs, right. They're they're usually capped. Blake Oliver: [00:41:37] I don't know how it works. Um, but yeah, if you want to share anything about that, we'll put that up on the screen here in the live stream. Um, and that's sort of like the other option, right? That's another side of accounting. Right? You've got the fire work, crazy hours, save a lot of money, retire early, folks, and then you could have like, the you know what? I just want to have like a 35 hour a week job and a lot of these government positions now let you work remotely, and I want to get a lot of PTO and, you know, take it easy and like to me, there's room for everybody if you have those kind of jobs available. And we should have a profession that has room for everybody depending on what kind of job you want. All right. So we get some listener mail. David. Yeah. Um, okay. You stop me whenever we need to do our sponsor messages. Um, so this is from Dan. This is regarding the, uh, Barry Melanson coverage on our previous episode. I think it was like two ago. We talked about various retiring. Yes, at the CPA, the CEO of the CPA, after like three decades leading the organization. Uh, Dan, says Blake, you are 100% on target about Barry. He has ruined the profession and the AICPA. They should have been the org that saw this shortage coming, and they probably did see it, which is why they have moved to their international focus and worked to improve the accountant image and education issues. The org is nothing about increased dues. The org is nothing but about increased dues and CPE. They are no longer an advocate for the profession. The dues are completely out of alignment with the benefits, and they are focused on international growth rather than US based issues. They even allowed non CPAs to obtain AICPA designations such as the above. Good riddance Barry. That is Dan. And he is, uh, uh, mincing no words. David Leary: [00:43:34] Yes. Tell us how you really feel. Dan. Blake Oliver: [00:43:35] Yeah, tell us how you really feel. Uh, we love hearing from you. Phil wrote in on the same topic and said, Blake, the same could be said about Nasba and their defense of the 150 hour rule. Nasba should be concentrating their efforts on uniformity among the states as to the requirements to sit and become licensed. Uniformity and changes in CPE requirements are something else that they could be working on. Instead, it seems that over the years all they have done is grow their organization as well. Your quote below says it all. We need bold leaders willing to make tough changes to secure a thriving future for CPAs. Phil. Phil is an associate professor of accounting. Thank you, Phil, for listening and for writing in. I appreciate all your kind words. You can send us a message at The Accounting Podcast at earmarked me. Make sure you put the in front we are the accounting podcast at earmarked me or even better you can join our community go to earmarked community. David would you put that in the chat for everyone? Sign up for your free account. We don't charge you to be a part of our community, and let us know what you think. There's a space for the accounting podcast. Blake Oliver: [00:44:38] You can comment on any of the stories that we've shared, offer your own suggestions, or just participate in general discussion. And you know, that's growing. We've got some folks in there and I'd love to have you as well. Here's another message. This is on a different topic. This is from Amy. She's asking for career advice for her son. Amy says hi. I am the mom of a 19 year old son who is majoring in accounting. He will be a sophomore this fall and will take his first college level accounting class. Can you share any advice on a career path for someone who is not interested in working for Big Corporate? Do you think he would benefit from taking a QuickBooks class and trying to start a side hustle using that? If so, can you recommend a course? Youtube suggested your podcast to me when we were looking at the difference between finance and accounting majors. I'm a former marketing director, but I've enjoyed listening to you. I've learned a lot about the profession. Thank you. Well, thank you, Amy and David. I'm going to give you a chance to respond to Amy. What do you think, uh, about taking a QuickBooks class? David Leary: [00:45:45] I always think that's a good idea. Like it's super important to do, but even better, we could just go right into our ad because coincidentally, our ad is about a workshop to for a bookkeeping business and learning QuickBooks. Blake Oliver: [00:45:57] Let's hear it. David Leary: [00:45:59] The ambitious bookkeeper. If you've dreamed of starting your own bookkeeping or accounting business, the Bookkeeping Biz workshops can help you turn that dream into a reality. This five day live workshop series hosted by Serena Shupe, CPA, will equip you with everything you need to launch your virtual bookkeeping business. You'll attend actionable workshops that cover what it really what it takes to really succeed, how to navigate essential tech tools and ways to build a sustainable business model, not just another job. You'll also master discovery calls and learn to sell without feeling sleazy. Say goodbye to the overwhelm of not knowing where to start. These workshops will answer your pressing questions about launching your bookkeeping business. From choosing the right technology to finding and securing clients. Don't let uncertainty hold you back from your entrepreneurial journey. The Bookkeeping Biz Workshops will give you the confidence and skills to transform your accounting expertise into a thriving virtual bookkeeping business. The workshops kick off August 26th, so secure your spot now and get ready to build the business of your dreams. Head over to The Accounting Podcast Dot promo slash Bebe workshop that is accounting podcast dot promo forward slash Bebe workshop. Blake Oliver: [00:47:10] Definitely check that out. Amy and I would add listen to the unofficial QuickBooks accountants podcast. That's the unofficial QuickBooks accountants podcast. Alicia Katz Pollock, Hector Garcia two legends in the QuickBooks world share their expertise, and you can find that show at Ucb's show. Type that into your browser Uqbar show and subscribe and you will get tons of great, uh, QuickBooks insights. Um, I would also say that. Oh, good, as you. David Leary: [00:47:42] Say, tying this back to Amber, right. And the arguments on Ambers post are like, oh, you're dumbing down the profession or people are going to have less skills. And I really think about like, we had interns here that were accounting majors. One meant and smart, right? She was top ten scorer for Arizona CPA candidates right on the test. But she couldn't reconcile QuickBooks like the concept was never taught. Right. So you just have to learn this because the colleges are not going to teach you. Blake Oliver: [00:48:11] The colleges unfortunately are. The curriculum is determined by PhDs who have had like 1 or 2 years of practical experience, uh, and which often isn't that practical when you're in the big four. And so they, they don't actually know how to do any of this stuff in real life, and yet they're teaching it. It just we have tied the education, our profession to an educational establishment that is expensive, bloated, overpriced. I'm using the same word to describe. I'm using different words to describe the same thing. Same thing. Uh, but also, like, not practical. It's all theoretical. And I know there are great educators and the ones listening are on the cutting edge. I'm not talking about you. I'm talking about the ones who, like, don't even know what's happening. And, um, like, that's the problem. And we need to free accounting from their claws. Right. That's why we need to allow anyone with a bachelor's degree to sit for the CPA exam. Uh, because that way, accounting programs would actually have to earn their accounting majors. They wouldn't just get it, because you have to do it in order to sit for the CPA exam. And if they provide good education, great people will take it. And if they don't, people will go elsewhere to get the education they need to become CPAs. David Leary: [00:49:27] That's gonna be a big ripple effect. Indirect effect is the colleges are gonna they don't have this guaranteed pipeline of students. Now. Blake Oliver: [00:49:34] Tino came back to us about the benefits of working in the government. Tino says I get 25 days off paid vacation and can carry up carry that over up to two years, plus 11 paid holidays as well as four hours of sick leave. A vested pension program after five years of service, matching contributions at 5% of your contribution to a TSP account. That's a tax advantaged savings, either Roth or traditional. I work permanently, remotely, and the feast and the rest of my team is spread across America. I can go on and on. That sounds great. David Leary: [00:50:05] So that's like 35 days off a year. It's a whole month. Blake Oliver: [00:50:09] Pretty good. Connor, 53, says. What about the Cgma designation? Is it a bonus attempt by bogus attempt by the AICPA to move into management accounting? Well, so this is something that I have not really paid attention to, but I have started to pay attention to recently, this, um, certified wait, it's certified Global Management accountant, and it was created by the AICPA when they merged. I think it's when they merged with CMA, which was the International Certified Institute of Management Accountants. It's it's it's big in the UK and in Europe. But like I, I have never met anyone who called themselves a cgma here in the United States that wasn't already a CPA. Like, it just is not part of like if you just walked up to people on the street and said, do you know what a cgma is, nobody would know. Does that make sense? The brand? David Leary: [00:51:05] It doesn't have the brand here. Yeah. Blake Oliver: [00:51:07] And why did the ACPa do this? Why did they create this Cgma thing? I think it's because they control it and they earn all the fees from it. And so it's they own it. The states don't. And it's a big moneymaker for the AICPA. But they really shot themselves in the foot when they created it, because for a few years, if you were a CPA and you had like enough work experience, you could just pay a few hundred dollars and become a cgma and you didn't have to take a test. So there's all these CMAs out there, and it could be most of them who, like, earned it by paying money to get it, like completely devalues the cgma. And to me, it's a joke. Like it's just a money grab. David Leary: [00:51:47] Organization insisting on extra education will give you a certification just by paying. Yeah, you don't have to take the test. You don't have to take classes. Blake Oliver: [00:51:55] Yeah, that was how they got it going. You have to pay them to take the exams to become a cgma. And they of course sell you the materials and stuff. Right. So like, you know, this is the problem with the AICPA is right. They everything the AICPA does seems to be about growing the influence and the money of the AICPA, not on helping your average CPA in America. And if they just surveyed the members, they would find that they are not very popular. You know, and when I talk to CPAs and ask, okay, why are you a member? The answer is, well, my firm pays for it, so I might as well be one. And the second answer is because they have good life insurance benefits. You know, I can I can buy discounted life insurance. And that covers the cost of my membership. And I'm thinking to myself, if that's the reason you're a member, the ACA is in trouble long term because that's not sustainable. David Leary: [00:52:45] Well, we could create a pool for the accounting podcast, and we're just like an insurance. We'll just get all accountants a really good discount on insurance, and then we'll have lots of members paying us. Right. We don't have to have any other services. Blake Oliver: [00:52:57] I don't understand why somebody else doesn't do that. You know, just just do the same thing for a lower membership fee. Uh, AV in the live stream, chat says, is 29 years old too late to get into accounting? I still have two years to get my bachelor's in accounting. No. Absolutely not. I switched into accounting. Let's see, I was I graduated when I was like 22. And then I kind of like did the music thing for a few years. I mean, I didn't become a CPA until I was in my late 20s. So you can do it. You work till you're. David Leary: [00:53:38] 65, you still have a 35 year accounting career. That's pretty. It's a long time. Blake Oliver: [00:53:42] The problem you're going to have is that there is a lot of ageism, especially when it comes to the big firms. Like they don't want to hire you unless you're coming out of that traditional career path. So you're going to have to look for other options. Um, joining a smaller firm or a regional firm to get your experience. But if you can overcome that, I mean, accounting is a great career, and I wish that we made it easier for career changers to come into accounting. That's why we need to streamline these education requirements, because asking somebody to go back to school to earn the equivalent of an entire accounting major, when they may not need those credits because they already have the knowledge or they can obtain it somewhere else quicker. Like that, to me, is is just unreasonable. We're shooting ourselves in the foot. So, um, no, it's not too late. You can totally do it. You should do it. Um, especially if you're coming from a career like I had, where my earning potential was seriously capped as a musician. And I realized after a year that I definitely wanted to make a lot more money than that, and I wanted more flexibility than being. David Leary: [00:54:43] Two people in the live stream actually concur. Blake Oliver: [00:54:46] Hooked says. I didn't finish my bachelor's until 29. You're not far off from that. I am eight years in now and doing just fine. I feel like I've made up for the lost time. Don't worry too much. Yeah, I actually felt like that when I was in my 20s and I did the career switches. I felt like a failure. I'd feel like I really screwed up and like, it's amazing. Actually, this is one of the best things about America is like, you can reinvent yourself so many times, like, if I wanted, I'm 40. If I wanted to like, change careers, I could do it. And in ten years I could be like a lawyer. If I wanted to be, I could, I could if I really wanted to do it. You can't do that anywhere else, Doctor Morbo says. I got my accounting degree at 35. Never too late. Awesome. That's who we should be focusing on. All those people who are underemployed. Maybe they picked the quote unquote wrong major in college, or decided that they didn't want to do what they did after college. And that's the thing. It's like the vast majority of college graduates do not end up working in the field that they majored in. So why do we tie accounting to an accounting major? We're just constricting the supply of accountants that way, Tino says. I entered accounting when I was 31 years old, and I started with a BS in nuclear engineering technology. That's super cool. One of my high school friends actually was a nuclear engineer on, um, not on subs. He was on, uh, aircraft carriers for a while. Doesn't do that anymore, but it's so cool. Um. All right, I got more listener mail. David, unless you've got top stories, let's do. David Leary: [00:56:18] One ad, and then we'll finish out with mail in some oddball stories. Blake Oliver: [00:56:21] Cool. And our final sponsor for this episode is. David Leary: [00:56:25] As Practice Protect. So Practice protect is the leading cybersecurity platform trusted by over 26,000 accounting professionals worldwide. As an all in one managed solution, Practice Protect puts your firm's security on autopilot, allowing you to focus on being your client's trusted advisor. The Practice Protect platform is tailored for accounting firms and offers comprehensive, comprehensive protection across five core areas, areas and access hub for secure logins. Email security to stop scammers, device security for your computers and laptops, a compliance hub to automate regulatory requirements and security training hub for your team. With Practice Protect, you'll enjoy enterprise grade security standards integration with over 6000 accounting applications and features like one click lockout and IP control. The platform not only secures your technology but also helps you meet compliance standards, providing customized documentation and risk assessments for just $34 per month per user, you get unlimited usage of the Practice Protect Access Hub, a dedicated onboarding specialist. White glove Support plus Practice Protect offers 90 day satisfaction guarantee, demonstrating their confidence in their service. Don't compromise on your client's data security or your firm's reputation to join thousands of accounting professionals who trust, practice, protect and to book your security consultation today, head over to The Accounting Podcast dot promo slash protect. That is The Accounting Podcast dot promo forward slash protect. Blake Oliver: [00:57:56] Here is a message from Ken about the $2 billion that was found in South Carolina. So you've got a nice little circular number here, David. We talked about $2 billion the Pentagon found through changing the valuation of their inventory. And we've also in the past talked about the $2 billion that South Carolina found. Uh, that was not a valuation issue. That was a wee real cash. We forgot about this bank account issue. And, uh, so Ken wrote in to enlighten us on that. How could that happen? Ken says, gentlemen, as a survivor of the federal budgeting system, I may have an insight for you. Governments at all levels requisition and in accordance with the annual or biannual budgets passed by their legislatures. So far, so good. But then appropriations begin. Earmarks must be observed, and someone in charge of something, somewhere, has to square the circle between what has been appropriated and what is being spent in the federal government. We refer to this as the different colors of money. Sometimes it is one year, two year, four year or five year funds, which gives us the time frame in which these funds must be spent before being returned to another fund. The general fund or a catch all fund? At times, many small amounts are not spent for their intended purpose, and the funds must be returned back up the budgeting line to a more senior funding level, where reallocation can occur. Blake Oliver: [00:59:21] If these funds are not used or arrive too late for the reallocation process, they can be sent back to a more general fund. Oh man, this sounds complicated. In some instances, due to project delays, accounting incompetence, or a myriad of other reasons, funds are aged out and cannot be reallocated within the current budgeting structure and end up in the fiscal equivalent of a dead letter office, where they await the legislature's attention. However, if the Treasurer's office loses track of these funds, they just keep automatically accruing without the legislature being made aware of them and therefore not applying them to a future ongoing requirement. This happens. This happens more often than 1st May think, although typically not for a $1.8 billion fund. Someone obviously lost track of these funds, and they were never surrendered to the legislature for reallocation under an existing budget shortfall or a future budgeting requirement. I have no personal knowledge of these specific funds, but I have seen the situation before. Numerous small amounts, typically in the hundreds and thousands of dollars, are returned in accordance with law and over time simply accrue into millions and billions of dollars to which someone should have been paying attention. I'm just glad they found them and are now able to use them for the people of South Carolina. Ken. David Leary: [01:00:38] So there's a fund, whatever. Obviously, you know, for schools, let's just say that fund didn't get used. There was $100,000 extra. Okay. Transferred over to this bank account. Then that happened across multiple funds over multiple years and it just started to add up. But then that's what's weird is it feels like they don't have any tracking of even that. Like it's very, very strange on the. Yeah. No visibility on what happened, how this money got into the account. Blake Oliver: [01:01:02] I mean, there there clearly is not some sort of dashboard where you have all of the accounts and all of the money in them explaining what these accounts are for. Like that would be something that if people in the treasurer's office looked at, they might say, oh, this account has a lot of money in it. It just keeps accruing. What is this? And I could totally see a situation where they've got some ancient ERP system that doesn't give visibility in that way and just nobody notices it. And maybe somebody does, but they they don't think to bring it up. Right. David Leary: [01:01:36] One of our upcoming earmark app or earmark expos, which is an app demo, we're going to have an app called Karma Suite. And that's basically fund accounting and transferring these funds out, making sure you spend them fast enough so you don't get in this situation where you have these surpluses. So stay tuned for that. I'll be putting the link in soon. Blake Oliver: [01:01:55] Uh, here's a message from Rich. Rich says long time listener, first time caller, with reference to relatively low starting salaries and long hours on those first jobs after graduating as the training and value while learning on the job and add to the client bill value proposition is not guaranteed. I thought I would mention that other professions like architecture and medicine, also have lengthy and challenging working conditions tied to state licensing as well. Yes, and that is one of the top reasons people oppose changes to the 150 hour requirement is they say, well, all these other professions have longer, more difficult licensure requirements. Why should we be lesser than them? And to that I would say just because somebody else jumps off a bridge, should you do it too? But also those professions are able to have more stringent requirements because they are more successful at limiting the practice of whatever it is they do to just people who are licensed. And unfortunately, the AICPA and Nasba have done a pretty terrible job of limiting the practice of accountancy to CPAs. There are very few things that you actually need to be a CPA to do if you don't want to sign an audit. I can't think of anything else that you need to be a CPA to do, because you can be an enrolled agent and do tax stuff and represent people before the tax courts. Blake Oliver: [01:03:21] You'd be a lawyer and do that too, right? Yeah. So, um, you cannot increase the burden on first time licenses, right? You cannot increase that educational burden if you don't increase the value. And actually the value has decreased because it's become easier and easier for non CPAs to do what CPAs used to do. And you can see this in the top 100 firms, all of these firms that are taking private equity money and spinning out everything except the attest the audit function into a separate company that's no longer a CPA firm. That's a threat to the CPA profession. And yet you have the CPA like cheering these accounting firms that are doing this. I mean, it's insane to me that like, they don't see this as an existential threat to the profession. By the time private equity is done going into these top 100 firms, uh, we will have smaller and smaller CPA firms that only do audit. And that's like pushing us into this tiny little niche. Because audit is not the accounting profession. It's like less than 20% of the accounting profession. David Leary: [01:04:26] And the majority of audit like that's the one thing that when people talk about a job that might go away because the AI that might be the one. Blake Oliver: [01:04:32] I just talked to a young guy, Josh, who's at a large accounting firm. This is going to come out as a bonus episode, and he's working on an AI tool that he believes ultimately could automate 99% of internal controls audits. I think audit is great for AI, and we will see companies come out with AI auditors and AI audit tools. And sure, there will be a CPA involved, but it'll be like one person at the end who signs off on the report. What's going to be left to. David Leary: [01:05:04] Replace an army of intern interns is the poor word. But junior staff or new staff? The people you burn out in two years. Blake Oliver: [01:05:10] If the if the AICPA really wants to increase the value of the CPA, they should be trying to restrict the practice of accountancy, you know, like to not to only CPAs or do more in that regard. You know, you can't call yourself an accounting firm unless you are owned by a majority of CPAs. Something like that, right? Only Texas is the Texas is the only large state that does that, I think, um, and that creates a lot of value for the CPAs in Texas. I don't know, should they do that? I'm not saying they should. I'm just saying, like, if they actually wanted to increase the value for CPAs, maybe they should try, like actually doing things that increase the value of the CPA for CPAs. David Leary: [01:05:50] Become public enemy number one, go attack a bunch of people that are doing bookkeeping and accounting work. Blake Oliver: [01:05:57] David says law of unintended consequences. The pain of working for PE will spawn thousands of new accounting firms. Yes. And as I said in our last episode, now that, um, basically all the partners are non-equity partners in these new CPA non CPA firms, the private equity owned firms, they're going to see that they have a lot more earning potential going off and starting their own firm. Um will those be CPA firms though I don't know. That's another problem is that there's so much red tape around being a CPA firm. And if you want to provide the most lucrative services, which include, you know, client accounting services, advisory services, tax services, consulting services, and you don't want to do audit. There's very little reason to be a CPA firm these days. It just creates more hassle for you than and I'm seeing this I'm seeing a lot of firms start up and they're not CPA firms. Yeah, they may have CPAs working there, but they're not CPA firms. And that's a big problem for the accounting profession. I'd be worried if I were a state board of accountancy, and if I were the AICPA, I'd be worried about that, trying to do something about that. You got to make it appealing for people to want to be CPA firms and to be CPAs. Uh, here's a message from Jim. Jim says, love your show. The fact that the CPA exam is now in the Philippines makes me kind of sick. Not only are they not fixing the pipeline problem for CPAs in the USA, they are making it worse. It's always about catering to the big firms and those partners who just want to cash out. Now it's all about cheap labor. Let's forget about quality and just make problems worse for our own culture. I just don't understand the logic and find it to be very worrisome. Thanks. This is a really good point. And it actually goes to what we were just talking about, which is you've got nasba focused on making it easier for non US citizens to become CPAs, but not making it easier for US citizens to become CPAs. That seems wrong, doesn't it? David? David Leary: [01:07:51] Yeah. It feels like this is one of the things that if Congress gets a hold of this, like this could be a neighbor could find themselves on national news, right? Oh, it's going to take the right senator to get all fired up about that when they hear about that. Right? Blake Oliver: [01:08:06] Well, you know, it's when it's going to become unsustainable is when you have these private equity firms controlling these what used to be CPA firms that are now accounting firms that are dictating policy at the AICPA and Nasba because they pay the member dues. So really, who does the AICPA work for? Right. It's it's going to be private equity eventually when there are no more equity partners. And that is a little bit of a disconnect for me because the AICPA is supposedly advocating for CPAs. And you could say that when the equity partners are CPAs, right? David Leary: [01:08:41] Yeah. Blake Oliver: [01:08:42] But not when the equity partner is private equity. David Leary: [01:08:46] It'll be interesting to see, like, will they be able to bully them like like what? What will be the result of that. Blake Oliver: [01:08:52] Follow the money. Right. Who pays the dues at the ACA? It's the accounting firms, right. The managing partners. That's who the customer of the ACA is. And that's why you see AICPA policies have benefited the equity partners at accounting firms, large accounting firms, not small ones and not individual CPAs. And the CPA in the past actually advocated against overtime wage protections for CPAs. And they specifically said because it would hurt CPA firm profits. David Leary: [01:09:20] Because the owners. Blake Oliver: [01:09:21] Yeah. David Leary: [01:09:23] But do you foresee a future where in theory, some of these private equity companies are gigantic and they have their own because they're doing private equity across lots of industries, and they probably have their own connection to their own lobbyists. Right? That they would maybe would say like, well, we don't even need to pay. We don't even want to pay our CPA anymore. Like, they just completely don't write these huge checks for 20,000 of their employees. Blake Oliver: [01:09:45] Yeah. Yeah, that's a really good point. David is like, if enough of the top firms are owned by private equity, at what point do the do the private equity firms like look at this line item on their PNL for the ACPa membership and say, you know what? We don't actually need them anymore and just stop. David Leary: [01:09:59] That's what PE does, right? They they squeeze. Blake Oliver: [01:10:02] Yeah, yeah. Yeah. Right. And the managing partners, you know, they did it out of uh you know peer pressure right. Like you can't not pay your AICPA dues if you're a top firm. Right. But yeah private equity folks don't think that way. They're just all about the numbers. So that is a big threat to the AICPA. I mean, they may think it's great now, but just wait. Just wait and see what happens. David Leary: [01:10:26] When one of these firms don't spend 20 grand, 30 grand, or pay for 20,000 people's memberships. Yeah. Blake Oliver: [01:10:33] David says, David Sculley says. Sounds like we found Blake and David's next business, the successor to the AICPA, laboring on behalf of actual accountants, offering competitive insurance and lobbying for the future of the industry. I. I mean, somebody's got to do it. I think the earmark community could be that if you want to be a part of the future of the accounting profession, get in on the ground floor with our earmark community, go to earmark community. Let's talk about this stuff. What can we do to advocate for CPAs? Um, somebody's got to do it. And really, that's what this entire show has been about over the last six years. Well, it started as, you know, just me and David talking about technology and accounting because we like to nerd out about that stuff, but it has morphed into really a way for us to talk about the problems and the solutions necessary to help the accounting profession advance. And technology is just one of those solutions, right? That's why we renamed this show to just the Accounting Podcast. David Leary: [01:11:35] And it's not us just talking about it. We're like, we're raising voices. Yeah, that have existed in the hallway conversations. And they were emails and like, it's not like you and I are just like, just one day woke up and be like, let's do this. Yeah, well, it's actually grassroots. Like we're just regurgitating inputs we've taken from all of you. Blake Oliver: [01:11:57] We are listening to you. When we go to conferences, we talk to you, we hear you online. We see what's being discussed on the on on the web. And we talk about that on the show and bring it to light. And we know there are lots of leaders in the accounting profession who listen at state societies, boards of accountancy, AICPA and Nasba who think, uh, like progressively like you do, like we do. And it's just a matter of time until the leadership changes over and we get the change that we need. Uh, and so we're doing our small part to, like, bring those voices, like David said, to light, uh, to the top. And I think AICPA needs to realize they can no longer control the narrative, as you have always said, David Cluetrain manifesto. Yeah, you love that book, everyone. I still haven't read that book and you've been talking. You don't have. David Leary: [01:12:42] To just read the 99 thesis. That's all you have to do. Blake Oliver: [01:12:44] So they can't control the narrative anymore. They're losing control of it, and they're losing control of California and the states. Um, this top down. Let's control this from the top method. Like that's a really old school. Maybe it worked when Barry Melanson took over the AICPA, you know, back in the dark ages. But it doesn't work anymore. Hooked says, I have opted to go for a CMA instead of a CPA, as I have never been in public, and I don't have a way to get my hours signed off on as my managers have never been CPAs. It's a bit discouraging. Yeah, that's a big problem, right? Like why why does a CPA have to sign off on your work experience requirement? It makes it so difficult to get through that work experience requirement because your direct supervisor has to be a CPA, and it's really hard to do if you're not in public accounting. But now, even in public accounting, a lot of the managers are not CPAs cause they can't sign off. So, right. We've got this old school licensure system for this old school system, uh, that we don't have anymore. Um, I'm sorry, but hooked. The CMA is a great credential and the IMA is doing awesome stuff. So do not be discouraged. You will do great as a CMA. David Leary: [01:13:55] I think back in the day we and I'm going back 2 or 3 years, but I think CMA salaries were higher, right? I think we talked about in the show like this is why people are going down that path because they were getting a little bit more money. Yeah. Blake Oliver: [01:14:07] Well, David, that's all the time we have this week. We've got more listener mail that we will get to next week and do join us, earmarked community and send an email to The Accounting Podcast at earmarked me. We love hearing from you, our listeners. Thank you everyone who joined us live. Find us on YouTube. Help us get to 20,000 subscribers. Uh, we'll have a party or something. I don't know when we. When we do. David. See you here next time. Bye, everyone.