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Trump's Department of Education Says Accountants Aren't Professionals · 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] According to a survey of thousands of US adults who used dating apps in the past 12 months. 1 in 3 dating app users are swiping for jobs not love. David Leary: [00:00:17] Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:24] 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] I'm David Leary Blake. We're back in. Like a lot of news, this has happened a lot, a lot, a lot. Blake Oliver: [00:00:37] A lot since we recorded just before Thanksgiving. We got to get through it all. So we'll get started right away. Our headline, Trump's Department of Education says that accountants aren't professionals anymore, but we're not alone. Nurses, uh, I think got left out as well. We'll talk about that. And the AICPA and NASA's response, as well as many other Her amazing stories in the in in accounting, open AI is investing in a private equity firm that is investing in accounting firms. So we've got the biggest player in AI directly investing into private equity. David, anything else top of mind for you this week? David Leary: [00:01:18] Your buddies at Dozier. Dosage is done. Blake Oliver: [00:01:20] Dosage is done. David Leary: [00:01:21] Dosage is done. But it kind of that story kind of fell under the radar because I think this not a professional degree thing really got people upset. They missed dose. And then Deloitte made more AI work slot but this time for the Canadian government instead of the Australian government. So we can talk about that. And then some news about Intuit opening up small business data to one of the world's largest third party ad networks, and then Intuit's raising prices on QuickBooks desktop. Xero is raising prices on developers, so there's lots to talk about. All right. Do you want to start? Blake Oliver: [00:01:51] Well, before we get to that, let's thank our sponsors. This week. David Leary: [00:01:55] Our sponsors this week we have cloud account and staffing. We have the Association of Certified Fraud Examiners, ACF and we have on pay. Blake Oliver: [00:02:03] And thanks to our livestream viewers who have joined us today, feel free to put your comments there in the chat. Let us know what stories you think we should be talking about today that are top of mind for you as well. All right, David, let's get to it. The Department of Education wants to strip accounting status as a professional degree program. This would slash federal loan limits for accounting students from $50,000 to $20,500 per year, starting in 2026. Why are they doing this? The Department of Education says that it is required by the One Big Beautiful Bill act to identify eligible programs, and the negotiating committee proposed limiting professional degree designation to medicine, dentistry, law and several other high cost programs. The proposal excludes accounting as well as nursing architecture education itself. Ironically. Social work engineering. Physician assistants. Occupational therapy and audiology. The AICPA and Nasba have come out hard against this proposal. Mark Kozol emphasizes that recognizing accounting as a professional is common sense. He's the president and CEO of the AICPA, and he also is joined by Daniel Dustin, president and CEO of Nasba, in his opposition to this. Daniel Dustin notes that CPAs have been licensed professionals since 1896, which is a pretty long time, I think, one of the longest licensed professions in the United States. Now, this would not generally affect undergraduate students, mostly graduate students, and I was following some of the commentary online about this on LinkedIn. And there's folks saying, well, you know, who needs to spend $50,000 per year on education? I think people forget, though, just how expensive degrees have gotten. Costs can exceed 300 or $30,000 a year for some programs. So this could affect accounting students. But for me, I think it's more just a prestige thing. Like if doctors and lawyers get counted as professionals and accountants don't, that's a problem. David Leary: [00:04:28] And the way it's previously kind of been defined is if you have to do any post-secondary work. So two year, 2 to 6 years usually says, okay, you've done post-baccalaureate coursework, you're probably a professional. Like that's kind of the loose definition in the past. But the issue with this is the bill did not spell out which professions qualify. So it turned into one of those. I mean, isn't the Trump so supposed to get rid of the deep state where these government agencies are just making the rules? And essentially they just told the Education Department to create a list on your own, and that's what they did. And so it's like, again, here we go with we government passes a bill, but it's not detailed enough. So the departments just have to make the rules up that like arguably the rules. Is that really part of the bill? I don't know. Blake Oliver: [00:05:18] Edgar in the live stream says if we are no longer professionals, that means we are entitled to overtime. I'm good with this. Now, this is a good point. Uh, under the federal overtime rules. David Leary: [00:05:32] Fair labor? Yeah. Blake Oliver: [00:05:33] Fair labor Act, uh, professionals are excluded from overtime. And that's the justification for accounting firms, especially large ones, paying salaries and not paying their staff for overtime. Uh, especially the CPAs, CPA's working for them, so maybe this could be a positive change if CPAs start to get, uh, start to get overtime finally, for their 50 60 hour weeks. David Leary: [00:06:00] That'll stop quickly. I imagine the firms will put pressure on AICPA, which will then have to finally put pressure on the legislature to get this changed. Um, it's funny, I was in Mexico. This was like the talk at Thanksgiving. The hot tub, right. There's a nurse in the hot tub, and I'm not a professional anymore. There was a lot of mocking it at some level. Right. I guess we're not professionals anymore. Uh, but I think that this is, uh, the list is what's shocking people. But the spirit of this, I think, kind of makes sense. Right? It's to it's to, like, ensure colleges are not overcharging for these degrees. Right. And the government doesn't have eat loans. If somebody gets a degree, that's never going to be able to pay it off ultimately, I guess. Blake Oliver: [00:06:39] Okay, I suppose that makes sense. But if you really want to bring down the cost of education, I mean, the, the, the way to do that is to stop subsidizing it. It's it's all this free money or what is perceived as as free money by students that allows colleges to charge more because the it's a supply demand thing, right? The more money there is available, the more people are willing to spend. So, ironically, giving money to students from the federal government to spend on education actually increases the cost of education. Yeah, same way that really cheap mortgages that are subsidized, guaranteed by the government also increases the cost of housing. David Leary: [00:07:25] So it feels like there was an attempt to do that, except for instead of making it globally for all degrees, they tried to stack rank. What what's what's it's okay to give loans for what's what's a what's okay to be expensive and what's not. Instead of trying to have a program to bring all costs down. But then the colleges would have lost their minds, right? If it was all degrees. Blake Oliver: [00:07:46] Yes. And the American Accounting Association, which is primarily educators, is also joining AICPA, Nasba and state societies and calling on the Department of Education to formally recognize accounting as a professional degree program. And yes, this would definitely hurt those master's programs. And it's probably the last thing they need when states are moving to not require the fifth year of education as a, as, as as part of becoming a CPA, as the CPA pathway. All right David, let's go ahead and thank our first sponsor for this episode. And it is cloud accountant staffing. David Leary: [00:08:23] Cloud accountant staffing. If you're thinking about increasing your team or using remote team members, but you want to avoid the high pressure sales calls and commitments before you even review possible candidates. 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Blake Oliver: [00:09:29] Let's talk about this AI work slop generated by Deloitte again now, not Deloitte US, but Deloitte in Canada. This time. Last time it was Is Deloitte in Australia? I believe so. I caught this in The Independent. This is a major healthcare policy report that was commissioned by the Newfoundland and Labrador. Is that right? Labrador government that contains fabricated academic citations likely generated by artificial intelligence. It was Deloitte and the report cost nearly $1.6 million. It was published in May. And it was. The purpose of it is to develop a human resource strategy for health, for the healthcare sector that is facing staffing shortages. And it is 526 pages. There have been four confirmed false references in the report about the cost effectiveness of certain monetary incentives. Um, it has false citations about a paper called The Cost Effectiveness of local Recruitment and retention Strategies for Health Workers in Canada. Professor Gail Tomlin Murphy confirmed that the paper doesn't exist. David Leary: [00:10:51] That's exactly what happened in Australia. They just created a paper that somebody never wrote. Blake Oliver: [00:10:56] And then there was apparently another citation about Covid 19 impact on workload and stress. And the hyperlink in the report leads to an unrelated article. The original paper cannot be found in academic databases. So another, uh. So I guess go ahead, David. David Leary: [00:11:15] I think there's a couple ways to look at this. A they're improving because in Australia in the summer, in July when that news came out, they had 20 hallucinations 20 plus. And now they only have four. So they're getting better, possibly at their AI. But the the thing that I find kind of hilarious about this is Deloitte has a website set up. Right. And they market their Deloitte AI and data teams. So Deloitte should hire that team before they do any more AI work with clients. Um, they're marketing themselves as AI experts so companies can hire them to do AI correctly and just go off their website. They you get what you get from this team is you get a global AI and technology consultancy. You get insights from an ecosystem, relationships. You get a center for sustainability and climate action. You get their AI trustee framework, and you get Deloitte's team of lawyers who help with AI compliance. So. So Deloitte has a team of AI and data people that in theory would prevent a company from making these mistakes. Deloitte is making. I find that just very ironic. Like use your own team. It's it's it doesn't make any sense. Blake Oliver: [00:12:23] We're talking about the big four. So let's talk about ey wise new. David Leary: [00:12:27] Leave on that a quick follow up of Australia. So the Australian Financial Review is reporting that the Deloitte partner that was in charge of the other, uh AI problem that happened in Australia during the. He is now in the process of quote unquote, retiring. So it looks like that he's being forced out that partner. Blake Oliver: [00:12:47] E has a new leader, Dante. Uh, d Egidio has been nominated as e wise new US leader after leading one of the most dramatic audit quality improvements in Big Four history. This was the guy who, under his leadership, e slashed its audit deficiency rate from 46% in 2022 to an expected 9% or less in 2025. Those are the PCAOB inspection deficiency rates. That is a huge improvement, even if you because you listen to the show, you know that the audit deficiency rate isn't exactly comparable across years. David Leary: [00:13:28] And not only that, it's hardly defined, right. Didn't you bring this up last week or. Blake Oliver: [00:13:33] Yes. That's one of the problems with the Pcob is that they've never, apparently never actually defined what audit quality means. They just look for deficiencies in the reports. But what is audit quality more broadly? Apparently they've never defined that. Go listen to last week's episode. Uh, if you if you missed that part, um, how did they do it? How did they how did EE lower their deficiency rate? They basically fired a bunch of clients. Uh, they built centralized support teams, and they invested heavily in technology and training. As reported in the Wall Street Journal. So basically, the way I read this is that EE had a bad audit deficiency rate, and it was because at the time, they had too many clients and their staff and managers and partners were over. David Leary: [00:14:25] Quality went down because you can't do both, right. Blake Oliver: [00:14:27] Quality went down. And so they shed clients they tightened up on building these centralized support teams and improved technology, and they were able to get their audit quality rate down to one of the lowest. I think it might actually be the lowest of the big four. David Leary: [00:14:43] It's interesting you say that like they got rid of clients, like because they never say who the clients are in these failed audits. It'd be interesting to see. Is there a trend like that client that company moves to this auditor, to this auditor, this auditor. And the same companies keep having these deficiencies. And it's the companies that are difficult or hard to work with. Blake Oliver: [00:15:03] Since we're talking about the Pcob, let's talk about Christina Ho, who has been a guest on my earmark podcast. She's a board member at the Pcob, and she is resigning after serving as basically the only dissenter on the board in Pcob history. And she helped to block several controversial audit standards. For instance, she voted against the no clear standard for noncompliance with laws and regulations that was ultimately withdrawn after widespread opposition from accounting firms. She also opposed the Firm and engagement metric standards, which were later shelved as well, and she was the board member who engaged in a public dispute on LinkedIn with Senators Elizabeth Warren and Sheldon Whitehouse, who she said were persecuting her for expressing dissenting views on those firm and engagement metric standards, which the senators supported as a way to improve audit quality. In her resignation comes after a major shakeup at the Pcob following the departure of former chair Erica Williams last year. So we wish best of luck to Kristina Ho in her future endeavors. David Leary: [00:16:16] And this is is this fully rolled into the SEC? I can't remember. I got confused that relationship is organized. Blake Oliver: [00:16:23] Yeah. David Leary: [00:16:23] So part of SEC now. Blake Oliver: [00:16:24] Well, no. David Leary: [00:16:25] No. Blake Oliver: [00:16:26] The Pcob, interestingly, is a nonprofit that is independent of. David Leary: [00:16:31] The federal government. Blake Oliver: [00:16:33] And the SEC has established the SEC. Well, Congress established Pcob as this nonprofit and SEC delegates its authority to regulate audit firms, to Pcob. And to do that, those reports, those audits of the auditors. And there has been talk in Congress, threats in, by, by Congress people to cut the pcob, um, funding to roll it into the SEC. That hasn't happened yet. We will see what happens with the new leadership. David Leary: [00:17:11] Yeah. The the new chair of the SEC, Paul Atkins. He wants to replace all five board seats in 2026. So there's a lot of shakeup happening on this. Blake Oliver: [00:17:21] Um, now here's the thing, though. The Trump administration is generally in favor of looser regulation. And we are seeing that now with the SEC considering loosening independence rules for big four accounting firms. They're thinking about revising these conflict of interest rules that prevent the big Four accounting firms from auditing companies with which they have business relationships. And a big reason for that is this complex web of technology partnerships that have emerged in the AI era. David Leary: [00:17:54] Yeah. Blake Oliver: [00:17:54] For example. David Leary: [00:17:54] How does somebody audit Microsoft if everybody has windows computers or everybody has iPhones? Or how do you audit Apple? Yeah. Blake Oliver: [00:18:01] Well, and not just using their products. Ey and KPMG are selling products that use Microsoft Azure Open AI tools. Pwc is OpenAI's biggest enterprise user and sells ChatGPT alongside their audit and tax services. And Deloitte is open AI's OpenAI's auditor. We don't know what they're doing in terms of that. So this is an independence dilemma, right? The current rules prohibit accounting firms from auditing companies whose products they use or resell. But there are only a few of these companies that make these enterprise products. And the big four all want to in their consulting relationships with their clients. They want to implement these tools, resell these tools. So now if they're all selling open AI products, who's going to audit open AI or who's going to audit Microsoft? And I'm just thinking about this from a like, let's take a step back and just think about what this means. Or does this make sense? It seems like a lot of the rules about auditor independence focus on these specific business relationships and, you know, separating out, like if you have any financial interest in anything to do with a company that is like a big deal. And they're very, very, very strict about this. But, you know, is there a is there a better way to ensure that auditors are independent? And maybe the answer is simply audit firms should not do anything else. Like if you actually want them to be independent, just have audit firms do audits, split those out of the big four. So there's not these consulting and tax relationships that could compromise auditor integrity. David Leary: [00:19:50] Yeah. And you could even go like even more like weird meta on this. So if accounting firms are going to use AI tools to audit things, how OpenAI technology is going to be used to audit OpenAI. This is even crazier, right? You start looping this through. But I don't know how you there's too many connections and too many people use too many services. There's too many relationships. It's not as black and white as it used to be. I'm not sure you can solve this, Blake. All right, well. Blake Oliver: [00:20:16] Go ahead, David. David Leary: [00:20:17] I was going to say so when you interviewed Christina. How did you get any vibe that, like, maybe she. Because it was not too long ago that maybe she's not happy being on the board. She maybe wants out? Or does it feel like maybe she's forced out? What was your vibe on that? Blake Oliver: [00:20:30] I don't think that she was. My guess is she was not forced out. She's been there a while. She's been the dissenting voice. I mean, I would get bored after being there for that many years. David Leary: [00:20:42] That's true. Blake Oliver: [00:20:42] So maybe it's just time to move on. Um, she she did her job. David Leary: [00:20:47] And she was at Deloitte previously. Right. Or. No. Yeah, I think she. Blake Oliver: [00:20:51] I don't have that. It's not on my screen right now. Okay. I'll test you on that one. Um. All right, David, let's talk a little bit about the economy, because it is December 5th. As we record this, we are going into the holidays. How are we doing? Where are we with all these tariffs? How's the job market looking? We've been talking all year about what is going to happen due to the tariffs and, um, the economic impact. According to a report by the Tax Foundation published just before Thanksgiving, Trump's tariffs have actually been not as bad in their words. Uh, well, or maybe this is, uh, this is my words. I guess Trump's trade war bark was worse than his bite. Um, the average tariff rate under the Ieepa was threatened at an average of 23.2%, but the actual weighted average rate is 10.8%. Uh, China got the biggest break. There was a threatened 145% tariff, and that's down to just 20%. And so the good news is that the economic damage is going to be smaller to. The tax Foundation calculates that GDP is now projected to fall 0.4% instead of the originally estimated 0.7% hit. It's still not great for the economy, but it's it's better than it could have been. David Leary: [00:22:18] So what was the average tariff rates before? Was it around 10% or just under. Blake Oliver: [00:22:23] Well, the the target tariff rate. Uh, after all, if the Trump administration announcements was 23.2%. David Leary: [00:22:30] That was the new target. But what was kind of the old historical number? Blake Oliver: [00:22:35] I don't know if there really was a number. I mean, you know, remember, Trump was threatening these reciprocal rates that could be as high as like 100%. Yeah. I mean, basically like forcing, um, us to not buy goods. And we still haven't actually had the Supreme Court decision that should be coming soon that will determine whether or not these tariffs are legal in the first place. Um. David Leary: [00:22:59] I'm going to ask ChatGPT fast. Historic average tariff rate for the US. Blake Oliver: [00:23:03] So the economy does seem to be slowing. There's a lot of mixed data here. Um, there was a not a great, payroll report from ADP for November. Small businesses lost 120,000 jobs. Large companies, though, added 39,000. Those are companies with more than 500 employees. So small businesses got crushed. Lost over 100,000 jobs. Large companies added tens of thousands. Um. It's Adp's chief economist says that small businesses are struggling with an uncertain macro environment and prices that have jumped 25% over five years, and inflation does seem to be remaining stubborn due to those in large part to those tariffs. Um, 3 in 10 companies plan to conduct layoffs during the holidays, according to a story on CPA Practice Advisor that cites a small survey from November. This was a survey of over 1000 US business leaders. So 3 in 10 companies are going to lay off workers before year end. 57% planned layoffs between Thanksgiving and Christmas, and 43% will cut jobs during the week between Christmas and New Year's. I always thought that that's like an awful time to lay people off. Like, why would you do that? David Leary: [00:24:29] Well, I also think that's like probably a deceiving number because there's probably retail places that once Christmas is over, you don't need those employees anymore. And there's I wonder, like everything needs context. Like, what are those exact numbers? And who are these companies that are laying people off? Like three out of 30% of all companies are going to lay off people. Blake Oliver: [00:24:49] Three and ten. David Leary: [00:24:51] Three, ten. Blake Oliver: [00:24:51] Two of US companies plan to lay off workers. David Leary: [00:24:53] How many like it feels like? Yeah. These surveys are a little broad. I do have the historic tax rate. So post World War two is roughly like 5 to 7%. And then in the modern era. So like 1990s through pre-trump. It got down to somewhere in like 3.4, 3.5%. Blake Oliver: [00:25:14] The historic. David Leary: [00:25:14] Overall. So? So Trump did raise it by three. But you're right, it's not what his bark was right. So it went up three x which is still pretty significant if it's hitting 10% target. Blake Oliver: [00:25:22] Now here's a little bit of good news. This is a survey of CPA business executives by the AICPA. This is their Q4 survey. And the result is that CPA business executives are feeling worse about the US economy, but more optimistic about their own companies. Only 28% are optimistic about the economy. That's down from 34%, but 41% are bullish on their own company prospects, which is up from 37%. So I suppose that's some good news, because when executives are bullish about their own companies, I think that in general translates more to you know, positive outcomes because people can be just negative in general, right? The same way that voters are negative about Congress but are positive about their own representative. So you have to really think about what are we asking? Tariff uncertainty is easing. According to this survey, only 49%. That's still a lot report significant uncertainty from tariffs. And that's down from 58% last quarter. But still half of CPA business executives report significant tariff uncertainty. About half a little less than 50% are planning to expand their businesses, which is up from 46%. It's at 48% now. It was 46% in Q3. David Leary: [00:26:48] And these are just CPA firm leaders around their own business. Blake Oliver: [00:26:51] These are CPAs in private industry. Oh, and that's my understanding of CPA business executives. Um, so Americans are likely to tighten their belts this holiday season according to a report by the Conference Board, this is the Conference Board holiday spending survey. Americans are planning to spend $73 less on holiday shopping this year, compared to 2020, for the average consumer intends to spend $990 on holiday purchases. That's down a little less than 7% from last year. But interestingly, it's not low income families that are driving these cuts. Consumers earning over 75,000 are reducing spending the most. And those earning under 50 K actually plan to spend slightly more. The only age group planning to spend more, both on gifts and holiday items this year are people over 65. I guess those gifts for the grandchildren are very important. David Leary: [00:27:53] All the ones that got to ride ride the wave of market going up, housing prices going up. You know they got in when it was cheap. Blake Oliver: [00:28:00] Black Friday sales jumped this year. They went up 4.1% despite all the economic anxiety. Online sales were up 10%. In-store sales rose 1.7%, but the retailers had to work harder for it. Shoppers said deals seemed weaker than last year, and stores were giving away a lot of free stuff, and I myself took advantage of some serious discounts, so we'll see if that good news about Black Friday translates into sales, uh, the rest of the month so that those retailers can get into the black. David Leary: [00:28:37] Yeah, people are very motivated by that Black Friday, Cyber Monday type stuff. Even us at earmark, we did a Cyber Monday sale and it was monstrous. People loved people love it. When you get 50% off, they love it and you can only do it one day a year. We can't do it forever. Blake Oliver: [00:28:53] Matt in the YouTube chat says, I don't get what use there is from economic surveys. They can be very easily manipulated. And I agree with you Matt, which is why I like to read a lot of different surveys and try to synthesize what is happening based on what all the different data points are saying the same way. When you look at an election, you don't just look at one survey of voters, you try to aggregate them. That's been the trend over the years with with sites like FiveThirtyEight and things like that. All right. Here's one more piece of economic data that is a little bit distressing, I guess. Or maybe it's just a social change that's happening. And I think this has to do a lot with the cost of living. David, 1 in 3 professionals, 1 in 3 young professionals are still living with their parents and nearly half are living with families. So it's 34% live with their parents, 11% live with other relatives. And why is this happening? It's because of 62% site high rent and housing costs. That's mainly it. And then there's some other smaller reasons, like the salaries are low. Um, they're saving for money, but it's really just high rent slash housing costs. That's incredible. That's a big change for our culture that basically half nearly half. Well, it's 45% of young professionals are living with relatives. That's according to the Boomerang Kids report by ZT, which is a resume template survey. They surveyed 1000 adults aged 18 to 33. So these are professionals that are basically in their mostly in their 20s. David Leary: [00:30:42] So people whose resumes have worked and they got a job, but they're still going to live at home. That's right. Blake Oliver: [00:30:47] And it's because the rent is too damn high. Um. David Leary: [00:30:52] Why do our next ad and let's do that. Blake Oliver: [00:30:55] Yeah, I will go ahead and thank our next sponsor, which is AC. Ever wonder how much fraud is really costing your organization? According to the Association of Certified Fraud Examiners, companies lose an average of 5% of their revenue to fraud every single year. That's 1.7 million per case on average. But here's the kicker organizations with dedicated fraud teams cut those losses in half and catch frauds twice as fast. That's where the Association of Certified Fraud Examiners comes in. As the world's largest anti-fraud organization, they're empowering professionals like you with the tools, training and credentials you need to protect your organization whether you're in accounting, compliance, internal audit, or fraud investigation. Ac membership gives you access to cutting edge resources, exclusive webinars, and a global network of over 95,000 members. Plus, you'll save 20% on all training and products and gain access to prepare for the prestigious Certified Fraud Examiners credential, the only one of its kind in the world. To learn more about ACF membership and receive a free ACF webinar, head over to The Accounting Podcast. That's The Accounting Podcast. David Leary: [00:32:11] So let's talk OpenAI and we'll kind of rewind a little bit. A few months back I want to say April time, um, Thrive Holdings, which is part of Thrive Capital, made an investment into creat professionals alliance. So creat professionals is a a p as a rollup of accounting firms, and their stated mission is to roll up accounting firms and then force them to use technology, including AI. So you have this rollup that has an investment from Thrive Holdings, who now Thrive Holdings, just took an investment from OpenAI for an undisclosed amount. And it involves two things. One is to accelerate the adoption of AI in the industries like accounting and IT services. But not only is OpenAI now investing in accounting firms, right, which ultimately firms they're forcing to buy AI stuff. Openai is also going to embed teams directly inside these thrived backed companies to improve speed, accuracy and cost efficiency. So OpenAI is going to help run accounting firms as well. So they're putting money in to be the technology but not tie this back. Right. Because I think when I tweet about this, I put it on social media. People don't get it. But this would be like Intuit Ventures, right? Buying accounting firms and making them buy QuickBooks and use QuickBooks. And people would lose their minds if that happened. But now I think about this more like if Intuit's paying open OpenAI $100 million a year now, is there going to be some pressure somewhere for OpenAI to put pressure on Thrive capital, put pressure on Crete to force those creep professional firms to use QuickBooks. Like if you start following. Follow the money, not the. At the end of the day, follow the money and. Blake Oliver: [00:33:57] It's a circular trail of money. That's what TechCrunch called it. Rebecca Bellin and TechCrunch described this deal as a circular deal. And that's been the the, the term that I've heard a lot in all this talk of an AI bubble is that you have these AI companies investing money in each other and making deals with each other. What does that do? It pumps revenue on the PNL of all these companies. But does that money, an investment, actually make it out into the real world and then generate returns? And so this could be that sort of circular deal where the portfolio companies, like you said, they they now buy OpenAI products and subscriptions and basically funded by OpenAI's own money. So OpenAI takes money from investors invest it into private equity, which then pushes it down into their portfolio companies, which then use that money to buy OpenAI's products. David Leary: [00:35:05] So is their stated goals. Like like this is not even a hidden thing. Like that's the stated goal of of Crete professionals. Like that's their goal. Now, it's funny that you used the word circular because I wrote that down too. I think I wrote down this is a circular mess, and I actually think it's going to explode soon, but the peak is probably my prediction. This is just a prediction in 2026. I bet you we see an AICPA CPAacademy OpenAI partnership and I have no inside information. I have no clue. I just based on behaviors of history. Do you remember we went to the AICPA engage conference in the heyday of crypto and blockchain? Yeah, yeah. And that and I'm not I, I'm not positive of which crypto company it was coin tracker? Possibly, but they were the top sponsor at the conference. They had the biggest booth, but they were so half assed they didn't actually have a booth. They just the masking tape was on the floor, but they never actually brought a booth. So they just had like a couch. And that was it, because they didn't know they were supposed to build a booth for an accounting conference, but it just. But AICPA took the money. Aicpa took the money. Right? And so I would not be surprised if we see some huge OpenAI money going into AICPA or CPAacademy. That's just a prediction in 2026. Do not be surprised if you see this. There's just too much money and AICPA and CPE are smart. They're going to go get some of that. The money's just sitting there for the taking. Blake Oliver: [00:36:31] Since we're talking about these AI companies, David, let's talk about some of the new features that have come out in the last month for accountants, for finance departments. Anthropic has launched cloud for Excel. Well, this is a beta release. It came out in late October and it allows for direct AI interaction within Microsoft Excel spreadsheets. Claude can now read, analyze, modify, and create workbooks with full transparency of changes. It rolled out initially to a thousand beta users, and I assume is going to roll out further. I don't think it's in public release yet. So we're starting to see this happen where these AI companies are not just building chatbots, they're actually building plugins for the tools that we're using that enable the chatbot to then click around inside of the app and do work for us. And that to me is is very, very exciting and powerful. David Leary: [00:37:33] How does Microsoft let this happen? And what I mean say, let it happen like they already had their own AI. They have their copilot, they have Excel. How did they not build this first? Well, is kind of crazy to me or prevent others from doing it. Blake Oliver: [00:37:45] It's funny you mentioned that because Microsoft has also launched an AI powered finance tool for Microsoft 365. It's called Microsoft Copilot for finance. It's in public preview, and it's an AI assistant that integrates directly into Excel, outlook, and teams. It also connects to financial systems such as dynamics 365 and SAP. Key capabilities. Examples. Automated audit and reconciliation. You can now pull and reconcile account data with a single prompt. They claim that it will reduce data reconciliation time from 1 to 2 hours to ten minutes per week. It can automatically identify inconsistencies, and they're saying they're seeing a 22% cost savings in average handling time based on their pilot. You could use it to streamline collections processes, enhance financial reporting. Basically, you can interact through natural language prompts directly in Excel and then ask it to pull data from different systems, update data back to source systems, manipulate the data in Excel. So think about this as like having a like a financial analyst inside of Excel. Now that can do work for you that you previously couldn't do if you didn't know all these Excel wizardry type of, uh, uh, actions. David Leary: [00:39:11] And we, I think previously showed how some of the Gemini AI was in Google Sheets. Now on fields, you kind of type what you want the field to do, and then it goes and creates the formula for you. I think you showed some of that in the past. So so good. Blake Oliver: [00:39:26] Well so we keep keep on with app news. David Leary: [00:39:28] Yeah I was going to jump into zero so. Oh yeah. Ties to what you're talking about. So zero is raising prices on developers. Exactly. Pretty much the same way Intuit did. But zero. They actually are fessing up and saying it's to stop AI models from accessing the data. So they're going to have a consumption tier. The more you, the more data you suck from zero, the more you're going to pay type of a model, which is exactly like QuickBooks. And they released their updated terms of service. And their terms of service now includes new rules around AI, and they specifically are prohibiting developers from using the zero API to train machine learning models. So I think we read between the lines on the QuickBooks price increases on this, but now it's been confirmed because zero actually has set it. And they're um, they're explicitly banning this, uh, they a couple other changes they're doing, which I find interesting. They're going to not allow apps to use bots or browser extensions. So, so a really useful tool like right Tool that adds on to QuickBooks through a browser extension cannot exist in the zero ecosystem, which will help which that prevents solutions from getting to the market. Or like this cloud thing with Excel based on Zero's rules, a tool like that cannot exist with zero. Um, so they have the new pricing model. The pricing page is out there. They have two webinars coming up. But people got very upset about this. I didn't realize how many, I think from my ecosystem days with the QuickBooks App Store. I got connected with lots of developers on the zero ecosystem and they are not happy on LinkedIn the amount of posts they just. For some this is going to kill smaller apps for sure. It's exactly the exact model is Intuit. Um, you know, they have a free tier, but it's so little like it's for like five connections. So it's an internal app basically. Um. Blake Oliver: [00:41:07] So I'm glad you brought up zero. David. Sorry you were going to finish I, I cut you off. David Leary: [00:41:12] I thought there was one more thing I was going to say. Um. Oh. Effective date. So effective December 4th for all new developers. So that was yesterday. And then March 2nd for existing developers. The new terms. Blake Oliver: [00:41:24] I'm glad you brought up zero, because I just got access to a new feature inside of a few of our zero organizations. They now have auto reconcile an automatic reconciling, um, option feature that is powered by AI, which they call Jax. Jax. Just ask. Zero and I turned it on, and now what it's doing is it's monitoring that bank feed inside of zero in the bank account, and it will automatically reconcile transactions where it has a high confidence that there is a match, or that it should do something based on historical data. And it's done it so far for three transactions. Just a small start. But it did successfully code a transaction based on historical like a credit card charge, and it also successfully matched to payroll transactions. So another way to think about this is that it's going and clicking okay to match. That's what I was. David Leary: [00:42:17] Going to ask is is it just matching. You still have to go and confirm or is it actually clicking the. Yeah it's a match. Blake Oliver: [00:42:22] It's clicking the okay. It's doing the transaction matching. And then there's a screen now where you can see all the reconciled transactions and see which ones were reconciled by AI and why, whether it was historical or it found a match. Now the one thing that is missing, and maybe it's there, I just haven't seen it, is a rationale. So when I click on that row where it auto matched, I want to know why. What was the logic that the AI used to match the transaction, or what was the logic for coding a certain way? And I don't see that, and that is disappointing. David Leary: [00:42:55] Not even the generic based on your history. We did this. Blake Oliver: [00:42:58] Well, it says history, but it doesn't say like we found. David Leary: [00:43:02] The logic is. Blake Oliver: [00:43:02] We found, you know, ten transactions over the last six months that are coded this way. I want to be able to see the audit trail of what the AI is thinking. And I know that's there because all the reasoning is there. When you use ChatGPT via the API or you use it just in the web interface, you can see it's thinking. The thinking is available. David Leary: [00:43:24] To you as it goes up the screen. Blake Oliver: [00:43:25] So I would like to be able to, for every transaction, see the logic so that I can then fix it or audit it myself. David Leary: [00:43:33] Is there an undo button. Blake Oliver: [00:43:35] You can then? Well, you can go in and fix it if you need to. You can click through into the transaction, reconcile it, edit it. Um, more Xero news. Xero con is coming back in 2026 with events in two cities. London gets Xero Con A July 8th and ninth at Olympia, London and Denver here in the US is getting Xero Con on August 19th and 20 at the Colorado Convention Center in Denver. David Leary: [00:44:03] The very first US zero con. Blake Oliver: [00:44:05] No, the very first one was San Francisco. Okay. That was very small. That was like 100 people. But, uh, and they have done Denver before, and I think it was at the Colorado Convention Center. That's a great location for it, very central. So the Denver tickets are going to go on sale in January. So look for those. That is always a fun event. And David, you and I are going to do our best to get out there. We always try to go to both Xero Con. David Leary: [00:44:25] And QuickBooks Denver. Intuit London would be great. Denver. Blake Oliver: [00:44:29] Yeah. So anyone from zero listening from zero UK? Uh, let's get us out to zero Con London. That'd be fun. Okay. David Leary: [00:44:40] I have to intuit news if we want to pivot to that. And then we could or should we read our ad and then do that? Blake Oliver: [00:44:44] Let's let's thank our final our next sponsor for this episode, which is on pay. Forbes and CNBC rank on pay number one for small business payroll. On pay really knows how to get payroll done right for every client you serve, no matter how complex their software is, easy to use and backed by outstanding service levels, they handle new client onboarding for free and have experts on call to keep you and your clients on track. The system includes multi-state payroll, local tax filings, integrated HR tools, and more with no hidden fees. When you join on Pace Partner program, you get a custom dashboard to easily manage all your clients in one place. Plus, you can gain exclusive perks like revenue sharing or discounts. Free payroll for your firm. Co-branding opportunities, premium swag and more. Amp helps you run your practice efficiently while providing exceptional payroll that your clients can count on and for a limited time. Arnp has a special offer just for accountants and bookkeepers. Here's how it works. If you add three clients and run payroll by January 31st, 2026, you'll earn $1,000. Then, for each additional client, you'll earn $200 for a maximum total payout of $10,000. Wow. To learn more about how you can earn up to $10,000 when you switch clients to Arnp, head over to The Accounting Podcast. That's The Accounting Podcast. David Leary: [00:46:10] So Intuit is raising prices on QuickBooks desktop effective February 1st, 2026. So they are going to raise desktop premium pros. Going up desktop for the Mac payroll is going up. They're going to start charging for QuickBooks enterprise, the number of employees you have. But all this is the reason why is they want to eventually kill desktop, right? And shove everybody to QuickBooks enterprise. So they keep raising the prices on that. But I also think it's tied to as Intuit gets everybody in the cloud. Now you have this data that you can monetize. So some other news about Intuit that came out. Intuit is now Intuit created a thing. I covered it about a year ago. Something called SMB Media Labs was starting to aggregate data about small businesses, right, for marketers. But now they're going to open that data up and make it available on one of the world's largest third party advertising networks, called Trade Desk. That's going to give advertisers far more accurate access to verified small business decision makers. So basically, you're taking Intuit's insights with the Trade Desk ad Buying Part program. So if you have, you know, some app or some company and you want to sell to small businesses, you're going to be able to target those ads really well now, because the QuickBooks data is being shared with the third party app platform. Your client's data. Um, basically how it works is the advertiser sets a goal, right? So you want to I want to get app installs or I want to reach small business owners. Then you can choose Trade Desk individual lists, but then you can also add on O. David Leary: [00:47:43] Also use Intuit's list of possible customers or small businesses. And then it optimizes the ad millions of times a seconds and serves up the ads all over the web. And then they get bid up these things. Now, on one hand, I'm kind of like f into it. Into it's evil for doing this. Like that's kind of the vibe. But on the other hand, I'm not sure like maybe you as a firm could market to new small businesses, right? Sure. This is data from your competing firm's clients. But maybe you could try to market services to small businesses. And then on the other hand, though, I went to the Trade Desk website and it looks to be a platform for big companies. I don't think our average listener and their smaller firms are going to use this product from Trade Desk. So what this tells me is maybe one of the largest accounting firms could take advantage of this. So what's worse, Intuit marketing to your clients and stealing clients from you. Or now big firms. Intuit's now made it easier for big firms now to find your clients and market to them. I don't know, the whole thing is like kind of weird, right? But it's the fear of cloud from the beginning. With the big two push backs on cloud was the IRS is going to access my data because it's in the cloud, or the data is just going to be sold like Google and Facebook and everybody else. And everybody was right. The data your small business client data is now being sold to third party advertising networks. Blake Oliver: [00:49:09] Let's talk about, uh, PwC and AI Audit Automation. Pwc is saying that they're going to have full end to end AI automation for audits by 2026. David Leary: [00:49:24] This was like 30 days from now. Blake Oliver: [00:49:27] Well, I guess the end of next year. David Leary: [00:49:29] So at the end of next year. Gotcha. Blake Oliver: [00:49:31] This was during a briefing at PwC's New York office. Sean Hanson, US assurance transformation leader, said end to end AI driven automation should be expected sometime within calendar year 2026. This is according to Accounting Today. They are developing tools now for every audit step planning, risk assessment, walk through evidence collection, testing and financial statement review. The goal is to integrate these AI tools into one global new agentic platform, unquote, expected within a few years. Um, some examples of AI tools that PwC has already deployed include. Simplified audit for private business. It's currently in use for audit planning. It's in its first year of deployment, and it auto populates planning documents using prior year information. It helps auditors understand business changes since the last audit, and it was specifically designed for private company AICPA audits. There's also an advanced walkthrough assistant, which analyzes prior year walkthroughs and current documentation. It generates tailored work plans and highlights changes or missing information from the previous year, and addresses traditionally tedious audit tasks in large global organizations. There's also Evidence Match, which is an agent led module for automatic evidence extraction and validation. It supports high volume testing areas such as cash, accounts receivable and accounts payable, and it's designed to handle multiple document formats and provides clear, a clear evidence trail and documentation. They're currently working on a risk assessment tool that's going to help auditors make smarter scoping decisions. Automated controls testing and Audit Innovation Hub, which is in pilot with asset and wealth management teams that will automate financial statement tie outs. David Leary: [00:51:28] And any of this shown or is this just talk? Blake Oliver: [00:51:31] Uh, so this was an article in accounting today. I can't see it. But, you know, they're doing a briefing for the press here. So, you know, there's a. David Leary: [00:51:40] Show and tell at best. Blake Oliver: [00:51:41] You know. Yeah, there's always, uh, maybe a difference between, uh, the, the the hype and the reality. Um, but based on what I know about what can be done with AI agents and, um, ChatGPT projects and custom gpts, all of this is doable. Each of these like, little steps. Now, actually linking them all together is the challenge. But you know, using like for example AI to do audit planning, take the prior year information, auto populate the planning documents for this year. That's a manual process that AI can totally do at this point. David Leary: [00:52:23] Well, don't a lot of firms just do that? They just take the old one, change the date, and just use it for the next year and not even do the work? That's been the problem for a lot of maybe. Blake Oliver: [00:52:31] Yeah. The the AI GAAP called Sally and it just does exactly what was done last year. That's the instruction set. Um, hey, switching gears, here's a feature, a new tool that could help small firms a lot. And this is related to Google Workspace. So if you are on Google or your firm, not Microsoft 365, you have access to this now. Google workspace now has shared inboxes. Multiple team members can now access, send and manage emails from a single address, such as sales at company.com. I think this is actually one of the biggest wins that you can have as a small firm owner in 2026. If you don't have it, is a shared email inbox or your team. David Leary: [00:53:21] You've always had to buy a third party tool to do this. Blake Oliver: [00:53:23] Yes, and so a lot of small firms don't do it. And maybe they share access to a single email account, but that's not particularly secure. What you really want is individual logins with the ability to access a shared email. And this has been game changing for us, David, with the podcast and with earmark, we now use an app called missive that does shared email inboxes. And we can have multiple different kinds for all different purposes. You know, we have a shared inbox for sales. We have a shared inbox for production. We have a shared inbox for you and me as founders. And it's really great because our emails no longer siloed in our inboxes. Um, but, you know, setting up something like that is maybe, uh, a heavy lift if you only have, say, a handful of people working on your team. I think setting up a shared inbox like this in Google Workspace is is a great idea, and it will help you as a firm owner or operator, get out of the weeds and help your whole team have access so you could set up a single email address inbox to do all your client work. You could have clients at firm. Com or you could use admin at firm com. Everyone shares access and so all the client emails are going into one place. And then you could delegate them. Now lets you delegate them I don't know if this shared inbox would let you do that. But in a small team maybe you don't need that, right? Maybe it's just you and an admin. David Leary: [00:54:49] You could easily use those labels. You could just assign them. There's all these things you could do. Yeah. The real question is, is like now that Gmail is doing it for this, really to impact the accounting industry would be for Microsoft to do it in Outlook or Teams. Blake Oliver: [00:55:02] I don't know if that's possible in outlook, but I think it would be great. Um, Chris Khan says Google delegated emails have existed for years, and Google Groups does the same with fewer features. Yeah, I've used Google groups for this purpose too, but I've just. Yeah, I don't like the interface. It's like they haven't changed Google groups in years. And so this allows you to work within the main Gmail interface, which is way better, uh, and still have shared inboxes. And welcome, Heather to the live stream. Heather Smith says hello from Brisbane. David Leary: [00:55:32] Hey, Heather. Blake Oliver: [00:55:33] Hey, Heather. Great to see you. Um, all right, so let's do a few more pieces of app news while we're at it. Unless you got something else, David. A little more. David Leary: [00:55:43] The only one I don't want to leave with is we have to talk about doge. Your favorite. Okay, go. Government agency. Blake Oliver: [00:55:48] Let's talk about Doge. David Leary: [00:55:49] Yeah. So Doge is done. So the Department of Government Efficiency Doge has effectively disbanded eight months before its charter was set to expire. The Office of Personnel Management has quietly absorbed Doge's responsibilities. So they essentially, when it's all said and done, they cut 300,000 government positions in the first nine months of 2025. Um, obviously lots of opinions on this. We got hate mails because of you saying it was kind of okay, what they're doing then, you know, the pendulum swings around on this a little bit, but I went to DOJ's website. They have not posted any new, you know, their wall of receipts they had on their website. There's nothing new since October 2nd and October 3rd. That's kind of the last time they've done anything. Um, so either they're done saving money or they ran out of stuff to do, or it's probably something. My suspicion is probably won't help the election. And I think some of these are the Republicans are cutting away some of this bad press stuff. Blake Oliver: [00:56:47] All right. I've got, uh, some career advice to take us out here. David, given the tightening labor market for, uh, new accounting grads, or I should say shrinking job market because the big four are cutting back on hiring entry level people because of all this AI stuff. It's a real challenge now to to get a job at this point. And I saw a data point that could be helpful to our young listeners. This was in CPA Practice Advisor, and the stat is that over half, 54% of workers got their current job through personal or professional connections. So it's not going out and uploading your resume to a job site. It's not necessarily going to a career fair. It is personal or professional connections. That's how half over half of workers got their current job. But only 60% of job seekers or not yet. Not only 60% of job seekers don't use their network at all. Personal connections are the most valuable resource for job seekers. Professional connections are next job boards. They only worked for 13% of people. So if you're only applying to job boards to get a job, you're only going to have success 13% of the time. And why don't people network more? Lack of confidence is the number one reason. Now here's a here's a new way to network. According to a survey of thousands of US adults who used dating apps in the past 12 months, 1 in 3 dating app users are swiping for jobs, not love. This is also in CPA Practice Advisor. Yeah, so 34% of people have used Tinder, Bumble and other dating platforms for career networking in the past year. And guess what? It works. 88% who tried this approach successfully made professional connections, and 39% actually landed job interviews. And that's that. 37% got job offers. David Leary: [00:58:57] Linkedin's The Redwater. It's the bloody water, right? You can't stand out there. But if you say on a dating site. Hey, I'm looking for a job. There's nobody competing for jobs there. It's really smart, actually, to do that. It's the blue ocean. Blake Oliver: [00:59:08] Some users are apparently making their profiles look like resumes and targeting people at companies they want to work for. David Leary: [00:59:14] It's amazing. Blake Oliver: [00:59:15] So think outside the box. You're going to have low likelihood of getting a job applying on a job site. But if you match. I mean, there's so much that's wrong with this. Like the HR folks must just be like, uh, you know, losing it. David Leary: [00:59:31] But it's that alternative path in building a network is really a smart way. When I, you know, every year I go and I do a talk how to be a podcaster, right? Or an influencer at my wife's high school. And the advice I give them when people are like, well, what would I make a podcast about if I was a young person in high school and I wanted to become a dentist? Make a podcast where you just go and interview dentists. They have egos. They'll want to join your podcast even if nobody listens to the podcast. When you're all said and done, you'll know 40 dentists. And when you finish school, you probably have a good chance of getting a job. It's a creative way to build a network. Blake Oliver: [01:00:04] Well, David, that's all the time we have for this week. Thanks everyone who joined us live. If you have not done that, go check us out on YouTube, search for The Accounting Podcast, subscribe and hit that notification bell. You'll get notified when we go live. What's so funny? David Leary: [01:00:19] David Matt K in the comments asked if those are quote unquote legitimate jobs on your dating site. Blake Oliver: [01:00:25] This is unknown. I did not research this further. You can earn free CPE for listening today. Download the free earmark app on the App Store or go to Earmark app in your web browser. You can get one free CPE every week for listening to this podcast and many other fine accounting, tax and audit podcasts. And if you want to support our work, you can subscribe for the low price of $170 per year for unlimited CPE. So don't forget your year end CPE requirement. Get that taken care of by listening to podcasts on your phone. You don't have to go to conferences or sit through webinars during your lunch hour. Get it done so you don't have to do it the week between Christmas and New Year. David Leary: [01:01:07] Which 10% of you will wait till that week? Blake Oliver: [01:01:11] That's right. Um, we had one more question here from Max. Who says Blake and David, what is your take on outsourcing talent? Is it hurting accounting in America, or do you have a globalist perspective? That's a that's an interesting question. Um, I guess my take on outsourcing is that I see I see the impact on American jobs, right? It's the same trend of outsourcing manufacturing that occurred in the 80s, 90s that hollowed out the middle class. At the same time, I don't know if it's preventable or if we want to prevent it, if there's anything we can really do about it. Um, you know, we use offshore talent. We have a global team here at earmark, and we have maybe half the team, a good chunk of the team here in the US. We got a good chunk outside the US. And the way I think about it is that we are just a global company. We don't have a US team and a and a global team. David Leary: [01:02:14] That's what I like about it too. They're just our team. Blake Oliver: [01:02:16] Yeah. And that's what a lot of firms are doing now. And I think the benefit is that, you know, it creates economic opportunity for all because the firms that do it right, they aren't just like outsourcing work and then, uh, firing people. I mean, there are firms that do that, right? The big four are famous for doing that. But I think the small firms that do this properly or the mid-size firms are offshoring the work, and then that enables their US team to do more and to do more interesting work and to do different kinds of work. A lot more client facing work, for instance. David Leary: [01:02:48] Well, I think it supports an entrepreneurial journey. It's one level. Yes. Like massive. If, like, we're going to lay off 100,000 accountants and go hire 100,000 people overseas, that's. It's hard to argue that that's a good thing. But I think for entrepreneurs who are bootstrapped and they're trying to build take a risk. It helps you take less risk, right? Like it's a lot less risky for us to hire six developers overseas than to hire one developer for our eggs in one basket. It's super risky for us to do that. So it's I think it helps entrepreneurs, small entrepreneurs do it well. I think for big companies, they're just doing it as a bottom line slash. They're looking at it not it's not they're not as and we're not we're we're not growing our team because we're using overseas labor to help us grow our team. They view it as like it's just a cost cut. I'm going to change this line item on the profit and loss and change it to this number instead. Blake Oliver: [01:03:39] I think that's a great point, David. Thanks everyone who joined us live. We'll see you here next week. Bye everyone.