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In this episode of the Accounting Podcast, Blake and David talk to CPA Roger Knecht about how much CPAs should charge for business tax returns. They also touch on the latest news, including Hunter Biden's plea deal for tax charges, the Pentagon overestimating supplies sent to Ukraine by $6.2 billion, and the SEC charging Marcum with quality control failures. They also dig into sports gamblers losing more money as parlays gain popularity, Roger's five pricing strategies, and AI in accounting.
Chapters
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Chapters
- (00:23) - Preview: CPAs are pricing themselves too low
- (01:13) - Welcome Roger to the show and a little background on what he does
- (03:20) - What topics we'll cover in this episode
- (04:25) - Hunter Biden takes plea deal in tax charges
- (09:20) - Pentagon overestimates supplies sent to Ukraine by $6.2 billion
- (12:27) - Who will win: Elon Musk vs Mark Zuckerberg
- (16:07) - CPA Ontario and CPA Quebec sever ties with CPA Canada
- (20:56) - The SEC charges Marcum with quality control failures
- (31:52) - Yahoo Finance article on how much people should expect to pay for a CPA
- (38:33) - Sports bettors losing more money as parlays gain popularity
- (43:59) - Roger's 5 pricing strategies
- (48:53) - Some updates on AI in accounting
- (57:18) - Wrap up and where to reach Roger
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Meet Our Guest, Roger Knecht:
Website: https://universalaccounting.com/
LinkedIn: https://www.linkedin.com/in/rogerknecht/
Twitter: https://twitter.com/universalacct
Facebook: https://www.facebook.com/universalaccountingschool
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Meet Our Guest, Roger Knecht:
Website: https://universalaccounting.com/
LinkedIn: https://www.linkedin.com/in/rogerknecht/
Twitter: https://twitter.com/universalacct
Facebook: https://www.facebook.com/universalaccountingschool
Instagram: https://www.instagram.com/rogerknecht/
Show Notes
Even by the standards of billionaire-versus-billionaire tiffs, the proposed cage fight between Elon Musk and Mark Zuckerberg stands out
Marcum, the SEC said, audited nearly half of the roughly 860 SPAC IPOs in 2020 and 2021. The firm agreed to pay the SEC $10 million in fines for widespread failures in its audits.
Accounting Mistake Caused Pentagon to Overestimate Cost of Weapons Sent to Ukraine by $6.2B - CPA Practice Advisor
I'm a Small Business Owner. How Much Will a CPA Cost Me?
4 in 5 Australians want PwC banned from new government work | Accountants Daily
CPA Quebec, Ontario bodies sever ties with national organization
Hunter Biden expected to plead guilty to tax-related misdemeanor crimes as part of a plea agreement
How much did Congress lose by defunding the IRS
Parlay bets are becoming a bigger part of online sports betting—which is good news for the house
BDO to Convert to a Corporation, Replacing US Partnership (2)
New bookkeeping platform Thriday says AI is on its way to save you from taxes and accountants
CLA launches high school summer intern program
Jeff Seibert, CEO and Co-Founder of Digits – Interview Series
KPMG's Banking Troubles Give Accounting a Black Eye (Podcast)
Digits AI Debuts as World's First Secure, Accurate, Business Finance AI
Pentagon's Ukraine accounting error revised up to US$6.2 billion
CPA Canada remains committed to a unified Canadian accounting profession
Pentagon Says a $6 Billion Accounting Error Allows More Arms for ...
Rumor: BDO USA Is Switching From a Partnership to a Corporation on July 1
Pentagon says Ukraine accounting error revealed last month is much bigger than previously stated
Ontario, Quebec accounting bodies announce planned split from CPA Canada
Digits AI Debuts as World’s First Secure, Accurate Business Finance AI
Tech News: Digits launched AI product
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Creators & Guests
Guest
Roger Knecht
Roger Knecht is president of Universal Accounting Center, a post-secondary school for accounting professionals. With over 20 years of marketing, sales, HR & operations experience, Roger Knecht has helped thousands of business owners work ON their businesses to increase revenue, improve profits and build value. His strong work ethic and collaborative style delivers reliable, high-quality results for business owners. Roger’s podcast, Building the Premier Accounting Firm, keeps accounting professionals on the cutting edge of the industry offering quality bookkeeping, accounting and tax services. He hosts discussions with some of the accounting world’s best minds and shares actionable insights for firms. Roger is the author of “Your Strategic Accountant” and “Your Profit & Growth Expert”, each written to help business owners understand what they can expect from the accounting profession.
What is The Accounting Podcast?
The Accounting Podcast (formerly the Cloud Accounting Podcast) is the world's #1 accounting, bookkeeping, and tax podcast! Join us weekly for a roundup of accounting news, analysis, and interviews. Plus, earn free NASBA-approved CPE credits for listening with the Earmark app. Learn more at https://earmarkcpe.com.
Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!
Roger Knecht: [00:00:04] The conversation that I'm sure most of you are having is too many people are pricing themselves too low and not really considering how much their services are worth. And so it's not uncommon for me to have conversations with firms where the first thing that we're addressing is that their pricing hasn't been changing. It needs to be increased. They're not valuing their services correctly. And so I would say more than the average is typically a pricing issue.
Blake Oliver: [00:00:36] Hello and welcome to the accounting podcast. I'm Blake Oliver.
David Leary: [00:00:39] And I'm David Leary.
Blake Oliver: [00:00:40] And we're joined today by a special guest, Roger Knecht. Hey, Roger. Hey, Roger.
Roger Knecht: [00:00:46] Pleasure to be here. This is going to be great.
David Leary: [00:00:48] Like, I'm actually at the Onpay offices, so I got you some swag. I'm actually in Atlanta at Onpay. It's not the fake on Pace Studio. It's the real on Pace Studio this week.
Blake Oliver: [00:00:57] That's great. Roger, welcome to the show. Pleasure. Roger is the president of Universal Accounting Center, a post-secondary school for accounting professionals. And Roger has helped thousands of business owners work on their businesses to increase revenue, improve profits and build value. You have your own podcast, Roger Building, the premier accounting firm. What's that about?
Roger Knecht: [00:01:20] We basically address various things that business owners of bookkeeping, accounting and tax firms need to consider as they're running their business, training their staff, finding new clients and most importantly, retaining and working with their clients and universal accounting.
Blake Oliver: [00:01:33] Here in your bio, it says Post-Secondary school for accounting professionals. What is what does that mean.
Roger Knecht: [00:01:38] So different than what you might imagine? It's not just a single program or offering that we provide. We're registered with the state of Utah, where our corporate headquarters are as a post-secondary school. So just as you would expect to go get like a CDL license, your your cosmetology license, we work with individuals that have their degrees, typically in accounting, bookkeeping. They have their two year, four year degree, let's say, CPAs, and they're wanting to specialize in small business accounting procedures. So we have a variety of curriculums to help individuals start their businesses, offer those services, train their staff. We work with about a third of the people that are non accounting professionals by education. So they've had experience in trade and they want to get maybe certified. And so we provide a pathway for that. We work with a lot of CPAs, enrolled agents that want to get into running their own practice. And so we're helping them transition into the small business spectrum and learn marketing, selling techniques, pricing techniques for them to start and build their businesses.
Blake Oliver: [00:02:33] Well, that's great because I didn't learn any of that in school when I went back for accounting to get my CPA. So it's great. Yeah, it's great you're out there providing that resource to people. So David, we got so much to talk about this week in the news. We have Marcom getting fined by the SEC. They're going to pay $10 million in fines for widespread failures in their audits. We've got Hunter Biden pleading guilty to misdemeanors that involve failure to pay his taxes. The son of the president didn't pay his taxes. Cpa Ontario and CPA Quebec leaving the CPA Canada Alliance. What about you, David?
David Leary: [00:03:11] Remember a month ago I talked about the the accounting error that gave the war in Ukraine war money? Well, apparently they found some more money. Oh, yeah. Yeah. There's even more available now. So it went from they thought they had 3 billion but maybe it's closer to like 6 billion that's available. The Pentagon, Congress, the billions.
Blake Oliver: [00:03:29] Billions of dollars.
Roger Knecht: [00:03:30] Sounds like a rounding error.
Blake Oliver: [00:03:32] Yeah, right. Well, they still haven't successfully done an audit of the Pentagon ever. So, I mean, it doesn't surprise me.
Roger Knecht: [00:03:40] Well, if I remember. Right. Right before nine divided by 11, on 910, there was a, I think $1 trillion that were unaccounted for. So there you go.
Blake Oliver: [00:03:47] What should we start with? Should we start with this Hunter Biden thing?
David Leary: [00:03:50] I didn't hear anything about this, so I'm fascinated.
Blake Oliver: [00:03:52] All right. Well, okay. So Hunter Biden has been under investigation forever. I mean, you've heard about this, David, right? I mean, this the whole Hunter Biden investigation for like five years that's been going.
David Leary: [00:04:02] On the laptops and the money, questionable money. Yeah, I've heard of lots of these things. Yes.
Blake Oliver: [00:04:07] So, you know, for our listeners abroad, Hunter Biden is the son of US President Joe Biden, and he is going to plead guilty to two federal misdemeanor counts of failing to pay his taxes. The plea agreement with the US attorney for Delaware includes a provision for probation for Biden, meaning he is unlikely to face jail time. The agreement also includes a gun possession charge that will likely be dismissed if certain conditions are met. This is a decision by a Trump appointed US attorney and it indicates an end to the five year investigation into Hunter Biden's conduct. The resolution suggests that prosecutors did not find cause to file charges related to Biden's dealings with foreign entities or other wrongdoing. So two misdemeanor counts of failing to pay his taxes and then one on a gun possession charge. And what I didn't mention is the fact that Hunter Biden had a drug problem. For years and years and years. And apparently during these years when he had a drug problem, he didn't pay his taxes for two years. And I was like thinking about this. And I'm trying to imagine, like, how that happened because the guy was making like $1 million a year. So we know he had an accountant, right? Like he had I don't know that we know that he's not filing his taxes on TurboTax. Right. So I hope not. So the question for me is, was like, who is the CPA doing the taxes? And then was he like trying to call Hunter Biden? And then the guy was like just not responding. And eventually they gave up, you know, like, I'm trying to figure out, like, how does that even happen? So can.
David Leary: [00:05:44] You clarify? I mean, is this just like, oh, he didn't file taxes because he just was busy, but he had he had very valid W-2s and proof of income? Or is this like we don't know where his income came from and that's why he didn't file taxes.
Blake Oliver: [00:05:58] It's unclear. It's unclear. I was curious about the charge because, of course, the the complaint from the folks on the right is that, you know, Hunter Biden's getting the he's getting off easy. He's not going to jail. He's not going to serve jail time. He's just pleading guilty. It's misdemeanors. And so I looked it up. You know, what exactly he's pleading to, which is the failure to pay and failure to pay your taxes. You know, that often gets a lot of people in trouble and gets them jail time. I mean, it's the classic, you know, mobster way to get mobsters in jail, right? You don't actually get them for the crimes that they committed with, you know, alcohol or drugs. It's with failing to pay your taxes. Right. Who is the famous guy? A Al Capone.
Roger Knecht: [00:06:42] Right. Al Capone Racketeering.
Blake Oliver: [00:06:44] Yeah, right. So I looked up, you know, and I was curious, like, when when is this a felony versus a misdemeanor? And I didn't really get a good answer. It seems like failing to pay or failing to file your taxes can be a felony if they want to make it a felony. And it can be a misdemeanor if the prosecutor wants to make it a misdemeanor. That's all I know.
Roger Knecht: [00:07:01] I'd be curious what any of the tax resolution specialists that may be listening would want to contribute here, because on a regular basis, they're representing their clientele before the IRS to try and get such resolutions. And I would be just curious, is this a abnormal, not traditional favorable thing that Hunter's getting out of this situation, or is this a typical resolution that someone could expect if they likewise didn't pay their taxes for two years? I know there's devil's in the details, but at the same time, I'd just be curious what some of our tax resolution specialists might think of the whole situation.
Blake Oliver: [00:07:33] Yeah, I'd be curious as well. I did read that it's very uncommon for this to be prosecuted as a felony. There's only a few hundred of those cases in the whole country every year where it's prosecuted as a felony. So I think it sounds like if you come clean and you make a deal, you're going to get the misdemeanor and you pay your past due taxes and you pay your fines and your penalties and all that. So yeah.
David Leary: [00:07:57] Yeah, I think the NFL linebacker Bill Romanowski was like a I think he used to be for the Raiders. Then he moved over to the Denver Broncos and he apparently this this broke this week that the government suing him for 15.3 million in back taxes. Apparently he had a nutrition company and they just like used that bank account to like pay for their kid's apartments and just use this money for years and years and years and obviously didn't pay income on it. But there's nothing in this news article, even though the Department of Justice is going after them, that there's going to be criminal charges. Right. There's going after them for the money. Right. And so you're right. Like there may not you know, there's another case where it doesn't seem like they're putting anybody in jail over it.
Blake Oliver: [00:08:35] Yeah, I think the key is don't don't go to trial. Right. Yeah.
Roger Knecht: [00:08:39] Resolution.
Blake Oliver: [00:08:40] Right. You go to trial and you lose, then you're going to jail. Well, since we're on the government beat David, let's talk about this accounting mistake that caused the Pentagon to overestimate the cost of weapons sent to Ukraine by $6.2 billion. So now we get to send more without having to do another authorization through Congress. So yeah.
David Leary: [00:08:58] Because they just it's just the book value of those jets, right? Like those jets aren't really $40 million. It's only worth 16 million. 20 million or 20. Yeah.
Blake Oliver: [00:09:06] So and it's not jets, right. Because I think that's the one thing we've refused to send them yet yet is we're sending rockets and drones and all that stuff but and bombs but or whatever. But we're not sending munitions but we're not sending jets.
Roger Knecht: [00:09:21] But yeah, javelins and so forth.
Blake Oliver: [00:09:22] Yeah, but so this is, this is fascinating, right? The accounting explanation for this I think the public generally misses is the Pentagon when they came up with the number. So so we're not we're not shipping new equipment to Ukraine. We're giving them the old stuff. And this is what we always do when we supply other countries, right? We give them our old inventory and they make use of it. And then we get to go buy new inventory from all our defense contractors who are really happy because now we're placing a bunch of orders, right? Yeah, that's.
Roger Knecht: [00:09:50] Referred to as the military industrial complex. I want to get down and dirty. So there you go.
Blake Oliver: [00:09:54] So apparently what happened is that the Pentagon, in tallying up the value of everything we've been shipping over to Ukraine from our inventory used replacement cost instead of net book value. And so when they adjusted for net book value because of depreciation.
Roger Knecht: [00:10:13] That's right. I was going to go.
Blake Oliver: [00:10:14] They they realized that they overestimated they over. Yeah, they overestimated the cost of the equipment. So now we can send more equipment and.
David Leary: [00:10:22] Two years in a row so it's 2.6 billion for fiscal year 22, 3.6 billion for fiscal year 23. And that's how you get your 6.2 billion. And they said it's great because this is going to mitigate the need for Congress to pass additional legislation to spend more money.
Blake Oliver: [00:10:37] But like thinking about this, it doesn't really make sense, right, Because we're going to end up paying the replacement cost of all this equipment so.
David Leary: [00:10:46] They can dip into the budget. Now, on that, remember, if you're short, you can dip into the IRS part of the the debt ceiling agreement.
Blake Oliver: [00:10:53] Now, I guess. So.
David Leary: [00:10:55] This is just a game. It's a game. And you're right. That's in the accounting world are like, yeah, this is a game. But for most people, like they're not going to understand this and it's it's it's this is a scam at some level, right It's they're playing games with these numbers.
Blake Oliver: [00:11:10] They're playing games. It's it's an accounting trick. Yeah. Right. That's that's what it is. And I wonder like in the in the law or in this like under the authorization that the Pentagon has to send the equipment to Ukraine. Does it define what accounting to use? Does it say you have to use replacement cost or book value, or is it just vague and they can do whatever they want? And if so, that's kind of clever what they're doing, I suppose, from an accounting standpoint.
David Leary: [00:11:38] And if you say how they figure out the valuation because is there an aftermarket to resell this into like, I don't know if it makes any sense, like why don't they just value it at a dollar and be like, Hey, look, we have hundreds of billions of left, right.
Blake Oliver: [00:11:50] So, Roger, I got a question for you. Yeah. Who do you think would win in a cage match? Elon Musk or Mark Zuckerberg?
Speaker4: [00:11:56] I've seen this.
Roger Knecht: [00:11:58] Yeah, And I saw something that said, no, this is legit. Yeah.
Blake Oliver: [00:12:01] Well, it made the Wall Street Journal so.
Roger Knecht: [00:12:04] So if I remember correct. Zuckerberg is like an into jujitsu. Yes. So and I understand he's good at jiu jitsu and Joe Rogan is big into jiu jitsu. So I'm going to assume that there's some favorability there. I don't know if Musk has any formal training, so I'm going to I don't wager, but I'm going to lean towards Zuckerberg. So there you.
Blake Oliver: [00:12:31] Go. Yeah, I think I got to go with you on Zuckerberg. Musk is notoriously unathletic and he.
David Leary: [00:12:38] Has to get in street fights as a teenager, though, he said. Or is this just made up?
Blake Oliver: [00:12:43] I in South Africa at the what the Emerald mines is his father owned or something? I don't know. But I just love this picture, by the way, on the screen. The Wall Street Journal article has it's it's Zuckerberg's head and and Musk's head on those Rock'em sock'em robot game and they're like punching each other in the face.
Roger Knecht: [00:13:06] So so I've got to ask, do you think one of them just needs money and they want a pay per view event?
Blake Oliver: [00:13:13] I mean, do they? It's hard to say. I don't think any either of them really need money right now.
Speaker4: [00:13:19] I'm kidding on that.
Roger Knecht: [00:13:20] I'm just pay per view. You hear about these pay per view event events that are millions of dollars for people to have access to the actual viewing rights and they turned into big events. When you get those, you know, the boxing matches and so forth so they could.
Blake Oliver: [00:13:34] Stream them on.
David Leary: [00:13:34] Their on their own platform.
Blake Oliver: [00:13:35] Respective social media platforms.
Roger Knecht: [00:13:37] So there you go.
David Leary: [00:13:38] So I was thinking about this and like, well, what about like in our own industry? Like obviously Brad Smith, he's left Intuit, he's retired. You have Rod Drury, you know, he's retired from zero, basically. But think about like those types of fights. Should we have had these battles in our own industry? Now, I think Brad Smith would have taken Rob Drury down because he's a black belt. His guns are monstrous like he probably would have. But it just makes you like like are there other battles that are brewing here? We could have Ko fights of different tech companies that we love in our space.
Roger Knecht: [00:14:07] Well, you do know there's precedence. There's that YouTuber that went went boxing.
Blake Oliver: [00:14:11] Yeah.
Roger Knecht: [00:14:13] I'm trying to remember his name right now. This this is big into it.
Blake Oliver: [00:14:16] This is the like this is what's this is everything that's bad about social media, right? There's a lot of good that's bad about there's a lot of good about social media. But this is like this is the worst of it. And I can't believe that Zuckerberg and Musk got like, got into this, you know, like like challenging each other to a fight. I mean, how childish can you be? And that's that's billionaires.
David Leary: [00:14:40] I'm waiting for our email next week where some accounting podcasters challenging Blake to a fight.
Roger Knecht: [00:14:49] That's how we're going to settle things nowadays.
Blake Oliver: [00:14:51] And Mark who's.
Speaker4: [00:14:52] Paul Logan.
Roger Knecht: [00:14:52] There it is. I see it. Paul Logan.
Blake Oliver: [00:14:54] Thank you. Mark, who has joined us for the live stream.
Speaker4: [00:14:56] It was Jake Logan.
Blake Oliver: [00:14:57] Jake Slash, Logan Paul.
Roger Knecht: [00:14:59] Probably it's Paul Logan was.
David Leary: [00:15:01] Oh, wait, we already know the battle. Here's the fight you have. Wait, is it Jake, Paul or Logan?
Blake Oliver: [00:15:06] Paul? Yes. Thank you, Mark. Thanks, David and Trinity and Heather and Randy for joining us. Randy says Roger has the best voice in podcasting.
Roger Knecht: [00:15:16] Right, Randy?
David Leary: [00:15:17] It's amazing because he's just using like, earbuds. It still sounds amazing. Yeah. No, I think.
Blake Oliver: [00:15:22] You've got a real mic, right?
Roger Knecht: [00:15:23] Oh, yeah.
David Leary: [00:15:24] Oh, perfect.
Blake Oliver: [00:15:25] Perfect. Yeah, Roger's got the mic.
David Leary: [00:15:27] Yeah. Professional here. We do have a fight going on, though, in our industry. You kind of let it a little bit here. You said the Canada versus Ontario and Quebec, so yeah.
Blake Oliver: [00:15:40] So Ryan Lazanis, Ryan Lazanis sent this over and. I want to read his message here. He said. Cpa, Ontario, CPA, Quebec are terminating their relationship with CPA Canada. I think I'm happy about this. Here's why. Plus, my interpretation. The profession is in trouble right now. Fewer and fewer want to become CPAs. The numbers speak for themselves. We are also less competitive than ever. My feeling is that CPA, Quebec and Ontario are concerned about the direction of the profession and are going to take matters into their own hands. Cpa, Quebec and Ontario both said the same thing in their communications. They need to better support their members as the world evolves. They need a professional body that is innovative, efficient, streamlined, responsive and nimble in order to attract talent and better prepare them for the future. So I wonder if we might see this. Well, I guess we don't really have this in the United States because everything's all state by state anyway. Right. State societies, state boards of accountancy. But I guess we could see maybe some state boards of accountancy severing more of their ties with the National Association of State Boards of Accountancy and doing their own thing. And I mean, we've seen that with Minnesota moving to replace or provide an alternative to the 150 hour requirement with 120 plus two years of experience going back to that model, that bill is in the legislature, they might actually do it. And that would be something kind of akin to this.
David Leary: [00:17:09] And isn't Quebec historically like the Texas of Canada, like they want to secede like they're it's the French Canadian part, right? I think in general, they're a little bit more of the rebel rousers. They don't want to be part of the bigger picture. And so some of that just their nature of rebelling against this. But you're right, though, I think this is a bigger trend of possible indications what could happen in other places, because I think the talent crisis and the leadership and a lot of these fields broken and everybody's doing desperate acts. And then did you see the response from Canada?
Blake Oliver: [00:17:42] No.
David Leary: [00:17:43] So this is an article on it's actually picked up in Yahoo! Finance. So it's just, you know, it's actually just a press release. And it says CPA Canada is disappointed and surprised that CPA, Ontario and Quebec have decided to sever ties with the national organization, triggering 18 month withdrawal period in accordance with the terms of the current collaborative agreement. And then they also have another paragraph that was in there that says we strongly recommend that Ontario and Quebec reengage with CPA Canada, including all provincial, territorial and Bermudian bodies and work with a world class conciliator conciliator to guide future deliberations. Like they almost like are there now. They're just communicating through the press. So obviously the communications are that broken where they're doing the press release things, which is really similar to what they did with Minnesota. Like they were doing letters, public letters back and forth. Right.
Blake Oliver: [00:18:31] We'll see what happens. Keep us posted if you're in Canada and your Canadians.
David Leary: [00:18:36] In the chat.
Blake Oliver: [00:18:37] Let's see. Saastr, 18 says Nice. A story from Canada. I'm originally from Quebec, actually, but got my CPA license here in the US. David is right. Quebec always wants to go its own way and be different than Canada. You're right. David Yeah. All right. So we talk about Markham. The Securities and Exchange Commission and its audit watchdog, the public company Accounting Oversight Board, have charged accounting firm Markham with systemic quality control failures and violations of auditing standards related to its work for hundreds of special purpose acquisition companies, also known as SPACs. Markham, based in New York, has agreed to pay a total of $13 million 10 million to the SEC and 3 million to the PCAOB to settle these investigations without admitting or denying the allegations. The firm has been accused of prioritizing revenue over audit quality, especially during the SpaC boom, neglecting standards around audit documentation, risk assessments, audit committee communications and engagement partner supervision. And as a consequence of the investigation, Markham has been mandated to make structural changes which have never been mandated before by the SEC or PCAOB. They have to put in place a chief quality officer role and an audit committee to oversee its quality control system. So Markham took on hundreds and hundreds of these SpaC audits and did not increase the number of audit partners and quality just dropped.
Speaker4: [00:20:09] Yeah.
Blake Oliver: [00:20:11] They prioritize revenue over quality. And. I got to say, I'm not surprised that this happened. Because that's the whole system. The business model of public accounting firms that do audits is designed to prioritize revenue. Top line revenue is what everyone talks about all the time, and quality quality only matters to the extent that you avoid getting in trouble with regulators. Now, they went way, way, way over the line, apparently like adding hundreds and hundreds of audits and not upping their staffing appropriately. But like, this is this is. This is not unexpected.
Roger Knecht: [00:20:52] So was there any any indication as to how long this would be going on? Is it a systemic thing that's been happening for five years, ten years, two years, one year?
Blake Oliver: [00:21:01] So this happened in 2020 and 2021.
Speaker4: [00:21:07] When two years when.
Blake Oliver: [00:21:08] The SpaC rage occurred, when when it became super hot to do SPACs. So the market saw more than 860 SPACs complete IPOs from 2020 through 2021 and Markham audited. Audited nearly half of them. Oh, and I think it's because the big four wasn't weren't touching these SPACs because, you know, historically SPACs have been something that have been a little bit.
David Leary: [00:21:37] The Big Four had their own audit quality issues. They were dealing with the bunch of other companies, never mind the SPACs, they need to help out with us. So so like, what's the total Fine then.
Blake Oliver: [00:21:48] $13 million.
David Leary: [00:21:50] So $13 million. And they were forced to create a new position or whatever, right? Yeah. So yeah, it's very clear. I heard a podcast on Bloomberg's talking tax and they're really talking about, you know, KPMG's troubles right now because they basically had the bank failures, audits, right, for Silicon Valley Bank and.
Blake Oliver: [00:22:07] They ordered all the banks that failed.
David Leary: [00:22:09] The other one. Right. Uh, looking at First Republic or First Republic and the other one, the first Republic, did not go under. It was signature. And Silicon.
Blake Oliver: [00:22:17] Valley.
Speaker4: [00:22:17] Silicon Valley.
Blake Oliver: [00:22:18] Yeah. Yeah.
David Leary: [00:22:19] Those are the two that went under. And they're talking about like a little bit of like, I guess in my brain I was listening to this is like, how big of a penalty does it have to be? Because essentially we're having the same problems they had with Anderson when they broke up. Anderson Yeah, 20 years ago. So it's 20 years later and the same things are still happening in like what? How big of a penalty is it going to take? Like what's 16, What's $13 million? It's not going to accomplish anything. You have to add a position. I mean, they destroyed a whole entire firm and it never improved it.
Speaker4: [00:22:46] So. Yeah.
Blake Oliver: [00:22:48] See, you make a good point, David Markham US annual revenue is like $800 million, okay, $800 million in 2021, the fine is 13 million. So, I mean, it's not immaterial. And probably in the you know, if we if we took the revenue that's just for audit, that's a big amount. Right? I don't know. I don't know if it's a big enough fine. But I also don't know if fines are even the solution when it's the the business model that encourages this kind of risk taking behavior. Roger, you were shaking your head there.
Roger Knecht: [00:23:29] Well, I think there's two things to consider. First of all, the fine is meant to obviously penalize the entity that's done the the egregious thing. So there's that slap on the hand and it's intended to actually curb future intentions of doing it. It should be enough to say, wow, that was significant. I don't want that to happen again. And then them change the routine. But it's also a message to everyone else around watching to see is this worth being worried about? Should I be concerned and am I going to change my business model because of what I saw happen over here? And the question that I think you're asking is, was the messaging of the $13 million fine significant to get everyone else's attention to say we internally need to address this within our own organizations? And that's where I don't know if the 13 million is accomplishing that. Is it too insignificant of a of a fine? Not for the entity that's being fined. It's the messaging to the to the profession.
Blake Oliver: [00:24:22] Well, well. And and. Were any partners held accountable individually?
Speaker4: [00:24:27] Yeah.
Blake Oliver: [00:24:28] If you don't hold individuals accountable and fined individuals and you know like what do I fear as a partner at a different audit firm like, okay, my firm might end up paying a fine, but if I don't pay the fine. I'll just keep doing what I'm doing.
David Leary: [00:24:44] Well, who. Who just got fined for the exam cheating last week? Which of the big four was that?
Blake Oliver: [00:24:49] I think well, I think it was KPMG in Australia that was cheating on the ethics exams.
David Leary: [00:24:54] And then they they it was like a $60 million fine or something. But my understanding is two years before it was one of the other ones, it might have been they got fined like 30 million because they were there were some sharing of answers for some of the exams, right? And so now they've doubled it. Like going back to Roger's thing. Like it obviously doesn't deter how other people are going to do business right? Like nobody's giving like, hey, let's make sure our ducks are in order because we don't want to get the next fine. It doesn't seem a $30 million fine was enough to wake up. Well.
Blake Oliver: [00:25:24] Continuing on with the unethical behavior at large firms, PwC in Australia got in big trouble for sharing confidential government plans with their private clients about tax avoidance schemes. The Australian Government was consulting with PwC Australia on ways to reduce tax avoidance by multinational corporations. The partners at PwC then turned around, took that information and gave it to their corporate clients to help them avoid taxes. And this all came out. And now it's been all over, all over the news. Bwc is in big trouble. They're under investigation in Australia and public opinion has not gone well for PwC There. A poll by the Australia Institute found that 80% of Australians want PwC banned from receiving any further government work due to the tax leak scandal. The survey found that 45% of respondents believed that the ban should be permanent, while the remainder believed it should be for a period of between 2 and 10 years. The survey also found that a permanent ban was the most popular response across all voting intentions. So despite political party affiliation, people really don't like this.
Roger Knecht: [00:26:43] Well, just to be conversational, I'd be curious on a personal note, the information that was actually shared with their clients were these loopholes that were legal, that were established by government for them to take advantage of, and they were just passing along the loopholes that existed and were meant to be taken advantage of anyway, Or were they sharing information that was, you know, something different? I'm just curious about that.
Blake Oliver: [00:27:07] So my understanding is that PwC was consulting with the government on proposed changes to legislation, and that was supposed to be confidential, and they gave that information to their clients.
Speaker4: [00:27:22] Oh, yeah, they're.
Blake Oliver: [00:27:23] Double dipping ahead of it.
David Leary: [00:27:25] They're double dipping. You know, they're yeah, they're consulting the government, getting paid by the government and helping them close some tax holes in the meantime, because they have such deep awareness of them, they're double dipping and charging their clients to avoid those. And this is the same thing I think we talked about in Canada with the all the audits of the the forest in the forest protection. It turns out like they're they're issuing these reports on deforestation. Kpmg was but so they're getting money from the government over here on this hand but they're also in the subcommittee creating the rules and they're also auditing the actual foresting companies or. Right. Like it just they're just double and triple dipping. And it's all conflicts. It's all conflicts.
Roger Knecht: [00:28:05] That's the right word for it, too, by the way, is conflict.
Blake Oliver: [00:28:08] All right.
Speaker4: [00:28:09] So pivoting away, definitely not fiduciary.
David Leary: [00:28:12] Pivoting away the big firms, because there's news about like.
Blake Oliver: [00:28:17] I was thinking we could save that unless it's burning. David because we've talked enough about the big firms. Let's talk about the small ones, because I think most of our listeners are small, firm owners. They work in small firms. That's what they don't.
David Leary: [00:28:30] The drama, it sounds exciting. Small firms can create some some $30 million fines.
Blake Oliver: [00:28:37] So I saw this article on Yahoo Finance. I'm a small business owner. How much will a CPA cost me? And David, you and I have been talking on the show about how we test it out. Turbotax full service business. And we finished that experiment, and it cost us $1,300 to file our LLC tax return with TurboTax business. So I saw this headline and I thought, Oh, that's interesting. I wonder if what we paid is in the range, what we should have paid. Was it too high? Was it low? In my conversations with many some CPAs and enrolled agents, tax preparers, some have said it's low, some have said it's high. So it seems like there's a wide range. So anyway, quoted in this article is accounting firm D Mercutio Advisors, a small. They said a small business owner should expect to pay between 1000 and $1300 on average to have a CPA firm prepare both their individual and business tax returns. So David, according to this firm quoted in Yahoo Finance, we overpaid because we paid $1,500 for just a business return.
David Leary: [00:29:52] Well, I've been over pain a lot the last three years.
Blake Oliver: [00:29:57] Roger. You teach about pricing, right, in your school? I do. Okay. So what's your reaction to this? Is that reasonable? Between 1000 and $1500 on average to have a CPA firm prepare both your individual and business tax returns?
Roger Knecht: [00:30:13] Short answer is yes. Based on the people that I speak with. The one thing I will kind of temper that with is this It does change based on that being a national average, where you're at metropolitan areas, you're definitely going to be charging different amount. So the regional or the metropolitan variable there does play into it. If you're actually dealing with specialty services, that'll add to that as well. So I think that's like an average I think it's a safe number to be throwing around. But it wouldn't surprise me at all if somebody added on another 500 to maybe $1,000 more to put it into that $2,500 range. So that's at a at a face value that's totally fine.
David Leary: [00:30:52] At least it's starting 1000. And the article didn't say like $250 and everybody price price sets off at that. I saw this article. You should be charging me $250. Yeah.
Speaker4: [00:31:01] Honestly, the.
Roger Knecht: [00:31:01] Thousands of little less than what I would have expected. I would have expected something like 1200 to 1500 as the lowest. So the thousands a little bit on the lower end. But when you consider that there's definitely places in rural areas where you do see traditionally these numbers just a little bit less than average, it stands to reason. So depending on your listenership, you could find that somebody up in Montana, somebody in North Dakota, they're going to say, oh, yeah, that's perfectly fine. But then you talk to somebody in San Francisco and they're going to be like, Are you kidding me? This is a 2500 or $3000 thing. So that's what I experience.
Blake Oliver: [00:31:33] Yeah, it's highly local and it depends on if you're in a major metro, If you're in a rural area, it's impossible to generalize across the whole country. The US is a big place.
Speaker4: [00:31:43] Yeah, it.
Blake Oliver: [00:31:43] Is. And just like housing costs vary dramatically, like there's places where you can rent a whole house for under $1,000 a month and then there's places where that's going to cost you 5 to 10 times as much, right? Yeah.
Roger Knecht: [00:31:57] So you basically start with a national average, and then with that you start to put in some regional components such as metropolitan specialization. So the industry components, whether or not there's anything unique going on with the service. But as a starting point, that's a national average. Yeah.
Blake Oliver: [00:32:12] So, so if you if you look at what Intuit is doing with TurboTax full service, the business returns are $1,500 flat fee. David You know what TurboTax full service individual is no clue. Turbotax Live, full service. Let's just take a look at the personal price. It says start for free. Pay only when you file. Of course, they always say start for free.
David Leary: [00:32:35] Try coming in at 350. 400, I bet.
Blake Oliver: [00:32:37] Okay, so full service is 219 to $409.
Speaker4: [00:32:43] There you go.
Blake Oliver: [00:32:44] State additional. So let's just say it's like 300 to 500. So. Basically 1800 to 1000 to $2,000 if you did TurboTax full service for both individual and your business return. So. Roger. I mean, should should everybody be raising their prices? So that's our minimum.
Roger Knecht: [00:33:05] Well, here's where it's going to go. The conversation that I'm sure most of you are having is too many people are pricing themselves too low and not really considering how much their services are worth. And so it's not uncommon for me to have conversations with firms where the first thing that we're addressing is that their pricing hasn't been changing. It needs to be increased. They're not valuing their services correctly. And so I would say more than the average is typically a pricing issue. So if this the average is 1500, that's great. But you're saying that you paid that for just the filing for the business and they're incorporating their the business and the individual. So it's just a proof and case for the fact that the people are today in the industry just undervaluing their services and not charging enough. So maybe a ten, 20% increase would be a warranted thing?
Speaker4: [00:33:58] Absolutely.
David Leary: [00:33:58] I think back to when TurboTax Live launched in QuickBooks Live launched and like, oh, they're undercutting all my they're going to undercut me and take all my clients and all this. But one of the first moves into it really made was they changed the prices immediately because I think they realized like, we can't do this for $99. And they just so so you're right now maybe the market price wouldn't do it has is probably pretty close to if you're below that you have some room to move up because because it's very well you could go to TurboTax. They cost this much. I'm only like $100 more. You have you have room to move your prices up right now.
Roger Knecht: [00:34:28] And if I could give Intuit credit, I would basically say they're helping the market because it's causing everyone else that's skittish to raise their prices to basically do so because they can see that the market can demand and expect that. So all of a sudden, these people that are squeamish about whether or not they ought to be charging their clients more, they're realizing their clients are paying this, The businesses around the corner are going into it and paying this amount. So it does give them that that confidence to perhaps go out there and do that or just price themselves a little bit below and say for $1,500, I'll do your individual and your business and, you know, be that competitive person in the local market.
Blake Oliver: [00:35:01] And if anyone complains, you just say, Hey, you can go have Intuit, TurboTax. Do it for for more, Right. That's that's a great. That's a great argument.
Speaker4: [00:35:11] I'm giving you a very.
Roger Knecht: [00:35:12] Impersonal.
Speaker4: [00:35:13] Experience. Yeah. Yeah.
Roger Knecht: [00:35:15] So that's where I'd go.
Blake Oliver: [00:35:17] So. I've got a story about online gambling. David. Roger. Do either of.
Speaker4: [00:35:23] You in the Bahamas?
Blake Oliver: [00:35:25] Well, you don't have to do it in the Bahamas anymore because it's all legal here, right? Like, we're. I feel like you have a cell phone.
David Leary: [00:35:31] You can gamble. Basically, yeah.
Blake Oliver: [00:35:33] Yeah. So, you know, we've got we've got major league sports going to Las Vegas, which used to be totally untouchable because of the stigma against sports gambling. And now we're all like into it. We're all on our phones. We're all gambling on every game. I don't I haven't tried it yet. Maybe it would get me more into watching sports.
David Leary: [00:35:53] I'm not mature enough to install a gambling app to my phone, so like, I know my personality enough. Like, you know, I won't I won't do cocaine. I won't put a gambling app on my phone. There's two things I just know my personality might like too much, so I'm not going to do those things. Well, isn't.
Roger Knecht: [00:36:06] The gateway drug to all this the fantasy football type thing?
Blake Oliver: [00:36:10] I guess I never got into that too, because it was like too much work, you know? Like I. Yeah, I don't need another full time job during football season.
David Leary: [00:36:19] It's a lot of work. Brackets are 20 bucks to make.
Speaker4: [00:36:22] Yeah, I'll do.
Roger Knecht: [00:36:23] Either of you do the brackets.
Speaker4: [00:36:24] Though. I'll do a.
Blake Oliver: [00:36:25] March Madness bracket because that's easy. Even it out. You're done. It's too much.
Roger Knecht: [00:36:29] You pick them by the colors of their jerseys, right? Yeah.
Blake Oliver: [00:36:31] Or randomly. So. So here's the story here. So the story here is I saw this in the Wall Street Journal Online sports bettors lose more as parlays gain popularity so parlay bets are these bets where. You have to to win the bet. You have to satisfy multiple conditions like my team is going to score X points and this receiver is going to score this many touchdowns and something else happens and you combine all these smaller bets into a bigger bet. And if all of these things happen during the game, then you win some amazing amount of money. And it could be, you know, like I put in $50 and I could win thousands and thousands of dollars because it's unlikely that all those things will happen. But it's a way to, you know, bet with a small amount of money and have a potentially big outcome. Right. Same psychological reason. People like playing the lottery. You know, spend a dollar, you could win $1 billion kind of thing. And parlay bets have increased in popularity with bettors and they have been pushed by these online gambling sites so that it's you know, one of the one of the top things that you see, you know, they they're promoting these parlay bets a lot. And I dug into this article and I wanted to know why you know, why The Wall Street Journal wanted to know why is parlay betting getting pushed so hard? And it's because the House makes way more money on parlay bets than they do on, you know, regular bets like just you know who's going to win or it's the.
Speaker4: [00:38:07] Margin point spread.
Blake Oliver: [00:38:08] And and there's a lesson in here for accountants But first let me tell you the difference because it is a lot. So on a typical straight bet involving single contests, the House's hold rate, meaning their margin is about 5%. So they keep about 5% of all the money. That's bet. And that's their take. Right. And the rest goes out back to the.
David Leary: [00:38:27] Because their goal is to keep if for straight bets, a little balance. They want to be perfectly in the middle perfect equal amount of bets on both sides and they just take their 5% vig And that's it, right?
Blake Oliver: [00:38:36] Yeah. Which like if you think about it, hey, that's pretty reasonable for the house to take for given the service they're providing as the as the bookie hold rates on parlay bets on the other hand offer the house 15 to 25% right.
Speaker4: [00:38:50] Wow right.
Blake Oliver: [00:38:51] 3 to 5 times the margin. And why is this. Well, it's because bettors can't easily compare parlay bets across betting sites because every parlay bet is unique. So I can't go to one website and see oh you know the payout is is this and the payout is this. I can't compare. It's apples to oranges. It's not apples to apples.
Roger Knecht: [00:39:16] Yeah. You can't compare the spreads on each of the bets.
Speaker4: [00:39:18] Right.
Blake Oliver: [00:39:18] And so that's why all these sites are pushing parlay bets. And so from a sales and marketing perspective of running an accounting firm or let's say, you know, you're in corporate and you're helping your company come up with pricing strategies, this is what you want to do. If you want to have a bigger margin on your services, you don't want to be easily compared to the guy down the street or the other service provider in your area. So you want to create bets or services or prices that are not comparable. So if you're pricing your tax return, like if you're selling a tax return for a price, like a business tax return and everybody else is selling a business tax return, I can easily price shop. So the question is, how do we change the way we price so that it's not easy to compare? And subscription pricing is a great way to do that. So if I'm if I'm selling you a subscription to bookkeeping and tax services that costs X dollars per month or quarter a week or whatever it is, you can't compare that to the price somebody is charging for a tax return.
David Leary: [00:40:19] You're even just bundling, even though you're bundling price. Like somebody could try to do the math of the 2 or 3 separate. But even that's hard, right? Right. Like if you just do one bundled price.
Blake Oliver: [00:40:27] That's a better way to say it, David, because that's what a parlay bet is. It's a bundling of multiple bets. So when you bundle you, you, you make it harder to compare. Roger I'd be curious to know what you think of that and like what you teach in terms of pricing strategy.
Roger Knecht: [00:40:42] The way I basically simplify this entire discussion is there's five pricing strategies and there's more popular ones within this, but it's hourly flat rate menu pricing, revenue pricing and value pricing value pricing is that enigma one that a lot of people just have a lot of fun with. But when you go to the menu, pricing menu is by default, that bundle pricing that you're talking about, and that's where you're saying pay this fee over a period of time and you'll acquire all these services. And so I'm quite a fan of it. In fact, I would dare say I encourage most of my clients to work with two pricing strategies. Typically it's the hourly and generally it's the menu pricing because that bundle component, you can really kind of create these nice packages that the client is able to kind of determine, okay, what do I really need? You can then take that client and have them just pay over time. So just an example, that $1,500 tax return that you paid for your firm, what we would want to do is amortize that and just basically take in over the course of months, just have them pay, say, 100, $150 a month over the course of the year such that when it came tax time, I didn't have to collect 1000 hundred dollars from you. And in that in that transaction I've already secured secured you as a client. You're not going to go anywhere else because you've been paying me. You don't want to leave that on the table. And at the same time, it gives me an ability to kind of nurture you. So all of a sudden I'm getting a lot of these best components. I've got the subscription, so I've got the recurring revenue, I've got the client retention, I've got the bundling. So there's a lot of great features that come into play there.
Blake Oliver: [00:42:13] So you take the 1500, break it up into 12 payments, say $125 a month. But then, you know, you could layer on the bookkeeping, the advisory, maybe you increase that 125 a month to 200.
Roger Knecht: [00:42:27] You can also bring in into it the tax planning component. So not just the preparation of the return of tax time, but the planning that I'll be meeting with you in the second, third and fourth quarters to come up with a strategy, see if we can implement this strategy, see at the end of the year if there's any implementations that we need to do before year end and that tax planning I've built into that monthly fee as well. So now I'm not doing say 125, I'm doing $200 a month and that's reasonable for $200 a month, 250 $500 a month. I'm getting tax planning and preparation. Okay. We're we're making sense here.
David Leary: [00:42:58] Yeah. If you roll an APS, like. Oh, and I'll cover your QuickBooks subscription, your other subscriptions, and that makes it even harder to figure out the total. I think we've talked about this before and it was to my mind this morning. But Mr. Carwash is based out of Tucson, and I think they're doing $700 million in like car wash subscriptions, right? Like, so if they if car wash can do a subscription model, everybody should be able to do this. But I just pulled up here in Atlanta and there's a mr. car wash. Right. You know, built in. I'm like, oh, you know, it's like, hey, that's based out of Tucson. And but going back to what you said about this bundling or not being to compare prices, you drive around in your car, you will see occasionally the 999 car wash out there or even gas stations. All the gas prices are on the curb. But most of the car washes, The ones that make a lot of money don't have prices. You pull in and then it's this confusing menu. It's all bundled. Do you want this? It's all bundling. And you're like, Guess I'll take that package. Even though I'm pretty sure the $27 package and the 12.99 are the same. It just looks different on the menu. But it's that same thing that bundling. You can't compare prices if they don't put the price out there and it's bundled. Yeah.
Blake Oliver: [00:43:58] I can never figure out like the sealer or the wax, the all the all the stuff that they spray onto your car. Like does that do anything. I should probably look it up.
Speaker4: [00:44:08] But it looks pretty though.
Roger Knecht: [00:44:10] The nice colorful thing coming down on your car while you're driving through.
Blake Oliver: [00:44:12] I'm just the sucker who ends up signing up for whatever they highlight is the most popular package. You know, that's me. I'm like, okay, decision fatigue, let's.
Speaker4: [00:44:20] Just go called groupthink.
Roger Knecht: [00:44:21] You're just trusting the masses.
Blake Oliver: [00:44:23] Exactly. David, you got anything else.
David Leary: [00:44:27] You want to talk? I like. Yeah, sure.
Blake Oliver: [00:44:30] Let's talk about I.
David Leary: [00:44:31] A lot and specifically accounting. So this is a story firm out of Australia. There's the headline of the article New bookkeeping platform. Friday think Friday. But starting with the word Thursday, Friday, Friday says I is on its way to save you from taxes and accountants. So no know you have a presentation that how is going to save accounting now somebody saying is going to save people from accountants From accountants.
Blake Oliver: [00:44:56] Oh what's so and so? What are we doing that needs what do people need to be saved from?
David Leary: [00:45:03] Like it's going to help? Yeah, it's going to, you know, automate banking, accounting and tax and eliminate time wasted on financial admin costs. Like that's kind of what their play is. But then you know digits this week announced they have some play where they're going to have they're going to have like a chat tool. Yeah you know a. Generative chat tool. But because they are they have the math data now it's going to be math data and they're making a claim that and I'll read this directly from the press release, this allows digits to understand the user's intent and request computations without knowing the data's underlying schema or encryption keys, while delivering 100% accurate responses to every request They're making that claim and then don't know, actually put the link to the tweet. There's another product that just launched called Parse.ly, and this is autonomous accounting. You can you know, you as a startup won't have to spend money on an accountant. It's going to save you. Like just like there's just like I feel like it's right back to these over claims we're seeing, right? Like it's just. Well, I don't know. And then I also feel like a lot of these things are just like, you're just connecting to a bank fee. It's employing on data. You're just which is what QuickBooks and Xero have been doing for a decade. Like, to me, it's not there's nothing mind blowing about this, but they're definitely getting all the press right now for this. Yeah, it's just.
Blake Oliver: [00:46:24] Well, I think the problem with these tools is, sure, they might be able to automate coding of transactions like you said, from the bank feed, ingesting those credit card transactions, bank transactions. But without more context, the insights they can deliver are pretty useless. Like a great example is marketing spend. Oh, your marketing spend increased 40% from last month to this month. Okay, great. But that's useless information without context. Like why did it increase? What did we do? What? What did we spend the money on? And the bank feeds is not going to tell you that. I mean, it might tell you that you spent it on Google ads or Facebook ads or but it's not going to tell you like what campaigns you ran.
David Leary: [00:47:07] And I still subscribe to your belief that, like, startup accounting is easy. You have you have payroll and you have some expenses on a credit card. You don't have any income like like pretty much like it's super easy to automate that kind of accounting through bank feeds. It's super easy. You have the same spend every month on a credit card for Amazon Web services and Facebook ads, and it's very easy to do this, but I don't think anything real. When I say real, I'm like knocking startups that are not real businesses, but I'm just saying like real, real companies have complicated stuff that I.
Blake Oliver: [00:47:39] Think what you're saying is fair, David, is that most startups are just looking at Burn. That's the number every month they look at is how much are we spending? And a lot of I think there's like five major categories that SaaS spend can be condensed into. And so you just aggregate all the transactions into those five expense categories and you report that to your board and that's all they care about. And then all the other stuff is non-financial metrics, right? The SaaS metrics on like cost to acquire customer and all that. But like these platforms can't deliver that information. I don't know, It's just it looks cool. And then you go in and you actually start asking questions and you realize like, okay, what's the use of this? What's the utility of this? There's not much.
Roger Knecht: [00:48:20] I'm going to jump in on this and I'm going to be kind of bold, if you remember, and I'm going to date myself with this. I believe QuickBooks had a campaign early on that said if you could write checks, you could do your own books. Yeah. And it was helping people transition from Quicken over to QuickBooks. And it was simply saying to the business owner, Look, if you can write a check, you can do your own books. And initially I think the accounting profession was like on their on their toes, you know, or should we be scared of this whole thing? In the end, it became a blessing to the accounting profession because the business owner gets in, starts using the platform and soon realizes after 3 to 6 months they've messed up their books. This doesn't make sense. I don't want to do this. And all of a sudden you had people leaving QuickBooks, coming out to the accounting profession saying, Can you go clean up my books? Can you figure this out? And will you just take care of it for me? And I presume that a lot of these things that are just trying to play the magic card are going to fall into the same situations. You'll have startups, you'll have people that are expense sensitive that will actually go ahead and try out the thing because they're early adopters and they just want the sexy little thing, but they're going to eventually need as a business, great accounting advice and insights, and that's where they're going to have to turn to the accounting professional and get that perspective because it's we're not going anywhere. We're I refer to it and I jokingly say this all the time. We're the second oldest profession. We're not going anywhere. We're going to be around for a long time. We are relevant in business. And the thing, if you embrace it, can be a tool that we can utilize as a profession to actually simplify and help us become more efficient. But it's not going to change the relationships that we have with our clients in the sense of necessity, they need us.
David Leary: [00:49:55] And somebody tweeted that, that, you know, because if you think back, things are going very fast. But let's go to the previous generation of these plays, right? Let's go to scale factor bench and pilot, you know, from a whole two and a half, three years ago. Like if we're going back into counting history here and those like scale factor realized they couldn't do it because they they couldn't scale. They can't scale. The humans and pilot and bench have really started to add a lot more humans to this process. Like you have to have the humans in the relationship and the people like you like it just and somebody said at the end of the day, when somebody has to make a really important business decision or they're facing bankruptcy or whatever it is, they want to talk to a human. They do not want to talk to an AI type thing. And so long term, can these businesses scale like it? You know, they probably get excited. They're going to they're going to get lots of investment. They have all the buzzwords. Right? Oh, look, 160 other founders invested in our company, right? Like they got all the buzzwords. But at the end, like they're going to discover, just like what else? You have to have humans in this, you know?
Roger Knecht: [00:50:58] So I'm going to simplify this. And I'm sure both of you have some great comments on this. I really feel that this breaks down into three areas and this is how I feel. It relates to the accounting profession. The first thing is there are those who want to go into the interfaces. The ChatGPT is the bards. They want to go in and actually write the prompts and may become great prompt writers and the results that the AI provides is contingent upon how well the prompts are written. So if you're a great prompt writer, yeah, you can get some excellent insights. But business owners don't want to become prompt writers. And so that's where I think we need to go to the next level, which is all of these different tech support things that we have within the accounting wheelhouse, all the tech stack services, all of them are going to integrate into their platforms for us. You're going to go to HubSpot or HubSpot, you're going to go to finance or finance or can't remember the name of it right now. The point is they're going to integrate these things into the platform so that as accounting professionals, we're able to actually, through what we're already using today, access this powerful tool.
Roger Knecht: [00:51:59] And that's going to be wonderful because they're providing for us this interface so that we don't have to become expert prompt writers, but yet we're leveraging the experience. Yes, but here's where it's going to be really. I think the the deal breaker for the business owner, what they're looking for is they're going to ask the question, therefore, what I'm a business owner getting this great insight from the from the accounting software. The AI is telling me I need to do certain things in the business because I asked a certain question or it just volunteered a certain bit of information, but how do I implement this? Or who's going to hold me accountable to make sure I follow through and do this? And that's where I think it comes to that real life person, the accounting professional, whether you're considering yourself a CFO, an advisor, accountant, whatever role you're considering yourself as, that's going to be the contingency as to the successful implementation of all of this in the business of our clients.
Blake Oliver: [00:52:48] Well said, Roger, and I think that's a great way to leave this episode. If our listeners want to get in touch with you, find out what you're up to, where should they go?
Roger Knecht: [00:52:57] Universal accounting.com. Great bit of information there. Free resources that everyone can take advantage of. Also the podcast is mentioned as well.
Blake Oliver: [00:53:05] Oh yeah, what's the name of it?
Roger Knecht: [00:53:06] Building the premier accounting firm.
Blake Oliver: [00:53:07] Find that wherever you listen to find podcasts. And David, not only.
David Leary: [00:53:11] Does Roger have the great voice for podcasting, like his photograph of himself that's on his podcast artwork is very like, well, well done. Like he like it's very attractive on the cover of his artwork.
Speaker4: [00:53:22] It's Thank you, David.
Roger Knecht: [00:53:24] I appreciate.
Speaker4: [00:53:25] That. It's very, very important.
Blake Oliver: [00:53:26] Very important.
David Leary: [00:53:27] It comes out very authoritative, too. It's a very. Yeah, very, very important.
Blake Oliver: [00:53:30] David Where can our listeners follow you?
David Leary: [00:53:32] I'm just on all the socials @DavidLeary easy to find.
Blake Oliver: [00:53:35] And I am at Blake t Oliver. Thanks everyone for listening. Don't forget you can earn free CPE for listening to this episode with the earmark app. Learn more at Earmark cpcomm. We'll see you around and hopefully join us live next week. Subscribe to our YouTube. We are the accounting podcast on YouTube. Bye, everyone.
Roger Knecht: [00:53:59] Take care. Bye bye.