Feds Target KPMG Polymarket Insider Trading, ComplYant Founder Charged with Wire Fraud

0:04Blake Oliver: Imagine me taking the car to the mechanic and the mechanic saying, can you provide me the documentation that says what kind of battery to put in this car? Like imagine if I had to do all this work with a mechanic or a plumber or anybody, like why do I have to do work to work with an accounting firm? Like accounting firms have to understand that's the difference. That's what the threat is. It's not AI. The threat is the experience for the client and they have to understand that.

0:29David Leary: Coming to you weekly from the OnPay Recording Studio. Hey, everyone, and welcome back to the Accounting Podcast, your weekly roundup of news in the profession. I'm Blake Oliver.

0:41Blake Oliver: I'm David Leary. And not just welcome everybody, welcome you back to the United States. You were on a little galley flatten around Europe there, I saw. What's that word? Galley flatten? What's the word? Fix that.

0:56David Leary: Gallivanting? Gallivanting. I think we work. Yes, yes. I was in London and Paris for 12 days. And for the first time in my life as an adult, as like a professional, I did not open my laptop for 12 days.

1:12Blake Oliver: That's great.

1:13David Leary: And I got to say, I highly recommend it. If you can do it, just do it. It will reset you completely.

1:21Blake Oliver: Any accounting stories from there? Is anything interesting? You're like, oh, I saw this on vacation. It ties back to accounting.

1:27David Leary: No, I didn't even think about it. It was great. So sorry, no stories. Good, good, good. No discussion of how the French pay too much in tax or whatever it is. I don't know. But yeah. By the way, they have amazing public pools. I went to the best pool for lap swim that I've ever been to in my whole life. It is, I can't even pronounce it, Esport Pontus in Paris. just you got to go if you're a swimmer you got to check it out five euros tax taxpayer funded right that's right exactly so that was amazing but David we have to get to the news there's a lot to discuss this week we don't have a ton of time we've got this federal investigation now that the Wall Street Journal is reporting into the poly market better that was apparently a maybe a KPMG employee using audit info to make bets on Polymarket and winning a lot of them.

2:28David Leary: And this compliant founder, this founder of a tech startup called Compliant, actually a tax services business, has been charged with wire fraud. Two big stories about fraud or insider trading. You've got some stories about KPMG, about Revolut, how AI is making fraud 4.5 times more profitable for scammers. And we've got that whole zero influencer mess in the UK. Not a great week for zero. But first, let's thank our sponsors, David.

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4:06Blake Oliver: accountingpodcast.promo.cast. That is accountingpodcast.promo.cast. I don't know how the internet works, obviously.

4:17David Leary: Cluster of polymarket accounts won big on companies audited by KPMG. That's the headline in the Wall Street Journal. a mystery trader made about$22 ,000 by winning 41 out of 42 Polymarket bets tied to companies audited by KPMG.

4:37Blake Oliver: And I brought this up months ago because we saw a post about this where people noticed there's a connection and I think we brought it up, but we didn't have any details.

4:46David Leary: It was originally exposed on, I think it was Reddit. And Polymarket is a blockchain-based what do they call it? A betting site. It's a prediction market where you can make bets on real world events and you can bet on the earnings of companies. And somebody noticed because it's on the blockchain, you can see who is betting on what, not who they are, but their username or there's like a unique identifier. And they saw that somebody's making all these bets and the bets all happen to be about the earnings of companies that are audited by KPMG. And this particular account won 41 out of 42 bets. That's a 98 % hit rate.

5:37David Leary: And now there is a federal insider trading investigation. Blockchain forensics firm Bubble Maps analyzed dozens of yes or no contracts predicting whether companies would beat quarterly earnings estimates. The activity covered 18 KPMG audited companies. That includes Wells Fargo, Home Depot, DoorDash. It started in November of 2025 and continued for several months. Across the KPMG bets, all but one succeeded. And this individual got$22 ,000 in earnings. The trader also wagered smaller amounts on companies with other auditors and got an 82 % win rate. Bubble Maps was able to link 19 different Polymarket accounts through a complex flow of digital funds, which suggested control by one person or a team and attempts to obscure this by using multiple accounts.

6:39David Leary: Some of the accounts also traded on sports and politics, but a vast majority of the profits came from KPMG audited companies.

6:46Blake Oliver: And to have that success rate is insane. Oh, yeah.

6:50David Leary: I mean, that's extremely high, right? 98%. How could you know that these companies are going to beat their earnings or not, unless you had some kind of information ahead of time? The CEO of Bubble Maps, Nicholas Viman, called the pattern highly symptomatic of an unfair information advantage. It's not proof of insider trading, and the Wall Street Journal couldn't determine whether the accounts were actually connected to a KPMG employee. But now Now there is an investigation. The journal previously reported that feds were preparing possible charges against a KPMG employee suspected of betting on these earnings announcements.

7:35David Leary: Charges could come in the fall of this year, but authorities have not yet made a final decision and these insider trading cases can be criminal or they can be civil. KPMG said it has zero tolerance for trading on non-public client information. Polymarket said it refers matters to law enforcement and supports investigations, but would not discuss this particular case.

7:59Blake Oliver: So law enforcement has named and said, we're probably going to bring up charges against a KPMG employee, like it's that black and white?

8:08David Leary: That is what the journal is saying. And I think that was like off the record type of stuff, right? Like sources. are saying there's possible charges coming. So, I mean, it makes sense, right? Like, who else could it be? It's either somebody there, or it's somebody connected to somebody with access to this information. It's hard to imagine how it could be anything else.

8:32Blake Oliver: Yeah, because it was too quidditch dental, right? And the only, what, 80 % on other companies that they didn't audit. Yeah.

8:38David Leary: Yeah. Now, I mean, you know, the KPMG-related win rate was 98%, but they also won 82 % of bets involving other auditors.

8:47Blake Oliver: He's probably friends with other auditors at other big forefarms.

8:51David Leary: Right, that's possible. So, you know, I mean, what does this say? It's like these prediction markets are making it harder in some ways to prevent insider trading in the sense that anyone can create an account, they're anonymous, the money moves through the blockchain, but at the same time, all of it's public. So if you can analyze all this stuff like this company did, what was it called? Bubble maps, then you can get caught. So new ways to do insider trading, but also old ways to catch them.

9:24Blake Oliver: You could use the prediction market, assuming there's insiders doing things, and to buy or sell the actual real stocks based on the data you're seeing in the markets, which I'm sure somebody probably did. I mean, that's what bubble mark, bubble, what's it called? Bubble?

9:40David Leary: Bubble maps. Yeah. That's what I would be doing, actually. That's what I would be doing is, because that's not, as far as I know, that's not illegal. No, you're just taking the data you found and buying stocks. Right. Monitor the prediction markets and then buy stocks based on what's going on in the prediction markets. It's like a derivative insider trading. I would need to consult with Claude Esquire on that to see if that will hold up. Claude Esquire. All right, David, you've got some more KPMG stories, and we will get to those right after I thank our next sponsor, and that is OnPay. Are you tired of payroll headaches getting in the way of the client experience you want to deliver?

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11:35David Leary: That is great for us and great for them. That's the one thing you can do other than subscribing to the Earmark app to support the work that we do here on the show every week.

11:46Blake Oliver: I might flip things around a little bit just because I have two KPMG stories. So I'm going to do the one because it's not tied to other stories. We'll just, as a solo story, then we'll get into the other one. So KPMG is rolling out an accounting simulator. They're calling it TACSIM. And it's a gamified accounting simulator. They developed it with Centurion AI. And the whole point of this, Blake, is to solve this big problem. How does a new entry level accountant get experience? And the way I'm thinking about this, it's like a flight simulator for pilots, right? But how many hours does it take?

12:21Blake Oliver: Like, if you have to do entry level accounting work, is it two years, three years? Like how much grind do you have to do to become senior level?

12:32David Leary: Well, that's a good question because a lot of that grind is repetitive and maybe you don't learn anything. So if it took two years of just doing data entry and grinding and gathering information and like admin to get the skills you need to be a senior accountant or to move beyond just being entry level. Maybe if you just focused on the actual work, you could do it a lot faster, like in months, not years. But my question is, David, have they -

13:00Blake Oliver: 10 ,000, 20 ,000 hours in a simulator?

13:02David Leary: Are they fully going all in on this, right? Are we going to be doing this in VR, like get meta involved, bring back the metaverse?

13:14Blake Oliver: It doesn't really say that, that it's going to be like that. It almost feels like it's going to be a quiz game or a game a little bit, it sounds like a little bit. But the point is, it wants to help them build muscle memory. But you have to do the 10 ,000 hours to have muscle memory. I think pilots, let me open up chat. How many hours does a pilot have to have on a simulator before they can fly a plane, a commercial pilot? Let's see.

13:40David Leary: Well, you figure that out, David. I want to talk about KPMG and OpenAI. They're working with OpenAI on a new strategic alliance. Well, they've already announced it. KPMG and OpenAI are going to build and deploy AI solutions around what KPMG calls a, quote, headless model of enterprise engagement, unquote. Headless model of enterprise engagement. What could that possibly be? That is Word Salad, if I ever heard one. The consultants definitely used ChatGPT to come up with that one, I imagine. Well, basically, it is this idea that core systems like ERP and CRM, right? Your GL and your enterprise resource planning system, right?

14:34David Leary: The NetSuite, your Oracle, your SAP, right? And your CRM, Salesforce, right? Those are the systems of record for data and transactions and controls and governance. But users are going to increasingly interact through an AI-powered work surface, which is another word salad for chat. They're going to chat with an AI instead of logging into individual apps. And so they are going to work together, KPMG and OpenAI are going to work together on basically building that front end so that employees don't have to actually log into the ERP or the CRM anymore. So it's going to be headless, right? It will be invisible UI, user interface, which is kind of a magical thing or a wonderful thing if you've ever had to work in any of those systems, which basically have the worst UI in the world.

15:36Blake Oliver: I have nightmares still of using Oracle I expense to file expense reports when I was into it for half a decade. It's the worst. I do have an answer on pilots in flight simulator training. This is going to scare you. They typically need 20 to 30 hours of full flight simulator training, a pilot, before they go. A commercial pilot. That's a week.

15:58David Leary: Right, but the actual flight hours they have to get is a lot. Yeah. I know this because I've got a buddy who's a pilot, and actually I took an introductory flight lesson here in Scottsdale. So 1 ,500 hours of flight time. Yeah, 1 ,500 hours of flight time. Almost a full year. That's almost like, you know, that's like the billable hours of your typical accountant in a year. It's like a full-time job.

16:30Blake Oliver: So how many hours of the simulator is somebody going to do? Are we going to require somebody to put 1500 hours on a simulator? This is crazy to get that muscle memory built up.

16:39David Leary: Well, and is the firm going to pay for it is the question.

16:43Blake Oliver: And then can you do it in 30 hours, 40 hours, one week? No. So this, No, maybe hundreds of hours. But I don't know. That's worse than doing accounting work. You should beg people will be begging to do the grind work over using a simulator for a thousand hours. They're going to be begging for the accounting work. It's probably to drive staff or wages down ultimately. All right.

17:09David Leary: What is this other story you've got here? You've got like KPMG buying a stake. Yeah.

17:13Blake Oliver: So KPMG is buying a stake in a company called Reality Defender. And this is one of these AI firms that can verify fake voice video in real time. So it can help stop these frauds where Blake, somebody clones Blake and says, pay this bill to this company, right? These types of frauds. And it makes sense why they're doing this because I have another article where it said, I saw that AI is helping make fraud 4.5 times more profitable than it used to be.

17:46David Leary: 4.5 times more profitable.

17:48Blake Oliver: So if you're doing a large scale fraud, you don't have to have a big old building. You don't have to have lots of employees making calls, trying to trick people to give them their credit card numbers and things like that. Now you just have like two agents running on a server in a basement. Yeah.

18:01David Leary: Well, you know, if anything, this is proof. This is proof of the productivity gains that are possible with AI. We've been saying 5 to 10x, and we're already getting 4.5 from the fraudsters. And if you think about it, financial crime criminals, fraudsters are some of the most innovative accountants out there. Historically, yes. Yeah, fraudsters out there, right? I mean, that's where the money's at, right? It's the least risk, highest reward if you want to be a criminal.

18:31Blake Oliver: And I'm an example specifically of this happening. So are you familiar with, we may have talked about in the past Revolut, they were a European bank, one of these new neobanks. They've recently came to the States and they've rolled out their business accounts and they've rolled out, they got a bank charter. So they're on the, it's just, I don't feel like a lot of people in the States know about them. Maybe they don't have their marketing machine on, but they exist. Well, they fell victim to a social engineering attack where fraudsters used a legitimate government email domain to request customer data.

19:00Blake Oliver: So they said, this is blah, blah, blah, government agency. We need this information, and Revolut handed it over. Now, what's crazy about this is if you go to their website, they have this whole section when you scroll down that says, your money is in a safe space. With Revolut Secure, you're entering a new era of money security where a proactive purpose-built defenses and team of fraud specialists help protect every account 24-7. And they even have a scam education page that they have on their website. And there's like nine different boxes of different scams. And one of them is right at the top, the very third one listed, impersonation scam.

19:38Blake Oliver: Scammers pretend to be legitimate organizations like tax officials, the police, or Revolut. Don't feel pressured to share anything on the spot. Contact the supposed organization via their official contact details instead. So Revolut is providing marketing information of what not to do in a scam, and then they completely did it. And they got scammed. And this is what, and it makes sense. Like if you think about all the Fortune 500 is being targeted like this, right? All companies. Yep. And it makes sense for KPMG to be involved in this. And that's a good part of your consulting division. Now you have this company you own a piece of, they're getting a piece of that action.

20:16Blake Oliver: They'll be able to come in and say, hey, we can help you stop this revolute from ever happening in the future. But I find it ironic that they provide information on how to not fall for this and they fell for it themselves.

20:29David Leary: That's the irony is palpable. All right, let's talk about this startup tax startup CEO who has been federally charged with conning venture capital funds out of more than$13 million. She said she was a CPA, started a tax services business, a startup to do taxes, raised$13 million. The Department of Justice says she has never been a licensed CPA. Shiloh Lucky, 42 years old, founded Los Angeles-based Compliant in 2019. prosecutors say she inflated the company's revenue, customer count, subscriptions, and cash reserves in pitch decks and investor updates from 2020 to 2023. Investors put in millions, 13 million, and they lost all of it when compliant rounded of cash and shut down in 2023.

21:31Some of that money allegedly went to a house in Englewood, a Tesla, and a wedding in Anguilla, A-N-G-U-I-L-L-A

21:42David Leary: The indictment also claims she bought the house using a check-kiting scheme She allegedly wrote a bad$1.5 million check from one compliant account, deposited it at another bank and wired the money out before the first bank caught on then paid off the negative balance with fresh money from new investors She was arrested in Fort Lauderdale on Sunday right before she tried to board a cruise ship 15 counts total, nine securities fraud, three wire fraud, one bank fraud, and two money laundering. You know, she claimed to be a CPA, but wasn't. And you know, CPA licenses are publicly searchable. So I guess none of the due diligence that the investors did included actually checking to find out if she was a CPA.

22:34Blake Oliver: It's interesting because I found like one of the articles about that we covered in the past where they had the raise and they raised 5.5 million in seed money. And she talks about how she had a firm, but she didn't have the technical expertise to build an app. But it turns out maybe she never really had a firm either. So she was an engineer with a startup and she actually wasn't the tax person in the startup. Was this just a straight up fraud beginning to end? Obviously, if you could be arrested, probably, yes.

23:10David Leary: I mean, the check kiting combined with the investor scamming and just raising the money and spending it on personal stuff, it's wild. But it happens more often than you might think.

23:26Blake Oliver: And this is why I'm never as impressed when companies reach out to us and are like, Like, we just raised this much money. You should talk about it on your show. Because over and over again, we see illustrations of these investors just seem to give money to anybody. Like, no due diligence. Like, you're right. Like, how did they not – nobody actually checked to see if she was truly an accountant or an EA or a CPA? All right.

23:52David Leary: Let's talk about this zero influencer scandal or embarrassment. But before we do that, I'm going to thank our next sponsor. And that is Thomson Reuters. If your tax workflow still feels like a grind every busy season, you're not alone. We hear from firm owners every week who are buried under disconnected systems, manual data entry, and staff stretched way past their limits. But it doesn't have to be that way. Thomson Reuters built the tax automation suite to solve exactly this headache. It connects SafeSend, SurePrep, and UltraTax CS into a single ecosystem that covers every step with true end-to-end automation, from gathering a client's documents to final delivery.

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25:30David Leary: I'm putting this up on the screen now, David. The headline is, Zero apologizes for Instagram influencers SponCon calling to cut out accountants. SponCon, that's a new word for me. Must be a UK term.

25:45Blake Oliver: Sponsored controversy. Is that what it means?

25:46David Leary: Sponsored content.

25:48Blake Oliver: Sponsored controversy.

25:49David Leary: I don't know. This was in Smart Company. And basically, in a zero-sponsored post, a British entrepreneur said she could save hundreds of dollars in accounting fees each month by connecting zero to Claude instead. And we go down to a screenshot of the post. It's an Instagram reel, and it's no longer available. It's been taken down. But we can describe it.

26:13Blake Oliver: It is an attractive female wearing possibly a halter top and a hat, maybe hiking in the Tuscany, right, somewhere.

26:23David Leary: And, yeah, I'll go ahead and read the caption, David.

26:27Blake Oliver: Yeah, so the caption says, Over the last six years, I've spent roughly£120 ,000 on accountants and probably another£10 ,000 on accounting software. Last week, I connected my Xero to Claude and asked it to create a full management account spreadsheet, something I used to spend£800 on a month having an accountant do it for me. And then there's a coupon that says get 90 % off of Xero for six months. And then it has a hashtag Xero, hashtag Xero partner.

26:53David Leary: It says add. So this was something that Xero did in collaboration with this influencer.

27:00Blake Oliver: And people had beef with this. Who would have the beef? Accountants, right?

27:05David Leary: Well, it's unusual for Xero to do something like this because it wouldn't surprise me if that came out of Intuit given that Intuit has this direct channel, direct to businesses is the main thing that they do, accountants are like this, you know, have been in the past a secondary channel. And although that's changing, as we've talked about on the show, they're viewing their customers or their accountants as customers now. That's a big pivot. But Xero has always gone through the accountants as their like primary channel, not direct to businesses. And so this really riled accountants in the UK where Xero is huge.

27:45David Leary: I think it's their biggest market outside of Australia. and they were not happy. David, do you have any of the reactions? I mean, a lot of the reactions were this,

27:55Blake Oliver: I'm done with zero. This is my last straw. A lot of that's, it makes me, I think I said this a week ago or two weeks ago, zero is becoming the new Intuit. Like, because zero raised prices a couple of weeks ago and the backlash was all online and people are like, this is so ridiculous. I can't believe they're doing this. And now this happened, like zero is, they've unlocked their achievement. They are the new Intuit. But accountants bitch about them just as much as they bitch about QuickBooks and Intuit now. Congratulations.

28:23David Leary: Well, makes them a good stock to buy though, right, David? Intuit has always been a great buy. May not be popular, but hey, you don't need to be popular to get rich.

28:36Blake Oliver: But I do feel like this was everywhere. Like every accountant reshared it. It just, like you want to talk about attention. Zero got tons. There's that whole concept of like no bad press. Yeah. This was everywhere. It was shockingly how – it wasn't like it was one person reshared it over and over again. Accountants kept resharing this, resharing this, resharing this.

28:56David Leary: So Xero issued a public apology on their blog. And what did they say? Let's see. Kate Hayward, the UK managing director at Xero, apologized and said the ad did not reflect Xero's values and should never have run. The chief strategy officer of Xero's Australia and New Zealand market, oh, and global chief strategy officer, Angad Soin, said Xero did not write or approve the post and that it bypassed the company's normal review process and that the guidelines have now been upgraded and acknowledge that accountants felt bypassed. Zero maintains that AI should handle routine heavy lifting, leaving accountants and bookkeepers more time for expert judgment and client advice.

29:49David Leary: Hayward, that UK managing director, compared AI with cloud computing, arguing it should reshape accountants' work rather than make them obsolete, which leads us into a personal anecdote. David, you recently did the same experiment that I did. Kind of, yeah.

30:11Blake Oliver: You had a little bit more courage than I did because you connected, you had Claude Cowork do all the mouse clicking and pasting in to create the tax return.

30:22David Leary: Yeah, I did my S Corp return in the last episode with Claude Cowork. working in TaxAct. And I had it in the browser, clicking around, filling it out for me, doing it. And it was really... It was not the fastest. It takes a while. But it was just chugging away on my other screen while I... Actually, it was while I was packing for the trip. I had my laptop up on my dresser, and I'm just going back to it every time, every now and then.

30:54Blake Oliver: So I basically did the same thing this week. I've had to get my S-Corp filed, the deadlines today. But I did a cocktail of TurboTax and ChatGPT. And I started with a simple prompt. I said, hey, I need to file my S-corp tax return. I plan on using TurboTax. Can you help me? What do you need first? And it says, first, upload your last year's tax return. And then I need these reports from QuickBooks. So I just did this dance. I went to QuickBooks around a report, it would look at stuff. It's like, Hey, why is this off by$28? It's reconciliation. You run me this report. And then it helped me figure out why there's a reconciliation different, which ironically was probably created by AI and bank feed crap anyways, but that's a different, I digress on that.

31:39Blake Oliver: And then when we're in TurboTax, I just grab a screenshot and said, what do I do on this screen? What's next? What's, and I just kept asking what's next. I don't have any skills. I didn't like try to out think it. I just said, what's next? What do I need to do next? What number goes here? And then it just chugged along, chugged along, chugged along, and then I filed it. Now, the post I made on LinkedIn, and I think it's gotten a lot of accounts upset, is, you know, we talked about the SaaSpocalypse, and everybody thinks AI is going to steal all these returns from Intuit, you know, that 45 million returns Intuit does.

32:14Blake Oliver: But my opinion is it's going to steal some of the 80 million returns that are done by tax pros, because that's all I did. I eliminated the tax And to be honest, Blake, it was nice. And what I mean by that, I didn't have to go through emails and portals. It asked me a question. It needed clarity. I just did it right then. I didn't have to wait three days for an email again. Then I sent something else. Then I realized, oh, I sent you, I uploaded an accrual report instead of a cash report. It told me I fixed it, re-uploaded it. It was actually a great process. Now, the feedback I'm getting is, oh, how do you know it's correct?

32:48Blake Oliver: And I would argue, I don't want to hear that argument because I've now done four different accounting firms to do my taxes. But, you know, I post my DIY world and I've gotten mistakes on them every single time. So you can't argue, what if there's a mistake? Because tax pros are making the same mistakes. And I think somebody has a really good point in here. And it ties into another blog post I saw from Christine Gervais, where she talks about what happens when your AI assistant lies to a client. And her piece of advice is talking about treat every AI answer like work from a first year hire and trace citations back to the actual code text before sending it to clients.

33:33Blake Oliver: And I agree, but firms should have been doing this before AI. I've got a tax return back. they ran the whole thing on accrual did not do it on cash once i've had another mistake where two firms two different firms two years in a row made the same mistake which i think now when i do this year's taxes is going to cost me about a hundred thousand dollars to the irs like remember remember

33:54David Leary: how my mom uh oh yeah the the the new firm that she got like marked her as blind but yeah on her return and she's the one who caught it and it's and she's not and my obviously is it's not i don't

34:10Blake Oliver: want to use a tax professional. It's not that. My argument is, why is it a better experience to not use the tax professional? My car, or my wife's car, I had to do some work on it. She's got an electric vehicle. Apparently, electric cars have two batteries. There's the battery that replaces the combustion engine, but then there's a battery that works the radio and the air conditioning, like an old school battery. I open up her car, where's the battery? I don't even know. So I use AI and I use some YouTubes and I change out the battery. I had to do the work myself. But if I would have went to the mechanic to the dealership, I would have gave them the car and I would have drink a coffee, played on my phone and did no work.

34:47Blake Oliver: How come when I use an accounting firm, I have to do the work? Imagine me taking the car to the mechanic and the mechanic saying, can you provide me the documentation that says what kind of battery to put in this car? Like, imagine if I had to do all this work with a mechanic or a plumber or anybody. Like, why do I have to do work to work with an accounting firm? Like accounting firms have to understand that's the difference. That's what the threat is. It's not AI. The threat is the experience for the client and they have to understand that. Yeah.

35:16David Leary: And having an AI agent do your return for you is just, it's there. It's fast. It's communicating with you. There's no delay. It's not, you send something and then it waits days or weeks to ask you for something else. And it just never ends. It's like, it's right there. It's happening. And like you said, yeah, there might be mistakes, but humans make mistakes too. So what really matters is whether or not those mistakes materially change anything. Yeah. And, you know, it's funny, too, because it's like I used Claude to do our partnership return after I did my S-Corp return, just did that embarrassingly.

35:54David Leary: Yes, this morning on the deadline, got the K-1s out. And, you know, it found, again, errors in how Tax Act calculates the Schedule M and L. Like it doesn't adjust for the non-deductible expenses. And so basically, if that's how Tax Act works, every single balance sheet is going to be wrong if it's not manually changed. And I guess that doesn't matter much because most of the people using Tax Act business to do their own whatever partnership or return are not actually filing those because there's a threshold where you actually have to do it. But still, it's like all the stuff that carries forward is wrong.

36:39David Leary: It's never going to be right. And it's just crazy to me that like these tech software companies can get away with designing software that just is incorrect. And Claude can catch it and fix it and manually adjust it. This is stuff that like professional preparers don't even bother to get right, a lot of them.

36:55Blake Oliver: And I'm not declaring war on accountants. I just don't be so naive. Like just because you think you're better than the AI and you very well may be, it's still my experience and my time. And when I work with you, I still get mistakes, but I did more work. So if I'm gonna do work, I'm gonna as well get the mistakes myself and not pay you, overpay you for the return. Cause that's actually more maddening. I pay more money and I do more work. That's insane. What other thing do you, has it ever worked that way? I don't pay a plumber$380 an hour and still have to do all the plumbing work, right? It's insane why there's something broken in our industry and our mindset on the client experience.

37:37Blake Oliver: And somebody's got to figure it out. Like an accounting firm, some accounting firm somewhere, somebody has to figure this out because it doesn't make sense that I have to do more work to get my taxes done with an accounting firm.

37:48David Leary: If you're listening and you are one of those firm owners or operators and you are getting it right, tell us how. Email the accountingpodcast at earmark.me. We want to hear it. Tell us what you're doing different. How are you focusing on customer experience? We will read your email. We read them all. And hey, we'll maybe even share it on the air. And maybe we'd like to talk to you, hear about it.

38:12Blake Oliver: Maybe I'll let you do my return. We'll try another.

38:16David Leary: I'm going to thank our final sponsor this episode, and that is Savant Labs. If your finance team is using AI for drafts and research, but still closing the books by hand, you're in the same spot as most enterprise accounting teams. Claude and Copilot handle the easy stuff. But what about the close, the reconciliations, and those tax provisions? Still manual, still spreadsheets, still eating up days every cycle. The real issue isn't effort, it's trust. General purpose AI gives you a different answer every time, and an auditor can't follow the trail. That's why Savant exists. You describe a finance task in plain language, and Savant turns it into a governed agent.

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39:45Blake Oliver: So, zero pissed off accountants. I might have pissed off accountants and tax professionals. One more person may have pissed off tax professionals, the IRS.

39:53David Leary: Oh, my Lord. You still haven't figured out that new AI Google phone you got. Is it Samsung or Google? What is it?

40:01Blake Oliver: It's the new Google phone.

40:03David Leary: And you like – can't you just tell it to like silence your notifications?

40:06Blake Oliver: I created something called doctor mode and it makes the whole phone gray like – and it still went off. I don't know. I'm like a boomer. But the IRS, they basically are saying tax proficient to tax practitioners that if you're using AI tools to do the return faster, you should pass those savings on to your client, which is – accounting professional, tax professionals are losing their minds over that because if you think about a smaller tax professional, you're assuming the risk. Yeah.

40:35David Leary: Well, that's because the IRS is assuming that these tax pros are billing by the hour. And yeah, if you're billing by the hour and it takes less time to do the return, then logically, ethically, morally, professionally, you can't bill the same time you did less work.

40:53Blake Oliver: Yeah. I think there's a term they use,

40:55David Leary: unconscious, unconscious, unconscionable fee, unconscionable fee. Yeah. I mean, like basically, if you're padding your hours, that's, that's unethical. And so the IRS came out and said it. I don't know why they feel like they have to say that, you know, they probably could be doing better things with their time. But it's funny because it got, you know, tax pros up in a tizzy. And the EICPA has issued a, I don't know, a letter or some statement seeking clarification from the IRS over these guidelines.

41:26Blake Oliver: And they pushed back right away. Finally, the ICPA just did the right thing as fast as possible instead of forming a committee on how we should respond to the IRS. They actually stood up for the profession.

41:36David Leary: I don't understand why they need to seek clarification. I don't understand that. If you're billing by the hour and it takes less time to do it, then it's ethical that you would charge less. And so the solution is not to push back on the IRS, which is correct. It's to get your members to stop doing dumb stuff like billing hourly for tax. Not that many firms, I think, are doing that anymore. I forget what the numbers are, but it keeps dropping every year. But yeah, there's still thousands and thousands of firms doing it, and especially big ones. But it's just... Well, it's so obvious.

42:16Blake Oliver: We've talked about AI is going to kill the bill of hour. The IRS is just like reinforcing, yes, stop charging hourly billing for your return. Yeah.

42:27David Leary: So I don't know. I don't know what else is in here. But like, yeah, like what's the pushback? You know, and like, yeah, just don't bill by the hour anymore. Problem solved. Well, and I think the pushback is if you just see the headline or you just see the initial thing,

42:46Blake Oliver: it makes it feel like the IRS is telling tax pros to charge less. You can easily read it like that and react to it that way. But they're really not. They're just saying, build your clients in a better way is what they're really saying.

43:00David Leary: I got one final story that I've just been saving here for a while that's just, I don't know, kind of interesting. Interesting to me anyway, because I used to live in LA, had my firm there, worked for a firm there. PwC is moving out of downtown LA to Century City. And that is a visual, big visual change because they've got their logo at the top of that iconic building, that 52-story tower on Figueroa Street. Their lease is expiring in 2028, and they're going to go to Century City. The new address is 2121 Avenue of the Stars, which is better known to movie fans as Nakatomi Plaza from Die Hard. Wait, wait.

43:47Blake Oliver: They're actually going to be in Nakatomi Plaza?

43:49David Leary: Yeah. Yeah. PWC LA. They signed a 15-year lease worth about$200 million for 150 ,000 square feet, according to a person familiar with the deal, as reported in CPA Practice Advisor. that's actually bigger than their current downtown space, which is 114 ,000 square feet. So it's a growth move. Not great for downtown LA, which is, I guess, had a renaissance and has now started hollowing out again. Office vacancy there has jumped from 14 % in 2019 to a shocking 34 % today. So a 20 % bump in like, you know, just a handful of years here. Nearly 40 % of financial district space sat empty at the end of last year, according to CBRE.

44:41David Leary: PwC joins Deloitte and KPMG as the big accounting name shrinking or leaving downtown. All right, David, that's all the time we have this week. Thank you to everyone who joined us live on this unusual recording time, but appropriate given that it's September 15th. Always fun to do an episode on a deadline. Thanks for joining us, Boring Accountant and ESYY4HM. ES says, hello, new viewer. I have been watching for the past two months. Big fan. Hey, great to have you. We've got 500 or so episodes in the back catalog and you can earn CPE for listening to hundreds of them, I think at this point. go to earmark.app in your web browser or get the free earmark app on the app store, create a free account, earn one CPE for free every week listening to this show or many others such as Oh My Fraud and federal tax updates and tax in action and our new show Audit Fundamentals or what's the other one?

45:47David Leary: Standard practice. Standard practice, which is standards updates. We're creating more technical content for all you accountants and auditors out there looking for that technical stuff, not just me and David spouting our opinions. Also, welcome to Knowles. Knowles99 says, what are the chances of some accounting podcast merch coming out in the future? Ooh, David, now that we've got the rebrand for Earmark.

46:11Blake Oliver: Yeah, we never created new merch. I'll get on that for the fall because we'll be traveling to a bunch of conferences and stuff in the fall. I'll take this on. I'll make sure we get new branded stuff. At least stickers at a minimum, but maybe some shirts too.

46:25David Leary: Tate says, AI doing accounting, LOL, good luck. Well, give it a shot, Tate. You might be surprised. Tate also says, nice water bottle, Blake, love those. Yes, this is my Fearless Foundry water bottle. By the way, Fearless Foundry is doing their advisory amplified tour again, and I'm going to try to make it to the Phoenix stop. Looking forward to that. Check them out. for some good in-person events, advisory amplified. And Tate said, accountants are actually very bad at customer service. Generally, that's why you prefer your AI. Go ahead, David.

47:00Blake Oliver: So what I think the problem is accountants, they go through school, they get a job in an accounting firm, but they never become a client of an accounting firm. So they don't ever experience it. They don't understand how bad it is. This was eye-opening for me. I didn't know this until I became a client of accounting firm. I became a client and I was like, this is not good. And it's not a one firm thing. I've had a bad experience with three or four firms now. It's not, this is not a one firm thing.

47:28David Leary: No, I agree. I mean, and that's the differentiator, right? If you just have good customer service. And actually, I would say that like with my firm, that was the difference. It's like the old stodgy firm in the fancy high rise in wherever PwC is moving to, right Avenue of the Stars, I was competing against them. I won clients from them. And they're paying like, I don't know, at the time, this is 20 years ago, like 90 bucks an hour to print out their bank statement and code it manually and fax it to a bookkeeper who's keying it into a desktop app. And I'm just making it easy for them.

48:04Blake Oliver: And to clarify, it's not that I've had bad customer service. I've had great experiences with all the humans I've spoke with at these firms. It was never about that. It's always about the overall experience. Like, why am I doing more work? The mechanics are a great analogy for this. I go to a mechanic, I drink my coffee, I scroll on my phone and my car gets fixed. That's what I want in my tax return. That's what I want. Like, figure that out and you win everything. You win it all. Be the accounting firm that does that.

48:37David Leary: And that is a great way to tie out this episode. Thanks, everyone, for joining us. Tune in next week for all the accounting news you need to know. Maybe not everything you need to know, but certainly the most entertaining accounting news you need to know.

48:52Blake Oliver: And welcome back now that you're past the deadline for the corporate terms.

48:55David Leary: Great to be here. I'll be here around here for a while. And yeah, that's it. All right. See you around here, everyone. Thanks for joining us.

49:10Blake Oliver: Time for the classifieds.

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50:17Blake Oliver: Here's a chance to learn directly from the firms already leading the advisory shift and bring your whole team to do it. Advisory Amplified is back this fall, showing up in six cities, Raleigh, Nashville, Minneapolis, Boulder, Phoenix, and Seattle, September 22nd through October 9th. GA tickets are just$199. dollars, the whole day is CPE eligible. And this is an event built for firm leaders and their teams to support them in transitioning to more profitable advisory work. Go to advisoryamplified.com to find your city and get your ticket today.

50:52Blake Oliver: Want to get the word out about your newsletter, webinar, party, Facebook group, podcast, ebook, job posting, or that fancy Excel macro you just created? Why not let the listeners of the Cloud Accounting Podcast know by running a classified ad? Hit the show notes for the link to get more info.