Tax Software Ranked & Summit Hosting Ransomwared

David traveled into the future to retrieve the earworm from the TurboTax Super Bowl commercial and subject us all to its terrors. Meanwhile, here in the now, we're talking about how CCH tops tax software, the AICPA backs legislation to present report on nation’s economic health, and Warren Buffett's theory that complex accounting is a warning sign. We'll also dig into the reasons why fewer CPAs are becoming CFOs, Teller's $4M raise to take on Plaid, what happened with the Summit Hosting ransomware attack, and much more

Show Notes
  • 00:50 – More Super Bowl earworms here | Ad Age
  • 01:34 – Last week's discussion on tax-prep confidence levels
  • 03:54 – Fake news or worthwhile information? You decide! | Business Insider
  • 06:38 – More helpful journalism from Biz Insider's Eric Rosenberg | Business Insider
  • 10:09 – Which tax software is the best for firms? | CPA Trendlines
  • 11:53 – Intuit ProConnect expands their tax professional ecosystem | Silicon Valley Daily
  • 12:35 – No news is no news when it comes to the Summit Hosting outage, but we're covering it!
  • 20:06 – As per usual, Reddit users have something to say about Summit | Reddit
  • 22:48 – The real cost of ransomware attacks? | Coveware
  • 26:14 – OOPS! That's our bad! – Microsoft makes a huge data boo-boo | Threatpost
  • 28:39 – Just what we need – another report. That'll fix what ails our government! | Accounting Today
  • 30:43 – It's only money ... $22 TRILLION worth ... | Politico
  • 34:03 – When you see complex accounting shenanigans, be like Mr. Buffett and run the other way | Yahoo! Finance
  • 35:06 – You might not like green eggs and ham, but Sam.I.Am likes The Cloud Accounting Podcast!  Thanks for a great review, Sam.I.Am! 
  • 37:11 – There's more to CFO-ing than numbers | WSJ
  • 41:03 – Blake sees goodwill in a new light, thanks to David
  • 46:07 – The Gene Marks tome - Outfoxing The Small Business Owner: Crafty Techniques For Creating A Profitable Relationship
  • 47:00 – Teller sets its sights on Plaid with a $4M raise | TechCrunch
  • 49:34 – Former CAP guest, Jason Deshayes, shares his delightful bank-feed experience 
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Blake Oliver: All people. All people. All people are tax people. All people, all people are tax people ... Well, that's what we have to look forward to this weekend.
David Leary: Well, I went to the future and I retrieved the Super Bowl commercial for TurboTax, but I have bad news - there is no QuickBooks Live commercial-
Blake Oliver: So, your prediction- [00:01:00]
David Leary: -all the commercial slots are sold out and there's only a TurboTax Live commercial, so I completely ... I've been predicting this for 11 months, I think, and it's never happened.
Blake Oliver: Well ... 
David Leary: They did commercials for QuickBooks Live in the championship games; just not the Super Bowl.
Blake Oliver: The timing's just not right for QuickBooks Live because that's not what- people are not thinking about that right now. They're thinking about getting their taxes done. That was very catchy, I have to say. Definitely better than the weird robot child ad from last year. Do you remember that one?
David Leary: Oh, far better, yes! This is gonna ... On Monday, [00:01:30] Tuesday, Wednesday, people are gonna have this as an earworm all week. It's ... 
Blake Oliver: All people are tax people ... 
David Leary: It ties into- what was the survey last- the survey data we had last week? 90 percent, 95 percent of everybody is very confident in their tax filings?
Blake Oliver: Yeah! People are getting comfortable with doing their taxes themselves, online.
David Leary: You know what we forgot to do is the intro ... Should we jump in and do that now?
Blake Oliver: Oh, yeah!  [00:02:00]

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Blake Oliver: Welcome [00:03:30] to The Cloud Accounting Podcast! I'm Blake Oliver. 
David Leary: And I'm David Leary. Blake, here we go. 
Blake Oliver: So, it's tax season. TurboTax is out in force. Have you seen any of these sponsored posts on Business Insider? Have those popped into your feed? 
David Leary: Sponsored posts from Intuit? 
Blake Oliver: I'm gonna pop it right here into the show notes for you, David, so you can check it out. It says, "The tiny mistake I made with TurboTax [00:04:00] that took hours to fix." This is in Business Insider. I was reading this on my phone, and I said, "Is this ... This cannot possibly be a real Business Insider article," because it just seems like way, way too promotional.
Blake Oliver: You just implied that there are any real Business Insider articles.
Blake Oliver: Well, no, I mean, it's not ... It's not to the level of The New York Times, or The Wall Street Journal, or anything like that, but it's not bad, usually. It's helpful. Actually, the little bullet points at the top of every article are great for people who like to skim. Well, [00:04:30] first of all, it's by this guy, Eric Rosenberg, who has written some other articles all about TurboTax that are highly promotional.
This one, I thought, was particularly interesting because it's cautioning people - watch out! If you use the Free File version of TurboTax, but then, after you enter all your information, you find out that you don't meet the criteria, you're gonna have to enter your information all over again into the paid TurboTax product. That makes filing your taxes [00:05:00] a big hassle, so if you don't want to have that problem where you choose the Free File option, and you can't go back, then maybe just do the regular TurboTax.
David Leary: Interesting [crosstalk] 
Blake Oliver: Right? Interesting approach. 
David Leary: -a guest post or a seeded article of some type? Well, it's-. 
Blake Oliver: On mobile, when you view it on mobile, there's a little tiny pop-up at the bottom that says 'ad,' and that's all that there is. I didn't even notice that until I was all the way through it. Then, on desktop, there's a [00:05:30] little blurb at the top, in italics, that says, "Personal Finance Insider writes about product strategies and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective."
David Leary: These articles, if I discover they're like this, I don't even bring them to the show. They don't usually make it, but this one's so obviously bad, I guess, it qualifies to be on. I do, though, question the ... Take the article out of this, but just the logic of this ... If you start TurboTax Free File and you discover, oh, [00:06:00] never mind, I forgot I sold ... I have a 1099, or I sold stock, or I forgot I did this thing-
Blake Oliver: Yeah.
David Leary: -and now I want to use the real TurboTax, the paid TurboTax. I can't upgrade my data or move it?
Blake Oliver: No, they won't let you.
David Leary: I wonder if that's because of fear of the regulatory stuff? It seems so illogical to me ... Did the pendulum swing too far the other way of like, "We don't wanna be accused of upgrading people that are using Free ..."? 
Blake Oliver: It might be part of the IRS rules. I don't know. But [00:06:30] I thought the approach was interesting. They're still clearly trying to obviously get as many people as possible to use TurboTax paid-. 
David Leary: Yeah. 
Blake Oliver: -and dissuade them from using the Free File product. So, this was kind of a, I thought, very sneaky approach to that. Another article by Eric Rosenberg on Business Insider is, "I've tried four major tax software programs, and TurboTax gets me the biggest refund every time."
David Leary: I saw that article, and I also feel like when I saw- I didn't read the whole article. I saw the headline, and I feel like I've seen that article every [00:07:00] year; like last year, and the year before, and the year before ... But, yeah.
Blake Oliver: It's just so ridiculous because unless there's actual errors in how these programs are handling your tax situation, the refund should be exactly the same. That's not what differentiates these programs, right? Like when the Wirecutter says that TurboTax Deluxe is the best version, which they do they say it's because the workflows are easier. It's just easier to understand the questions, and answers, and all that, not because the actual calculations are better.
David Leary: You [00:07:30] know, I think ... Because we get approached all the time with people who wanna advertise on the podcast, and people want us to just talk about them, and they'll pay us to talk about them. This is why I make it so clear that all our sponsors- it's very clearly called out as, "This episode sponsored by ..." so there's a separation of content from sponsorship, because I argue most of the media out there, especially in our industry, it's very gray.
Blake Oliver: Oh, yeah.
David Leary: It's super-super-gray, and it's not clear what's paid for or not paid for. I'm really insistent about that, to keep [00:08:00] it as separate as possible. So, just to clarify, TurboTax did not pay for us to play the whole entire commercial. It's just ... It's so infectious, we could not stop listening to it over and over again. 
Blake Oliver: I was very amused by it. You're gonna be hearing it. If you watch the Super Bowl, you're gonna be hearing that in your head now, and I apologize to you.
David Leary: Well, one of two things is gonna happen here, right? Some people are gonna listen to it on the Super Bowl. It's gonna be stuck in their ear, and it's gonna get out of the air. Then they're gonna tune into the podcast, and it's gonna go right back in their ear again, and they're gonna be cussing us. "Damn it, David and Blake! Why?!" [00:08:30] But it's very infectious. It's pretty, pretty funny. Wanna stay on taxes for a second? 
Blake Oliver: Yeah. 
David Leary: All right, so my daughter's gonna graduate eighth grade here; go on to high school. In the state of Arizona, you gotta pass that civics test.
Blake Oliver: All right.
David Leary: So, she's got a review test ... She's taking the practice test at the table yesterday, and she yells out, "What is the deadline for filing federal income tax forms?" I yelled back to her, I said, "If you don't answer that correctly, you have to move out." But, technically, it's not just April [00:09:00] 15, right?
Blake Oliver: Right. Well, the correct answer - if you're an accountant - is, "It depends." 
David Leary: That's not an option on this test. 
Blake Oliver: It's always the answer to basically any question where you don't know the answer. So, are you gonna tell her, or are you gonna make her look it up, because it's [crosstalk]
David Leary: Oh, she knew. She was smart enough to figure that out.
Blake Oliver: Okay, good. 
David Leary: I don't know if that's true for all kids, right?
Blake Oliver: Yeah. What she should do is she should answer - to get extra credit - "It depends if your client is filing an extension or not, and if they're an individual or a corporation ..." What is the entity type, right? 
David Leary: Yeah. [00:09:30] It didn't have any fill-in spots for those questions. The sad part is I think this test is made to where you really have to screw up to not pass it. One of the questions is like, "Who is the president of the United States?"
Blake Oliver: That would be ... Well, you know, actually, when we do real polls of that of the general population, there is a significant part of the population that does not know this question every year. It's like when Jimmy- well, it wasn't Jimmy Fallon; it was ... Who walks the Hollywood-. 
David Leary: Oh, the 'man in the street' type interview stuff? Yeah. 
Blake Oliver: Yeah. They [00:10:00] always find people who don't know.
David Leary: We should do that at an accounting conference once ... We can ask them about filing dates. All right, enough about that. Should we get into some real news?
Blake Oliver: I got one more tax-related story. CPA Trendlines, in their Annual Accounting Firm Operations and Technology Survey, asked firms what is their tax software? So, are you curious to know what is the most popular tax software among firms?
David Leary: This is software they're using to produce returns internally.
Blake Oliver: Yeah, yeah, what software [crosstalk]. 
David Leary: Excel! It's gotta be [00:10:30] Excel!
Blake Oliver: No, thank God. No, no ... Nobody's doing that. Well, maybe some, but 28 percent of all firms in 2019 were using CCH ProSystem; 16- well, let's round up to 17 percent, Ultratax CS from Thomson Reuters; 14 percent, CCH Axcess Tax; 12 percent, Lacerte; then, there's seven percent that says not applicable, none, or unsure. So, I wonder if the [00:11:00] people who are still filling out paper forms are included in that number?
David Leary: What was the percentage of unsure?
Blake Oliver: Well, it's not applicable, none, or unsure is seven percent. Now, not all the respondents to the survey are in tax, necessarily.
David Leary: Okay, okay ... 
Blake Oliver: I guess if you're just really ignorant of what your tax people are up to, you might not know what they're using. After that, it's seven percent, Drake Tax; then, ProSeries Professional at four percent; other at four percent; ATX at two percent; Intuit Tax Online, 1.4 [00:11:30] percent. Yeah, so CCH comes out on top, but that's really thanks to the medium/large/extra-large firms, those over 10-11 people. On the small-firm side, it looks like Lacerte, and Ultratax, and Drake are coming out as winners there.
David Leary: Tagging on this, Intuit ProConnect had an announcement. They released some new features and functionality. I'll read the article [00:12:00] title - this is an article from Silicon Valley Daily - "Intuit ProConnect Expands Partnership Ecosystem to Accelerate Software Capabilities for Tax Professionals." One of the big features is hosting for ProSeries and Lacerte, which I was actually shocked that this wasn't really being done. Another thing was e-signatures, and then pay-by-refund enrollment functionality.
Blake Oliver: What was the first one you said?
David Leary: Hosting. 
Blake Oliver: Oh ... 
David Leary: Right Networks is going to host ProSeries and Lacerte software.
Blake Oliver: Got it.
David Leary: I can quote here: "Cloud hosting also means [00:12:30] tax professionals can have more flexible and secure storage options of tax data in their current workflow."
Blake Oliver: Well, since you brought up hosting, David ...
David Leary: Yes.
Blake Oliver: That brings us to the Summit Hosting outage [Cue dramatic music] which we found out about last week, on Friday, right after we had finished recording. This is a big deal! Did we cover a Summit previously? We talked about them when they acquired iNSYNQ, right? 
David Leary: they purchased iNSYNQ. iNSYNQ, last- was it [00:13:00] June or July, had a major outage-. 
Blake Oliver: And it was so big that we extensively covered the iNSYNQ outage. People were out for, what, weeks, right, in many cases?
David Leary: Yes.
Blake Oliver: So, then iNSYNQ gets bought by Summit Hosting; maybe a distressed purchase kind of situation, right? Clients are leaving. Let's save this this enterprise. Then Summit, itself, goes down from ransomware. I can't help but think, was it an iNSYNQ customer that they [00:13:30] were porting over and then infected the Summit Hosting environment?
David Leary: All you can do is think because there's not much for communication on this. I'm surprised that we didn't even hear about it until Friday because it was already down a full week before that. 
Blake Oliver: Apparently, this started on Saturday, the 18th, according to a user posting on a Reddit thread. We were recording last week, on the 24th, when we found out about it. So, yeah, almost a full week people were out. Somebody, as recent as 16 hours [00:14:00] ago, posted that, on Monday, they logged in and tried to open their two QuickBooks company files and couldn't get in because the password wouldn't work for either company file. They realized that the server didn't have the latest versions of the company files. The versions that had been restored were from two months ago, and two months of transactions were missing. So, then they contacted Summit, and Summit said they would restore the most recent backup. There was no word, but later in the day, the files had been restored to the latest versions.  [00:14:30]They won't answer this person's question as to why that happened or how that happened. They're closing support requests without a response ... Just going through the customer feedback, and the reviews, and stuff, it seems like they're just ignoring a lot of people completely.
David Leary: There's a lack of communication on their Twitter handles or anything else.
Blake Oliver: We reached out, right? You reached out to them- 
David Leary: I sent them an email because they emailed us, after the acquisition, to give us some details about the acquisition of iNSYNQ. I replied to that email. I said, "Hey, I heard you guys were out [00:15:00] all week, and it was ransomware. Is there any public information? Is there a link, or a blog, or any communications?" Nobody replied to the email. What I find entertaining about this is if you rewind a little bit ... This is a game that all these hosting companies are playing - a marketing game. When iNSYNQ went down, a lot of hosting companies, including Summit Hosting- employees of Summit Hosting, were tweeting at customers who were like, "My iNSYNQ's down ..." like, "Hey, you should switch to Summit Hosting!" Well, now there's new ... Go to myERP. [00:15:30] They were tweeting at customers of Summit Hosting and go, "Hey, you're down! Come switch to us! We never crash. We're reliable!" People are just jinxing themselves.
Blake Oliver: Right.
David Leary: I find it very entertaining because if I had to bet money, guess who's going down next?
Blake Oliver: Yeah. 
David Leary: It's gonna be the one who brags about how they never go down.
Blake Oliver: Let's talk a little bit more about what exactly happened here.
David Leary: Okay.
Blake Oliver: So, we know it was a ransomware attack because a user posted an email sent by Summit Hosting to users. [00:16:00] We know that it started on January 18. So, they said, "On Saturday, January 18, the MyAsp environment was hit with a ransomware attack. Our security systems caught it immediately and shut down all client servers, of which there are 400 within this environment, in order to isolate the attack and protect end-users' data. In order to resolve this, our engineering team had to scan or restore every server individually. We had about 90 percent of the servers back online by Monday night."
So, they went down- they got attacked Saturday. [00:16:30] They said they had 90 percent of the service back online by Monday night. Continuing: "But in the process of scanning and restoring one of the servers, the encryption file that triggered the attack on the 18th was executed again, and the whole environment had to be shut down a second time." They continue and say, "It is very important to note the backups are secure and data was not compromised."
Sounds like what happened is ransomware was triggered in this environment ... By the way, this is a shared hosting environment - and that is really, really important to note here - because [00:17:00] all of the attacks that I am aware of that have spread like this, that have impacted a lot of people are on shared hosting environments, meaning that you are on the same server as many other companies. So, one company gets infected, and it spreads throughout, potentially, many servers. 
his is very different than dedicated hosting, where you get your own computer in a data center that is isolated from the other ones. So, if somebody gets infected in that [00:17:30] data center, it's not going to spread to you. It's a lot more expensive to have your own dedicated server, but probably, at this point, worth it. So very, very important to note. But it's also interesting here, right, that it was a backup file. It was a file from a backup that then re-infected everything. So, somehow, they didn't have a way of stopping the ransomware from getting into the backups.
David Leary: Well, I think it's not so much that the ransomware gets in the backups. It's- it was in that machine. It was there. You backed up the machine, not knowing you- you just did [00:18:00] a backup, not knowing you backed up ... Because it wasn't discovered yet, right? [crosstalk]  I think this has happened with some of the other cases we've looked at is where you have to make sure the backup you're restoring ... This is why you have to go so far back, and people are missing data because [crosstalk] If that backup has a virus, or the ransomware, you can't restore it. You're just bringing it back.
Blake Oliver: So, that's why this one customer that I mentioned earlier logged in and found company files that were two months old because they were just going back as far as what they thought was safe. So, [00:18:30] people might be working on files and not even realize that they lost data if Summit hasn't informed them of that. That's something to really watch for, right? 
This is all a really, really good reason to - if you're using a hosting provider - make your own backups, not of the whole environment, but of your critical accounting files, and do it every day, multiple times per day, even, down to your local machine, or a separate host, or a Dropbox file, or a Box file, or Google Drive, or something [00:19:00] that is not connected. That way, if this does happen, you have your own backup that you can restore locally, and you can keep working. That was another problem with this whole thing is that people were-
David Leary: The timing. 
Blake Oliver: -people were requesting their backup files, but Summit didn't have a way to get them their backup files because they had to restore the whole environment, and that takes a lot of time, and they were just completely slammed. Apparently, if customers were pestering them ... People said they had success just calling over, and over, and over again until somebody answered, and then, that person would get them the backup files.
David Leary: I was actually [00:19:30] surprised there wasn't more about this online. I mean, there was posts, but it didn't explode the way ... Considering the deadline that everybody's at, today ... It's full-blown busy season right now. Either, A) there's not that many people using Summit Hosting, so that's why it was a little quiet, or they're just ... Everybody's just so busy, like, "Okay, that's not working. We have to do them by hand, or do things manually," and they just didn't even have time to complain about it online, right now.
Blake Oliver: Yeah ... Well, I just think a lot of times, too, the people using these services are business owners, themselves, and they're [00:20:00] very sympathetic, and understanding, and actually probably more than they really ought to be. I don't know if- I would not be this patient. The link to this Reddit thread will be in the show notes. You should take a look because this is actually ... People are furious. You look at the online reviews lately, and Summit Hosting has just plunged.
Now, one more thing I wanna add is there's a big question as to did Summit Hosting simply restore backups and not pay for the ransomware, or did they pay the hackers? Because this happens all the time. Somebody [00:20:30] posting here on this Reddit thread said, "Yesterday, I logged in using TeamViewer, while their engineer was working. Later I saw a message saying, 'All files successfully decrypted. Have a nice day.' I'm wondering if they paid the ransomware?" 
David Leary: My understanding - that's the game, right? The insurance companies, they sell this ransomware insurance, then they do payouts; but what they're collecting in ransomware insurance fees from companies is nowhere near what they have to pay out ... Everybody's happy about this. The insurance companies want people to pay out, [00:21:00] so more people buy the insurance. So, it is what it is, but ... If you affected by the Summit, and you felt like you're in a silo, there's other people that have been affected, too. 
Blake Oliver: Yeah, and if you have more information on this or anything we reported isn't correct, let us know. We wanna hear from the users. Again, I just want to emphasize - this is my key takeaway from all of this - use a dedicated private server. Do not use shared hosting environments. Just because somebody is listed as a preferred provider, that doesn't mean that they're secure; because Sage, [00:21:30] and Intuit, and these other app developers, they don't generally investigate the security protocols of these companies to become a vendor associate, you just answer a questionnaire. David, we talked about the Intuit Authorized Commercial Hosting Providers list. We have to update it now because now, I believe, four out of the 16- 
David Leary: I think we're at five. 
Blake Oliver: Five? Five out of the 16 authorized commercial hosting providers have been ransomwared. All right.
David Leary: What concerns me about this, I think, is the risk [00:22:00] that you're putting your data in. The whole value prop of this was I don't wanna have to do the security in-house on my own computers. so I'm gonna use a service like this, and they're gonna provide me the security. But I'd argue that these companies are a higher target because they have 2,000 customers; 2,000 machines that could be a target of ransomware. So, if one gets ... If all it takes is one person on one of those machines to open up the wrong email, or install the wrong file, and there's a chance everything's infected ... If you have your own network for your own accounting [00:22:30] firm, if the dentist office next door in your shopping mall gets ransomwared, that's not gonna jump into your- over the wall into your servers. I almost feel like the risk may be the pendulum swinging where it's actually less risk for you to have it on your own- on-site.
Blake Oliver: Now, I still think that it's more risky to have it on-site. I mean, you're not as big a target, but there's just no way that your router, or your firewall is gonna be as good as what these hosting providers have. I think the [00:23:00] best solution is use a dedicated server. Don't use shared hosting, even though it's cheaper, and otherwise, have your own host. But if you do host it yourself in your office, have a professionally installed firewall to prevent somebody from hacking in, and professional monitoring. 
Have a backup plan for what is going to happen if your hosting provider does go down because, according to a report from a cybersecurity company called Coveware, the average number of days a ransomware incident lasts is now 16.2 [00:23:30] days; 16.2 days, which is up from 12.1 days, and that's because of how long it takes to restore all of the files that get encrypted in a ransomware attack. Most these companies don't have a good enough backup plan for how they're gonna do that. They don't have the personnel to do it. You need to have the files so that you can keep operating for up to two weeks.
David Leary: You just had that other article, three or four articles ago, and you were talking about what tax software people are using at the firms. Are all of those desktop apps [00:24:00] ... Even in the cloud accounting, and the small business SaaS app side of the world, lots of things are cloud now in SaaS. But on the tax prep world, am I making an assumption here - but a lot of it is not cloud yet-
Blake Oliver: Basically-
David Leary: -and that the only option is to host.
Blake Oliver: Yeah, virtually all of it that people are using has to be hosted. It's either desktop, local desktop in office, server-based, or hosted environment, because the software companies have not innovated. Now there is, I think, Intuit Tax [00:24:30] Online, right? That's completely online, but it's a very, very tiny install base.
David Leary: Obviously, Canopy's taking a shot at this, and some others, but-
Blake Oliver: They don't- 
David Leary: -in the grand scheme of things, firms have to use hosting if they do tax prep.
Blake Oliver: Yeah, basically.
David Leary: They don't have an option ... If you're not doing tax prep, you have options. You could not use hosting at all. You just be all 100-percent cloud. 
Blake Oliver: Yeah. You could get away with it, if you're just doing accounting; but, yeah, if you do any tax, you've got to have a solution. That's why this is really important.
David Leary: This is gonna happen again. We'll talk about this again before 2020's over, I'm sure, [00:25:00] with some other provider. It's just a matter of time.

This episode of The Cloud Accounting Podcast is sponsored by G-Accon. G-Accon is the Google Accounting Connector that seamlessly integrates Google Sheets with Xero or QuickBooks Online and synchronizes data in both directions, eliminating the need for mistake-prone manual exports and imports. G-Accon is a powerful app for accountants, advisors, bookkeepers, and business owners to automate reporting, consolidate data, and build charts, and dashboards. 

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Blake Oliver: I got another security story kind of on this front. 
David Leary: That's good. I don't have any story that tags on, so go ahead. 
Blake Oliver: Maybe Summit Hosting can feel a little bit better because Microsoft had a recent security shocker. A database containing 250 million Microsoft customer records was found unsecured and online just sitting out there in the open-. 
David Leary: 250 million.  [00:26:30]
Blake Oliver: Yeah, spanning 14 years; it was just sitting there online without password protection. This was found by a security research team from Comparitech. They uncovered no less than five servers containing the same set of 250 million records. It was customer service and support logs detailing conversations between Microsoft support agents and customers from across the world. It spanned a period from 2005 through December 2011.  [00:27:00]By unsecured, it means anyone with a web browser who just stumbled across the databases could access them. No authentication was required. There's no evidence that this data was actually accessed by anyone maliciously, but just the fact that it was sitting out there - an open database-
David Leary: Since possibly 2011, it's just been sitting out there somewhere on some drive-
Blake Oliver: Well, and if you're using OneDrive, or Dropbox, or Google Drive, or whatever - one of those services - and you send a link to somebody so that they can access the document, and you change the security settings so that [00:27:30] anyone with a link can access that ... We do that all the time just because it's convenient, because we don't know if the recipient is going to have a login for these services. Well, that's essentially what you're doing, and the Microsoft folks just did this at a grand scale.
So, this was the result of misconfigured security rules, but I think it ties back to this whole discussion about the California Consumer Privacy Act, David, because as you pointed out, it's going to cause a ton of companies to have to create new databases that consolidate all the information about their customers in one [00:28:00] place. That's actually a huge risk because if they don't configure the security settings properly, then somebody might be able to access all of your data rather than just a piece of it. Imagine if this was [crosstalk] 
David Leary: -more convenient ... You already brought that up, Blake. It's convenient for thieves because they can just get all your data ... All they need is one piece of your data. They contact a company; they send them an email with all your data.
Blake Oliver: Right.
David Leary: Or, in this case, they just have to break into the one main database now, and they get everybody's data.
Blake Oliver: Exactly. So, unintended consequences, here.
David Leary: Thanks, California.
Blake Oliver: Yep. Hey, at [00:28:30] least the weather's good. It's gonna be 81 degrees today, and it's January 31 ... 
David Leary: We can-  thanks, California. Wanna talk about the federal government?
Blake Oliver: Yeah.
David Leary: The AICPA backs legislation to present a report on the nation's economic health.
Blake Oliver: So, how is the economy doing? Is the report out yet?
David Leary: Well, no, there's no report yet. There's a bill being presented by Kyrsten Sinema. She's a Democrat senator from Arizona. It's a bipartisan fiscal state of the nation resolution, which would require [00:29:00] a nonpartisan official to present a clear, unbiased assessment of America's economic health-
Blake Oliver: Uh ... Unbiased assessment? 
David Leary: -and the AICPA is supporting this bill.
Blake Oliver: Oh ... That's cool. So, this would sorta be like the Office of Budget and Management- or Management and Budget, where it's a nonpartisan group that reports on things that we need to know.
David Leary: Yes. They're gonna, apparently, prepare the report yearly. Then, they have another 45 days later to report out on it. Rewind [00:29:30] here ... There's a trillion dollars of bunk journal entries by the Pentagon.
Blake Oliver: Right.
David Leary: We talked about the IRS accounting problems, and money going out, and there's no approvals, or controls [inaudible] of refunds they send out. Computer systems are out of date. This bill feels just like it's a political game. Like, I don't know if this is really possible. The accounting systems don't work.
Blake Oliver: Well, this is going to be a report about the state of our economy, not the government.
David Leary: But it's all tied to the nation's debt and federal budget deficit. That's what it's really about; it's so [00:30:00] lawmakers can understand the federal budget and deficit.
Blake Oliver: Well, yeah, this is fun, right? It's always fun to create new reports ... It's sexy, right? Whereas fixing the Pentagon's accounting or actually enabling the IRS is not.
David Leary: We need more dashboards. We need a big dashboard app that pulls data from all these government systems, and any citizen can just go view the dashboard every day if you want.
Blake Oliver: Well, you know, maybe the folks in California who are building the state accounting system could get to work on that, and can spend a billion dollars on it, and not have anything after 10 years.
David Leary: $1.1 [00:30:30] billion, right? I think it's past that.
Blake Oliver: Yeah, I think it's like $0.1 billion every month now, at this point.
David Leary: I saw another article with a great quote from Warren Buffett.
Blake Oliver: Yeah? [crosstalk] Well, wait, wait ... Before we go there, you mentioned the deficit, right? 
David Leary: Yes. 
Blake Oliver: I just saw a stat, actually, about the deficit. The CBO is reporting that the debt has topped $22 trillion dollars. Federal debt held by the public is projected to rise to $31.4 trillion at the end of 2030, which [00:31:00] amounts to - and this is the big number - 98 percent of GDP. So, in 10 years, the federal debt will nearly equal our entire gross domestic product. That would be like, David, if you or I held personal debt that was equal to our entire salary for the year.
David Leary: That's the American way, baby.
Blake Oliver: I think a lot of people do, actually ... 
David Leary: I think there's a lot of people that are like that. Yeah, this isn't ... Okay, whatever ... That's what it is.
Blake Oliver: Maybe that alone, if that's the American way, that's fine. [00:31:30] But then it's projecting that debt held by the public could climb as high as 180 percent of GDP by 2050, if we don't do something. So, that's what really worries me, is if we go underwater, or if we go more than 100 percent of GDP on debt, how do we extract ourselves from that? I'm gonna end up paying for all this stuff, as a millennial. 
David Leary: You just earn more money ... It's not a big deal. But here's the real motivation, though. If you really read Kyrsten Semina's quote about this- this is [00:32:00] her quote ... Now, keep in mind, Arizona has a lot of retirees. You know what retirees love to do?
Blake Oliver: What?
David Leary: They love to vote. They love the vote! 
Blake Oliver: Vote for higher taxes?
David Leary: Well, they vote. They just vote. They show up to the polls and vote. Unlike any other demographic, the retirees vote.
Blake Oliver: Yeah. 
David Leary: Here's her quote: "Measuring America's economic standing is a commonsense step to address our nation's debt, grow our economy, and protect retirement benefits Arizonans [00:32:30] have earned." This is a vote-pandering move. This is not a real bill.
Blake Oliver: Well, this is why I'm putting as much as I can into my Roth IRA, because I wanna pay the tax now, because I feel like it's inevitable that old people are gonna get together and just raise taxes on working people to pay for their benefits. That's what's gonna happen politically. My taxes are gonna go up. Our taxes are gonna go up, David, to fund the retirement of [00:33:00] boomers who never saved.
David Leary: I remember me saying that when we were 18, 19, 20 years old in Accounting 101 classes ... I don't know. 
Blake Oliver: It'll happen. It'll tip. Unless the boomers just keep working, which is also possible. That keeps extending. We keep thinking that the retirements are gonna come in record numbers, and they just don't. So, maybe that'll keep us going.
David Leary: Speaking of saving for retirement, you obviously wanna be like Warren Buffett one day ... There's [00:33:30] a quote from Warren Buffett about how [crosstalk] 
Blake Oliver: I don't wanna be like Warren Buffett, one day. He still lives in the same house that he had 30-40 years ago. If I'm as rich as Warren Buffett, I'm gonna be on my yacht in the Mediterranean with a helicopter, and speedboats. That's the whole ... That's what- I'm investing in podcasting for a reason, David.
David Leary: Yes, our podcast boat that we're gonna buy. 
Blake Oliver: Maybe it'll be a deduction if it [00:34:00] is a recording studio.
David Leary: Oh! All right, we got a plan now. We got a plan. So, his quote is related to complex accounting is a warning sign. Essentially, he talks about how businesses that have complex explanations of their financials, you have an insight to the character of management; you probably shouldn't trust them, and just move on, and invest in something else. I can read his quote, if you'd like, here? 
Blake Oliver: Yeah. 
David Leary: "Accounting can offer you a lot of insight into the character of management...When you don't have a product where revenues and expenses are being matched up on something close to cash in the short term you have the opportunity for people playing games with numbers - and some people have learned to do that very well and they've sometimes created long-lasting stock manipulation or promotion schemes that have enriched the managers at the expense of the public over time. If you ever get suspicious about accounting just go onto the next company." [00:34:30]
Blake Oliver: That's good advice. Yeah, don't put up with complicated accounting.
David Leary: Stepping back, would you invest in the Pentagon, knowing what we know about that?
Blake Oliver: No, I would not. 
David Leary: Step [00:35:00] back and really look at some of these things, yeah ... 
Blake Oliver: Hey, so did we get any reviews this week?
[You've got mail]
David Leary: We did get a review. One review came in on Podchaser.
Blake Oliver: This is from Sam.I.Am. "I really enjoy listening to The Cloud Accounting Podcast. Really appreciate the effort that you guys put in to make the podcasts so engaging and insightful. I am just starting out as a cloud accountant in a country where cloud accounting is not so popular yet and am grateful for this priceless resource, which keeps me well informed on the latest trends in the industry." Awesome. [00:35:30] Thanks, Sam!
David Leary: Thank you, Sam.I.Am ... Green Eggs and Ham ... That's a great screen name. 
Blake Oliver: I received some feedback from a listener, Caroline Dillard. She said, "Hey, Blake, I was listening to y'all's last episode on my drive into work today. Really enjoyed your discussion about goodwill. It was a much better breakdown than any of my textbooks have given. When you were talking about pneumatic tubes, there was a Wells Fargo across the street that had pneumatic tubes. Thought you'd like to know the tubes are alive and well in north Texas."
David Leary: She [00:36:00] should go over and put some Cloud Accounting Podcast stickers in there, and send them into the tellers- 
Blake Oliver: Send them over to the Wells Fargo folks? 
David Leary: - so they can go for a ride. 
Blake Oliver: That's great. Thank you, Caroline, for that feedback. Just a reminder to everyone, if you want to read this review, we really appreciate those. They help get the word out. You can write a review on Apple Podcasts, or on Podchaser. While we're at it, if you wanna contact me and tell me anything, give me any feedback, I'm @BlakeTOliver. How about you, David?
David Leary: I'm @DavidLeary, so I'm easy to get ahold of. Hey, Blake, [00:36:30] you ever wanna be a CFO?
Blake Oliver: You know, part of the reason that I'm doing what I do now over at Jirav is because I wanna learn how to do financial projections; look forward rather than backward. I'm increasing my value ... That's what CFOs do, right? 
David Leary: But you're CPA, right?
Blake Oliver: Yeah.
David Leary: Did you know that of the 1,000 largest public companies in the U.S., CPAs that are CFOs are at the lowest level in six years?
Blake Oliver: Yes, I saw this, and it's kind of depressing. It used to be over, what, 40 percent, six years [00:37:00] ago?
David Leary: Yeah. 
Blake Oliver: It's declined by quite a lot - 10 percent or more, in just that amount of time. Why does this article say that CPAs are not CFOs as much, anymore?
David Leary: Well, a lot of it is the CFO just has to oversee so much more than just the books, right? The human resources, IT, risk management. They just have a lot more to do than just paying attention to the books; not to mention the actual financing parts of things, right? Never mind the accounting, but just the finance game.
Blake Oliver: Mm-hmm. 
David Leary: A lot of people [00:37:30] who just came up only doing the books don't have that skill set to manage all these other things. The interesting part of the article, though, was- this is from Michael Bryant. He is the CFO of the National Association of State Boards of Accountancy. He said that CPAs are held to a professional code of conduct. If they breach it, they could be suspended or lose their license. If you believe that ethics bring value to an organization, the accounting offers something more- the accountant offers something more. So, it's [00:38:00] kinda weird because he's almost implying, like, because they're not a CPA, they're questionable.
Blake Oliver: Well, somebody having a professional license that has an ethics requirement definitely increases confidence - by investors, by management. CPAs, I would hope, are gonna be less likely to do something improper and more concerned with ethics. So, that's a good reason to hire a CPA, but apparently, that's not as important anymore; or other things have become important enough [00:38:30] where the CPA is just not as valuable in the head of finance position.
Hey, let's just go back to all the discussion we've been having over the last few years about the CPA license, the value of the CPA license. Is it keeping up with what the market wants? It has not been, and the AICPA, and NASBA have taken notice, and that's why they're doing this whole CPA Evolution project to change the initial licensure to include more than just traditional audit, tax, and accounting, and add technology, and add business intelligence, and all these [00:39:00] things. That's a good move.
David Leary: It even ties back to the discussions we've had about the FASB and the GAAP rules-
Blake Oliver: Yes! 
David Leary: -and what people even value, like the value of accounting, and accounting reports, in general; not just the CPA, just in general ... The value people are perceiving it provides companies.
Blake Oliver: Yeah. So, I got into kind of a vigorous debate on LinkedIn after posting this with some folks. This is my feeling - it's that accounting standards have gotten many, [00:39:30] many, many times more complicated since the 1970s. We have just so much more that we have to worry about when it comes to GAAP. So, what are accountants focusing on in corporations, in these big 1,000 largest public companies? They're spending more and more of their time dealing with technical accounting. That gives accountants less time to focus on other stuff.
So, my concern is that accounting is getting pigeonholed into this compliance function where [00:40:00] we're spending all of our time, as CPAs, getting the financial statements right, according to GAAP, which has gotten so-so-complicated. But have financial statements gotten that much more useful to investors? If accounting standards are four or five times more complicated than they used to be, are the financial statements four or five times more useful? I think we all agree - no! I haven't heard anyone make the argument that they've gotten that much more useful; that having volumes of disclosures in the footnotes is helpful.
David Leary: Arguably, [00:40:30] it's made everything worse, right? I've experienced this, myself, where you can't do what is the right thing for your customers and your employees because of some weird revenue-rec thing. I've seen situations like this where the accounting standard is overruling what is the right thing to do for the benefit of the company.
Blake Oliver: Yeah, that is bad, if that's happening.
David Leary: It's definitely happening. I've experienced that, where decisions have to be done and made because [00:41:00] of accounting standards, not because it's the right thing to do for customers.
Blake Oliver: Bringing it back to the goodwill discussion about FASB is investigating what to do with goodwill, you said something last week, David, that was- actually, it has stuck with me, and I've been thinking about it the whole week. You said that, to you, goodwill is brand.
I owe you an apology because I was wrong. When you said that, I said something like, "Oh, yeah, it's brand, but it's also all these other things." Then, I went looked into it, and it actually is a lot brand. [00:41:30] You can make the argument that almost all of it, in many cases, is brand value. We don't currently, in U.S. GAAP, we don't put brand on the books. It's an intangible asset. We're too scared, as accountants, to deal with it, so we just say, look, we're not gonna put it on the books." It's too difficult to value, too difficult to capitalize, so we don't.
Okay, that works great until you have an acquisition where brand is a big component of the value. Then, as in the case with Amazon and Wells- not Wells [00:42:00] Fargo- Whole Foods, you get $9 billion dollars of goodwill added to Amazon's books and brand is in there, somewhere, along with other stuff, and now it's on the books. So, we can't keep intangible assets off the books even if we want to, because acquisitions forced them onto the books in this weird category called goodwill, where they're all just lumped together, and it makes it less transparent. 
David Leary: I'm starting to feel like we're getting into a crisis. It's building up [00:42:30] to, like, what's the point of accounting? What's the point of accountants? What's the point of all of this? Because it's doing nothing but slowing down economic growth, arguably. 
Blake Oliver: It's putting a compliance cost on companies that they don't need to have, and that doesn't create a lot of value for investors. So, it arguably makes everything that we produce more expensive because every time you add a compliance cost, that gets passed through to consumers. So, if we figured out how to reduce accounting standards to make them less rules-based and [00:43:00] give accountants more discretion, actually trust them to make the right decisions inside of companies about what to capitalize, and how to do it, and all that stuff, then maybe accounting would be more fun; maybe it'd be more useful; maybe it'd cost less [crosstalk]. 
David Leary: Maybe the Pentagon is cutting edge. They're already there. They're like, "Just screw it! Just journal entry out to some other stupid thing, and they'll just cancel each other out eventually, and nobody cares."
Blake Oliver: You know, yeah ... I don't think we should go quite that far, but ... Yeah ... 
David Leary: They're ahead of us in the curve. That's exactly what's happening here. [00:43:30] Or it's just a leading trend. Everybody's gonna start copying that. 
Blake Oliver: None of this, of course, means that accounting isn't gonna be successful and great, but it's just this traditional path of audit, tax, financial accounting inside of companies, it's just not where you wanna be. I think if you wanna have a great career, you've gotta branch out. If you're a CPA, you've gotta learn stuff beyond the CPA. Go learn those CFO-type skills. The accounting background is really, really helpful. It's just you don't wanna get stuck doing financial [00:44:00] statements for public companies that ... Do you really wanna be doing that for the rest of your career, if investors aren't really using it? 
I think one of the last stats we said, it was 14 percent of investor decisions; 14 percent of the decision by an investor. I'll say it another way - when an investor decides to invest in a company, only 14 percent of that decision is because of what's in the financial statements. I don't have that stat in front of me, but I really- I recall that. If it's not that, it's a small amount. So, do you really wanna be doing that for your career? Do you really wanna be auditing [00:44:30] public companies? If the financial statements are not helpful, what's the point of the audit on these financial statements [crosstalk] 
David Leary: There's a whole industry built on this. A whole billions and billions and billions of dollars industry. 
Blake Oliver: Busywork. A lot of it is ... A lot. Now, I'm not saying it's not ... Obviously, financial statements, and accounting, hugely important to the economy. We need them. But there's a ton of busywork associated with it that we don't need. If we could just reduce it to what matters, then we'd all be better off.
David Leary: Amen. 
Blake Oliver: I love getting up on my soapbox here with you, David. It's a lot of fun.
David Leary: Well, they're all [00:45:00] related themes, right? Over and over again [crosstalk] 
Blake Oliver: Well, how do we bring this back down, though, to ... Most of our listeners are accountants and bookkeepers in public for small businesses. We're not doing accounting for big public companies. We're not doing GAAP, in most cases. We're doing cash-basis books, or modified cash-basis. There's some accrual stuff going on, but it's not GAAP. So, why do we care about this? I guess I'd just say because, hey, we have money in the stock market, right? 
David Leary: Well, I [00:45:30] think that, but not just that. I think it's really the way you treat your clients, right? You could get in the minutiae, and over-track things, and lose perspective when you're dealing with your clients' books and not actually help your client because you're overly tracking and breaking out line items on receipts that don't need to be tracked to that detail level, possibly-
Blake Oliver: Right. 
David Leary: -in splits, and classes, and tags, and all this other stuff, and you missed the point of actually helping your client. So, I think it totally really because that's what's happening right now ... The [00:46:00] overregulation's getting away from running a corporation in a good way, possibly, and that's the same thing with your clients. It totally relates.
Blake Oliver: You know, Gene Marks talked about this once in an article- actually, it was in one of his books that I read; it's a book for small business owners. He says, on hiring an accountant- he said your accountant's gonna try and sell you financial statements - income statement, balance sheet, statement of cash flows - and they're gonna spend- you're gonna spend a lot of money generating these reports, and they're not really that useful to you.
I'll have [00:46:30] to dig it up for you, David. But it's really funny, and it's true, right? The accrual-basis income statement, balance sheet, and statement of cash flows are not helpful to most small businesses. Those are not gonna move the needle for them. They need completely different information. So, that's the takeaway. What information they need, we won't go into that right now.
David Leary: So, speaking of information, one thing everybody needs is bank feeds, right?
Blake Oliver: Yep.
David Leary: I don't know if you saw ... We talked about Plaid, what, two weeks ago? They got acquired by Visa for half-a-bajillion dollars or something ridiculous-.  [00:47:00]
Blake Oliver: Yep, yep. 
David Leary: $450 million ... It was a ridiculously high number. Well, there's another competing company that just raised $4 million. It's a company called Teller. So, Teller raises $4 million to take on Plaid in the U.S. by providing API access to bank accounts.
Blake Oliver: When I sent this to you, you said that- you joked that that's probably what Plaid spends in a month.
David Leary: Well, I think I joked that Plaid probably spent that in the time it took you to paste the article [crosstalk] They were in the UK, before, and in Europe. Then, with open banking, there's not a need for that type of a product. [00:47:30] What was really interesting for me, reading this, is the founder's tone against Plaid. He argues that people are not happy with the market leader. People are not happy with Plaid. I don't know if that's true. I mean, I've talked to a lot of developers. Almost every app I looked at is using Plaid. I'm not hearing grumblings about Plaid. 
Now, maybe some end-users complain about it because there was an outage. It wasn't working with this bank, or it wasn't working with this bank because that's the typical fault of screen-scraping. The [00:48:00] founder, he actually gets into this a little bit about his app, a little bit. Plaid uses screen-scraping, which he calls it a "creaky technique." The way screen-scraping basically works is it's a web browser; that data travels to the web browser; and the bank is sending data to a web browser. 
Blake Oliver: When you log into online banking, what you see is what is getting sent to Plaid.
David Leary: Yes. Now, what he's done- they do it a different way. They're tricking the bank. This is the way I read [00:48:30] this is that they reverse-engineered the banking app. So, they take the Bank of America mobile app, reverse-engineer it ... I think what they're doing is they're sending a signal, so the bank thinks they're communicating with their own mobile app, and then he's pulling the data out that way. If he thinks the banks were blocking Plaid over and over again, they're gonna lose their minds when they find out this is going on. 
Blake Oliver: Yeah because they could just shut it down, right? Wait, so tell me how it's working, again? 
David Leary: Okay. There's not tons of details, right. I'll just [00:49:00] read this straight out here: "He, along with the cofounder, Dan Palmer, had spent several years building an early version of Teller that reverse-engineered the APIs used by UK banks for their own mobile apps and offered access to developers that wanted to create apps using banking data. It was billed as a more robust, and real-time alternative to screen-scraping. So, screen-scraping is the bank knows you're a browser; it sends the data, and then you're just getting the HTML and pulling stuff out of that HTML.
Blake Oliver: Yeah.
David Leary: He's connecting into the banks under [00:49:30] the guise of being their own mobile app. This is insane!
Blake Oliver: Yeah, yeah. Well, hey, so you said, before all of this about the actual how it works, you questioned is Plaid working for people? Given that bank feeds are breaking a lot, and most bank feeds, a lot of them are using Plaid, we can assume that issues with Plaid might be behind it. I found example! Jason Deshayes said, in response to our discussion about You Need a Budget, that they use USAA. He and his wife use [00:50:00] USAA for banking, and the security is all jacked. "It requires us to re-credential whenever we pull transactions." So, they're connecting YNAB to their USAA bank accounts, and they have to re-authenticate every single time. I looked it up, and YNAB uses Plaid. 
David Leary: Yeah, and it's not so much because of Plaid. It's not having an open API at the bank, right? 
Blake Oliver: Right. 
David Leary: So, every time you sign into that bank, you have to re-authenticate. Until the banks support - which, obviously, we're seeing now with Chase; we're seeing it with Wells Fargo, [00:50:30] Bank of America ... They're all starting to support some auth-token access instead of screen-scraping-
Blake Oliver: Mm-hmm. 
David Leary: We'll see. I just can't imagine tricking the banks is a good play. I just don't see ... I don't see that going down well.
Blake Oliver: Well, that's all the time we've got for today. David, great chatting with you, as usual. If people wanna get in touch, where's the best place for them to do that?
David Leary: On Twitter, I'm @DavidLeary, but it feels like a lot of people like to message me on LinkedIn, so use LinkedIn messaging if that's where you're at, instead. 
Blake Oliver: Yeah. I'm [00:51:00] Blake Oliver. I'm @BlakeTOliver. I'm also on LinkedIn. You can connect with me. Message me there, if you do connect with me. Please leave a note saying that it's the podcast because, otherwise, I have no idea who you are, and you might be a bot. You can also email me at
If you are interested in getting notified whenever we post new episodes, you can join our email list. We'll also keep you apprised of where we're gonna be this year. Go to, [00:51:30] and scroll to the bottom of any page, and you will see a signup form for our email newsletter. If you join that, you'll get notifications of new episodes in your inbox with links to the show notes and any other special communications that we wanna send you.
David Leary: We're starting to figure out where we're going this year. So, in about two weeks, we should be able to put up a final list of where we expect to be.
Blake Oliver: Well, David, pleasure, as usual. I'll see you here next week.
David Leary: Enjoy the Super Bowl.
Blake Oliver: Thanks. 
David Leary: Bye. 

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