Technology Reduces Accountant Stress During Pandemic

Faulty data collection raises questions about Trump’s claims on PPP program; New York City didn't get its fair share of PPP loans, says comptroller; Accountants predict 2020 will be worst year for economy since World War II; A surprising number of S&P 500 companies pull guidance; Under stress, accountants turn to technology to get through the pandemic; Firms commit to remote work; U.K. orders Big Four to separate audit practices (but not really) by 2024; and Zoom gets into the hardware game with an all-in-one home communications device for $599.


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Blake Oliver: [00:00:21] Most accountants are working harder and longer since the pandemic began, which is really interesting because I've seen other stats or articles saying that productivity is down. So, I don't know how this squares up, but accountants, themselves, are saying that they're working longer hours. Almost half are working longer hours; 38 percent have lost sleep due to work-related stress.
David Leary: [00:00:41] I believe both those stats. 

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Blake Oliver: [00:02:44] Welcome to The Cloud Accounting Podcast. I'm Blake Oliver.
David Leary: [00:02:47] And I'm David Leary.
Blake Oliver: [00:02:48] So, David, we're recording on a Thursday so you can have a long weekend. Where the hell are you going? 
David Leary: [00:02:52] I'm gonna go to California, believe it or not. 
Blake Oliver: [00:02:54] Oh, really?
David Leary: [00:02:55] I just can't ... I gotta get out of the house? I gotta get someplace where it's not 107 degrees for a couple of days. For four days, I'm just gonna go. Got an Airbnb in Venice Beach area. I'm just gonna do nothing but eat Cheetos and drink beer or something. I don't know, just do nothing. 
Blake Oliver: [00:03:07] Nice. Venice is fun.
David Leary: [00:03:10] That's what I've heard.
Blake Oliver: [00:03:11] Hopefully, it won't be too crowded. I had a client down there. I got to go hang out at the bars and the beach. It was great.
David Leary: [00:03:18] Well, I'm gonna get a mask that's the Arizona flag and then people will stay extra away from me. I guess California has their own COVID issues, right now, a spike.
Blake Oliver: [00:03:27] Yeah, Venice is full of nonconformists, so I'm curious to know how many people are social distancing, wearing masks down there. That should be interesting. You'll have to let me know.
David Leary: [00:03:37] Yeah, definitely. The real talk here is we are one day post-Tax Day. 
Blake Oliver: [00:03:40] Yay! 
David Leary: [00:03:40] Congratulations, everybody.
Blake Oliver: [00:03:44] Hopefully, you're taking a little bit of a breather; maybe a vacation ... Not that you could go anywhere, but- 
David Leary: [00:03:48] There was a lot of tweets on #TaxTwitter of big bottles of alcohol being opened last night, I noticed, on the feed through Twitter ... Bottles of wine ... Yeah, this has been a tough one to get to the finish, but people made it.
Blake Oliver: [00:04:03] I've got some stories on our favorite topic - PPP. Questions about that data from that CSV file that SBA released on all those loans over $150,000. What else here? Wall Street earnings forecasts: a lot of companies have withdrawn their earnings forecasts, so we really don't know what's gonna happen. Accountants are pretty gloomy, unfortunately. I've got a survey here, by AvidXchange, about how accountants are seeking new technology to get through the pandemic. Apparently, there's quite a bit of adoption of cloud technology, as you might expect. Then, finally, Big Four in the UK - UK Regulator of Accounting has ordered the Big Four to separate their audit practices by 2024. Oh, and finally, remote work; Zoom is getting into the hardware game.
David Leary: [00:04:53] I heard about that. I was thinking about that. I heard about that coming out. Well, just as we wind up this PPP stuff,  Congress is reconvening next week, and we might see new stimulus next week and new packages, so we can talk about some of that stuff that's coming down the pipe.
Blake Oliver: [00:05:10] Yeah, I wouldn't be surprised because isn't the unemployment bonus amount of $600 per week, isn't that ending at the end of this month?
David Leary: [00:05:18] Yes, at the end of July.
Blake Oliver: [00:05:19] Yeah. That's a big problem because a lot of people have been relying on that during shutdowns, and a lot of states are spiking. I saw recently- the number keeps changing every day, but 41 states are having increases of coronavirus at this point. It's just all over the place. It's just spiking everywhere. So, the idea that we can get by without more stimulus- direct stimulus to individuals is hard to believe.
David Leary: [00:05:42] Yeah. We can talk about that. What else? A little bit of app news. Right Networks- remember we talked about they acquired Transaction Pro? They have a little bit of news about that. 
Blake Oliver: [00:05:51] Cool. 
David Leary: [00:05:51] I guess this ties your PPP news; there's an article about "5 reasons borrowers shouldn’t rush their PPP forgiveness applications."
Blake Oliver: [00:06:00] If you even can. I don't even know if the banks are allowing you to do that yet. 
David Leary: [00:06:04] I think my lender sent me some website with a link, and I have yet to click on the link. I'm just gonna wait.
Blake Oliver: [00:06:09] All right. What do you wanna start with?
David Leary: [00:06:10] Why don't you start with this PPP data? That's always fun. 
Blake Oliver: [00:06:14] Okay. So, that giant CSV file ... You can actually go download it; if you're listening, go to the SBA website, and search for Paycheck Protection Program loan data. You'll be eventually directed to a page where you can download a giant CSV file that you can open in Excel. It's 125 megabytes; massive file with thousands- hundreds of thousands of loans that were over $150,000.
Blake Oliver: [00:06:40] The Washington Post, like a lot of news outlets, was poring through this after it came out, and they published a story raising quite a few questions about that data because it's really inconsistent. There are businesses- they found something like, I don't know if it was half a dozen or a dozen businesses that they actually spoke to, where the number of jobs saved in the column - this is Jobs Saved - didn't match anywhere close to how many employees that those businesses had. There were cases where a business might have had a few dozen employees, and they were listed as having 500 employees in the Jobs Saved column. I'm interpreting that as, even though it was called Jobs Saved, it was just number of employees on the application. They're calling it Jobs Saved because the administration wants to promote how many jobs were saved, right? 
[00:07:31] Big picture, the Trump administration is saying that the 4.9 million loans supported or saved 51 million jobs. That's the number of jobs at businesses, in aggregate, that received these loans. But, as we have seen, if you call up these businesses, we find that many of them, the numbers don't match. So, the question is, what is going on there? Was there some sort of error in the database? Was there an error when the bank submitted these applications? Apparently, Wells Fargo didn't submit any employee data for any of the loans to the SBA. I guess they weren't required to; that's according to a spokesperson at the bank, that they were able to apply for these loans on behalf of their clients without even submitting the number of employees. So, all those loans are blank.
David Leary: [00:08:18] So, we won't have that data til the forgiveness paperwork goes through, assuming they make anybody actually file forgiveness paperwork.
Blake Oliver: [00:08:23] Right. Basically, there's a big question as to, is this number right? Did 51 million jobs get saved? Economists are saying probably not; seems very unlikely. The Washington Post has a diagram here showing some of the industries where the jobs supposedly supported by the PPP, according to this document, are greater than the entire jobs in that industry in 2019. For example, employment placement, specialty food stores, cattle ranching, grant-making, and giving, performing arts companies oil, seed, and grain farming. 
[00:09:02] Those industries do not have as many jobs as the administration is saying were saved. So, no one has any answers, at this point, as to why there's this big discrepancy, and the SBA hasn't said why. Landscape architecture is a great example. That's way different. They're reporting that 114,000 jobs were supported in that industry - landscape architecture - but that's three times the number of people who worked in the industry last year. Doesn't make sense.
David Leary: [00:09:27] Yeah, none of the numbers add up. There are some indicators that maybe it did save some jobs, because I think I remember, at week eight of the PPP loan, or week nine, unemployment went- the number of new claims went up. There was new ... Things started to open up, so there was new hiring happening.
Blake Oliver: [00:09:42] Yes. 
David Leary: [00:09:42] It was like 7 million people were new unemployment claims ... The companies ran out of their PPP and had to let employees go. If anything, it kept people employed for a little while. I'm not sure it saved jobs; it just delayed the inevitable a little bit.
Blake Oliver: [00:09:58] Yeah, there's no doubt that millions of jobs were saved, and that millions of people didn't go on unemployment. We just don't know how many millions. Was it 50 million? Was it 5 million? That's a big question. I think it's an important question to answer because this program cost us $571 billion, so far-
David Leary: [00:10:20] That's our kids' problem to deal with. We don't have to worry about this, Blake. 
Blake Oliver: [00:10:21] Uhh, I'm hoping ... 
David Leary: [00:10:21] It's two generations from now. They can worry about it. 
Blake Oliver: [00:10:25] I'm optimistic about my life span, David, so I think I'm gonna end up probably paying these taxes at some point; I have some concerns. Anyway, there's one more bit of PPP news before I'm done with that. It's that The Wall Street Journal is reporting that New York City, which was hit the hardest by the pandemic, did not get its fair share of PPP loans. That's according to the comptroller of New York City. Just 12 percent of small businesses in New York City got federal aid. That is compared with 20 percent in states that were much less economically harmed, such as North Dakota, South Dakota, and Nebraska. We have reported on this previously; we didn't have hard numbers like this, but we said based, on the data, it looks like the Midwest seems to be getting way more loans. It was a result of many more small banks- small businesses having direct lending relationships with these banks already, and they were able to work the system in a way that small businesses served by giant banks, like Bank of America, and Chase, and Wells Fargo, just weren't able to do.
David Leary: [00:11:31] Yeah, and I think in a lot of the Midwest, you have a lot of farms, and those farms already have loan relationships with banks. For a lot of small business owners, this is the first time they ever went to get a loan or talk to the bank, beyond just opening a checking account for their small business, or a merchant service, or something. It's unfair just because people never thought they'd be in this situation. There's nothing that's been all that fair about this.
[00:11:54] I have two PPP-kind-of-related things. One is there was a survey done by Morning Consult. They interviewed 2,200 adults; they interviewed them last week, so this was right in the heat of all the 'who got PPP money' news. Remember, last week, all the headlines? So, really feeling out, "Do you support these businesses that got it? Do you don't know, don't have an opinion, or do you oppose?" Overwhelmingly, support non-franchised restaurants? 65 percent, they feel non-franchised restaurants should be getting it. Private K-12 schools should be getting a PPP loan.
Blake Oliver: [00:12:26] Who is this a survey of? I missed that. 
David Leary: [00:12:29] 2,200 adults.
Blake Oliver: [00:12:29] Okay, just people in the country. Got it. 
David Leary: [00:12:32] That's correct. At the bottom, 56 percent opposed dating apps getting the money. 
Blake Oliver: [00:12:38] Like Grindr? You mentioned Grindr got a PPP loan- 
David Leary: [00:12:38] I think Grindr. 55 percent opposed celebrity clothing companies, like Kanye West's company, Yeezy, which is sad because more people opposed that than companies with ties to lawmakers. Companies tied to lawmakers, only 50 percent opposed that. Religious organizations, 35 percent opposed that. 40 percent of people support- they're okay even with restaurant chains; it was still 45 percent. Medical organizations, 47 percent.
Blake Oliver: [00:13:06] Well, speaking of celebrities and their clothing lines, we mentioned Kanye West's Yeezy brand got a PPP loan. He's on the ballot in Oklahoma. I don't know if you saw it. Kanye West is gonna run for president in Oklahoma.
David Leary: [00:13:23] So, he's checking both boxes now. He's checking the companies tied to political people [crosstalk] 
Blake Oliver: [00:13:31] Exactly. Maybe getting that loan inspired him to enter politics, so that he can get more money through influence. I don't know where I was going with that, but I do have some pandemic-related news.
David Leary: [00:13:44] Before you jump into that, I have something else with the PPP. Remember, last week, you're like, "Hey, we haven't heard much about this whole PPP agent-fee stuff.
Blake Oliver: [00:13:51] Yeah, the banks get the 1-, 3-, 5-percent commissions. The accountants aren't getting those agent fees that were supposedly in the bill.
David Leary: [00:13:59] Yeah. So, remember Newt Gingrich from the '90s? 
Blake Oliver: [00:14:01] Who can forget Newt Gingrich? He won't go away.
David Leary: [00:14:05] Won't go away ... He wrote an article; it's an opinion piece in Newsweek about: "How Banks Are Trying to Hurt Small Business in a Time of Crisis." He writes this article and basically, it's about how the banks fought and lobbied to get the agent-fee stuff removed from the PPP. The argument is: most of the PPP agents are really just small businesses, themselves, with revenue under $300,000; approximately 45 percent of them are in minority and women-owned businesses. He doesn't go on to actually mention accountants in this, but it's really how the banks went out of their way to avoid paying agent fees to, essentially, small businesses. 
Blake Oliver: [00:14:40] Yeah, because why would they wanna split the commission? It makes sense, right? They have all the influence, and the small firms don't.
David Leary: [00:14:47] I read the article three times. I was like, "Did he say accountants in here?" No, he just says PPP agents, PPP agents, over, and over, and over again. 
Blake Oliver: [00:14:52] Yeah, who exactly are those? It's usually gonna be the accounting firms, but ... I don't know. I'd be curious to know who else, other than bookkeepers, and accountants, were trying to get those agent fees, and weren't able to. 
David Leary: [00:15:04] Processing that paperwork, yeah. 
Blake Oliver: [00:15:05] So, speaking of some bad news, I suppose, accountants are predicting that 2020 will be the worst year for the economy since World War II. That's according to the Q2 2020 Global Economic Conditions Survey conducted by the Association of Chartered Certified Accountants and the Institute of Management Accountants. Now, accountants in North America are surprisingly more optimistic than in other parts of the globe, but overall, accountants are not particularly optimistic. Now, let's put that in perspective- 
David Leary: [00:15:37] When was this survey done?
Blake Oliver: [00:15:39] This was done in Q2. I don't know exactly when, but-
David Leary: [00:15:44] I feel like there were surveys in Q1 where people were pretty optimistic, but I guess this ebbs and flows with the waves of COVID, maybe.
Blake Oliver: [00:15:52] Absolutely. It makes sense, right? Wall Street is having the same challenge, where they were feeling really optimistic, and now, according to The Wall Street Journal, more than 180 companies in the S&P 500 have pulled their earnings guidance in the wake of the new coronavirus pandemic, or the second wave, or the beginning, or the end of the first wave, whatever you wanna call it. This is the widest dispersion in earnings estimates in the years. It's leaving investors with really not a lot of ... Well, they don't have guidance because companies are pulling that guidance. They aren't willing to say what their earnings are gonna be.
David Leary: [00:16:30] Let's see what else is ... We could jump into five reasons you probably don't want your clients to fill out that forgiveness application.
Blake Oliver: [00:16:37] I know the AICPA is saying, "Hey, just hold tight; wait; more things will change. It's better just to wait now." We have, what, like 11 months to actually submit this thing? That's quite a while. 
David Leary: [00:16:49] Yeah. This is directly from the AICPA. Number one is most lenders aren't ready, which you already mentioned that. Many are developing technology tools, such as 'Forgiveness portals,' so we'll see how that goes- 
Blake Oliver: [00:17:01] Well, because we know how well the actual application process went, right? 
David Leary: [00:17:04] Yeah. Now that you can opt into that 24 weeks to use the money, you just have this elbow room. You just have this time. There's no reason to rush at all. Since payroll costs are a significant component, now, a lot of the payroll companies, or software companies are actually building custom reports to report out this data out of your payroll software. So, if you just wait, the reports will just be done for you nicely; compliant reports will just be provided for you. There's a benefit to procrastinating here. You're not even required to make a payment until 10 months after your covered loan period ends. Then, applying for forgiveness might be easier if you use the EZ form, instead of doing the standard ... I still think there is a sixth, that they're just gonna tell people, "Don't worry about it." 
Blake Oliver: [00:17:47] They're certainly not gonna be able to audit all these. All right, let's talk about accountants and technology during this pandemic. AvidXchange did a survey that was published in Accounting Today asking: "How are you responding to the pandemic using technology?" There are some interesting insights in here. "How many solutions have you added to your tech stack since the pandemic?" That's one question. About 12 percent of respondents said they have added four or more new solutions to their tech stack since the pandemic started. The largest group, over a third, 36 percent said two to three. Then, about 26 percent said one. Only about a quarter of accountants have added no technology since the pandemic started. This makes sense. People are working at home. They need to add tech.
David Leary: [00:18:36] Yeah, so the quarter who didn't, it's either ... Is it 12 percent that were 100-percent already cloud and another 12 percent are people that just don't ever change, or is it there's just 25 percent that have already been there, and they didn't really have to do much new tech?
Blake Oliver: [00:18:48] That's my guess. There was about a quarter that are already in the cloud. They were already set up. They didn't have to change anything, really, because they were already set up to work from home. Then, you have that 10-or-so percent, where they had nothing, and they had to add the four or more apps. Then there are the folks who are in between.
David Leary: [00:19:03] It makes sense. I mean, nobody could buy a webcam. What used to be a $19 webcam, I think were all going for $220 on Amazon, for a little while there. You couldn't buy any video-conferencing type tools at all. 
Blake Oliver: [00:19:16] Well, I've got a story that I'm saving for later in this episode about that Zoom hardware. Basically, it's like a $600 webcam. We'll talk about that. But continuing on with this survey here, there's another question: "New tech will make my job less stressful during COVID-19. Almost 80 percent of survey respondents said that new technology would make their job less stressful during the pandemic. Accountants are very positive about the impact of tech on making their jobs less stressful.
David Leary: [00:19:46] That feels like a very different answer than would have happened two years ago or three years ago.
Blake Oliver: [00:19:50] I think things are changing so rapidly, right now. I mean, it's not just accounting. Everything is changing. E-commerce, before this pandemic, was really actually small compared to the overall retail economy. It was less than 20 percent. I bet, coming out of this, it's gonna be half. I would not be surprised if we started spending half of our money on e-commerce versus in-person retail. Maybe that's a little bit extreme, but I could see it happening; at least doubling. 
David Leary: [00:20:22] It almost feels like the retail locations are almost pushing you towards that. I was trying to look up an audio receiver, and I was poking around on Best Buy's website, You can't really go to the store. None of them are available. It's all, "We'll deliver it to the store for you, or ship it to your house. So, it's almost to the point where I'll just order from Amazon, then, or just use any e-commerce site, there's no ... You really can't just go in and buy something [crosstalk] food and grocery type stuff, it feels like. 
Blake Oliver: [00:20:49] It's changing behavior. We never ordered groceries online ever, before this. I'm a big Amazon person, but I'd always bought things in boxes. I never bought food. I never bought furniture online. I've done both of those for the first time, now, and it was a great experience, and we'll probably keep doing that. People are getting used to this order online, and then you drive up to the store, and they put it in your trunk kind of thing, which is super-convenient, right? I love that. Everybody is getting used to this, and once they get used to it, then the behavior sticks. It only takes, what, three months for a habit to stick, right? We, as a society, have been doing this for more than three months now. So, even once, once the pandemic is over, I don't expect our behavior to go back to normal.

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David Leary: [00:22:50] Does this survey talk about the relationship with clients? Is it easier to get your clients to adopt technology, now? I know, previously, sometimes that was always the excuse: "Well, I can't get my clients to move to software. Why would I move?"
Blake Oliver: [00:23:01] No, it hasn't. This survey doesn't ask about that. It has some information about disaster-preparedness plans. Apparently, about 17 percent of firms did not have a disaster plan in place before and now have put one in place. That's quite a significant number. Only 15 percent actually had a plan that they considered robust.
David Leary: [00:23:23] So, basically they wrote up a plan and they just implemented it the next day because that's kind of where we're at ... 
Blake Oliver: [00:23:28] Yeah, and it's funny because there were some quotes here in the article about people and their disaster-preparedness plans. A lot of that, in the pre-cloud era was "Who's gonna take the printer home? Who's gonna take the check stock home?" That sort of thing. I think actually that's probably the most urgent thing to do because getting payments out with paper checks is the thing you gotta do every week, if not every day. One other thing before we move on ... Actually, this has so many good stats. Just give me a few more stats before we move on.
David Leary: [00:23:56] This is this your thing. I'll give it to you.
Blake Oliver: [00:23:58] So, most accountants are working harder and longer since the pandemic began, which is really interesting because I've seen other stats, or articles saying that productivity is down. So, I don't know how this squares up, but accountants, themselves, are saying that they're working longer hours. Almost half are working longer hours. 38 percent have lost sleep due to work-related stress.
David Leary: [00:24:20] I believe both those stats.
Blake Oliver: [00:24:22] "Has your firm's productivity been affected by more staff working from home?" This is the thing that doesn't quite make sense. 62 percent said that productivity has decreased. So, somehow people are working more hours, but productivity has decreased. That would be unfortunate-
David Leary: [00:24:41] Unless you bill by the hour.
Blake Oliver: [00:24:42] Right. This is weird because ... I mean, maybe it's the fact that they're having to work more hours to accomplish the same amount of work. I guess it depends if you're billing hourly, or if you're fixed. It depends how you measure it. That's the question.
David Leary: [00:24:56] I mean, subjectively speaking, I feel like I've gotten a lot of stories from accountants that everybody's working tons more than they ever have, and they're busier than they've ever been. But at the same time, there's also just more distractions. It's harder to focus ... It's not this ideal situation where you're working at home and nobody else is there. Kids are there-
Blake Oliver: [00:25:16] Right, right. 
David Leary: [00:25:16] It's like the days never end. I'm sure there's plenty of accountants and bookkeepers that are working Saturdays and Sundays because what's the difference between a Saturday and a Monday, or a Wednesday?
Blake Oliver: [00:25:26] That's kind of the genesis of this podcast, right, David? It's so that you and I can get away from our families?
David Leary: [00:25:30] Sometimes ... Sometimes, that's the plan. 
Blake Oliver: [00:25:31] Sometimes. A few more stats here. "Will your firm allow employees to work from home permanently?" Of all firms, 82 percent, just the vast majority, 82 percent plan to allow employees to work from home permanently. They say it's very, or somewhat likely; it is slightly fewer, if the firm is under 50 people; that's 78 percent. If they are 50-plus, it's 88 percent. 
[00:25:58] What are firms planning to do with their physical offices? Of all firms, 65 percent plan to keep their offices and locations as they are; six percent plan to significantly alter their office configuration or function, and 18 percent plan to significantly downsize space and locations, going forward. Now, the one thing that's interesting here is, if they're are large firm with 50 or more employees, that jumps to 31 percent; almost a third plan to downsize their space going forward.
[00:26:28] Now, last stat in the survey: "How do you feel about your firm's response to the pandemic? Positive, somewhat positive, or negative?" 65 percent of folks responding to the survey had a very positive feeling about their firm's response to the pandemic. 24 percent, somewhat positive. Somewhat, or very negative was 11 percent. So, overall, the accounting profession did pretty good; 9 out of 10 positive, somewhat, or very, but there's about one in 10 firms, where it was not a good experience. 
David Leary: [00:27:03] It feels like, in general, I think the Big Four were a little slow to do the work-from-home policies, but I think a lot of firms did it. They sent people home. The work was still there. There's tons to do. It could have been the other way; it could have been a traditional tax season where everybody needs to come in and work on Saturdays. Remember, we've had pictures of that; people taking pictures of their parking lot on a Saturday afternoon at some of the firms and the cars are still in the parking lot. I think it could have been 90 percent disapproving, but accounting firms have stepped up this year and handled this properly.
Blake Oliver: [00:27:37] What's really interesting about this is that the larger firms were a bit slower, it seems, initially, to send people home, but they are now being slow to send people back. I just saw a story about I think it was PwC, or ... No, it's Deloitte is just not gonna send people back for a while. That kind of makes sense because they've got a lot more worries about lawsuits, employee liability;  they've got to deal with that, from an HR perspective, so they're gonna be a much more careful, I think, than smaller firms. 
David Leary: [00:28:07] Plus, it's harder to control, I guess. A smaller firm, they can ... It's probably easy for a small firm to implement, like an every other day schedule. "Only 10 can be in the office a day. Sign up on this form. Come in, and you can be in the office, and we keep our social distancing," etc. I think a big, huge, gigantic firm, that's probably impossible to plan or work around.
Blake Oliver: [00:28:26] I mentioned the Big Four, so maybe I should talk about the Big Four in the UK.
David Leary: [00:28:32] Yeah, because this is all indirectly tied to Wirecard, right? [crosstalk] their previous downfall they've had, as well [crosstalk] 
Blake Oliver: [00:28:41] Yeah, so the Big Four in the UK- Wirecard was German, so I guess that doesn't really count- 
David Leary: [00:28:47] I think it's resurfaced, this news about all the fiascos they had in the UK over the last two years ... 
Blake Oliver: [00:28:53] Yeah. There have been a string of corporate failures in the UK that really pushed public opinion against the Big Four there. To name a few: the construction giant, Carillion; the coffee-chain operator, Patisserie Holdings; the travel company, Thomas Cook Group. These are big public companies that collapsed, and everybody was asking, where were the auditors? Why didn't they see what was going on?
[00:29:21] Their consequences are coming. The Financial Reporting Council, the UK's accounting, an audit watchdog, has asked the Big Four to separate their audit practices. Now, they aren't asking them to spin them off completely into completely different legal entities, which is the more extreme approach that some people were recommending. They didn't decide to do that, but they're gonna basically put up, it seems to me sort of like a wall inside of the firms between the audit practices and the consulting practices. So-
David Leary: [00:29:58] That's gonna work, I'm sure.
Blake Oliver: [00:29:59] Yeah, and that's the problem- 
David Leary: [00:30:01] It's gonna create the outside impression, but ...
Blake Oliver: [00:30:04] So, what does that mean? It means that audit practices are gonna have to publish their own profit and loss statements separate from the overall firms and make sure there are no material structural cross-subsidies from other parts of the business. What does that mean? I take that to mean that an audit partner couldn't earn a commission for upselling an audit client on consulting work. That would not be allowed anymore. Audit partners' pay has to be based on their contribution to the audit-practice profits, nothing else. The firms have to be more transparent about their audit business and for audit professionals to demonstrate ethical behavior and professional skepticism. That doesn't really sound like much to me.
[00:30:41] There are some other recommendations in here. I really wish they'd gone the full- all the way, and I wish they would do that here in the U.S. We all understand human behavior, and I just don't think that auditors can truly be independent when other parts of the firm are earning fees from clients on other work. They just need to be separate entities. Audit firms should just do audit, and ideally, they wouldn't be paid by their clients. They would be-
David Leary: [00:31:08] Where's the real money? Is the money in the consulting or is the money in the audit? 
Blake Oliver: [00:31:12] The money's in the consulting. There is a chart here in this- 
David Leary: [00:31:16] That's why you don't wanna report it, right? Because you might lose the consulting contract.
Blake Oliver: [00:31:19] Right. That's the obvious conflict of interest is that [crosstalk] Big Four firm, you have an audit client, you do a bunch of consulting- 
David Leary: [00:31:28] If they break it up, what partner's gonna be like, "Aw, sure, I'll go to the audit company ..."?
Blake Oliver: [00:31:33] Audit division? Yeah, because the audit division doesn't make much money, right? 
David Leary: [00:31:35] Yeah, you're gonna wanna stay with the consulting division. I don't know how they're gonna do this unless there's some sort of government subsidy for audit companies to encourage them to be more independent.
Blake Oliver: [00:31:45] Well, and what would actually make them independent is if some independent third party selected the auditor, not the client, and if there was a way that the audit fee could be determined and paid that was independent, as well. So, the auditors, they can't be independent if they're paid by the client. It's just impossible. When you're getting paid by somebody, you can't be independent. You have a financial relationship. You have a conflict of interest, inherently. There's nothing that you can do, from an ethics standpoint, to mitigate that. There's gonna be a conflict there. I mean, this is better than nothing, right? So, that's it from the Big Four standpoint, for me. The only thing else I've got to talk about is Zoom. What about you?
David Leary: [00:32:24] I have some homework for you. One of my articles this week is actually- you were on a podcast. You were on the , so you're on the Yaeger CPA Review & More podcast, and you were debating the CPA licensure with Martin Zych, and Brian Tankersley. I listened to it - I listen to a lot of podcasts - and this was really, really good- 
Blake Oliver: [00:32:42] Oh, good! Thank you! 
David Leary: [00:32:42] One of the things- I almost wanted to treat it like ... I must say, one of the things you said was that it's a trade. Now, you corrected yourself because you didn't wanna get people upset. So, maybe I could say it's a trade. I can say it's a trade, as being somebody who grew up in construction. You just can't go to school for construction and then build the house. You just won't have the skill set to do it, if you never swing a hammer; if you've never hammered in a nail; you've never used a power saw. You just can't do it. You could teach it in  theory, but you're not- 
Blake Oliver: [00:33:07] Accounting is. Yeah, I mean, it has elements of a trade. It is a profession. I guess what I meant to say on that show is it is a profession, and I think it would be better if we taught it more like a trade than like an academic subject.
David Leary: [00:33:24] Yeah, I agree. That was really good, and we'll put that in the show links. People should listen to it. I thought it was a very great argument.
Blake Oliver: [00:33:29] Thank you. 
David Leary: [00:33:29] I also have homework for you, Blake. 
Blake Oliver: [00:33:31] Okay. 
David Leary: [00:33:34] You like to dig in on these things, and this just came out today. There's a 48-page PDF attached to this for you.
Blake Oliver: [00:33:39] Oh, boy! 
David Leary: [00:33:40] The FASB is finalizing changing some of the conceptual framework. So, the document, which has been a work in progress since FASB's formation in 1973, is supposed to serve as a manual to help FASB make decisions about new accounting. They're changing concepts. Revenue and expenses are getting new proposed definitions.
Blake Oliver: [00:34:01] Very exciting. I'm gonna have to check this out.
David Leary: [00:34:02] So, this is on your table now. I thought it was gonna be easy. I clicked on it; I was like, "Oh, this'll just be 10 words and definitions ..." No, it's a 48-page document. I was like, "This is up Blake's alley. I'll toss this over the fence to Blake." 
Blake Oliver: [00:34:13] Well,  48 pages for FASB, that's pretty good, given that a lot of pronouncements come in at hundreds of pages. So, hopefully, it won't be too much extra credit for me. But thank you, David. Now, I have something to do this weekend, while you're on vacation.
David Leary: [00:34:29] So, let's talk about your Zoom, and then, I have two app news, and then, we can talk about possible stimulus we might see next week. 
Blake Oliver: [00:34:34] Yeah. I know a lot of folks invested in Zoom and have done really well. Zoom is the darling of the tech world right now. I mean, we're all using it, right? It's either Zoom or Teams, at this point. The big news about Zoom is that they are getting into the hardware game. People are frustrated about using Zoom at home. I know I am. I get tired of sitting at my computer with Zoom on my computer screen, doing zoom calls for hours, and hours, and hours every day. David, I think you do way more of that than I do because you're working with- 
David Leary: [00:35:07] I bought a tablet just to do- only for Zoom calls because I wanna still use my computer. Zoom just sucks up all my resources.
Blake Oliver: [00:35:15] Yeah. My problem with Zoom is that I have it on my screen, but then I have to move it off to the side if I wanna do something while I'm zooming with somebody, and then I feel like I'm not really focusing on them or talking to them. So, I, too, have longed for that device that's dedicated for Zoom, like in a huddle room. I've been spoiled to work at companies where we have dedicated Zoom rooms. Some of them are small, some of them are big. You just go in, you press a tablet, you start your meeting, and you can look at a screen on the wall. You feel like you're there in the room with somebody.
[00:35:46] I've wanted that experience at home, but all of the Zoom-room setups are thousands of dollars because they're designed for businesses. I even thought about buying my own mini PC and hooking that up to a big-screen TV in my office and then getting a webcam and setting that whole thing up, but I just couldn't figure out if it would be smooth enough to wanna do that on a regular basis. Then, I saw that Zoom has decided to make a hardware device to solve this problem.
[00:36:16] It's called Zoom for Home - DTEN ME ... It's being produced by partner DTEN. It's a standalone 27-inch screen, essentially a large tablet equipped with three wide-angle cameras designed for high-resolution video, and eight microphones. The idea is that this device has really good video/audio quality, so that you sound good, and you look good. You don't have to worry about anything. You don't have to put on a headset. It's just gonna work.
David Leary: [00:36:49] I heard that. I think it's just gonna work. You don't even have to set it up. You just type in a pairing code, essentially, and it works.
Blake Oliver: [00:36:55] It just works. It logs into your account. It's touchscreen, so your meetings are there on the screen. You just click to start. You can have this on your desk. You can have this over on another table. I'm thinking about putting it over on a high-top table in my home office, where I can walk over there with my laptop and kind of sit there and have a meeting, like I would with somebody across the table; kinda give myself that feeling.
David Leary: [00:37:20] How much are these devices gonna be?
Blake Oliver: [00:37:22] They're $599.
David Leary: [00:37:25] Oh, they're gonna put these into Costcos at $499, and they're gonna sell. People will impulse-buy this when they're at Costco. There's no doubt. 
Blake Oliver: [00:37:33] It seems kind of crazy to spend that much on a dedicated device. The one thing that it has going for it that makes it more versatile is you can use this device as a secondary screen, or a third screen, so I think people [crosstalk] 
David Leary: [00:37:45] Oh, so when you're not in a meeting, you could use it as a extra monitor.
Blake Oliver: [00:37:48] Exactly- 
David Leary: [00:37:48] That's efficient. 
Blake Oliver: [00:37:48] Yeah. So, I could set it up on a table where I can walk over with my laptop and go use that. I was talking with somebody who says they wanna buy it just for their parents to be able to use as a video-conferencing device that's high-def.
David Leary: [00:38:03] Probably better than having Facebook being in your house [crosstalk] 
Blake Oliver: [00:38:05] Yeah. No ... Zero chance I will ever let Zuckerberg into my house with a microphone and a camera. Are you kidding me? The people who buy those? Man, they're insane. Don't trust Facebook. 
David Leary: [00:38:16] I have a little bit of app news.
Blake Oliver: [00:38:18] What else is ... Oh, well, I just wanna say, I have preordered one of these devices.
David Leary: [00:38:21] Oh, you have? [crosstalk] Wow! 
Blake Oliver: [00:38:23] Yes. So, I'll review it. My justification is that this is a podcast story, so get ready for me to expense this, David. 
David Leary: [00:38:31] Oh, perfect. Perfect. You just have to cut it in half.
Blake Oliver: [00:38:36] Exactly. I'll send you half of it [crosstalk] Maybe we'll just split it. You can have it one month. I'll have it the next month.
David Leary: [00:38:44] So, some app news. Right Networks, who purchased Transaction Pro Importer last year- actually, last year- it's almost two years ago now it's taken place. They just announced a bunch of changes to it, and one of them's a big, big change. What they're doing is-
Blake Oliver: [00:39:04] So, before you get into that, what is Transaction Pro Importer? 
David Leary: [00:39:06] Transaction Pro Importer essentially would take any table data you had - if you had CSVs, or Excel - and you need to get that into QuickBooks, they could put it all in. They wrote to every single field of QuickBooks Desktop, and every single field of QuickBooks Online. When they created their cloud product, Transaction Pro Importer for the cloud, one of the biggest gripes people had about it is you had to pay per subscription. If you had 10 clients, you had to buy 10 separate subscriptions and sign them up. Some of that, Transaction Pro is a small business. They're trying to maximize their own revenue. I think, with Right Networks, their goals are much bigger than just this one product. They have a suite of offerings to sell somebody now; not to mention the coaching; they've got rubrics. So, they're actually are opening this up. They're giving people a dashboard now, and they have it- basically, unlimited users with unlimited access to unlimited clients. 
Blake Oliver: [00:39:57] Wow, that's great.
David Leary: [00:40:00] Everything's rolled into one subscription now. 
Blake Oliver: [00:40:02] You said this is a cloud product now? Because I used Transaction Pro Importer once, a long time ago, and it was a desktop app. 
David Leary: [00:40:07] Yeah, they had their desktop and then, when they went to cloud, they changed their pricing model and all of that.
Blake Oliver: [00:40:13] That's great. 
David Leary: [00:40:13] They've been around ... They were easily within the first 20 apps, probably, I helped get on QuickBooks. They've been around a long time.
Blake Oliver: [00:40:19] This is the version for QuickBooks Online. That's what we're talking about- 
David Leary: [00:40:22] That's correct.
Blake Oliver: [00:40:24] Got it. So, if I need to get a bunch of data into QuickBooks Online, this is the way to do it.
David Leary: [00:40:28] Which is an interesting play, right? Because you have Right Networks, who really, their game is to host QuickBooks Desktop, but they're not ... I've said this before. I think, of all the desktop-hosting companies, Right Networks is one of the only ones  that's really trying to reinvent themselves.
Blake Oliver: [00:40:44] Mm-hmm. 
David Leary: [00:40:44] They obviously are doing things around cloud, and they have a tool just for QuickBooks Online. 
Blake Oliver: [00:40:50] Well, that's great.
David Leary: [00:40:50] I have another smaller article. There's a UK company called Coconut. They are more of a small business finance app. They had a raise of about $3.15 million USD to build out accounting software. So, it's another competitor that's coming into the market that's going to- 
Blake Oliver: [00:41:10] They're like a general ledger, an accounting application? I never heard of them before.
David Leary: [00:41:14] Yeah, I've never heard of them either. They're building out to become more of a general ledger. They're gonna build an SMB accounting platform. I cannot believe- 
Blake Oliver: [00:41:20] I'm looking at the website now. It says, "The financial companion for self-employed people." Okay, now, they're a self-employed play
David Leary: [00:41:26] It's just amazing how many people are ... It's not QuickBooks versus Xero anymore. It's QuickBooks and Xero versus the world. Everybody and their brother is starting an accounting package. The reason why is I think it's that whole competition with the banks want GLs because they know they're gonna lose if the GLs become banks. There's a lot of upside, right now. If you have a GL, you could probably possibly sell it to a bank in the next five years; there's probably a high chance that's gonna happen - a bank would acquire you, or some other company that wants to be getting into the space. Do you wanna talk about possible relief packages that we might be seeing next week? 
Blake Oliver: [00:42:05] Do you mind if we just wait until next week when they actually release?
David Leary: [00:42:09] When it's news? 
Blake Oliver: [00:42:09] Yeah, because these things change so much. What's the point in talking about the hypotheticals?
David Leary: [00:42:15] I think one of them's called the Restart Act, and I was looking at the paperwork on that. The best part of it is, if it does pass, they give the SBA 15 days to roll out the program. 
Blake Oliver: [00:42:26] Great. That's definitely gonna be successful.
David Leary: [00:42:29] That's exactly what I said. I was like, this is not ... We're already setting this up for failure. It hasn't even been passed yet. 15 days to stand up the program. 
Blake Oliver: [00:42:35] If I worked for the SBA, I'd just quit, at this point ... Go get a job at a bank or something. 
David Leary: [00:42:40] The SBA has a pretty nice budget. They have a huge- 
Blake Oliver: [00:42:43] Oh, yeah, you mentioned- what was it? It's like $300 billion or something for 3,000 people? 
David Leary: [00:42:48] It's ridiculous, that budget. They do pretty good. 
Blake Oliver: [00:42:50] They probably get paid pretty well then.
David Leary: [00:42:53] Yeah, so that, and then, next week, we'll find out probably, because federal stimulus runs out; all the unemployment payments are running out. There's proposals on the table that you might get paid for being employed. So, if you go to work, you're gonna get like $450 extra. That could be on the table. They were talking, one of the things, like UBI ... People would just get a $2,000 check every month now instead of the stimulus that never showed up. We're gonna see a lot of talk next week ... The PPP-4 ... It's just gonna be a lot next week we're gonna be talking about. 
Blake Oliver: [00:43:28] Jerome Powell and the Fed just gotta oil up that money printer, get it ready to go. 
David Leary: [00:43:35] More checks ... If this was not an election year, I really wonder how much of this stimulus would be going out.
Blake Oliver: [00:43:42] Yeah, that is a good question. I guess we're lucky that it's an election year, in a way. I mean, if you believe that the stimulus is the way to solve this, which, I tend to think it's better to err on the side of printing more money than not printing enough, given the great lesson of the Great Depression, and the Great Recession was that we didn't do enough.
David Leary: [00:44:06] Yeah. 
Blake Oliver: [00:44:06] Let's not do not enough. Let's do more than enough if we have to. 
David Leary: [00:44:09] At least this gives us an illusion of control. We don't have control over the virus. At least this is ... We can control how much money we print.
Blake Oliver: [00:44:18] We can do that. That one thing we can do. Maybe they should print the money in the form of face masks. Then people would wear them.
David Leary: [00:44:26] This is a good one I just saw. A $4,000 tax credit/travel bonus, if you took a vacation at least 50 miles from home.
Blake Oliver: [00:44:33] Oh, that's our senator here in Arizona. Martha McSally. Is that it?
David Leary: [00:44:41] I think so. 
Blake Oliver: [00:44:41] Yeah, that was the most bone-headed proposal ever. She wanted to give a tax credit to families for taking a vacation during a pandemic. 
David Leary: [00:44:51] This is how crazy it's getting. They're talking about eliminating student loans. This was crazy Bernie Sanders talk, 12 months ago, and now it's seriously on the table. We're gonna have a fun week next week when things start panning out- 
Blake Oliver: [00:45:04] I have a hard time believing that'll ever get anywhere in the Senate, or anything, but, hey, you never know. Well, David, this was a pleasure as always. Enjoy California. Say hi to the water and the beach for me. I'll be here in the desert soaking up the radiation-
David Leary: [00:45:22] Yes, exactly, the radiation.
Blake Oliver: [00:45:24] If our listeners wanna reach you while you're on vacation and bug you, where should they do that?
David Leary: [00:45:30] Twitter's probably gonna be best. I'm @DavidLeary on Twitter. You could also do LinkedIn, but I probably won't check it much, unless I'm sitting in the passenger seat while the wife's driving the car or something like that. I really wanna ... I wanna cut out! I wanna cut out for two days. I really do.
Blake Oliver: [00:45:44] Well, good. Do that! Disconnect. I am @BlakeTOliver.
David Leary: [00:45:47] What if people are done with their tax season now, and they're drunk on Friday night, and they're partying it up, could they call us and leave us a ... Drunk-dial us! 
Blake Oliver: [00:45:58] Nobody calls that number, David.
David Leary: [00:46:00] I know. 
Blake Oliver: [00:46:00] I think people are just too shy, or all of our numbers are wrong, and we really don't have as many listeners as we think. But if you do wanna give us a call ... I don't have the number in front of me. Do you, David?
David Leary: [00:46:12] (202) 695-1040. You're right, I think they are a little shy because I've had people vent to me, either in Slack or something, and I'm like, "This would be great! Call and leave a voicemail!" They never do it. 
Blake Oliver: [00:46:24] Until next time- 
David Leary: [00:46:25] Have a good weekend, Blake, or week. 
Blake Oliver: [00:46:25] Have a great trip. Thanks, David.
David Leary: [00:46:29] All right. Bye-bye. 
Blake Oliver: [00:46:29] Stay safe. Bye. 


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