So Much Fraud

Senator Warren wants IRS to build online tax prep; Alliantgroup antics date back over a decade; Crypto lender Celsius has its "desk broken"; Chasing ESG scores may be a mistake; and more!

[00:00:00] Thank you to our sponsor, Liscio

David: Are you tired of chasing clients for documents? Or even worse, your team wasting countless hours searching for things across multiple different platforms? Do you want a way to work with your clients 19 times faster than email?

How about having an average response time from clients of only six minutes? Stay tuned to hear more from our sponsor, Lisio, later in the episode.

[00:00:23] Preview

Blake: How do you make money on this? Do you know what I mean? Like, there's no- it's not like this crypto is being invested in productive enterprises. It's just being invested in other-

David: Yeah.

Blake: Ponzi schemes. It's layers and layers of Ponzi schemes. It's multi-level Ponzi schemes.

David: It- yeah, it's very, yeah. It's very, very interesting to like, think about it.

Blake: It's, you know, it's like the regulators are just like asleep. They're like clueless to all of this stuff. It is so ridiculous.

David: Coming to you weekly from the OnPay recording studio, this is The Cloud Accounting Podcast.

[00:01:06] David is back from vacation

Blake: Welcome to another episode of The Cloud Accounting Podcast. I'm Blake Oliver.

David: And I’m David Leary.

Blake: Back in Tucson.

David: And you're back in your home studio in Scottsdale. We are not recording remotely this week. I apologize. I listened to the episode from last week and there was a couple spots where it got a little crappy mic quality, but now I'm back to the high-quality, high-fidelity, stereophonic- I'm making up words now- recording studio. The OnPay recording studio.

Blake: It's amazing that we were able to do that. You dialed in, called in to our recording software live from Italy, up in the- Northern Italy, Lake Como. And we were able to record. We had to do it in three takes, but we managed to get it done. And we haven't missed a week yet. So, what is top of mind for you this week, David? Do you have any more takeaways from your trip to Europe?

David: We can talk about Italy, if you want me to kind of jump into that quick, or do you want to-

Blake: I just wanna say, if you haven't seen David's picture with Luca Pacioli, you gotta go on Twitter, follow @DavidLeary and check it out. I think it got more likes than anything The Cloud Accounting Podcast has ever been tagged in.

David: I think I retweeted it too, through The Cloud Accounting handles as well. So, I've, reshared it. But yeah, so, on Tuesday, the 12th, I got up at 6:00 AM and I jumped on an express train to- so, I was in Florence. So, I jumped on an express train to a town called Arezzo, A-R-E-Z-Z-O, and then caught a taxi cab to Sansepolcro, which is the birthplace of Luca Pacioli.

And the taxi guy, when we get there, I think he thought I was nuts. He was giggling almost. He's like, “Okay, we're here.” I was like, so, I get out. ‘Cause I probably am the first tourist to do this. And it was funny. There was no tourist there. It was just me in this town.

So, I got there and then had a little coffee, spent some time, took pictures from all sides of the statue. I wanted to make sure I have everything. And the reason I went to the statue is even though he really hung around with-

Blake: Leonarda DaVinci.

David: Leonardo DaVinci a lot, he's a mathematician, he helped really define that- is it the golden ratio, the divine ratio, the perfect ratio? I think it has a couple names, but.

Blake: Yeah, he did a bunch for geometry, I think.

David: Algebra.

Blake: And yeah, algebra and- but yeah. So, Luca Pacioli, father of Accounting, wrote down the theory of debits and credits for the first time.

David: Yeah, but nobody cares. So, there's a statue in his hometown where he was born, and then there's the one famous painting that we've all seen. But that was in Naples, which is in Southern Italy. And I wasn't venturing down there. So, I went and did this, got the photos, took a bus back, took the train back. Start and finish, I was back to the hotel room by- so, it was like a six-hour venture. I did all by myself. It was- and it was fun. No tour guides, nobody else involved. It was a- it was a really cool thing to do in the morning there, but-

Blake: So, was it just the statue or was there a museum or anything else?

David: It’s just the statue. It's just a statue. I’m like, I think it's kind of like a- possibly a small college campus thing. I can't read Italian. You've known a tour guide, I'm making it up. I think it's a campus.

Blake: Well, it's a pretty big statue. Like they did him right in his hometown.

David: It's very, very big yeah.

Blake: It's like- gotta be 20 feet tall, beautiful statue of Luca Pacioli. You're right next to it wearing your Cloud Accounting Podcast shirt. It warmed my heart, David. Thank you for doing that.

David: I really went out of the way to do that. At first, little while there, you'd start telling people about it and they're like, “Yeah, it's gonna be hard to get to. You're crazy.” Like Italians try to talk you out of it, but then, you know, push through.

Blake: You did it.

David: And actually, I'm really glad that I did it. So anyways, I can give some observations in general about Italy, a couple things.

Blake: Yes, please.

David: So, QR codes are everywhere. Just like they are in the states, but it's- I think we've crossed a new line. Like, you're touring these big, huge churches, and there's literally, QR codes on every single column in these churches.

I tried to take the photo of the one, but the website was down wherever it was pointing to, but it's kind of outta control, how QR codes are just everywhere.

Blake: Like on a column of a church, like inside the church, there’s a QR code.

David: A 500-year-old church, there's a QR code on the column. The other thing is the number of tourists in Italy. Have you heard any of these numbers before?

Blake: It's popular. That's what I know right now.

David: So, Venice, for example, there's 49,000 residents in Venice and they get 23 to 25 million visitors a year.

Blake: Wow.

David: Which is impressive, until you hear about Rome, which apparently, gets over 100 million visitors a year.

Blake: Wow.

David: And so, what's- the result of this is there are different levels of service being offered. So, when you go to these churches, you go to these museums, you- they have fast lines, you know? You get- if you have a tour guide, you can bypass lines in certain places, depending on when your tickets are all timed now. Because for example, Michelangelo, David’s statute, 6,000 visitors a day. So, you've got a time.

How many people ahead of time can go look at that statute? So, there's a lot of that that goes on. I even did it myself. I wanted to tour the Leonardo da Vinci interactive museum, and they didn't have any time slots that worked for us. So, I found, oh, if you do the tour guide one, the tour starts in 10 minutes.

I'm like, “Boom,” bought that ticket, went on with the tour guide instead. So, did some of that- I did one of the- so, we went into a bunch of cities, did all of Northern Italy, but did spend some time in Sienna. So, what's interesting about Sienna, it's the home of the world's oldest bank. And the reason this happened is they- Sienna didn't have any industry.

So, what they had was a lot of people traveling through, it was like a crossroads, right? Through trade. So, they established essentially, a money exchange. And there's a square. And in this square, there's a street called Bianchi di Sopra and Bianchi means desk. So, all these merchants, these exchangers would set up their desks and people would exchange money.

It was a currency exchange, essentially. And then, in that square, there's a big statue. And I have those pictures- I didn't post them- of Celestio Bandini- you probably have heard about him, maybe, an economist back in the day.

Blake: No. No.

David: What's interesting about him, he basically created the bill of exchange, which is basically, a check.

Blake: Wow. So, you visited Luca Pacioli’s statue, father of Accounting. You went to the first bank and the place where the check was invented.

David: Yes. And- but the best part of this story is Bianchi means desks. Right? And what happened was, if any of these merchants went bad, they had to fold, they had to close, they would come and physically break their desk.

Blake: Who would come?

David: The government, I guess.

Blake: Like the government?

David: Officials, right?

Blake: Oh, wow. So, the place where you do business, they would break your desk in half or something?

David: If you're insolvent or whatever, they break your desk in half. And that word is Rempre, R-E-M-P-R-E. So, if you take those two words, Bianci and rempre, that basically is the evolution of the word bankrupt.

Blake: Bankrupt. Wow.

David: Which is to break the desk. So.

Blake: Break the desk. Well.

David: That is all my Italy excitement. That's it.

[00:08:30] Celcius bankruptcy

Blake: Well, it's- and it's a perfect transition to the bankruptcy of our favorite bank that's not a bank, Celsius, the crypto bank. So, fallout from the Celsius collapse, the Tether collapse- I don't even know what to call it anymore because there's so many-

David: It's a contagion.

Blake: So many- the contagion. Yes. It's a contagion. We love that word now after the pandemic, right? Well, bit of news, Celsius has been filing paperwork to go bankrupt, to break the desk. Right? And we know some more information about their balance sheet. They have a 1.2 billion-sized hole in their balance sheet, according to a filing, as reported by The Financial Times.

What does that mean for users? While you're probably not getting your money back, they have 5.5 billion in liabilities, and 4.7 billion of that is owed to Celsius users. The problem is that Celsius lists just 4.3 billion of assets, much of it illiquid. And that's assuming that those have been calculated properly. A large part of Celsius’ holdings is in its own crypto token, also called Celsius, which has taken a nose dive in the past year.

I'm trying to understand what that means. So, they're reporting that part of their 4.3 billion in assets is their own crypto token, their own currency that they issue. You know what I mean? That's like not really an asset, especially when the value has nose-dived. So, they've also got a billion of assets tied up in their Bitcoin mining center.

David: They had a blog post and they talked about how it's the right decision. And this is the quote from their founder, Alex Mashinsky. He said, “This is the right decision for our community and company. I'm confident that when we look back at history of Celsius, we'll see this as a defining moment.”

Blake: Well, they're trying to relaunch it, I guess. He wants to issue more tokens and somehow, recapitalize it. And we were joking about that in a previous episode, how when your Ponzi scheme goes bankrupt, the only solution is to start a new Ponzi scheme, a new token, and get people to buy that.

And then you can pay out the people that you owe money to. And it's all happening in the open.

David: And it was interesting. I was just thinking about this, using the Euro, right, in Italy. And I was at the train stations and able to pay with the Euro everywhere, and it's kind of convenient. And I took it with me and I exchanged it out for USD and I was thinking about- but what hit home is I was looking at the big conference Money Money- or it's, I'm sorry, Money 2020.

So, it's a huge conference in Vegas. And it's all about the future of fintech, the future of payments. It's- that's the space it's in. I go to the website and then the FAQs, when you- to pay- the only thing they accept- now, mind you, they're out of the UK, this company. The only thing they accept is USD.

Blake: Wait. So, this is a fintech conference and there's gonna be a lot of crypto there, and they don't take crypto for payment.

David: Yes. And then now they have, you know, that you can use VISA and MasterCard, PayPal, they have different platforms you can- but there is no- you cannot pay from the conference money. And it's expensive. It's like 3,300 bucks to go to the Money 2020 conference. But I just thought that was funny, that there is no ability to pay outside of USD.

Blake: Right. Well, it's just, I love when you point that out, David, because it just- it totally tears down that argument that crypto is going to replace Fiat currency as a medium of exchange, as a currency. Because sure, maybe someday, somebody will figure it out, but at the moment, no, it's terrible for that purpose. To the point where even these closely-related entities to the crypto world don't accept it.

So, you know, not a currency. Not a currency.

[00:12:21] Thank you to our sponsor, LedgerGurus

David: This episode of The Cloud Accounting Podcast is sponsored by LedgerGurus. Do you wanna work for a firm that offers balanced flexibility? Do you wanna work with a team that takes ownership, solves problems, follows through and gets work done? Do you wanna work where you feel valued as an individual?

If you said yes to any of those questions, you should check out LedgerGuru's most recent job opening. LedgerGurus is a successful, all remote, CAS-only firm that specializes in eCommerce clients. And they are looking for a director of service delivery to lead their growing client accounting services team of 50 plus people.

They're looking for someone who is a team builder, is flexible, has a learning mindset, and is a leader, who will join the senior leadership team to help LedgerGurus grow to eight figures and beyond. If this is you, head over to That is

[00:13:21] Three Arrows Capital founders go missing

Blake: So, in more crypto news, another name that you may have heard if you've been paying attention to all of this contagion is Three Arrows Capital. They're the hedge fund that owes a bunch of money to these crypto exchanges/bank/whatevers that have gone insolvent. And nobody knows where the founders of Three Arrows Capital are. They have disappeared.

David: Were they known before this happened or they've always been mysterious and hidden?

Blake: Oh yeah. No, they've been very public.

David: Oh.

Blake: According to the liquidators for Three Arrows Capital, a fund whose sudden insolvency has spread fear and contagion across the crypto realm, the whereabouts of Su Zhu and Kyle Davies are unknown. “We don't know where they're located today,” said Adam Goldberg, the liquidator’s lawyer during a court hearing on Tuesday.

After Goldberg stated that Zhu and Davies haven't cooperated, and that attempts to find them have failed, Chief Judge Martin Glen of the US Bankruptcy Court for the Southern district of New York, granted liquidators permission to subpoena them, they're on the run.

David: But nobody know.

Blake: Popular suspicion is that they're in Dubai, but nobody is 100% sure.

David: So, just wanna talk about, are you having more crypto or I can just continue on about money movement and payments, if you want.

Blake: Well, I've got a bit more crypto news, just a few quick things. So, you know, one of my complaints is that the SEC has moved incredibly slowly to regulate crypto. And I hold them responsible for what happened here. All the money that was lost by regular investors, by middle class Americans.

We had advertising at the Super Bowl, and we had Matt Damon shelling crypto, and all these celebrities getting people to buy crypto with CashApp and PayPal and all this stuff. And a bunch of people bought into it. A bunch of regular Americans bought into it, and then they lost most of their money in the latest crypto collapse.

And I blame the regulators for failing to regulate and protect us. Well, they still haven't done anything. You know, the SEC continues to explore this possibility, and you know, maybe it'll finally happen. You know, these entities, like are acting like banks. These cryptocurrencies are behaving like securities.

And if it walks like a duck and talks like a duck, really, it is a duck, when it comes to this sort of thing. Right? In terms of consumer protections anyway. Well, the Europe- go ahead, David.

David: Continue on. I'm gonna get a tweet that I sent out last week. I forgot about this. I read something on an airplane flight. I'm gonna find my tweet. Continue.

Blake: So, the EU, the European Union has agreed on rules that would regulate the crypto market in the block, and would provide safeguards to users, basically treating them more like banks and all that stuff like that. now, it still has to go through the EU’s rulemaking- formal rulemaking process. They gotta vote on and everything.

So, it might not kick in until 2024, but they are doing it.

David: Yeah. So, I tweeted on July 8th, the Howey Test. Are you familiar with this?

Blake: Howey Test, no.

David: So, this goes back to determining if something's a security or not. And this goes back to the original court rulings way back in the 30s about security training. And this is where all these rules came from.

A transaction is an investment contract if it is an investment of money, there is an expectation of profits from the investment, and the investment of money is a common enterprise. Any profit comes from the efforts of a promoter or third party.

Blake: So, I mean, that sounds like a cryptocurrency to me.

David: Yeah. So, even if an investment is not labeled a stock or a bond, it may very well be a security under law, meaning that registration and disclosure requirements apply. After the creation of the Howey Test, some promoters masqueraded securities to try to escape registration.

Blake: I mean, there is an expectation to gain. I think one of the issues is that there's no- like with Bitcoin, for instance, there is no ownership of anything else that is connected to the coin. So, it's not like you get a piece of a company or a piece of an enterprise. And so, that's how it's been able to get away with being a commodity.

But there is this expectation to gain sold that way. Right? It's sold as like, you know, 10%, 20% gains. And-

David: Oh, just search for Bitcoin and Twitter. It actually- I'm like, you must- emotionally, like I should be invested in this. It's a little chaotic on that front.

[00:18:01] The largest CFTC crypto fraud yet

Blake: Well, and, you know, crypto may not be used for actual transactions very much, but it is used a lot for fraud, and scams are all over the place. And we saw another story, the Commodities Futures Trading Commission on Thursday. So, this is actually back at the beginning of the month.

So, this was in June. They charged Mirror Trading International and the firm's owner, Cornelius Steinberg with fraud, claiming the company operated as a fraudulent multi-level marketing scheme that scammed billions from investors. It's the largest fraudulent scheme involving Bitcoin charged in any CFTC case.

They stole 29,000 Bitcoin from investors, valued at over $1.7 billion. They advertised returns as high as 10% a month through investments managed by a trading bot. They created account figures, a fictitious broker. It was basically a Ponzi scheme.

David: And then the way they do this, do you turn over? You're not just taking your Bitcoin and selling it and sending them money, and then repurchasing Bitcoin. It sounds like in some of these frauds, you're giving- ‘cause when you have Bitcoin [INAUDIBLE] right, you have this hash. So, I have some secret password.

It's like 10 words, right? Or 10 phrases or something like that.

Blake: Yeah. Yeah.

David: And nobody has those. It sounds like they hand these over to people and then that's it.

Blake: Yeah. So, this is the case with Celsius too. If you read the fine print, what you were actually doing, when you gave Celsius your Bitcoin, is you were actually giving Celsius your Bitcoin. You were handing over custody of it to them and loaning to them. So, you're just- you're loaning it to them.

And then they go and they loan it out to other parties, and they promise you a return, which I would argue is unrealistic and not sustainable. And so, in order to keep generating those returns, they've gotta make riskier and riskier investments. And that's when it all came crashing down. Because they loan it to some firm that then loans it out to another firm, that then loans it out to another firm.

Right? At the end of all of this, somebody has to be making a profit and passing that back. Right? But there is no- there is no- what, like, how do you make money on this? Do you know what I mean? Like there's no- it's not like this crypto is being invested in productive enterprises. It's just being invested in other-

David: Yeah.

Blake: Ponzi schemes. It's layers and layers of Ponzi schemes. It's multi-level Ponzi schemes.

David: And yeah, it's very, yeah. And it's very, very interesting to like, think about it.

Blake: It's- you know, it's like the regulators are just like asleep. They're like clueless to all of this stuff. It is so ridiculous.

[00:20:43] More fraud stories

David: We could talk about like other payment movement fraud, if you want me jump into that.

Blake: Fraud? Yeah, we love fraud. Right? Fraud is good.

David: So, the title of this article, which is a very- you know, this is in banking automation news, is called “Fintech execs convicted in U.S. after 160 million sent to Nigeria.” So, this is a Texas payments company with ties to the UK. These two operators pled guilty to money laundering failures.

Blake: What's the name of the company?

David: The company's name is Ping Express. Their parent company or the second company that they’re actually also involved in is in the UK. And that's called Payzen, P-A-Y-Z-E-N. But really, this focus of this is on Ping Express. And essentially, what they did is they let money go through the system. So, if I had one of those Rome- think Roman schemes, Blake, and you were sending me money.

And apparently, there's limits to these things, right? There's anti-money laundering rules, there's limits you have to follow as a payment company, things- for example, there's a $4,500 limit, and people are sending $80,000 a month to their supposed roughneck oil worker in the Gulf of Mexico or their purported [INAUDIBLE] sea captain. Like people are sending these people money, massive amounts, and it's just fraud, and it- anyway.

So, they got convicted. They have 27-month prison sentences for failing to maintain effective anti-money laundering controls, and unlicensed money transmitting, according to U.S. legal filings. So, just the learning for all of everybody else here is, so, when you go to send payments through Intuit’s payment platform,, Melio, et cetera, these companies, and your client's payments get blocked because of risk or know your customer type- they do truly, on this side, feel hassles, right?

You're like, “My client sent the payment.” It's because the executive of these- executives of these companies don't wanna go to jail. That's why these controls are in place. And yes, they are pain in the ass. Like as from your client’s standpoint, point of view. Because like, you know your client, your client's legit, it's a legit payment, but this is why they exist.

‘Cause they don't wanna go to jail for money getting sent to Nigeria.

Blake: So, I don't know how to transition into this topic, so I’m just gonna make it-

David: We have lots of fraud. We could keep going.

Blake: More fraud stories?

David: Yeah. Remember Wire Fraud? Wire Fraud. That was a slip.

Blake: Wire Fraud? That's their new name?

David: Yeah. WireCard.

Blake: WireCard.

David: So, they apparently forged client data and handed that over to SoftBank when they got SoftBank to invest 900 million- or sorry, it was 900 million Euros.

Blake: 900 million Euros. Wow. So, they were deceiving SoftBank, their major investor.

David: And then, because they got that, that's like a vote of confidence, so then their investors were like, “Hey, if SoftBank's in, we're in.”

Blake: Right.

David: So, it's just blind investing.

Blake: So, SoftBank doesn't seem to be- you know, they don't seem to do a lot of due diligence or at least they haven't in the past. Right? Because SoftBank invested in WeWork. They invested in-

David: Blindly. They were the base investor. Yes.

Blake: Yeah. In Wirecard. I mean, they're enormous fund, but still.

[00:23:57] Accounting professor charged with tax evasion

Blake: So, here's a story I've been keeping on my list. Accounting professor at Drexel university charged with allegedly using creative bookkeeping to evade millions in taxes.

David: What’s creative?

Blake: So, Gordian- his name is Gordian Ndubizu, and he has taught Accounting at Drexel university in Philadelphia since 1987. He was charged with tax evasion and filing false returns. I guess he inflated costs or he is accused of inflating costs to a pharmacy business he ran with his wife in order to under-report their actual profits by millions of dollars. He is accused of failing to declare more than 3.3 million in profits that his Trenton business healthcare pharmacy took in between 2014 and 2017.

And it resulted in him allegedly underpaying what he owed to the IRS by $1.3 million. He's also charged with declaring certain large wire payments as business costs when they were actually transfers of money to an auto business he ran in Nigeria. He was charged with four counts of tax evasion and four counts of filing a false tax return.

His wife, Florence, was also charged on Thursday for separate alleged federal drug offenses. Okay. Well, so they're-

David: Oh. So, now that’s the fraud triangle, right? Like what's the [CROSSTALK]?

Blake: What's the- well, fraud triangle is you have to have like, means to do it. You have to have a motive to do it. And what's the other one?

David: It's the entitlement, right? Like you have to feel like you're wronged, right? Or-

Blake: Opportunity, incentive, oh, and rationalization.

David: Rationalization, yes, rationalization.

Blake: You have to like, have a reason. You have to rationalize why you're doing it. But anyway, it's funny that he's a professor of accounting that did it. I mean, not funny, but- and he's award-winning. In 2012, he got the outstanding international accounting educator award from the American Accounting Association.

David: Now, is he gonna have to give that back? They're gonna pull the, or get some asterisk on the-

Blake: Will they strip it off him?

David: In the record books, get a little asterisk on his name?

[00:25:59] Thank you to our sponsor, Liscio

David: This episode of The Cloud Accounting Podcast is sponsored by Liscio. I have to admit, I love email. But as soon as I'm in the zone, head’s down, focused, working on a task, something may require me to go look at a related email to the task at hand. I jump over, open my inbox, and just like that, I get distracted and derailed by hundreds of other unrelated emails.

By the time I find the email I was looking for, I've wasted a half hour or. If you and your team are still using email to communicate with your clients, I suspect you have a story similar to mine. Even if you don't, using email with your clients is probably a bad idea. It's like sending postcards back and forth.

Anyone who could read, not very secure. And let's admit it, clients are probably ignoring your emails anyways. Maybe it's time to move all your client communications out of your email inbox and into Liscio. Liscio allows you to have secure, real-time communications with your clients via mobile app that includes reminders, task management, e-signatures, document scanning, and uploading, and unlimited storage.

With everything inside of Liscio, your team can just focus on the task for each client, and won't need to jump between email inboxes and other tools to get work done. And if they need to communicate with a client, they can even save more time by using message templates or printing reports and documents directly into Liscio to instantly send to clients.

If you're ready to significantly improve your staff's focus, collaboration and relationships with clients, head over to That is

Liscio – everything you need to delight your clients and your staff.

[00:27:37] Alliantgroup update

Blake: Let's keep going, since we're on the fraud beat.

David: Yeah. You have another one or I can jump in too?

Blake: Well, I think you're gonna talk about Alliantgroup, right?

David: Yeah, we can go in Alliantgroup.

Blake: Let's talk about it. So, we mentioned Alliantgroup. It's a company, big firm based in Texas that specializes in R&D tax credits and other tax credits.

David: About 5 weeks ago, we mentioned them.

Blake: And they were raided by the IRS, you know. IRS agents with guns sweep into the office, lock it down, taking computers, taking files, you know? Big, big news and scary for the CPAs who referred work over to Alliantgroup because that's how they operated, right?

They would get the tax accountant, the CPA firm to refer the client over. And I'm sure there was some sort of financial relationship. So, now, Going Concern is reporting that the government is sending subpoenas to CPA firms that referred clients to Alliantgroup and is seeking client tax returns as part of the investigation.

They saw a letter from one CPA firm to clients that received services from Alliantgroup advising these clients that the firm has received a federal grand jury subpoena seeking information regarding Alliantgroup. The government's demand for information is broad, and includes tax returns and related information in the firm's possession for clients who receive services from Alliantgroup.

The government's demand references R&D tax credits, cost segregation, and IRC section 179 D and any related information from January 1, 2011, to present. So, yeah, go ahead.

David: So, I kind of deep dived in this ‘cause about two weeks ago, somebody gave us a heads up. A listener who said that, “Hey, just start Googling, you know, lawsuit, Alliantgroup sex, Alliant group fraud.” And so, I've been kind of doing that a little bit and digging back into the past. It's really bad when you start to dig into this company. For example, there's a lawsuit against the University of Texas or University of Texas versus them.

And essentially, they hired an architectural firm, hired by the university to do a health- to build some sort of center, a medical parking garage in a science center project. So, three buildings in 2007. And they basically, the lawsuit’s claiming, from the University of Texas, that Alliantgroup in the architectural firm, conspired to reap 1.6 million in unauthorized benefits from this.

Blake: Yes, that’s the-

David: So, the firm would get the money, essentially, for doing the work for the school.

Blake: Yeah. I think it's those environmental deductions that you can get, the credits you can get, the 179D.

David: Yeah, it's called the 179D, yup. For that.

Blake: Yeah. And so, the architectural firm took the credit and the university says- the university is the one that built the building. Right? They should be able to determine where the credit goes.

David: Yeah. So, it was tied to that and then just, you know, continuing down these paths, you can- they- over and over again, there's lots of sexual harassment allegations. I think it was a little bit of a bro-show. There's a bulletin board that's kind of like- it's called InHerSight. It's- I think it's a women's employer reviews board, if you wanna call it that.

And there's quotes in here about how- and I'll read this straight up. “The absolute worst company to work in every day. The culture is cult-like- and I keep seeing this cult-like thing over and over again- the culture is cult-like with mandatory social activities, raves where executives who have no families get falling down drunk, and try to have sex with every young women there. Very long hours until 10:00 PM almost every night.

And they make you feel like a criminal if you leave before it's dark outside. They have cheap food catered in for lunch and dinner because they don't want people leaving to eat. There is a gym, but it's closed from 8:00 AM to 6:00 PM. So, you can't use it during the day. Men are paid substantially more than women for the same job.

I know, because I was in recruiting. The CEO has been sued and currently, in a lawsuit for sexual harassment. The director of HR keeps her job because she sits on firings where the CEO rants and calls people disgusting names so she can say it didn't happen when they file a lawsuit. The only way to move up is to suck up to leadership, rat out your coworkers for anything and everything, work like you have equity in the company.

And then when you don't, be a man. Zero women in the executive management team. Stay aware.” So, like, it's pretty harsh on these types of things. Then I found a Twitter thread. This Twitter thread is from Leann.

What is her actual handle? @LafinTexas. So, she's a lawyer of some type. So, Leann has a whole thread on Twitter about Alliantgroup and you start digging in that. And one of the things she brings up is about their advisory board. Then I'm like, “Oh, that's interesting. Who's their advisory board?” So, I click on the page and I go there.

And it's a bunch of ex-IRS commission heads, right? So, this is former IRS commissioner, former IRS acting commissioner, former IRS commissioner of the small business self-employed group, former IRS commissioner of the small business self-employed division. Here's the other people that are their advisors.

Former U.S. Senator, Attorney General, former U.S. Secretary of agriculture, former senior council to the U.S. Finance Committee, former U.S. Congressman, former U.S. Congressman, former council of the U.S. Senate finance committee, former U.S. Congressman, former Missouri governor, former Alabama governor.

It just goes on and on and on, the people that are involved in this. I keep peeling back the onion, and then I see an interesting thing. So then, I found a September 17th, 2019, article from- it's an industry website for oil and photochemical oil and gas type industry news. And I don't really know who these people are, but he was the founder and chairman of a company called Cajun. Cajun industries. But the U.S. Department of Justice sued he and his wife for $750,000 for an income tax refund that they said they were not entitled to receive.

So, they basically filed their taxes in 2013. They're done. Like, we filed our taxes in 2013. Somehow, they came and got involved with Alliantgroup, who performed them attached credit study for the years 2012 to 2016, and then refiled the return, amended return in 2017, claiming this credit. And they got the check, and then obviously, the lawsuits happened from there.

But then this goes back even further- as I kind of poke around- all the way back to 2012. I found an article from Bloomberg or Bloomberg was blowing the whistle on the IRS. The actual article itself is in the Columbia Journalism Review. And essentially, what this article's really about is the- you know the IRS rewards whistleblowers. You're familiar with this program?

Blake: No.

David: And you get 30% of the take if you're a whistleblower. So, basically, they're claiming that this program doesn't work. 99.8% of all the whistle blowers get no money. The program does not work. And they trace this through one story of an employee of Alliantgroup.

So, this goes back to- this is an article again from 2012, and essentially, this employer- this employee really pulled up this smoking gun of the problems before. Like, for example, one of the tricks they would do is they would change somebody's job title at a company. So, that way, they can apply for the credit.

So, maybe you just have a guy and he's just like construction-

Blake: And we should say allegedly. Allegedly.

David: Allegedly. Allegedly. Okay. Okay.

Blake: So, tell me, so, what would they allegedly do?

David: Well, for example, like you might be a construction guy at a company. Just, you're the head of- you're the foreman. You might change your title to like Head of Environmental Compliance. So, that way, it looks like somebody at the company is in charge of the ESG-type stuff, right? It's not really truly ESG, but one of the conclusions in this is there's a lot of concerns-

Blake: Well, and they would get that person to sign off on the tax credit. Allegedly.

David: Sign off, yeah. And- but one of the things they found in this article is, even then, the IRS had major concerns about all the- how connected this company is, politically. My thing is, this goes back to the subpoenas that I think the article from Going Concern said what, 2011, they're going back to?

Blake: Mm-hmm. Yeah, 2011.

David: I mean, at this point, if you have any clients that had ever worked with them, you probably need to take a look at what was done, ‘cause it's pretty much [CROSSTALK].

Blake: And it's a lot. It's probably a lot because on Alliance- on Alliantgroup's website, they say they serve more than 4,000 CPA firms nationwide, and their chat bot- this is according to Going Concern- when you visit the site, it informs visitors, 27,000 businesses have claimed over 16 billion with Alliant group.

It's a lot of money at stake here over a decade.

David: I think even the funny thing in that Twitter thread is even on the day they were raided, they must have had some automatic tweets being scheduled out. And one of them- one of 'em was bragging about how they have four former IRS people on their board. They were like bragging about, like, “Look at how reputable we are.”

Blake: Interesting.

David: It was like an auto-scheduled tweet or something that was going out. So.

[00:36:57] Were the Comey and McCabe audits targeted?

Blake: So, speaking of the IRS, you remember that whole story about how James Comey and Andrew McCabe got selected for very invasive audits? And there's all this speculation as to whether or not the Trump administration singled them out, like got the IRS to single them out for these audits.

David: Because nobody gets audited, so what are the odds?

Blake: Because as we all know, audit rates-

David: Right? Of these two guys.

Blake: Right. What are the odds that James Comey and Andrew McCabe, who both were enemies of Donald Trump, who like, he did not like them at all, what are the odds that they would both be selected?

And there were numbers floating around that, this is like the chance of winning the lottery, right? Like, that both would be selected. And so, there's speculation going on about how it must have been political pressure that made this happen. And there's an investigation going on. Right? But I was wondering if that's really true.

Like, I mean, it would be a pretty big breach to like, tell somebody at the IRS to go audit these guys. Right? That would be a pretty obvious no-no. You're not supposed to do that. There's laws against that. And so, like, it would not be smart. So, even if Donald Trump wanted to do this, would his- you know, it's not like he's gonna directly call up and do this stuff, right? It just doesn't make sense to me.

So, anyway, there was a follow up article in The Hill, and there was a quote from my former representative, Brad Sherman, from California, who represented me when I lived in LA. He's an Accountant, he's a CPA. And he said to The Hill, “It's still a coincidence, but it's closer to being one of those one in a hundred coincidences, rather than one in a billion coincidence.

You have two individuals that went from government salary to independent contractor-big money, and anybody who goes from A to B in that circumstance is closer to a 1% chance, rather than a one in a million chance of being selected for that audit.” So, I think this is one of those stories that is most likely a distraction.

Like, probably nothing happened here. It's just a chance that this could happen, and it happened. And these guys make good money, and their circumstances changed. So, you know.

David: And they were audited, things came back fine.

Blake: Yeah, I think one owed a little bit of money. One actually got some money back, right? Yeah. There was nothing- it was time consuming. Right? And annoying. I think Comey said he spent-

David: Yeah, I think he said he paid his acountant $5,000 to drive to visit with the IRS. Yeah. There's expenses involved on that front, but in general, this is this- maybe the IRS auditing you is not a bad thing. But I mean, it's like, it's just part of the deal. So, every so often, you're gonna- just like when you get called to jury duty.

It's like your duty as a citizen, right?

Blake: It happens.

David: Yeah, that's a good take, that the math doesn't- this is not- it's not something that happened on purpose.

[00:39:51] Thank you to our sponsor, Canopy

David: This episode of The Cloud Accounting Podcast is sponsored by Canopy. Accounting practice management software should bring together all your firm's mission-critical functions in one place - client management, document management, workflow, time, and billing and payments to keep your team organized. Canopy knows that not all firms are on the same practice management journey or timeline.

So, Canopy let you build your practice management platform as you need it. You start with client management as your foundation, then you choose the modules that your firm needs. And since nobody likes paying for modules they don't use, they offer modular pricing as well. Canopy integrates with QuickBooks Online, Xero, FreshBooks, CRMs, form builders, spreadsheets, calendars, email, and Zapier.

They have a mobile app, centralized file management, fillable PDFs, a client portal, task management, and the list goes on and on. For either integration with the IRS, you can easily retrieve all your client’s transcripts, notices, and child tax care credit payments without leaving Canopy.

To try Canopy free for 30 days, head over to That is

[00:41:01] Senator Warren introduces bill to make filing taxes easy and free

David: You wanna stick with the IRS?

Blake: Yeah.

David: So, we have our most famous Senator Warren. She was on Twitter again. So, she tweeted out.

Blake: No, Senator Warren is not the most famous person right now. It’s Joe Manchin.

David: No, but she's ours, on our podcast, I think. She might be ours. She's our favorite on the podcast.

Blake: Your favorite, she's your favorite for sure.

David: Might be. Because she's con- she likes to insert herself into stories we talk about. “Americans-”

Blake: She’s good at writing letters. She's good at being outraged.

David: Yes. So, she tweeted out, “Americans spend 13 hours and $240 on average to file their taxes, while corporations like Intuit rake in billions. That's outrageous. Today, I'm leading 22 colleagues on legislation to make filing taxes free and easy for taxpayers.

The IRS itself can, and should adopt my plan. Elizabeth Warren, July 13th, 2022.” And so then, I had- because you know, she's useless and doesn't actually put the link to her bill. So, I had to go find her bill. So, I found her bill and a couple notes on this that I thought was kind of interesting.

Blake: So, let me guess. This is a bill to have the IRS create their own tax filing software.

David: Yes, it gets very, very specific.

Blake: Which we’ve talked about. We've- this has been something that's been tossed around for a long time, and other countries have this.

David: Yeah. And it gets very specific. Enhancing taxpayer data, by allowing all taxpayers to download third-party data provided to the information the IRS already has into software programs of their choice, saving time and decreasing the risk of math errors on the W2 income or CTC payments to lead to significant processing delays.

And when possible- one of the other bullets was to provide the return itself. Right?

Blake: Yeah.

David: You know, getting-

Blake: Just prefill it, you know.

David: Prefill it.

Blake: Prefill the return with the W2 information and then let people add in anything's missing and then file.

David: You could choose a return option where you just- it's prepared already. You just get it from them. Now, my question is, isn't the whole point of this, of filing taxes, to reconcile what- because they don't have all the data. So, I, on my side, am reconciling what I think I own in taxes to what they think I owe in taxes.

And if they just provide everything they keep on the one source of data, now it's not a reconciliation process anymore. Right?

Blake: Well, you would still verify it and say yes or no.

David: Oh, so, you have the opportunity to fight it, or overwrite it, possibly.

Blake: Yeah, you can change it. I mean, that's what it should be. It should be, the IRS, they have your W2 information, right? They get it from your employer. They just fill that into an online form. It's like, like how- the same way TurboTax gets it, right?

TurboTax gets it from these companies that they've partnered with. And you can just go ahead and put in your information and they'll pull it in. Right?

David: Yeah, they’ll pull it.

Blake: IRS can do the same thing.

David: They could do it.

Blake: And then for very simple returns, it's literally- for a lot of people, it's just W2, dependence, standard deduction, done.

David: Yeah. But if they're doing all this, then just take it to the next step. The IRS currently can deposit stimulus money in your bank account. They can remove payments. Right? Just, why even file a return at all? The IRS should just put money in your bank account and take money out as they deem necessary, based on the data they have. Like, just take everybody out of it.

Blake: Oh, now you’re fear mongering.

David: Okay. I'm fear mongering a little bit. Okay. So, the funny thing was, is the amount of- you know, obviously, she has a bunch of democratic colleagues that have signed onto this. You know, they want this bill to move forward, but then she has a huge list of national groups that have endorsed this.

And I was going through this list and it's a- it's very wide. Like, the National DIAPER Bank network has endorsed this. Humanity Forward.

Blake: Wait, the national diaper bank network? What is that?

David: Yes. I don't know. The Network Lobby for Catholic and Social Justice, the Fayetteville Police Accountability Community Task Force, Futures Without Violence, Unitarian Universalist for Social Justice, Women's March and I'm going through this list.

[00:45:10] What the AICPA has been up to

David: There's a lot of groups on here. You know who's not here? The AICPA.

Blake: Of course.

David: So, what did you think the AICPA would either endorse or have opinions about bills like this? I don't know. I'm just thinking. It impacts the profession.

Blake: The AICPA-

David: I mean, what are they doing instead?

Blake: Well, here's an example. So, on July 13th, Journal of Accountancy published a story, AICPA recommends additional IRS backlog measures. Now, one thing the AICPA has been vocal on is this backlog of tax returns. The picture of the files of unprocessed tax returns filling up a cafeteria at one of the IRS processing centers.

Like, that's what we are still dealing with, years into the pandemic. IRS has not caught up, and this is seriously impacting tax preparers and CPAs and tax payers. So, the AICPA has, you know, has some recommendations and Jan F. Lewis, CPA and chair of the AICPA Tax Executive Committee wrote another letter- the AICPA likes to write letters to the IRS- wrote another letter to IRS commissioner, Charles Rettig and reiterated their recommendations for how the IRS could improve things.

Here are the four bullet points. Clearly and publicly report on the status of all its operations, including return in mail processing and reply times, and regularly give updated projections of when its inventories of unanswered mail and unprocessed returns will return to pre-pandemic levels. So, be more transparent.

Two, continue its use of redeployed staff and surge teams to attack those inventories where needed. So, the IRS is using surge teams of people that's just hired that it’s redeployed to try and process all these paper returns. Three, continuous suspension of automated compliance notices and actions, until it can better resolve taxpayer issues, more timely and properly.

So, suspend notices and actions. And then offer a penalty waiver for reasonable cause, similar to procedures for first time abatement, but without affecting taxpayer's eligibility for FTA in future tax years. So, that's been the AICPA's recommendations since I can remember, since the pandemic started. Which is, you know, give us more information, apply more staff to this problem, and then waive the penalties and stop sending notices.

David: Sending notices. Like, sending notices, it seems like, makes the most sense. Yeah.

Blake: Now, here's the thing. Given the volume of the backlog, none of this is actually going to solve the backlog. Sure, it solves the problem of these notices coming and then the penalties coming, and then sending in mail and that not getting processed, and the whole thing getting worse. Right?

So, it can potentially stop the problem from getting worse, but it doesn't actually solve the problem. The only thing that's gonna solve the problem, in my humble opinion, is more people at the IRS because they have a very manual system, right? So, you can't apply technology to this because it's all paper still. You gotta apply people.

And they're trying to hire at the IRS, but they don't have a lot of money to do it. Right? And that's one thing the AICPA has refused to take a position on, is how much funding should the IRS have? Is it underfunded? We have seen for a decade or more that its funding has declined. Its job has increased, and its number of full-time people has declined.

So, you wanna solve this problem, you gotta make different recommendations. Right? I think we gotta take a stand on this. But I think for political reasons, right, the AICPA is very careful not to get political about anything. Like, that's seen as a political thing, believe it or not. Like, funding for this agency, funding for the IRS has become a political thing.

Because I guess, you know, people fear- the fear is that if you give the IRS more funding, then audits of businesses will increase. Audits of individuals will increase. And that's not popular politically. So, it just gets- it gets more work every year and fewer resources to deal with it. What do we expect?

Like, this is the natural outcome. This is- you could have seen this happen- coming, you know, 10 years ago. Same way the talent shortage in accounting. You could see it coming 10 years ago.

David: So, just- it’s easier just to stay as is. Don’t do that.

Blake: Well, it's not easier. It's not gonna- it's just gonna- basically, nothing is gonna change. I mean, that's the sad state, is that it's just gonna become more and more difficult to work with the IRS until something bigger happens, I think. I dunno, maybe the chat bots will solve it, but it just seems like not enough.

[00:49:43] The 150-hour rule for CPAs

Blake: So, here's something else relating to AICPA opinions or opinions of like the leaders in our profession. We talk a lot about- or I talk a lot anyway, about the 150-hour rule for CPAs, right? The fifth year of education being like one of those things that we should remove from the profession to get more CPAs.

Like, we don't have enough CPAs, 75% of CPAs are eligible for retirement. We need to start bringing in people from, not just school, getting them to take, get more degrees. We don't need to just focus on getting more Accounting majors. We need to actually focus on bringing in career changers because we have to solve this problem.

That's my opinion. And getting rid of the 150-hour rule would help with that because it was a huge barrier for me, being a career changer, to come into the profession. Dr. Josh McGowan, CPA, who is an Accounting professor over at Troy University and is prolific on Twitter. He put out a tweet survey asking his followers. I'll just read his tweet.

“Obviously, most CPAs are against the 150-hour rule. But what if those extra 30 hours were beneficial? Would going to 120 hours hurt public perception of a CPA?” And there are three options. 150-hour rule as is, 150-hour, but specialized, and third, go to 120 hours. 61% of the respondents- there were 200 votes on this- said we should go to 120 hours.

61% are in favor of dropping it. Only 13.5% are in favor of it as is. The other quarter or so would say keep the 150 hours, but actually make it mean something by making it be not just random credits that you earned, like I did. Like, my Music degree-

David: Yeah, because ultimately, nobody cares about those classes you took. People just care, do you have the letters?

Blake: It doesn’t matter what you take.

David: Did you pass the exam? I mean, as far as the customer of accountants. Like, I don’t care.

Blake: There's certain classes you have to take. You have to take basically an Accounting major, but then you have to earn 150 hours, but the 150 hours, like, doesn't matter what that’s in. So, people just take random classes. I took Intro to Philosophy for my Accounting. My Music credits counted towards 150 hours.

David: But the customer of accountants and of CPAs, the customer of a CPA doesn't care, or probably, doesn't even know that this requirement exists for the number of hours. They just care, did you pass the CPA exam?

Blake: Right. And one of the arguments against removing this 150-hour requirement is that, you know, it was put in place to raise the status of our profession to like match more doctors and lawyers, right? Who have to get more education. But I think that without it being something like law school or medical school, it doesn't really do anything.

It doesn't- it’s just an artificial barrier to entry that doesn't improve the quality of people entering the profession. And then I hear every time this comes up, somebody argues, “Well, it's good that we have this artificial barrier to entry because it increases my earning potential because it- you know, it reduces the supply of CPAs,” which is an incredibly selfish way to think about it.

And short-sighted because if the shortage of CPAs gets too bad, the market will go elsewhere. And that's what we're seeing. We're seeing people no longer wanting a CPA because a CPA is seen as being too expensive and too hard to obtain. So, you know, like, it's- we're sowing the seeds of our own destruction if we don't solve this problem.

David: So, do you think the- that this has- this falls on the AICPA, or do you think private groups could solve this? And remember,where I'm coming from on this from a labor standpoint shortages. I'm on my United flight and, you know, they have the video, the commercial, they play, right? On the screen, on every flight before they take off.

And United's talking about how, you know, there's the pilot shortages. And so, they've created their own private flight school, for lack of better words. And they plan on training 5,000 new pilots because they can't depend on the market to do it for them. So, they are going to recruit, give scholarships.

They are going to train people to become pilots themselves, from ground zero. And is that what it's going to take? If eventually there's not enough CPAs showing up, is it gonna take somebody like EY or one of the Big Four to be like, “We're just gonna do- start doing this ourselves and bypassing the university system and just start creating an Accounting school,’ for lack of better terms.

Blake: Yeah. I don't know. Maybe. Maybe they'll create their own program, but the problem is that it's- you still have to get the 150 hours from a university. Like, this is built into the law. So, they'd have to-

David: Oh, so, probably, [INAUDIBLE] can solve this then.

Blake: Yeah, the rule. I mean, it was designed in a way that really benefits the universities. Right? So, it's a- I've heard it described as a cash grab.

David: Because pilots, it’s about flight time. It's about hours. Butts in the seat, flying a plane. That's the [CROSSTALK].

Blake: And then yes, you have to pass- you have to pass some- well, I imagine a federal exam, right? Like a test and all that stuff.

David: But the time requirements are time flying a plane, not a random 150 hours.

Blake: And that's like- wouldn't we want like work experience to count for this? work experience is so much more valuable than classroom experience. I think almost everybody would agree with me on this, unless you're a professor. Right? But like, I've never heard anyone talk about an accountant or a CPA who came out of university and like knew how to actually do anything. You don't know how to do a tax return. You don't know how to do an audit.

You have to be trained completely. And so, the firms do it. The firms are doing it. That's what the first three years or two or three years of working in a firm is, it's just learning how to do stuff. Yeah. Well, and that's why everyone's paid so low at the beginning. It's because you can't pay people more when really, you're- you know, you're lucky as a firm to get enough labor out of people while you're training them to cover the cost of training them. The whole model is kind of falling apart now.

[00:55:33] Takeaways from AICPA's ESG symposium

David: Jeepers. So, I think you mentioned it last week, the AICPA had their ESG symposium, and they finally released their findings. But we never- we- I think you mentioned it last week, but we never talked about on the show. I don't wanna [CROSSTALK].

Blake: We may have mentioned it. It may have been cut. Yeah. So, they had this symposium in May on ESG and we joked about flying everybody to New York and having this symposium there, how much environmental impact did that have? Is there an ESG score for the event?

And you know, we've been skeptical of ESG since we started looking into it. because you find that it means different things to different people. All of these concepts about environmental, social and governance, they're all different things, lumped into one concept. So, I could read about the takeaways as published in Accounting Today.

Erik Asgeiresson and Susan Coffey of the AICPA and wrote a summary of what came out of that event. There's four key takeaways. Number one, ESG momentum is accelerating. Regulators and standard setters at the U.S. federal and state levels, as well as internationally, are feeling the pressure to respond to increasing ESG demands on organizations, with new rules and reporting requirements.

The IFRS, last year, formed the International Sustainability Standards Board to simplify global sustainability, disclosure landscape, and currently, have two proposed standards out for consultation. And the SEC, as we have discussed on this show, also has some standards out there for discussion, right? The idea that companies would report on their direct environmental greenhouse gas emissions. That's one that is out there. And it would require an attestation engagement.

Number two, consumers are driving demand. With issues like climate change, social injustice and racial and economic inequalities dominating the headlines in social commentary, consumers are taking stronger stances on the businesses they want to work with and for, and it's not just younger generations. According to a recent PWC report, 76% of all consumers say they discontinue a relationship with a company if they treated the environment, employees or community poorly.

So, I wonder about this though. Like, how much do investors really care about ESG scores? I mean, clearly, they do because funds are- all these, you know, investment firms are creating funds that have the word ESG in them, and the term ESG.

David: Well, because- but they don't care about investing in them. They care about creating financial vehicles they can market to others to give them money to invest. Like, it's a marketing gimmick, in a way. They're naming funds ESG or green fund, et cetera. It's a marketing play ‘cause they're in the game of getting your investing money so they can take fees.

Blake: Number three, investment in ESG solutions is growing. In the climate technology sector alone, investments reached 23.2 billion in 2021, more than double the amount invested in the year prior. That one, I definitely do agree with, that investment is increasing. And that's probably why AICPA and the firms that are part of this are really interested in it because there's a lot of money at stake.

If you can be a firm that is the go-to for getting that ESG audit whenever these regulations pass, then you could get a lot of business. Lastly, number four, firms and finance leaders are well positioned to deliver on new needs. CPAs and management accountants are equipped to meet marketplace demands with the innate skills, experience, and systems to assure the performance of quality services and core values of independence, integrity, and competency.

David: So, did that article talk about how they've also named their first ever global head of environmental and social governance matters? It did not.

Blake: It did not, but I saw that as well.

David: As well. So, the AICPA named Jeremy Osborne as its first-ever global head of ESG. Osborne will lead the association's ESG strategic initiatives, which aim to build the professional skill sets around sustainability and position the AICPA as the leading voice in the area of disclosure and reporting standards that are being established. He previously was the director of accountancy relationships at the Value Reporting Foundation and ESG Standard Center that's now going to be rolled into the IFRS in August.

So, this is this like insider game, right? The guy creates the standards over here. Well, now that I've made these standards, I need to make some money selling people to adopt these standards, right?

Blake: Compelling audits.

David: It's the insider’s game.

[01:00:01] Did ESG contribute to Sri Lanka's troubles?

David: But there's another ESG story that's really important that I think really paints a picture of ESG. So, this is an article that was in Forbes. It's- the title of the article is “Rising social unrest over energy, food shortages threaten global stability.” Have you seen what happen- it's been happening with Sri Lanka right now?

Blake: I know that the leaders of Sri Lanka have fled the country. Is that right?

David: Because the residents are revolting.

Blake: And what are they revolting against?

David: They're revolting against the ability that they cannot purchase food or fuel, like to do things. Because guess what Sri Lanka’s goal has been the last few years? Their ESG rating. So, Sri Lanka has an ESG rating of 98.1. Put in perspective, the U.S. is about 56 or 58. Just over 58.

Blake: And this is like out of 100, I’m guessing?

David: Out of a hundred, correct. And what happened is they stopped- a lot of these smaller countries, you're seeing this, they're getting pressure, right? To be green, for lack of better terms. So, they basically stopped their farmers from fertilizing using certain chemical fertilizers to grow food. So, their ESG score went way up, but the food that their citizens can eat does not exist now.

So, how is that- it's very, very crazy.

Blake: I'm so glad you brought this, David, and you made that connection because this shows how the metric you decide to put emphasis on and track and regulate has huge consequences for the real world. And so, if a country's leaders are focused on ESG scores- but there's a human cost that, like you said, and that- is that part of the ESG score?

So, if I don't invest, as a leader of a developing country, in things that will improve the quality of my citizens lives, right, by industry, industry, and power-

David: You mean like food, starvation?

Blake: Food. Yeah. Then I have a high ESG score because we're not measuring the starvation of my people as part of my ESG score.

David: But this is not just developing countries. So, in the Netherlands, who now has an ESG score of 90.7, has done the same thing where they have a preference for ESG over food production. And they've, again, unlimited nitrogen and pneumonia, and what's happening is they're closing many farms. So, you have your citizens that have had five generations of farms, who've been a productive member of society, of their community, are just being shut down.

And so, there's kind of some revolts happening there as well in the Netherlands. And the conclusion of this is basically, if this continues, this dynamic continues, you're gonna see governments drop ESG in a heartbeat. Because nobody wants to be ran out of their political power in their country.

Those in charge do not want to be hung, tarred and feathered, shaved heads, dragged through the streets by their starving citizens. And so, this is- my prediction is you're going to see the- which is the opposite of the AICPA. The AICPA is going all in on ESG. My prediction is the pendulum's gonna swing the other way on ESG.

Blake: Well, it's certainly not popular right now with the whole situation with the global economy, right? Teetering on recession. Like nobody, you know? Like it just- it shows the problem with trying to reduce- and I know ESG isn't a single score. But all the regulation I've seen tends to focus on one thing or a few things. And improving the quality of life for people, improving environmental, social, and governance in the world is a complex thing.

And there's trade-offs that have to be made. So, you can't reduce it to these scores and try to like improve the world. I just don't think it- as a concept, I don't think it works. And this is an example of that.

David: Well, it ties back to what you said about what you measure. Like even inside your own firm. Everybody's always so big on net promoter scores. Right? And it's very clear. Go get your tires changed at the auto dealership or your oil changed. And they like, watch you fill out that survey. And then they- everybody coaches and behaves around the number. They don't actually provide better service, they're just like, trying to get the number.

And yeah. What you measure is the results you'll get. So, if you measure amount of hours, you're gonna get people billing billable hour, right? It really ties back to our industry. This, like what you track is what you get.

Blake: Yeah, well, and if you track something and you manage exclusively to it, and you don't look at all the other stuff going on, you'll make some bad decisions. So, yeah, interesting.

[01:04:48] Listener mail

Blake: Well, David, we've got some listener mail we should probably get to. And you've got some reviews that we got as well.

David: Got some reviews, yes.

Blake: So, here's a quick email from Donald. The message is, “Abortion episode. In the accounting world, we often talk slash complain about scope creep. This is largely an external pressure that needs to be resisted. There's also an internal pressure for mission creep. It, too, should be resisted.”

From your homepage, The Cloud Accounting Podcast is the number one Accounting and Bookkeeping podcast in the world. And that's the message. Care to reply to that, David? Scope creep is a problem that we should fight. I agree with that.

David: Mission Creep.

Blake: But I'm not sure that what we did with that episode, I would argue that it doesn't qualify as mission creep or scope creep. And it actually was within what we try to do here in the accounting world, which is quantify things.

If you ask me, the thing that we accountants are good at, is quantifying and gathering insights from that accounting that we do. And it doesn't have to be just financial information. It can be non-financial. And so, when something in the world of news happens, and we see that other news organizations aren't looking at the data, we can do that and we can help.

And I think that, like you said, David, accountants are positioned well to do this. I don't know. I feel like the whole, like, we shouldn't be political thing, we shouldn't take a political stand, I mean, it's not about- it's about improving the discourse. That's what it is. That's why we did that. It's about trying to add data to the conversation so it's not just people yelling at each other about something they believe, or they have faith in.

David: Like Bitcoin?

Blake: Does that make sense? Like Bitcoin. Just trying to add some context to things. I don't know. It was an experiment. It was an experiment. I don't know if we'll do it again. Kinda makes me wanna start a new show that would just talk- do that. Maybe people would be happy with that.

David: The politics of accounting. Accounting politics.

Blake: No, no just like the quantifying current events, right? Because that often gets missed. We don't talk about the numbers because most people don't really wanna hear about the numbers. But I, as a accountant do.

David: I mean, I still think at the end of the day, like there is- you cannot talk about anything politically related without accounting being involved, accounting and tax. It's impossible. What- like, this is what's so great about us, our industry, right? Like we get to be involved in everything. Everything. Should we jump into app news?

Blake: Here's a message from Lauren. Well, I got more email- more mail.

David: Oh, another email.

Blake: Yeah. Here's a message from Lauren. “Hi David and Blake. I've been listening in since late 2019, but haven't written in before. Though that interview with the a I C P about funding the IRS almost got me. I just wanted to say thank you for not shying away from discussing the impact of Roe versus Wade on the pod.

I, too, was raised Catholic and have been on both sides of the fence. I, ultimately, arrived at the same conclusions. That contraception is really the way to reduce the number of abortions. And there are a myriad of personal and medical reasons for abortions that go beyond the black and white argument presented by the religious pro-lifers.

I appreciated how you approached the discussion with facts and figures. Just wanted to provide my support and encouragement, and drawing attention to an issue that goes beyond the label of politics, and impacts more than meets the eye.” Thank you so much, Lauren. I'm glad you liked that. And again, I actually, I wanna be clear.

I'm not anti pro-lifers. Like I said, I have pro-lifers in my family. And if that is your religious belief, I'm not gonna- that's not my purpose here, to question that. What I wanted to do is say that we can actually have the same objective. I believe that almost everybody will agree that it is a good matter of public policy to reduce the number of abortions, to work to do that, right?

So, whether or not we agree on the why, I think we can agree that it's a good thing to do that. And how do we do that, is the question. How do we do it? Is banning it the best way to do it? I think that our show demonstrated there's a more effective way to do it, that doesn't infringe on people's personal liberty, nearly as much.

Sean said, “Thought you might be interested that there's some overlap between your abortion episode and your podcast. I am a cast consultant for medical clinics that also happens to be the owner and executive director of an abortion clinic here in Canada. Thought it was an interesting and balanced episode overall. The only factual oopsie I noted was an equation between plan B and a medication abortion, totally different ball of wax.”

So, thank you for that correction, Sean. And yes, actually, in listening to it afterward, I realized that we did conflate those two things, but they are different. Anyways, well done. I'm always happy when I hear abortion content on any podcast. Thank you, Sean.

And finally, a message from Liz. “I'm writing in response to your discussion about tax preparers and orphan 1040s in episode 279. I don't think we can continue to talk 1040 pricing without also considering inequalities in the U.S. Most U.S. citizens are required to file a tax return, which requires navigating an exceptionally complex intimidating landscape of laws, regulations, and hearsay with a little help.

If you have a couple W2s, sure, using H&R Block or TurboTax online is fine, but with the swing towards contract work, large companies have offloaded many costs of compliance under workers who aren't necessarily equipped to deal with it. So, we are left with a situation where people need high quality tax services, just to file their required forms, and potentially, claim needed tax credits, but few firms willing are able to provide these services at a price that people can afford.

Sure, they can go to H&R Block or TurboTax to pay less for either online filing or an in-person appointment with mixed quality, and pay money to companies who actively lobby to keep taxes complicated, and have gone out of their way to hide the free tax services people in certain income brackets are eligible for.

VITA sites are also an option for lower income taxpayers if it's available in your area, not to mention that low income taxpayers make up a disproportionate percentage of audits, while also being less likely to pay for support from a professional to help them through it. As numbers people, it's easy to forget how much taxes stress out non numbers people. The system is broken from so many angles, and just charging people more, and working less, don't solve the larger issues and allows us all to bury our heads and make it someone else's problem.”

David: I've always thought about this, in general. Like, if people- if you keep firing your C, D and F clients, right? And just try to keep your A and B clients, what happens to these people? These clients. Either being personal tax or even small businesses, like, what happens to them? Like, who's going to help them? So, it's kind of- I'm sorry. I missed her name.

Blake: Yeah, Liz. I think it was Liz.

David: Yeah. And it sounds like Liz has that- has had that same thought process going in her head as well.

Blake: Yeah. Well, and I actually think that the way that firms evaluate who the C and D clients are is kind of messed up. If it's just based on revenue, I don't know if you're doing it right. Like, I think it's actually possible to have a profitable 1040 practice, but most firms aren't set up to have the automation-

David: It’s a scale game, right? Yeah.

Blake: Or the offshore labor, or- yeah, you gotta have volume and you gotta have systems in place, and like, really, really robust systems. But I think it could be done. I dunno, I'm tempted to go like buy a 1040 firm and modernize it, and prove that it can be done. But that would be like a five-year journey. And podcasting’s so much easier. Isn't it, David?

Sometimes. sometimes, it’s easier.

David: Well, yeah. And I think that's- you know, I think a lot of accountants probably just tell their clients, go use TurboTax. Or go use the free product the IRS might invent or create decades from now, if they write the code.

Blake: That- and that's the problem, is like, yeah, you know, if the AICPA isn't gonna tear down the barriers to making more CPAs, and it's gonna artificially restrict the supply beyond what we really need, you know? Beyond like to- there's not enough, then at least, you know, offer solutions to taxpayers. Help come up with something. ‘Cause it's kind of- it’s just kind of sucky.

We're not gonna make more CPAs, but we're also not gonna like do anything to help these taxpayers who can't afford CPAs. Right? It's a very selfish point of view.

David: It's gonna make it even more- like, CPAs are gonna- they're gonna make more money. They're gonna be in more demand because the demand's insane, but the amount of people that can successfully work with one is gonna be tighter. Only the one percenters of the one percenters are gonna be able to have an accountant one day.

Blake: Yeah. It's gonna put CPAs at a reach of most small businesses and individuals. They're gonna have to go to tax software. I mean, you can see it happening, right? Like, all the firms I know that serve small businesses and individuals are doing their best to get out of the whole game of 1040s.

David: This is why companies like Intuit think this is a 30 billion-dollar opportunity. Like 20 billion on the tax- personal tax side, and another 10 billion on the small business accounting side. Because they just know there's millions and millions of customers that other firms can't handle. They'll never touch.

[01:14:09] Do us a favor! Write a review.

Blake: So, we got some reviews. We should read those real quick before we go.

David: Yeah. So, this review is on Apple Podcasts. This is from VBCPA, the title of review is- this is five stars. The title is, “Best and most relevant podcast for bean counters.” Blake and David do a great job at bringing us the latest happenings, news in the accounting and tax world. They’ve inspired me to go out and dabble in the fintech world.”

Blake: Nice.

David: Good review. And then we have another one from Apple Podcasts. This is from C-D-U-B-Y-U-H. That's just the letters I have. I don't know if I should try to pronounce that. It's all lowercase. I don't know if it's a name or just a code.

It says, “Gold standard Accounting Press, five stars. David and Blake are my favorite way to track cloud accounting news and other current events surrounding the profession. They're the most entertaining and informative accounting press in the market. Their insights derived from combined experiences give listeners great context.

As a nontraditional student and a career changer, I fully appreciate their viewpoints as I find my footing in the cloud accounting profession. Cloud Accounting is the way. Thanks, gentlemen.”

Blake: Thank you.

David: That's so great.

Blake: I agree. This is the way.

David: And this is a career changer. One of those career changers, you mentioned, Blake.

Blake: That's right. We need more career changes because the schools aren't producing enough accountants. So, we gotta figure out.

David: And this is a re- one more review. This one is on Podchaser. This is from P. Breslin. No title on this, but the review is, “These guys are the most informative accounting press as they are relevant to the present and future of accounting.”

Blake: Awesome. Thank you, P. Breslin.

David: That might be Penny Breslin.

Blake: That's it, David. That's- I think that’s just Penny Breslin. She knows who she is. Hey, thank you everyone for listening. If you wanna get free CPE credit, download my app, Earmark CPE. Go to You can get CPE for listening. And if you hung in for the full over an hour now that we've been going, you deserve it. David, where can people talk to you online?

David: I'm on all the socials, just @DavidLeary.

Blake: Go, follow him on Twitter and see that picture of David with Luca Pacioli. It's special. He took a whole half day to go get it for us. It's worth it. I'm @BlakeTOliver. David, I'll see you here next week.

David: I think the other thing is emails, right? If people wanna send emails.

Blake: Oh yeah. Send me an email, Make it a voicemail. And we got a lot of lengthy emails recently, so I'm gonna add a request that if you send an email and it's not a voicemail, please make it less than like 300 words. Try to keep it tight, so we can read these on the air.

Otherwise, I'm gonna have to start editing for content, or for duration, or whatever you call it. I'll have to shorten it. I'll have to abridge it.

David: Make it tweet-sized.

Blake: Make it tweet-sized, if you can, yes. Alright.

David: That’s another week.

Blake: I'll see you here next week, David. This was fun.

David: Alright.

Blake: Bye.

David: Time for the classifieds.

[01:17:06] Future Firm

David: If you're looking to quickly grow a scalable, systematic, seven-figure accounting firm without having to work 50 plus hours per week, check out Ryan Lazanis’ says online coaching membership, Future Firm Accelerate. Designed around Ryan's experience taking this cloud firm from scratch to sale, so that you don't have to reinvent the wheel.

You'll get online learning in topics that help you automate and systemize all aspects of your firm. You'll get coaching when you need help with implementation. And you'll also join a collaborative community of hundreds of other forward-thinking firm owners. For more details, head over to

[01:17:42] Get W9

David: Tired of clients not remembering to get W-9s? getW9 automates and streamlines the collection and storage of W-9s. getW9 has a QBO integration, and they have a partner program that pays 25% commissions. getW9 plans start at only $19 a year. Visit today to get started. That is

[01:18:42] Royalwise Solutions

David: Are your bookkeeping clients driving you crazy, asking the same questions over and over? They need QuickBooks training, and you have more important things to do with your time. Let Royalwise be your training partner. Create your own customized client training program, and outsource your QuickBooks training department.

Listeners of this podcast are invited to join our partner program and receive a 10% referral commission when you sign up. Join us at to learn more and get started today. Again, that's

[01:19:12] Oh My Fraud: A True Crime Podcast for Accountants

Blake: Hey, podcast listeners, it's Blake, and I wanted to let you know about a new show I'm working on with CPA/comedian, Greg Kyte, and blogger/former CPA, Caleb Newquist. It's called Oh My Fraud, and it's a podcast all about financial crimes. That's right, a true crime podcast for accountants, by accountants.

Caleb and Greg are going to come together every couple of weeks to unpack their favorite frauds, and explore the circumstances, psychology, and interpersonal dynamics involved. They also fully indulge in victim blaming the defrauded widows, orphans, infirm, and feebleminded - because who can resist?

If you fancy yourself a trusted advisor, or prefer your true crime with spreadsheets instead of corpses, listen to this show to learn what to watch out for, and to keep your clients, your firm, and even yourself, safe. To subscribe, go to, or search "Oh My Fraud" on Apple Podcasts, Spotify, or wherever you get your podcasts.

[01:20:11] How to advertise in these classifieds

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

So Much Fraud
Broadcast by