B (5:11)

Well, Rachel and Lisa, you know, we've been doing these town halls for four years now. And actually I remember back when we had the election in 2020, and then there was actually, I think, a similar occurrence where we had a lot of activity in the latter part of December. So it's something that our town hall community has been through a number of times. I think they'll be thinking this lame doc session, you'll have the funding issue. And then you also potentially could still have some tax discussions related to the bill that people have been talking about over the past year.

E (5:50)

Yes. So depending on the elections, it will depend on what may or may not get done in the lame duck beyond the appropriations bills. So as you mentioned the tax bill, the Wyden Smith bill that we've talked about extensively on this town hall that may have new life. So it passed by an overwhelming vote the beginning of this year, as you know. And then in the Senate it wasn't able to get enough votes. And so at this point, as you know, we have conversations on the Hill, it appears that it's not likely to pass in the current environment. However, after the November election, it could be completely different. So whoever wins the White House, if, you know, if it's a President Harris or if it's a President Trump, he or she may say, you know, let's get this done this year. TCGA will be a big issue next year and we're going to have, you know, as we all know, a big tax year next year. So let's get this piece done now. So if they were to say that it would mean that this Wynton Smith bill could actually have some life to it, we just don't know at this point. But there are some other issues that the profession is following that could impact us things related to boi. You know, we've talked about that a lot here on the town hall. There's legislation that would provide some protections regarding UPL for CPAs. So that bill might be able to get attached to a must pass bill like the government funding bill. Or, or there are other bills that have to get done during the lame duck, such as the Farm bill or the National Defense Authorization act, something like BOI could get attached to that. So protections on UPL as well as that also includes a delay in some of the reporting. There's also legislation related to cannabis and protections for ancillary services that would include CPAs. So that might be something that could occur during the lame duck as well as issues related to government contracting and firms that do government contracting work could get attached to the ndaa. So we know that the lame duck will be very active. We just don't know at this time exactly how it will play out because it is all dependent on the outcome of November.

B (8:25)

Well, sorry, Lisa, go ahead.

C (8:27)

I was just going to say so Rachel, on the last town hall, Melanie Lauridson joined us and she did an UPD on boi. And I know that we're continuing to get questions rolling in right now. Does it look like BOI will be delayed or even repealed? And from our perspective, we're not seeing any signs that it is going to be repealed, is that right?

E (8:50)

Yeah, I think repeal is unlikely. But like I said, you know, lame duck Anything is possible at this point. I would say never say never. And so there is that possibility. I also don't want to get people's hopes up for it not to happen in December.

C (9:09)

And I think that's what I'm concerned about is because we know nothing's going to happen in the next six to eight weeks and then we're into November. You've got until January 1, 2025 for the filings. So I don't think that you can assume that you can just wait and see what happens in the lame duck session because if it doesn't get repealed or if it doesn't get delayed, then you've got a whole bunch of BOI filings that are going to be due by January 1st. The last estimate I heard was that four and a half million out of the expected 32 and a half million BOI filings had been sent in by the end of, you know, by now. And so that leaves us a whole bunch that still need to get submitted.

E (9:55)

Yeah, I would say it's a tremendous risk not to do the work and to just be hoping that Congress passes legislation in December.

C (10:05)

I think that's fair because a lot of folks are still wondering if it's going to be declared unconstitutional because we had that one district case. But again, that's not going to be resolved by the end of the year more than likely. So you got to be ready and help your clients be ready for that January 1st day.

B (10:28)

Well, let's pivot and talk about another activity. In D.C. we had a five hour testimony where the SEC chair, Gensler and all five commissioners participated and a lot of lot of discussions that are relevant to the profession, in particular related to PCAOB activities.

E (10:49)

Yeah, this was noteworthy because this is the first time that all five commissioners have testified since 2019. So the first time since Chair Chairman Gensler has been leading the sec. So as you mentioned, it was a long hearing and they covered a whole lot of topics. Digital assets was probably the topic that got the most attention that was repeated frequently as well as capital formation and things like that. Climate got some attention, but not as much attention as it has in the past when Chairman Gensler has testified just by himself before the House Financial Services. But we do want to note that the PCAOB did come up and this is relevant because the SEC as you all know, it approves the PCAOB's budget and it votes on final rules from the PCOB. So the PCOB came up in the context of whether or not the rules that are currently coming out of the PCOB are hurting auditors and especially those in small firms. And then also in the context of there is a proposal and legislation that would move the PCOB into the sec. So this was raised and the questions were asked if, you know, by doing this it would mean that the SEC budget would essentially double and the headcount of the SEC would double. So what would that mean and what would that mean for enforcement? Would the SEC then have to subpoena and could someone then plead the fifth? And Chairman Gensler said that he felt like moving the PCAOB into the SEC would weaken both institutions and that by doing that they would have to follow all laws related to pleading the fifth or then having to subpoena. So this PCOB came up a couple of times during the five hour hearing.

C (12:50)

And I know that a lot of the folks on Town hall aren't doing public company audit work, but it's still important to understand the regulatory environment that the profession is operating in. So Rachel, I appreciate you bringing that update to us about what's going on in the regulatory landscape.

B (13:07)

And the PCAOB has become quite large organization. I think their budget's well over $300 million right now. So I don't know, how old is it now, the PCOB, Rachel?

E (13:20)

It was created in 2002 in the Sarvent Oxley Act. So just over 20 years.

C (13:26)

That was a good answer for a pop quiz. Good job.

B (13:32)

Well, let's talk about another SEC matter that we're following and this related to the use of in House Judges, that decision, SEC vs. Judges Jarcy, that occurred recently. Any developments there?

E (13:49)

Yeah, so we'll just mention just really quickly on this. We've talked about this Supreme Court decision in the past and how it could potentially impact CPAs. And we're starting to see that. So just recently there were eight auditors in which the SEC had dropped their enforcement proceedings on them. And the SEC hasn't publicly commented on the reasoning why, but it is speculated and being reported that it is in light of this decision by the Supreme Court saying that the use of these in House judges is unconstitutional and that these individuals have a right to a trial by jury. It's still unknown exactly how this may or may not impact the pcaob. We do know that Justice Sotomayor in her dissent, she named a number of different agencies that this could impact and PCOB wasn't listed on it. But there is speculation that it could have a trickling down effect on the pcaob. So we thought that this was definitely noteworthy because in the past when some of these enforcement proceedings occur, it means that an auditor might have a suspension from doing work before the SEC for a certain amount of time or barring them from doing work permanently. So we just wanted to make sure that everyone was aware that there are some developments on that front.

B (15:19)

Well, thanks, Rachel. Great to have you. Maybe next time we'll have you up here in our New York studio. You're in our Washington, D.C. studio today. So thanks for these updates and we look forward to having you back on the town hall again sometime soon.

E (15:33)

Thank you.

B (15:35)

Okay, Lisa, and now time for technical updates.

C (15:39)

All right, we'll do a lightning round of technical updates and I'm going to start with, unfortunately, another round of disaster relief declarations. So I've given you links to the announcements about business and individual relief for those impacted by weather events in Connecticut, New York, Louisiana and Pennsylvania. I also can't let the day pass without mentioning all of those folks who are in the path of Hurricane Helene. I hope I said it right. And there has already been a disaster declaration for North Carolina, Georgia and Florida. That does not automatically mean that we'll get disaster relief from an IRS standpoint, but it certainly does give us a shot of getting that announced quicker. So we will keep you posted. As soon as that announcement comes out, we'll put it in a town halls newsletter to let you know. This brings to light an advocacy issue that we've been fighting for for quite some time about some speeding up the disaster relief declaration process. And also on last Town Hall, Melanie mentioned an advocate blog from Erin Collins about another legislative fix that we're for on the disaster look back. So we've given you some links there. As always when we talk about disasters, I want to mention that AICPA members and their families are eligible for assistance through the AICPA Benevolent Fund. And that is short term assistance for members who might have a weather related incident, unemployment, medical expenses, et cetera. And I'm also pointing out some new resources this time that I haven't previously called out around certain tools that we've made available around financial issues related to those disasters. So again, all of our thoughts are with those in the path of Hurricane Helene and we'll keep you posted on where that goes. Oops, sorry, hit the wrong button. All right, let's talk about erc. And we've talked over the last several town halls about the denial letters that the IRS has been sending out. And there's been a lot of feedback that some of those denial letters are in our members opinions in error. So the IRS came out and said here's what you should do if you feel like you got a denial letter in error. And this link that I've given you will give you information straight from the IRS on how to check the eligibility again as to whether or not it was a valid ERC claim. Also how to respond if you want to file an appeal or file a suit. If you're going to file an appeal, here are the things that you should include in your letter, including the documentation that they're looking for and the timelines around filing an appeal. Basically, the timeframe for these disputes is that it has to be settled within two years of the date of the disallowance letter. Two years sounds like a long time, but the IRS has actually asked that if possible, file your dispute, your response to the denial letter within 30 days if you can, to start the process and to keep you within that two year timeline. So it's a good resource from the IRS and I think it'll give you some good guidance on what to do if you're getting those rejection letters and you feel like they are in error. As a reminder, you do have other options depending on you or your taxpayer situation. If you feel like there was an improper ERC claim filed and you haven't gotten one of those denial letters, the IRS announced in August the second round of their voluntary disclosure program that only runs through November 22nd. So I know that you've got the October 15th deadline coming up, but you've got that November 22nd deadline if you've got clients in that situation that may want to take back their ERC claim as a reminder that allows the taxpayer to correct their improper payment at 15% off. So it is a discounted offer there. And if they can't repay, then there is a there could be penalties and interest, but otherwise if they can repay, there are no penalties and interest. Other options that are available are you can withdraw the entire erroneous ERC claim if you haven't gotten the refund, or if you got the refund but didn't cash the check. And then you can also amend the return to revise the amount of the claim as long as that statute of limitations is open. We get a lot of questions about the statute of limitations for the filings because they're getting close to the date of the ERC claim still having not been received, but the amended return being due. The IRS has this on their radar. We do not know when they will issue anything about that, but we know that they are looking at it. And obviously we'll keep you posted on that as well. We got some news just a little while ago, maybe a little over an hour ago, about another common question that we get around erc, which is what happens if a payroll provider, so let's say a PEO or a large payroll provider, a third party submitted all of the payroll filings and the business can't get any ERC claims processed. I haven't had a chance to read the new announcement in detail, but basically it's my understanding that it outlines the approach for a third party payer to be able to withdraw a portion of the claims so that some can stay and some can be withdrawn. It will allow it'll line out that process and hopefully if you've signed up for the IRS announcements, you'll get that. If not again, we'll have a link to that in the town hall newsletter. Again that's hot off the presses. So I just wanted to make sure I called that to your attention as we've been doing for the last few town halls. There are a few things that I wanted to get in onto your radar but that we're not going to go through in our segment here. So make sure that you download the slides from the resource center and you'll find that there are some additional slides in there warning about mills trying to take advantage of businesses or individuals looking for an offer in compromise. You'll find one about a new survey that the IRS will be conducting around services and things like that. So download those slides and look through those additional bits of information. I'm going to switch gears a little bit and invite Eric back into the conversation because this is one that we've been following for quite some time. There's a lot of words on the slide, but I wanted to make sure that I gave you the right links and that we get it all framed correctly. Arsc, which is the Accounting Review Services Committee, has issued a proposal that will revise the language around preparation of financial statements. And it basically the proposed language clarifies that a CPA who's providing financial statements as part of an ongoing consulting services arrangement does not have to follow the preparation standard from SARS 21 and that the engagement would then fall under the consulting standards. So Eric, the practical implication, as we've called out here, is that these engagements aren't subject to the peer review and are not subject to ARC section 70. That's a lot of gobbledygook. So Eric, give me your thoughts.

B (24:10)

Well, I mean, this is all about the client accounting services category, the CAST category, probably the fastest growing service line in firms. SARS 21, section 70 came out a number of years ago to address what was happening before that. It was under the compilation standard, as you remember, Lisa, and this was a step forward. But what's happened over the past number of years is it still has been holding back some of the CAST practices because there's just been discussions inside the firm. Should it. If it's under the quality management, if it's subject to peer review. There was some anxiety there at times. So the ARCS has really. They've worked hard at this. There was a lot of research done with the firms. So I think this is a very positive development. It's an exposure draft. We know we're going to. They're looking for feedback. And, Lisa, we will, in an upcoming town hall, have some practitioners just, you know, shedding more light on, you know, the why behind this and how they. How they see this. But I think this is. It's a good step, and I know a number of firms will welcome being able to put this under consulting services and have it under the consulting standard and not have it subject to peer review.

C (25:39)

Yeah, agreed. All right, so that's our technical update, but we've got more great conversation. And for that we're going to bring in our guests. Eric. So I'll let you introduce them.

F (25:52)

Yes.

B (25:52)

So this is great. We can widen the camera angle. We've got four of us here in our New York studio, almost at maximum capacity. With us is Dan Hood, who you all know rather well, the editor in chief of Accounting Today, and somebody who really provides insights all the time through all the articles and information that you produce. Dan, welcome.

F (26:18)

Thank you for having me. It's glad to be here.

B (26:21)

Excellent. And then with me, with us is Andrew Argue, who is the CEO of Corvi, and he was one of the technology companies that was with us over the past couple of days. And, you know, Corvey's all about, you know, really advancing the tax practice. So welcome. Yeah.

D (26:40)

Eric, Lisa, thank you so much for having me. I watched this from the very beginning, many years ago, like many of the rest of the audience may be in pajamas, so. And all these years later, it's very good to be here. Excited for today.

B (26:53)

Excellent. Well, let's kick it off just with a little bit of background on this executive roundtable event that we just held here in our New York office. One thing that we talk a lot about is how the technology ecosystem is transforming the practice of finance and Accounting billions of dollars is being invested to put solutions in place for firms as well as for members in business and industry to help them drive more value and be more efficient. What we do here with this annual executive roundtable is we bring 40 plus of the leading companies. It's a very inclusive event. We have the large players, the Walters, Kluwer, the Thompson, Reuters, Intuit, Bill. But the spectrum is wide and we have a number of earlier stage companies because innovation is occurring in all spectrums. It happens with the large companies. But there is a lot of technology startups. We've got our startup accelerator program where we try to spurn more solutions for the profession. This dialogue is just excellent because we learn a little bit more about their solutions and we talk about where the practice is going. So that's what I want to talk about with the panel. Lisa was a key participant over the past couple of days. Here's just some of the themes Dan and Andrew and Lisa that came out. We got a lot of bullets here, so let's just maybe start with the first couple and I'll ask the first question to you, Dan. But you know, automation, it's amazing. Everyone's talking about automation, efficiency and their tools. I'm excited about how they're getting a lot more tailored in their solutions. And one thing I'd like to say is that I've never seen a more comprehensive set of solutions across all of the practice areas. I think the next couple of years is going to be all about audit transformation. So they really are building new tools in tax, in audit, client advisory services and practice management. So share some of your thoughts.

F (29:06)

Sure. No, they are, absolutely. They're touching everything. They're reaching every part of the firm, every part of every practice and every level of practitioner out of practice. Right. They're touching. They're talking about things they're going to do for younger accounts, entry level accounts, things they're going to be doing for people who have practiced for a long time. It is great because you say you saw that list of logos. When you have all those people in the room and you hear from all of them all at once, you start to see these great trends emerge. And one of the big ones is they are very laser focused on automation and efficiencies and allowing firms to do more work more quickly, more easily, ranging from when I was talking about automating a lot of the entry level work for younger accountants. So they come in, they can start doing meaningful work right away, like on day one. So they're not doing the grunt Work that firms have been stuck with for a long time. They're also very focused on. We heard from a lot of different vendors about data moving data back and forth, reducing the friction of moving data from one system to another, from one silo to another, from our practice area to another. They know that's a huge pain point for accounting firms. And they are from firms that deliberately do nothing else but move data back and forth to the firms that hold the data to start with. They're helping accountants move it back and forth. So that's a really encouraging thing for a lot of accountant firms that are looking at capacity crunches and are trying to figure out how to get all this work done is that these software vendors are really paying a lot of attention to that.

B (30:25)

Andrew?

D (30:26)

Yeah, I think that I've been fortunate to be at this roundtable for the last three years. And in the last two years it's really been a massive focus on artificial intelligence. And I think last year all the companies that presented were really kind of in the earlier stages. A lot of ideas. This is a direction we want to go. And it was really inspiring to see. This year, pretty much every company had something in production, an applied use case for artificial intelligence for some vertical area of the firm. And they were all over the board, as we kind of mentioned. And I think we had a couple of practitioners come up on a panel and started to ask how is this really impacting inside of the firm? And I think they were pretty candid. When some of these tools first came out, a lot of people afraid like, am I going to lose my job or these going to replace? And I think they've gotten to the point now where they're seeing a lot of tasks that people do in different roles are getting consumed into these applications and then they're having to move people's roles into other types of work. But they've been able to do that effectively. And so it was very interesting this year just to see an excitement amongst the practitioners that were there about their experience using these tools and looking forward to what's coming next.

B (31:30)

Yeah, well said. I mean, would I. We had the cloud computing movement, which really transformed how firms could interact with their clients as well as how members in business and industry could work with their finance teams. This AI movement does seem to be accelerating the role of the advisor because you automate better. We've had AI in place for a number of years now. It's this Gen AI movement, but it's all coming to fruition more and more and it's Going to allow these firms to really focus on the trusted advisor role more. But let's just dig down into the big technology topic, artificial intelligence. One thing that we saw, we had about 45 companies give us updates on where they're at. Dan. And almost all of them have a Gen AI agent. What is it? Gen AI, it's like Microsoft Copilot. I think we all know Microsoft Copilot and a lot of them are giving their, naming them. So we have a lot of names.

F (32:29)

Out there, but that.

B (32:30)

And it's kind of a, it's a, it's a wrapper in some ways on ChatGPT. And you know, at this stage it feels like it's, you know, it's helping people do some marketing, email and you know, people are all, you know, they're experimenting. But so how, I mean, and you've seen a lot of these kind of technology adoption movements. So how do you see this right now?

F (32:51)

It's very much, it's early days. A lot of people will say, oh, I can put a, you said put a wrapper on ChatGPT, my firm name on it. Or put a, usually a woman's name. Not quite sure why, but it's common to see that people are picking that up. We're seeing a lot of uptick. We saw people. A lot of different research was presented that talked about how people are picking up, particularly for marketing. Someone talked about that as low hanging fruit for AI. But they're looking at a lot of different use cases Andrew mentioned. Right. They're starting to come forward with actual specific use cases for accountants. But it's still pretty early days yet. What was interesting to me was a lot of them talking about the principles that they're working on with them. They're coming up with use cases, but they're also saying what is this going to mean for accountants and what is it going to mean in terms of how they deal with their clients and how they interact with them? And can they rely on this, on the tools they're using in the AI? It's really interesting. A lot of them talk about transparency and the need to make sure that the accountants who are going to use these tools know what goes into them, know that they can rely on it. There's what they call the black box problem, which is you put data in one at one end, you get a result out the other end, you have no idea what's in the, no idea what's in that box. And that's trouble for accountants. Right. Because they need to be able to Say to a client, yes, this is how we got to these numbers. This is how we got to this result. And when it's something as complicated as AI, it's really important that you're able to come with some confidence to a client and say, yeah, we used AI for your engagement and you can rely on it because we know what's in it. So there were a lot of the vendors who were talking about transparency and that importance and how they want to make sure that the accountants know what's going on inside.

B (34:23)

Well, thanks, Dan and Lisa. I mean, you and I are both looking at a lot of the questions that are coming in here. You know, what, you know, AI's role in helping with the shortage of CPAs or even, you know, grunt work's a great teacher. So what are we going to do?

C (34:38)

I've done a lot of grunt work and I understand why we think that it's a good teacher. But now there are new ways to teach. And you know, I was reminiscing earlier about the good old days when I was manually footing a trial balance. Well, I don't think we need to do that anymore. So we can use case studies, we can play in a sandbox, we can do other things to help people entering the profession understand some fundamental concepts. But they are more than eager to use technology to work smarter, to work more efficiently. And a lot of this technology is going to give those quality guardrails that we're all really focusing on as well. So it's going to increase quality and efficiency by moving some of that grunt work, some of that mindless work into, you know, behind, behind the scenes. And then what, what comes out of that is using these tools to help upscale it and get the grunt work off of the plate of a, of a, a new person so that they can be focusing on higher value work.

B (35:51)

And, you know, things that we've talked about, it is the great equalizer, you know, for firms of all sizes, can LE technologies. So I think it's very, it's an exciting time. There was really good discussion around responsible AI. All the firms are thinking about that. We highly, you just mentioned a number of the key areas, transparency, security and privacy. So that, that is top of mind. And we're all watching, you know, what's happening from a legislative standpoint related to that as well. And the final topic here is just this growing influence of private equity that's really not related to the tech companies part, but it is something that we discussed and that's helping drive further acceleration of the adoption of these tools, one of the private equity always has a thesis, their thesis of one reason of making these investments in these firms is because they think they can help them do better by utilizing more technology to drive greater value and more revenue growth. So I think that just, you know, it's an exciting time with this capital infusion and it's probably going to drive the technology adoption, make it happen even faster. So any comments on pe? I mean, I know you're tracking the.

D (37:06)

PE movement, Lisa Yeah, I think that.

C (37:09)

It'S exactly what you said. It's a different way for firms to access capital and it's not the only way. So I think firms are thinking differently about how they're structured. And you know, this may not apply to the smallest of firms, but I think firms with, you know, 50 professionals and up are really thinking about how are we going to structure and how are we going to ensure that we have the capital that we need to invest in technology, to invest in people. And you know, some people have really firm decisions about PE versus non pe. And you know, I think right now we're just going to see what happens in the next few years.

B (37:50)

Well, what we're going to do now is we talked a lot about technology over the last couple of days, but actually we also talked a lot about the evolution of these different services. So you look at where client advisory services has gone over the past decade and one big topic, Andrew, and that's what I'm looking forward to discussing with you, is the evolution of tax services. And you've got a number of comments. One comment I like you've made. You've like, we've got two more normal tax seasons left. I don't know if anyone ever called this tax season normal, but I'll let you explain.

D (38:23)

Yeah, so I think that, you know, these products that all of us use, if you're on this call today, you're very likely using a product for tax preparation and compliance that was built in the 70s and the 80s and the 90s. And there's been improvements to those products over the years, but there's never really been a rebuild. These products survived, you know, cloud, they survived the Internet, they've survived decades. And you know, when you start to look at the way that these new tools have been coming out, specifically artificial intelligence intelligence, the LLMs, these tools are remaking tax products. And so I tell people that there's only about two normal tax seasons left. And you're already starting to see that with products on the front end that help you ingest all the client data and then route that data to specific points all throughout the return to make it easier to prepare and review those returns. And ultimately you're going to see, you know, when we were at this event on not just the tax side, but also the accounting side, some of these technology vendors coming up and saying, you know, we think we can get to zero touch bookkeeping, you know, where you can actually do bookkeeping with zero human touching it. And on the, on the tax side saying we can reduce the time it takes to prepare a return by 60 to 90%. And these are pretty bold claims, but you see kind of a progression of that over each quarter as these models improve, as the products improve. And so, yeah, I would say that over the next 18 to 36 months, you're going to see a massive shift. And the good part about that is it's been hard to get the time to do these other value added services, tax planning and advisory services, because we got so much time on compliance. Things get more complicated, there's regulatory changes change, but if we can actually go through the process of reducing the time it takes to prepare a return so we can free up time to move to some of these higher value services, I think that's some of the things you're going to see over the coming quarters. As these technologies start to, you know, today they exist, they're just not fully deployed and ready for production use cases where you can actually go out and use them in the firm. But you're going to see that over the next two tax seasons.

B (40:11)

Andrew, I couldn't agree more and I want to bring Dan in here as well. I mean, what I'm seeing, I'm seeing a lot of, lot of capital in these early stage companies in a lot of capital being invested to disrupt, to disrupt how the tax technology works. If you think about generative AI and looking at large data sets, the tax area is perfect for it. And we've seen a lot of automation on the gathering of the tax information. We've also seen a lot of automation in how this is distributed back to their clients. I think we're going to now see is this middle area, this middle area of tax prep and somebody really saying, okay, this is going to be the next generation tax prep software and it's going to be much more dynamic and we're going to get to this is going to offer the opportunity just like we saw in client accounting services when it was just bookkeeping and then you had all these great tools and now you have client advisory services. So same Thing with tax, we could, we could be, you know, a big shift could be underway.

F (41:19)

Yeah, no, it's absolutely, I mean this is a model that can be applied to almost every service that an accounting firm offers. Right. You start with, you take technology that allows you to minimize the grunt work, automate it, commoditize it almost so you still have it, you're still doing that work, you're still getting the data from it. But then you can, instead of having to spend all your time processing it or moving it around around, you are able to then take the top level insights from IT and provide advice on it. And that's cas, you know, almost in a nutshell. Right. That's what makes caas brilliant. It's a little ahead of tax, but tax is following up. I think we're going to see a lot of other accounting firm services go this route where technology gets applied to it. You reduce the amount of make work that you have to do to get it done and that frees you up to offer real serious valuable advice to your clients in a wide range of areas. You know, we're starting with, with cash you mentioned, but tax. And we're going to look at a lot of others I think going forward.

B (42:09)

Well, let's look at this. So we've got, it's always good. You kind of just highlighted this and come back to you, Andrew, on the evolution of what we're calling tax advisory services and starting, you know, it starts with the preparation and moves, moves up the value chain.

D (42:26)

Yeah, I think almost every firm, every tax and accounting firm does tax preparation compliance and meets with the client on an annual basis, maybe even a couple times a year, exchanges some emails or even has a couple meetings. And most firms are also offering some kind of recommendation. Right. So if a client comes in and starts asking questions about, you know, should I, what should my legal entity be? This business has gotten to a certain level or you know, anything that might come up related to legislation and then we, we provide sort of these one off recommendations. There's maybe about 20% of firms out there, practitioners that are doing some type of planning where they're actually kind of looking forward and looking at more than just one individual recommendation area area and starting to put together, you know, these are the things you should do to optimize your tax situation given your specific circumstances. And then there's an even smaller group of firms, I would say maybe less than 5% of firms that are doing full advisory packages. And these kind of take places in different forms. But really it's Working with the client either every month or every quarter, managing their entire tax arrangement, all of their different tax strategies and key tax positions, making estimated payments, filing the returns. And so I think, I think over the years, it's been very difficult to free up time to focus on this. You know, we were joking before coming on today that we've got about 19 days left before the deadline. So you got to get out here and do this with every single client the next 90 days. That's not really realistic. These transformations take years. But going and saying, hey, how can I start to move up? This is becoming easier and easier because the core work is going to become easier and easier over the next couple of tax season. So if we can free up our time on that core tax preparation compliance clients, we pick our head up and we say, gee, you know, most of our clients could be doing a little bit more. They have a few more questions. If we were to work a little bit more with them, could we provide a little bit more value? And, you know, now these services are becoming more possible and more realistic than they have in decades.

B (44:09)

Well, Lisa, when you look at this chart here, there are a lot of similarities between CAS and this tax advisory services tas, where bookkeeping, you know, in some ways could be fees could be, you know, one to one to 2,000amonth or even lower. And then you've got, you know, there's recommendations that occur, but really moving into the planning advisory. And you can see the price points that we've got highlighted in the slide that that's what, that's what has happened with CAS. And you saying, I think you just said about 5% are potentially providing that advisory service today in tax. I think it was under 5% when the cast movement started. And I think right now it might even be at 50%.

C (44:53)

Yeah. And it's exciting to see that we're now having the conversation in the tax space because as we work toward making that preparation process easier through automation and AI, that is going to be embedded in your technology tools. That's what I want to make sure that we talk about is this isn't something that you have to go out and program yourself, and it's going to be embedded in the programs that you're using on a regular basis, and you're going to naturally begin to take advantage of these skills and the things that are going to make your life easier. So I think that from my perspective, what we're seeing is that a lot of clients are looking for that holistic approach to their tax planning. They don't want to just have one touch point a year or one touch point when it's time to extend and then another when it's time to file. So I think that they will. This allows you to think about the clients that you're going to serve, how you're going to price these services that you're going to offer, and make sure that you're working with the clients that fit your needs as well as you being able to fit their needs. And this is a way to really even out the workflow so that that busy season is a thing of the past. We know that there are firms doing this already and they are talking about how it streamlines the workload compression and they don't have the huge crunches in April, in September and October. So I think it's really exciting. And again, embedding the technology is going to make this so much simpler. As you said, Eric, technology is the great equalizer. And I think this is going to make that a year.

B (46:39)

Well, let's, let's keep shedding light on this opportunity here related to tax advisory services. Questions coming in, Andrew, on small firms. In some ways, I think this is all about the small firms.

D (46:56)

Yeah, I think for small firms, it's easier to adopt. It's just generally easier to change if you've got a small team and you can go then once you become a really large organization. But this is a great example of a business and an individual where you were to go through and try to estimate how much can I save them right now? That's actually quite a difficult thing to do. You know, most people, what they might do is open up their tax software, create a shell return and try to figure out, okay, based on what this client says they're going to do this year, how much do I think they're going to in taxes? If I made some recommendations, you know, what do I think I could change that to? But really in the area of tax, what most clients are thinking about in terms of getting more value from a tax engagement is what would my savings be if we were to do this? And so that's kind of the first thing. Once you can kind of start to discover what that is, you start to look at, okay, how do I wrap this into a different engagement? Rather than just working with them once a year, how do I do planning with them, how much do I charge for that? And then if they say, oh, there's 12 different tax positions or strategies that they could do, maybe they only want to do six or eight. And so of Those six or eight, I need to. And then help them implement those, make sure that they actually take the actions in their business and their life. And. And then also make sure that those are documented and the substantiation is there so that we can take that position on the return. And then ultimately that makes the preparation a little bit more complicated because, hey, we were a little bit more organized, we did a few more things, and so we've got to get that done. And so this is an example of the different components of an engagement that we've seen some of the top firms doing when they really start to move into a different type of relationship. And some of them are doing this monthly, included in the cash services. Some of them are doing it just quarterly, where it's just the tax service, you know, if they're not offering other services. And so this is just the beginnings of what firms are doing. And I think over time, these prices will change. The prices that the firms charge today are all over the map. But this is kind of how some of the best firms are thinking about making this move today. In the early stages of technology. When you look at Cass, one of the reasons why that's been so successful is because the technology there is so mature on the tax side. We're really at a beginning of a new wave because of artificial intelligence that is going to take place over the next couple of years. But these CAST tools are so mature and it's been going on for so many years that they're a couple years ahead of where we are on the.

B (48:56)

Tax side and attacks. Prep software tool is not an easy software tool to build. That's another reason why there hasn't been a new entry in the last 20 years.

D (49:08)

There's been, you know, less than a half a dozen, maybe four or five companies that have tried to say, you know, let's actually go out there and let's make a new tax software. And really no one's been able to do it since 1993. That's the last company that created a standalone tax product. And so really. And that was the last one. So all the rest of them were built in the 70s, the 80s, and the 90s. And so that core architecture, you know, when you look at all the forms that you have, and some of them have calculations, some of them don't, how they all fit together, how they concatenate into a final return, all that has been relatively the same for about 30 years, you know, even more than that. And so. But all of that is kind of at the early Stages of being transformed.

B (49:42)

So, Dan, one question that always come up is, okay, what's my role? And when you really think about the role of the firms here, it's all about the clients are looking to outsource this work. So even though this automation is happening, the do it yourself movement is kind of plateaued. So this really here is about firms, what they've always been doing the last 30 years, and they have this tax prep software has done them really well and just continuing to ride the next wave of capabilities.

F (50:17)

Right, well, and what you described here is exactly what we saw in CAS over the last 10 years, which is the move up in value. It's the move up from just getting the books done, which they know they want it, they want someone else to take care of it for them, and they'll pay for it, but they'll pay more for a higher value. And that's this chart is a perfect example of that move up the value chain of delivering. I get your tax return done, that's fine. But really what matters to you is how much extra money I'm saving you or how much extra I can do for you in making your finances better. So it's that model that move towards a higher value service that's really, it's exciting. You're seeing a lot of different areas of the practice and it's all being enabled by technology.

B (50:59)

Well, Lisa, let's kind of wrap things up here. I mean, a lot of people are saying, okay, what are the solutions? You know, come to me with the solutions. I think that's, we're not talking, this is really not about the 2024 filing season. This in some ways is about thinking about, you know, the next filing season after that, to start thinking about this movement. And I know of a lot of tools that are in beta this year, and I think by the next filing, you know, the next tax filing season, they could be ready for prime time. So this, it's a good discussion for us to have on the town hall. And I think it's something we'll come back to on the, you know, on the town hall where we can talk solutions per se.

C (51:37)

Yeah, exactly. I think again, it is September 26th, so you've, you've got a few weeks if you're, if you're in the tax base, you're dealing with an upcoming deadline. But be thinking about the clients that you have coming through your process right now who might be ripe for that next deeper conversation. Who do you see that is in a growing company or is getting ready to Sell a business. How can you start identifying those that need that additional level of service so that you can make your action plan for following up with them after, you know, after October 15th, they really might not want to continue to wait for you to wrap up tax season before you have that next planning conversation. So be thinking about what would you do differently in your business model? And I think that's an important conversation that we all need to be having. And as we get closer and closer to deadlines, the pain of these existing business models might get more and more and more.

B (52:40)

So this was, you know, this firm transformation concept. It was the last topic that we had on our executive roundtable. We had some firms here, they were all talking about how they have. Have more intentional strategies related to thinking about the technology opportunity, driving the change management, thinking about their business model, and also just upskilling their talents. I don't know if anyone has any additional comment on this before we move into Open Forum.

D (53:10)

Yeah, I think it was great to hear directly from the practitioners. These were people that were really in charge of trying to find the best technology across the firm. And I thought it was really cool. They said that there's a lot more collaboration between, between firms now. So if you're looking for something great, one of the best places to go is to another firm. What are you using? What are you really seeing that's working and adopting that you're able to adopt? And they call it coopetition. Right. So not, not so much a competition mindset, but how do we work together to figure out what are really going to be the things that are going to make the most sense? And that's happening more and more. There's actually dedicated people in many firms where they're just dedicated to getting the best technology solutions for the firm across all the different practice areas, which was really neat. And then also, yeah, I think one of the most interesting things that was mentioned in that session was that some roles are changing, it looks like every 18 months because of the technology that's coming in, that the substantive nature of a role, you might still have a role in this organization, in this firm. We like you, we like working with you, but what you were doing over the last six months is really not what we need you to be doing over the next. And so that's happening in not every area, but in certain key areas as they roll these technology products online, which I thought was fascinating.

B (54:18)

Well, let. Go ahead, Dan. Let's, let's bring, let's. We can drop the slides and bring. Bring Rachel Back up, Dan.

F (54:24)

I just wanted to follow up on that because there's another element of that. They, they said a couple of times, people said, you know, we're looking at it and we don't know what's going to come. We don't know what's happening next. We don't know how the software is going to change. But it wasn't. They weren't nervous about it. They weren't anxious about it. They were sort of intrigued. And like, I can't wait to see what it's going to be like because it's been so good for us for so long that, yeah, we know we got to learn something new, but it's probably going to help us and it's probably going to make our business better and make our jobs easier. So there is. The uncertainty was there, but not the anxiety. And I thought that was a really interesting change because that's commonly you hear, oh, technology's coming. It's going to take my job or it's going to disintermediate me or eat my lunch. And that was not the case. There was a lot of excitement around the technology that's coming.

C (55:04)

I think that gets to mindset. We have to have the mindset of thinking about what's next and not being scared by it, but being curious about it. Having that, this is going to be fun. This is going to make my life easier. And even if the work I'm doing today becomes something else in the future, how can I grow, how can I adapt? And how can I use it to serve my clients and to drive efficiency and quality within my firm?

B (55:32)

Well, Elise, I'll let you look for a question as I ask one to Rachel here. So, Rachel, we talked about, about the SEC hearing and the question about PCAOB moving under the sec. A question here. SEC has oversight of PCAOB right now. So maybe just clarify, what is the SEC's role right now at the PCAOB? And what do you mean when you say moving under the sec?

E (56:04)

So right now the PCAOB is separate from the sec, but the SEC has oversight over them. But they're their own different entity. They're not a governmental entity, but they do report to the SEC as far as the SEC approves their budget as well as any final rules. So what the proposal would do is it would move the SEC completely or the PCB completely into the SEC under the office of the Chief accountant.

B (56:38)

And right now, this, that it was a question. There really isn't. I mean, what is the path to that? Happening.

E (56:48)

So it would require legislation. So legislation has been introduced in the House. So it would have to pass the House, the Senate and then make it to the president's desk.

C (57:01)

I'll address a BOI question, Eric, since this is one that was we get quite commonly and it is about whether or not CPAs can assist in filing BOI reports for their clients. And the answer is to this date we have had no states say that CPAs are not allowed to help. There are state opinions and again, if you'll go back to the prior town hall, Melanie lan did a great overview of some recent state attorney general's opinions that dive into this a little bit more. But it's really up to the state attorney general. And some have said there is no issue with UPL. Some have said there's a line that CPAs need to be careful not to cross in terms of helping a client figure out who is a beneficial owner. So go back to the last town hall and check out Melanie Laurenson section. But as of right now, there is no state who has said that CPAs are not allowed to assist their clients in BOI filings.

B (58:06)

Well, and we're all going to be looking, I mean as you said, only 4 million of the estimated 32 million filings out there. So we'll see what happens as the months continue to that deadline, the end of year deadline. So Dan Hood, I want to thank you for being on the town hall. We reference a lot of data from accounting today. So thanks, thanks for all that you're doing to kind of support these firms and members in business and industry.

F (58:32)

Thanks for having me. It's exciting times.

B (58:34)

And Andrew, great, great to have you. And you're I know you've got a lot of things underway at Corvi and some new technology solutions. Maybe one quick lightning round here question just the accuracy of of the AI tools now and we heard from a lot of the firms on how that's that's improved dramatically.

D (58:54)

Yeah, I think, you know, we have all, all have this experience where you ask one of these AI tools a question and then it responds even though it doesn't know what the answer is exactly. And it kind of says something they call that hallucination. And that is still absolutely a thing. And you know that because it always responds. It never, it almost never most of the tools you're using don't ask for clarification and then kind of get there. But most, you know, I don't know about you, but I've noticed a few humans that hallucinate as well. And so a lot of people, what they do is they trust track these relative to a human. So am I getting a better result than a human? And you can see every quarter, you know, quarter over quarter, year over year, we are just kind of approaching these levels in various different areas. And it's surpassing on almost every exams, you know, if you look at the math exams, you know, scientific exams and medical exams, all of these things are just getting to the highest levels. And so it's, it's massive improvement. And then that allows us to expand it to so many more use cases inside the firm. We can rely on not 100%. Like we still need supervision and review and it's a different kind of supervision and review. So still need supervision and review, but much heavier reliance than before.

B (59:55)

Okay, well, thank you, Andrew, Rachel, always great to have you. Thanks for the insights. Lisa and I now will close out the final slides here. So here's just a highlight related to some digital CPA resources. We've got an upcoming webinar, complimentary webinar, webinar, where you can hear about some of these future topics in greater detail. A blog and a podcast that you can take advantage of. Here is the digital CPA conference which is occurring in Denver this year. It really is a, you know, it's made up of a group of very progressive firms that are really driving adoption. And we also have a number of members from business and industry that attend digital CPA as well. Well, we've got this, Lisa, this new AICPA town Hall rebroadcast. I, I know a lot of people are taking advantage of it. Not everybody can join us at 3:00 clock Eastern Time or wherever you are, you know, 12:00 clock Pacific Time on Thursday. So we're glad we have that available for you. Here's the lineup for October 10th. Lisa, you'll be back and we're gonna, I think there'll be a little bit more discussion related to the new ARCS release with Kim Blasco on consulting services. And we've got Gene Marks and Mark Peterson joining as well, as well as Michael Cerami sitting in the overall kind of host role. So here's the way to make sure you're subscribing to the town hall. So please do take advantage of that. And Lisa, that's it. Any final remarks for the audience?

C (61:35)

It's always an exciting time to be here for the roundtable and to see the possibilities and to see what's coming next for this profession. It gets me so excited and I just I see so much potential for the future if we leverage these technologies that are being made available to us.

B (61:52)

Well said. So thank you very much everybody. Have a great end of the week and we look forward to seeing you on October 10th.

A (61:59)

Thank you for your participation. You can now subscribe to the AICPA Town hall series on your favorite pump podcast platform, as well as watch archives on YouTube and AICPA TV. Tune in for live broadcasts Thursdays at 3pm Eastern Time.

G (62:17)

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