Forty percent of U.S. workers admit to using AI to generate fake receipts for expense reports. Even more troubling is that 40% of those workers use AI tools their own companies paid for.
Blake Oliver and David Leary opened Episode 494 of The Accounting Podcast with these startling statistics from new surveys by AppZen and Emburse. David introduced a new term that’s emerged from this trend: “revenge spending,” in which employees who fear AI will replace their jobs turn the company’s own AI tools against it by submitting fraudulent expense reports.
“It’s similar to spam,” David explained. “AI and technology make it easier than ever for people to send you millions of spam messages. But then on your side, you’re using all these AI tools to detect the spam messages and move them to your trash.”
The numbers tell an interesting story. In just 14 months, AI-generated fake receipts went from virtually nonexistent to representing 70% of fraud flags in expense systems. These fake receipts average about $100 each, with a median of $32. Those deliberately small amounts are designed to slip under auto-approval thresholds.
NASBA Backs Down
The theme of shifting power dynamics became personal for Blake when he shared the resolution of Earmark’s standoff with the National Association of State Boards of Accountancy (NASBA).
Back in April, NASBA sent Blake a demand letter over comments he made at an AICPA conference. While demonstrating how to use AI to create CPE courses, Blake criticized NASBA’s methods as “backward” and called out the problems with current CPE practices, including webinar polling questions that serve as mere check-the-box exercises, attendees doing email during sessions, and people sleeping through in-person presentations.
NASBA’s letter directed Blake to “cease making any unfavorable, unprofessional, or inappropriate comments” about the organization, citing a sponsor agreement requiring programs to “reflect favorably on NASBA.”
Blake pushed back hard. “I felt that it was wrong, even unconstitutional, for an organization like the National Association of State Boards of Accountancy to tell a sponsor of CPE, a CPA, a professional educator, what they may and may not say about NASBA,” he explained to David.
In his response letter, Blake argued his comments were meant to improve CPE, not attack NASBA. He also asked for clarification on what exactly would constitute a violation, since terms like “unfavorable” weren’t defined in the agreement.
The resolution came in June when Amy Tongate, NASBA’s Director of Compliance Services, essentially backed down, writing, “NASBA welcomes constructive professional dialogue regarding continuing professional education. Based on your response and subsequent discussions, NASBA considers this matter resolved. No further action is required.”
Blake sees a deeper issue here. NASBA isn’t actually a regulator; the state boards are. NASBA was created as an administrator to handle licensure efficiently across all states. But it often acts like a regulator, which Blake argues oversteps its bounds.
“If a state board of accountancy tried to do what NASBA tried to do with that demand letter, that would be unconstitutional,” Blake said. “The question is whether or not the state boards can set up a private company, a nonprofit that then acts on their behalf and suppresses the speech of CPAs. And I would be willing to bet that they can’t.”
Big Firms Can’t Command Loyalty Anymore
While regulators discover the limits of their authority, big accounting firms are finding they can’t control their workforce as they once did.
A new academic study published in Contemporary Accounting Research with the dramatic title Losing Control: The Erosion of Disciplinary and Pastoral Power in Accounting Firms, reveals just how much has changed. Based on 31 interviews with Canadian auditors from 2021 to 2023, the research shows firms are struggling to shape employees into the traditional model of the committed, overworking auditor.
The numbers are striking. What the study calls “default auditors,” defined as people who enter under weaker selection standards and treat the job transactionally, are replacing the highly socialized, career-committed auditors of the past.
“The Big Four is becoming less of a cult,” David summarized bluntly.
The breakdown is happening on multiple fronts. Remote work disrupted the in-person observation that once normalized 80-hour weeks. When young auditors don’t see everyone else burning the midnight oil, logging off at a reasonable hour becomes much easier. The “we’re all in this together” busy-season rituals, like late-night pizza parties, matter less and less.
But employees aren’t just passively benefiting from remote work. They’re actively pushing back. According to the study, they’re setting firmer personal boundaries, prioritizing family and mental health, rejecting unpaid symbolic rewards, and openly comparing their compensation to that of partners and managers.
The partners and managers feel trapped. They’re taking on more work themselves, reviewing more because of lower work quality, and offering higher pay and more flexibility, but it’s not working. As Blake noted, “They are feeling more exhausted, underappreciated, unable to enforce the old standards and unable to design convincing new ones.”
This cultural breakdown makes the recent wave of private equity investments in accounting firms particularly puzzling. Eide Bailly just became the latest to take PE money: a majority stake from Reverence Capital valuing the firm at $1.8 billion, about 2.1 times revenue.
Looking at a chart of the top 30 U.S. firms, Blake and David counted that a majority now carry outside capital. Yet the hosts are skeptical these investments will pay off.
“I have not heard of a PE success story where PE came in and the company became this rah-rah great thing,” David said. “It gets worse from PE, right?”
“Are they really going to be able to turn it around and sell it for more?” Blake asked, pointing at the math problem.
David’s verdict was characteristically direct: “Put lipstick on that pig and sell it to somebody else.”
The AI Revolution Gives Power to Individuals
While institutions struggle to maintain control, individual practitioners gain capabilities that once required entire companies or expensive software.
The adoption numbers are explosive. According to Blue J and CPA.com’s latest survey, 60% of tax professionals now use AI for tax research at least weekly, up from just 33% a year ago. They use it for advisory projects (44%), tax planning (40%), and compliance research (39%).
“Where are the other 40% getting answers?” David wondered about those who are not using AI, noting that even Google searches now show AI answers first.
This surge in AI use prompted the IRS Advisory Council to issue its first-ever guidance on AI in tax practice. The guidelines don’t create new rules but clarify how existing standards apply. Most notably, practitioners can’t bill for time not actually spent, can’t charge manual rates for AI-assisted work, or double-bill for work done by both staff and software.
“This is the nail in the coffin of hourly billing,” Blake declared. If you use AI to cut your work time in half, you’re ethically obligated to pass those savings to the client.
The democratization goes even further. David highlighted Xero Developer’s new YouTube series, Is Everyone a Developer Now?, where the development team “vibe codes” working applications in real-time. In one episode, they built a functional month-end close tool in just an hour and fifteen minutes.
“Instead of chasing a small pool of developers to build apps, they basically have now opened up millions of accountants that could actually create apps,” David explained.
Blake shared his own example. He’d been procrastinating about converting Earmark’s books from a cash to an accrual basis because building the revenue recognition workpapers seemed overwhelming. Then he tried Claude.
“I just asked it what I needed,” Blake said. The AI walked him through methodology choices, downloaded sales reports from Apple and Google, and built a complete waterfall table that spread revenue across 12 months, plus reconciliation tabs and journal entries.
“This is the right template. This is the right format for me to have done this manually,” Blake marveled. “I don’t even know how many days it would have taken me to put this together.”
This shift in capabilities has venture-backed companies worried. Pilot, valued at $1.6 billion, just spun off its internal AI close platform as a standalone product. Another startup raised millions for similar technology. But as David pointed out, if you can “vibe code” these solutions in an afternoon, “is the app ecosystem the way it’s traditionally been just going away now?”
The Power Shift Is Just Beginning
These aren’t isolated stories; they’re all symptoms of the same fundamental change. Power is flowing away from institutions and into the hands of individuals.
Regulators like NASBA are discovering they can’t dictate what professionals say. Big firms can’t enforce the overwork culture that once defined public accounting. Private equity investors are betting billions on firms whose fundamental model is breaking down. And the same AI that helps Blake build sophisticated workpapers helps employees create fake receipts.
“It’s rules-driven innovation instead of customer-driven innovation,” David said about the institutional mindset that’s failing across the profession.
This shift brings opportunity and responsibility for accounting professionals. The tools that can build a revenue recognition system before lunch can just as easily fabricate an expense report. The capability is neutral; how the profession uses it isn’t.
Want to hear Blake’s complete walkthrough of building his rev rec workpaper, more details on the NASBA correspondence, and the hosts’ full analysis of these industry shifts? Listen to the complete Episode 494 of The Accounting Podcast. You can even earn free CPE credit through Earmark.
As Blake and David make clear, the redistribution of power in accounting is just getting started, and every practitioner needs to understand what it means for their future.