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The Accounting Podcast

The Manager Paradox: Why AI Agents Need Just as Much Oversight as Human Employees

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David Leary had something to confess at the start of The Accounting Podcast episode 471. He needed an employee health insurance survey for his company, and the whole thing, from blank page to finished Google Form, took him three and a half minutes.

“I started with nothing, and I needed a result, and end to end it did everything for me,” David told co-host Blake Oliver. ChatGPT created the survey questions first. When its implementation got clunky, Google Forms with built-in Gemini AI took over and built the entire form. No tedious field creation or manual option adding. Work that would have taken an hour vanished in the time it takes to brew coffee.

It’s the kind of AI success story that’s becoming common: technology wiping out drudgery and freeing humans for better work. But as the hosts dug deeper in this episode, they uncovered a reality check for accounting firm leaders.

AI’s Hidden Cost: Same Management Time, Different Headaches

The tools keep getting better at connecting dots. Blake pointed to Google’s new “Personal Intelligence” feature that links Gmail, photos, YouTube, and search into Gemini with one click. ChatGPT has similar workspace integrations that search your email history for client and project information.

“Once your firm gets big enough, you don’t realize three other people also have relationships with that client,” David noted. AI that surfaces that context before you act is a real leap forward.

But the success story gets complicated when you deploy AI agents across an organization. Jason Lemkin, who runs SaaStr (a community for software startup founders), has been tracking the results of such deployments. At SaaStr, about 60% of the team is now made up of AI agents. They deliver huge productivity gains, but also need about the same weekly management time as humans.

“The big mistake,” David explained, summarizing Jason’s findings, “is that you can’t treat AI as set-it-and-forget-it. You have to have daily management of AI.”

The reason you need that oversight is the accuracy rates. For five- to ten-minute tasks, AI hits near-perfect accuracy: 99.9%. But stretch those tasks to an hour or two, and accuracy drops to 80% or even 50%. And AI mistakes don’t announce themselves.

“The AI makes these small mistakes that compound into big mistakes,” Blake said. “Humans do this, too. If you don’t have proper oversight of people, they’re just doing their own tasks, and small errors can compound into disasters.”

When There’s No One Watching the Store

The IRS is an excellent case study for what happens without human oversight of AI. The IRS just lost more than 25% of its workforce through various reduction programs, according to the IRS Advisory Council’s annual report. Over 2,000 IT workers have left since January 2025 alone. More than half of the $80 billion allocated under the 2022 Inflation Reduction Act has been rescinded, totaling about $42 billion since 2023, including nearly all enforcement funding.

Now the agency faces implementing the One Big Beautiful Bill Act (OBBBA), which includes more than 100 tax law changes. They need new guidance, technology updates, and process changes—all with fewer people and less money.

The consequences of this skeleton crew approach became clear in the case of Attallah Williams, a former SBA and IRS employee charged with stealing more than $3.5 million from federal COVID-19 relief programs. Williams used insider access at both agencies to approve fraudulent applications, recruiting accomplices through Instagram and collecting kickbacks. The scheme ran for three years and touched Paycheck Protection Program (PPP) loans, Economic Injury Disaster Loan (EIDL) grants, and employee retention credits.

“If one person can approve fraudulent pandemic applications, there are no controls at the federal level,” David said.

Tax Season Reality Check

Against this backdrop, tax season readiness varies wildly. CPA Trendlines’ busy season survey found that only 44% of firms feel about as ready as they were last year. Larger firms with 25 or more professionals report greater stability thanks to deeper staffing and refined processes. Smaller firms with 1-10 employees face the most volatility.

“Late documents, absences, compressed review cycles. When you have fewer people, you have less redundancy,” Blake noted. “When problems happen, it hurts more.”

Tax-heavy firms feel particularly exposed since their entire season depends on client behavior. Firms with recurring revenue from bookkeeping or advisory work report more stability because their work spreads throughout the year.

One bright spot came from Brenda Cannon of Cannon & Associates, who shared an innovation on the CPA Trendlines podcast. Instead of letting tax work pile up, she gives clients calendar links to schedule when they’ll submit documents. Eight slots per day, Monday through Thursday. Fridays for internal work. No slots three weeks before April 15th (reserved for extensions). Clients who don’t schedule by year-end get marked inactive.

“Clients no longer complain about extensions because they basically chose to miss their self-imposed deadline,” Blake explained. Only about 5% of clients left after implementing the system.

The Vanishing Entry Level

But even successful adaptations can’t solve a bigger problem: what happens when AI absorbs all the entry-level work that trains future professionals?

“The quality burden used to fall on the senior staff and managers,” David said. “But now the managers are going to have to bear that weight.”

Blake expanded the concern. Managers used to trust that trained seniors had learned to review work through years of practice. With AI handling those training tasks, that trust disappears. “I have a theory that life is going to get harder for managers in public accounting because they’re going to be the only thing between the AI doing the work and the partner.”

A viewer captured the problem in the live chat: “You can’t get experience to become a manager without an entry level. Bots and offshore have absorbed entry. So how do you get new managers?”

Blake’s answer was sobering. If firms can’t develop managers internally, they’ll have to recruit from industry. But industry professionals who’ve tasted work-life balance won’t return to the grind of public accounting. “The people won’t drink the Kool-Aid after they’ve had a break from drinking the Kool-Aid.”

Testing for Yesterday’s Skills

This transformation raises tough questions about the CPA exam itself. The 2024 pass rates were:

  • Audit and Attestation: 46%
  • Financial Accounting and Reporting: 4%
  • Tax Compliance and Planning: 73%
  • Regulation: 63%
  • Business Analysis and Reporting: 38%
  • Information Systems and Controls:58%

“The hardest part of the exam isn’t the material,” Blake argued. “We’re not doing advanced math. We’re doing algebra. It’s not complicated stuff; it’s just a lot of memorization, and it’s a real grind.”

Blake’s theory is the exam filters for grinders because that’s what firms needed. “The exam is a grind, and public accounting is a grind so they lined up.”

But that’s not the job anymore. “We don’t need accountants to come in and do a bunch of boring, manual, tedious work,” Blake said. AI does that now. The profession needs people who can analyze concepts and direct AI agents, not memorize rules they can look up in seconds.

“You have all these AI tools where they have all the knowledge. You don’t need to memorize things,” David added.

Yet change comes slowly. “Even if the powers that be agree with you, Blake, it’ll be a decade before they change that,” David said.

The Bottom Line

David’s three-minute survey creation shows where we’re headed: routine tasks becoming instant. But efficiency isn’t freedom. AI needs as much management as humans, but a different kind of management. The cognitive burden shifts up while the entry-level work that trained judgment disappears.

Every knowledge profession will face the same questions. How do you develop talent when AI does the training work? How do you maintain quality when the middle layer of reviewers vanishes? How do you test for skills that matter when memorization becomes obsolete?

Listen to the full episode of The Accounting Podcast for all the details, including more on the IRS crisis, innovative tax season solutions, and a surprise supporter for millionaire taxes.

The Accounting Profession Has AI Completely Backwards

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When Accounting Today surveyed industry thought leaders about AI’s impact on the profession, every expert agreed that AI would automate the boring stuff like bank reconciliations, data entry, and transaction matching while humans would rise to strategic advisory work. Not one thought their own job was at risk.

On a recent episode of The Accounting Podcast, hosts Blake Oliver and David Leary did something clever. They fed the same questions to ChatGPT, asking it to respond as an accounting thought leader. The AI’s answers were just as good as the human experts’.

“None of the accounting thought leaders think their job could be replaced,” David said, “which is crazy because essentially AI can at least do the thought leader job.”

Blake and David argue that the profession has AI’s impact exactly backwards. While everyone confidently predicts automation will eliminate mundane bookkeeping tasks, the technology actually excels at synthesis, narrative-building, and strategic analysis—the very work that defines “thought leadership.”

What AI Actually Does Well

The standard story about AI in accounting is machines will handle the boring, repetitive tasks while humans ascend to strategic advisory work. It’s comforting and logical. But according to Blake and David, it’s completely wrong.

“AI can take financial statement information and turn it into a narrative better than I can, better than almost anyone can at this point,” Blake states. “That’s what we should be using it for.”

Consider Mike Salvatore, a Chicago business owner with two cafes, two bars, and a bike shop. He used to analyze his cost of goods once or twice a year, spending hours crunching numbers. Now he does it every three weeks by feeding data from QuickBooks and his point-of-sale system into Google’s NotebookLM, which creates a podcast-style summary of his business performance. He sends these AI-generated recordings to his managers.

“It’s essentially my CFO,” Salvatore told The Wall Street Journal.

This isn’t AI doing mundane bookkeeping; it’s performing executive-level analysis and communication.

Blake’s own experience drives the point home. He built an AI system that turns news articles into detailed research notes and social media posts. That work used to eat up hours each week. He also trained an AI ghost writer on hundreds of his past writings. Now he can dictate a voice memo and get back a polished article in his own style.

“Basically, it has made it so, as ‘thought leader,’ I don’t do any of that anymore,” he admits. “It’s like I have a team that does that for me. I started working out and I’m just enjoying life.”

Meanwhile, the supposedly “easy” transactional work is stubbornly resistant to automation. David, who spent years taking QuickBooks support calls before co-founding the podcast, gets fired up about this misconception.

“Matching bank feeds is not bookkeeping. That’s just matching,” he argues. “Accounting is sending an invoice to somebody so they’ll pay me.”

He describes his recent struggle trying to upload an invoice to a client portal. It’s a “mundane” task that should be simple but isn’t. The process requires navigating confusing interfaces, making contextual decisions, and handling exceptions that don’t fit predetermined patterns. AI can’t do this reliably because it lacks the real-world context that humans take for granted.

The disconnect is striking. Thought leaders keep repeating the same message they’ve preached about cloud accounting for a decade: technology will free you up for advisory work. But as David points out, “I don’t think AI is freeing up your time to do that work yourself.” Instead, AI is doing the advisory work directly.

Are You Willing to See the Opportunity?

Where things get interesting is the same AI capabilities that threaten thought leaders create a massive opportunity for regular practitioners if they’re willing to see it.

Mike Salvatore, the Chicago business owner interviewed by the Wall Street Journal, wasn’t working with an accountant before. His AI “CFO” didn’t displace a human. He simply started getting insights he’d never received.

“Very few accountants serving Main Street businesses will actually do that kind of work for a price these business owners want to pay,” Blake explains. “So they do it themselves, but they don’t do it often and they don’t do it well.”

AI is filling a vacuum, not replacing existing services. And that vacuum is huge.

If a business owner can get advisory insights that are even 50-80% accurate from AI, that’s better than the nothing they’re getting now. The question for accounting firms is whether to let clients figure this out themselves or to offer AI-powered advisory services with professional oversight.

“Firms can feed data from clients’ QuickBooks files and their point of sale systems into these tools to generate AI analysis,” Blake suggests. “You can charge for it, because you’re adding the oversight—checking the numbers, making sure it actually makes sense.”

David connects this to a decade-old challenge. He remembers when LivePlan tried to train bookkeepers to offer business planning services. “They really struggled with it because they’re good at bookkeeping. But it’s hard to teach somebody to tell a story and create the narrative around the numbers.”

Now, “all those bookkeepers can basically offer that with AI out of the box and charge for that additional service.”

When ChatGPT (playing the role of thought leader) was asked what would make it worry about being replaced, it gave a revealing answer: clients accepting “AI-generated advice as good enough, even in ambiguous scenarios.”

Blake’s interpretation is blunt. “That’s what AI will fill—the gap in the market where accountants aren’t providing the service. There’s a big gap and there aren’t enough of us.”

Why Billable Hours Kill Innovation

One survey question asked about the “AI premium.” How much more should an AI-savvy accountant earn compared to an identical colleague who doesn’t use AI? The thought leaders said these employees should obviously be paid more.

Blake laughed at this. “How can you pay them more if you’re looking at them in terms of billable hours? AI is going to actually reduce their billable hours, not add more.”

If an employee uses AI to finish work in half the time, they bill half the hours. Under the traditional model, they look less productive, not more. Under the traditional model, “you should pay the AI employees less because they’re working less,” Blake points out.

This creates a ridiculous situation where your most innovative, efficient employees appear to be your worst performers.

Ryan Lazanis, who built and sold an accounting firm and now coaches other firm owners, has a different approach. He focuses on just two numbers: bottom-line profit and monthly recurring revenue. Not billable hours, utilization rates, or time per client.

“He is not breaking it down by client. He’s not looking at individual job profitability,” Blake explains. The only thing that matters is whether the firm made money over the year.

This makes sense because staff costs are fixed. “The amount of hours they spend has no impact on your profitability,” Blake notes. You only need to worry if one client is so demanding they prevent you from taking on others.

“You don’t have to track hours for months to figure out which clients are eating up your profits,” David adds. “You just go to your team and say, ‘Who’s the biggest pain in the ass client?’ And they’re going to tell you.”

There’s also a technical angle to consider. Blake cites research showing AI is nearly 100% accurate on tasks that take humans 4-5 minutes. That accuracy drops for longer tasks, but the threshold is “doubling every seven months.” By the end of 2026, AI might handle 10- to 20-minute tasks reliably.

But this only matters if firms can capture the productivity gains. Under billable hours, faster work just means more hours to fill. Under outcome-based metrics, faster work means more capacity for growth.

Is the AI Accounting Influencer Coming?

As the episode wraps up, Blake and David float an idea that captures the absurdity of the current moment. They’re considering creating an AI accounting influencer—a completely artificial thought leader to see if it can build a following comparable to real industry voices.

“Let’s make an AI accounting influencer and see if we can build its following to eclipse that of those real influencers,” Blake suggests. They could have it write newsletters, create content, maybe even land sponsorship deals.

It’s partly a joke, but it makes a serious point. If an AI can answer thought leadership survey questions as well as humans, write articles, and provide strategic insights, what exactly makes human thought leaders irreplaceable?

The answer might be less comfortable than the profession wants to admit.

Looking Ahead

The Accounting Today survey offered some important insights, though probably not what it intended. The people most confident about AI’s limited impact are those whose work AI does best. When ChatGPT generated answers indistinguishable from human experts, it demonstrated the very vulnerability those experts deny.

The real story is that AI excels at synthesis and narrative, which are the heart of advisory work, but struggles with the contextual, exception-filled world of everyday bookkeeping.

Firm owners should rethink their services to capture the advisory opportunity AI makes possible, and abandon billable hours before they strangle your ability to innovate.

For individual practitioners doing transactional work, the news is actually good. Your skills remain valuable precisely because your work requires the messy, contextual judgment that AI lacks.

And for thought leaders? As David observed with obvious frustration, the elitist attitude that “I’m better than you” has been in accounting for 30 years. “The reality is completely opposite. People are completely missing what’s really going to be replaced by AI.”

The race isn’t between humans and machines. It’s between practitioners who recognize AI’s true capabilities and those who cling to comfortable narratives while missing the transformation happening around them.

To hear more about Blake’s AI-powered lifestyle, David’s thoughts on what bookkeeping really is, and their plan to create an AI influencer that might outperform the human ones, listen to episode 469 of The Accounting Podcast.

The Auditors Got Red Flags About $95 Million in Missing Funds and Signed Off Anyway

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In the last episode of 2025 of The Accounting Podcast, hosts Blake Oliver and David Leary kicked off the conversation with an unexpected problem: America is running out of pennies. David’s friend owns sandwich shops in Tucson and literally can’t get pennies from the bank anymore. Businesses are being forced to round to the nearest nickel, and point-of-sale systems are scrambling to adapt.

“Square admits one fifth of all the transactions on Square are still paid in cash,” David noted, highlighting how this seemingly small issue affects millions of daily transactions. The government claims there are 300 billion pennies in circulation, but as David pointed out, “Obviously this isn’t true because businesses all over America do not have pennies to use in transactions.”

But the penny shortage was just the warm-up. The hosts quickly moved to a much bigger story about missing money: $95 million vanished at Evolve Bank, yet the auditors still signed off on clean financial statements.

$95 Million Went Missing While Auditors Said Everything Was Fine

Blake followed the Evolve Bank story for years, and recent Freedom of Information Act requests uncovered stunning details about what the auditors knew and ignored.

Evolve Bank is a chartered bank that worked with Synapse, a “banking as a service” company that wasn’t a bank itself but managed the technology connecting consumer apps like Yotta and Juno to actual banks. When you used these apps, you’d see your balance, but you had no idea which bank actually held your money. Synapse managed all those details.

“Everything worked great until April 2024, when Synapse filed for chapter 11 bankruptcy and shut down operations,” Blake explained. Suddenly, the banks and the apps couldn’t figure out where customer money actually was. Evolve froze withdrawals from thousands of accounts, leaving people unable to access their own money for months.

When banks examined Synapse’s records, they found massive problems. Between $65 and $95 million in customer funds couldn’t be traced to any bank. “Your Juno account might say $10,000, and the bank that’s supposed to have the $10,000 says, ‘We don’t have it,’” Blake explained.

The most damaging revelation came from the 2023 audit. When Crowe, Evolve’s auditor at the time, asked Synapse to confirm cash balances, the response should have triggered immediate action. Evolve listed 113 accounts, but Synapse was missing 29 accounts from daily data feeds. Synapse’s general counsel asked to discuss the discrepancies with Evolve’s leadership.

Evolve never responded to that request, yet Crowe still issued a clean audit opinion.

“Ninety five million is a lot of money,” Blake observed. “It would be 6% to 7% of Evolve’s total assets, likely over 100% of their annual net income, a double digit percentage of equity capital in some years. And typically, materiality would be 1 or 2% of assets.”

Are SOC 2 Reports Worthless?

The Evolve disaster led the hosts to question other compliance frameworks, particularly SOC certifications that companies display as badges of trustworthiness.

“My guess is Synapse had their SOC 2, because it’s not that hard to get a SOC 2,” Blake said. “According to my understanding, it’s really just a lot of documentation of the controls. But there’s not necessarily any confirmation that those controls are being followed.”

“They paid the money and got the badge for their website,” David observed. 

The hosts also discussed how a New Jersey accounting firm, Sax, took 18 months to inform nearly 250,000 people about a data breach. The firm claimed it followed standard procedures and saw no evidence the stolen data was misused, but for 18 months, affected individuals had no idea their personal information might be compromised.

“People could be using your stolen identity fraudulently 18 months before the accounting firm lets you know,” David said.

The problem is that while firms must have Written Information Security Plans (WISPs), they’re not necessarily legally required to execute them properly. “We focus on the wrong thing,” David argued. “We focus on having a WISP, not actually executing the WISP.”

Partners Don’t Know What Partners Make

In a lighter but equally revealing segment, Blake shared his favorite LinkedIn post of the year from Chase Birky, CEO and Co-founder of Dark Horse CPAs. Chase shared that almost a third of partners don’t know how much partners make at their own firms.

“How do CPAs not know how much they make? Isn’t that sort of what we do?” Chase wrote. The problem stems from a lack of transparency at many firms where partner compensation is calculated in a “black box” and communicated well after the fact. This secrecy is at least part of the reason talent leaves public accounting.

“I left because I got offered a job in tech that paid a lot more,” Blake said, sharing his own experience. “I didn’t know how much a partner made, and nobody could tell me what the path looked like.”

Should Companies Report Twice a Year Instead of Four Times?

The hosts also debated President Trump’s suggestion that U.S. companies should move from quarterly to semi-annual reporting, like much of the rest of the world.

Research from the UK showed that changing reporting frequency had “virtually no impact on companies’ internal investment decisions.” Studies also found that quarterly reporting creates “noisier data” that benefits sophisticated investors while hurting everyday investors.

“We’re always talking about how we have too much work to do in accounting and we’re pressed for time,” Blake said. “What better way to give ourselves more time than to make it two times a year instead of four?”

David wondered if less frequent reporting might reduce the pressure to play accounting games. “Monthly reporting probably puts pressure on people to sidestep the rules because it’s so fast and you have to perform.”

Looking Ahead to 2026

The hosts wrapped up with predictions for the coming year. David was skeptical about AI transforming bookkeeping. “I don’t see me doing bookkeeping at the end of 2026 any differently than I did in 2025, 2024, 2023, or 2022.”

Blake disagreed, pointing to new AI browsers that can actually navigate accounting software and complete tasks. “The time is doubling every seven months,” he explained. “Within the next year, we’re going to see AI able to complete tasks that take 15 to 20 minutes with 100% accuracy.”

David also predicted that OpenAI would strike a multi-million dollar deal with the AICPA, that at least two AI companies would fail, and, in his easiest prediction, “Intuit will tick off accountants in 2026.”

The episode covered far more ground than can be captured here, from the technical details of audit failures to the future of AI in accounting. For the complete discussion and all the insights Blake and David shared in their final episode of 2025, listen to the full episode of The Accounting Podcast.

Two-Thirds of Accounting Staff Hate Private Equity—But Partners Love It

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Two-thirds of partners at private equity-backed accounting firms say they’re satisfied with their arrangements. But ask the staff actually doing the work, and you’ll hear a different story. Over half are dissatisfied, with one director calling the situation “a dumpster fire.”

This stark disconnect emerged from an Accounting Today survey discussed on The Accounting Podcast by hosts Blake Oliver and David Leary. The episode also revealed a disconnect in pricing. Tax preparers charge an average of just $280 for a basic 1040 (CPAs) or $228 (enrolled agents). These numbers had David asking incredulously, “Where are these people? I’ve never been quoted this low of a price.”

The Private Equity “Dumpster Fire”

The numbers from Accounting Today’s survey reveal a profession divided. Among partners and owners at PE-backed firms, 67% report satisfaction (40% very satisfied and 27% somewhat satisfied). But look at staff responses and it’s almost a perfect mirror image: 52% are either somewhat dissatisfied or very dissatisfied.

The anonymous comments from survey respondents paint an even bleaker picture. “It is a dumpster fire,” said one director at a large firm. “Low morale, people leaving, bonuses cut, pay raises eliminated or lowered.”

Another director at a very large firm agreed. “It’s horrible and dysfunctional. Losing clients, staff leaving, and partners pay more attention to their bank account than taking care of staff. Most partners are counting the days until they can leave with their money in hand.”

Perhaps most concerning for the profession’s future, 64% of respondents believe private equity will have a negative impact on the integrity and independence of public accounting firms. Another 56% think clients will suffer negative consequences.

“The industry will take a hit and the clients will take a hit,” David noted. “That’s not going to bode well for everybody else.”

It’s worth noting that fewer than 400 of the 44,000 US CPA firms have taken private equity investment, so less than 1%. But these tend to be larger, high-performing practices, and the trend only started accelerating around 2022.

Tax Preparers Leave Money on the Table

While PE-backed firms wrestle with cultural upheaval, smaller practitioners face a different challenge: chronic underpricing. The National Association of Tax Professionals’ 2025 survey reveals CPAs charge an average of just $280 for a basic 1040. Enrolled agents charge even less at $228, while non-credentialed preparers average $185.

These numbers shocked David. “Since I stopped doing my own taxes and pay an accounting firm to do them, it’s $1,200 to $1,300 a return. I’ve never been quoted this low of a price.”

Still, the survey contained some encouraging news. When preparers raise fees, clients rarely leave. Melissa Bowman, an EA in Ohio, increased prices 12-20% across the board twice since 2020, and “not one client left because of pricing.”

“If not one client leaves after you implement a substantial price increase like that, you’re still underpriced,” Blake pointed out.

One particularly surprising finding is that 18% of preparers don’t charge extra for state returns. “TurboTax has trained 45 million taxpayers over the last 30 years that you have to pay extra to get your state return done,” David noted. “The fact that almost 20% don’t charge for doing the state return seems crazy to me.”

Billion-Dollar Audit Relationships Raise Independence Questions

The independence concerns raised by private equity pale next to the decades-long, billion-dollar relationships between the Big Four and their largest clients. Deloitte has audited Microsoft since 1986, collecting $78 million in 2025 alone.

“This is like a $2 billion relationship between Deloitte and Microsoft over the last 40 years,” David calculated. “With that much money involved, the motivations just can’t be aligned with the public.”

The situation gets more complex when you consider that these firms also sell consulting services. “Doesn’t Deloitte sell Microsoft consulting type services and they implement Microsoft Copilot AI type things, but they also audit Microsoft?” David asked.

Blake acknowledged the concern. “These firms are audit firms, but they’re also consulting firms. And consulting teams are some of the biggest resellers now of the technology their clients develop.”

Change may be coming whether firms want it or not. With Microsoft cutting 15,000 jobs in 2025, David predicts inevitable pressure on audit fees. “They’ll go back to their auditor and say, ‘we don’t want to pay this much for our audit. We want you to use AI,’” David predicts.

What’s Next for the Profession?

The AICPA is seeking comments on ethics rules updates for alternative practice structures—the arrangements that enable private equity investment. But there’s a catch. Despite announcing the comment period weeks ago, the actual exposure draft won’t be available until December 29.

“Today is the 23rd,” David pointed out. “If it’s not done today, when are they doing this? Christmas Eve, Christmas Day?”

David predicted the process could drag on. “This could take a decade,” he suggested.

The accounting profession is under pressure from private equity reshaping firm culture, chronic underpricing in tax prep, and billion-dollar audit relationships raising independence questions. For practitioners, there is a clear need to raise prices and watch the PE developments carefully.

For the complete discussion, including a story about a Scottish police officer’s heroic retrieval of evidence from a toilet and concerns about IRS readiness for tax season, listen to the full episode of The Accounting Podcast.

From OnlyFans Audits to AI Cheating Scandals: Inside Accounting’s Strangest Week Ever

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In episode 465 of The Accounting Podcast, hosts Blake Oliver and David Leary tackle one of the most bizarre unintended consequences of recent tax legislation: IRS agents may soon need to review OnlyFans content at work to determine if digital creators qualify for tax deductions. This absurd scenario perfectly captures the chaos unfolding as artificial intelligence and new regulations collide with traditional accounting practices.

The IRS’s Awkward New Job Requirement

The new “no tax on tips” deduction allows digital content creators to deduct up to $25,000 from their taxes. But conservative groups successfully lobbied to exclude “pornographic activity” from this benefit, leaving the IRS to determine what qualifies as pornography—a definition the Supreme Court has never clearly established.

“Are IRS agents going to have to sit in their offices at work and look at OnlyFans accounts and determine whether or not this content qualifies?” Blake asks. “Supreme Court Justice Potter Stewart famously said, ‘I know it when I see it.’ So that’s my question.”

The timing couldn’t be worse. The IRS just closed hardship telework requests, forcing employees back to the office while the agency faces a backlog of over 8,000 accommodation requests and has lost 25% of its workforce through voluntary separations this year.

David raises another complication: “If somebody did one video that got determined to be pornographic, do you lose the whole deduction or can you claim all the other days that you got tips?”

Tax professionals face their own dilemma. “Let’s say you get a client who says they want to claim the tips deduction, and they’re an online creator,” Blake explains. “Are you going to check out the content and decide whether it qualifies?”

When AI Meets Ethics—The KPMG Scandal

While the IRS grapples with content moderation, KPMG Australia is dealing with its own technology-related embarrassment. Multiple auditors were caught using AI and group chats to cheat on mandatory compliance training during 2023-2024. This happened after KPMG had already paid a $50 million fine for exam cheating from 2015-2020.

“AI is really good at taking these kinds of tests,” Blake notes. “Just copy paste all the questions into ChatGPT and you’ll pass in a heartbeat.”

The consequences were light: formal warnings for most, one verbal caution, and one person who left months later. The firm didn’t report the incident to regulators.

“They got fined $50 million for it before and then they just continued to do it,” David points out. “So the fines don’t work, obviously.”

The PCAOB is now warning it will closely scrutinize AI use in accounting firms. They’re particularly concerned about private equity-backed firms, fearing pressure for short-term results will compromise audit quality when combined with AI automation.

The Death of the Billable Hour

Beyond scandals, AI is reshaping how accounting firms operate and charge for their services. The billable hour, introduced in the early 1900s as a management tool and dominant since the 1960s, faces extinction.

“When AI can review thousands of contracts in minutes instead of weeks, charging for time spent becomes economically absurd,” writes Rita McGrath of Columbia Business School in the Wall Street Journal.

Blake experienced this transformation firsthand as a freelance bookkeeper. “I billed hourly for keying transactions into accounting software. I then figured out how to automate 90% of it. I had a choice: bill 80-90% fewer hours and lose all my revenue, or switch my clients to fixed fees and take ownership of the process.”

The efficiency gains are already here. Ramp has AI approvals handling 80-90% of transactions automatically. Xero’s new auto-reconcile feature uses AI to match transactions with high confidence. According to OpenAI’s survey of 9,000 workers, employees save an average of one hour daily using AI, with heavy users saving ten hours weekly.

But not every company succeeds at this transition. Pilot raised $118 million at a $1.2 billion valuation, betting it could automate bookkeeping and achieve software margins. Today, they have just 2,500 clients and recently launched a partner program to offload the labor they couldn’t eliminate.

“The fact that they’ve launched a partner program indicates they’re trying to push labor costs out of the company so they can be a software company,” Blake observes.

The irony isn’t lost on David. “They have this headline, ‘Tired of endless QuickBooks updates breaking your workflow.’ But the very first app they list in their integrations is QuickBooks. It’s built on QuickBooks.”

AI Writing Reports Nobody Trusts

Companies are racing to use AI for financial reporting even while harboring deep doubts about its reliability. Twenty-eight percent of financial executives already use generative AI for external reporting. ON Semiconductor’s AI writes entire sections of management discussion and analysis. Hewlett Packard Enterprise plans to use AI for first drafts of financial statements starting in January.

“Take financial statements, drop them into ChatGPT and ask for the narrative. It does a spectacular job,” Blake says. “Taking numbers and turning them into a story that non-accountants can understand, highlighting what’s important, it’s really good at that.”

Yet Harvard Business Review’s survey of 603 business leaders shows only 6% of companies trust AI for core business processes. Most limit AI to low-risk or supervised tasks.

“The work accountants do requires near 100% accuracy,” Blake explains. “Research shows AI achieves 80% accuracy at 30-minute tasks but 100% only for tasks taking a few minutes.”

Meanwhile, Meta’s creative accounting for its Hyperion data center—using complex structures to keep it off-balance sheet—shows human financial engineering still outpaces AI. As the Wall Street Journal called it, “Artificial intelligence, meet artificial accounting.”

What Comes Next

Interesting research is challenging assumptions about what drives audit quality. Studies show offices with less competition deliver better audits with fewer errors. “Competition pushes down fees, which incentivizes auditors to cut corners,” Blake explains.

Another study found audit teams with more women deliver higher quality at lower fees, but only in supportive environments with good work-life balance and female partners.

President Trump, meanwhile, claims tariff revenue will eliminate income tax entirely. “We’ve taken in literally trillions of dollars,” he stated, though actual tariff revenue was only $258 billion last year versus $2.7 trillion from income taxes.

“Doesn’t anybody prep him?” David wonders. “He just makes up numbers.”

The accounting profession is at a crossroads. Will accountants become the quality control layer ensuring AI meets professional standards? Or will they cling to outdated models until technology makes them irrelevant?

To hear Blake and David’s full discussion, including details about the new Trump IRA accounts for kids and Senator Jim Justice’s $5 million tax settlement, listen to episode 465 of The Accounting Podcast.