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.