The accounting profession is facing turbulence on multiple fronts. KPMG is laying off roughly 100 audit partners in the US, while the best artificial intelligence available still gets one out of every five accounting tasks wrong.
In episode 485 of The Accounting Podcast, hosts Blake Oliver and David Leary unpack these converging stories that show the challenges and opportunities facing the profession. From venture-backed firms abandoning their “automate everything” model to a heated controversy over CPE standards with NASBA, the episode paints a complex picture of an industry in transition.
The Hard Truth About AI’s Current Capabilities
A new benchmark study from DualEntry tested 19 AI models across 101 real accounting workflows, and the results are interesting. Claude Opus 3.5, the current darling of AI enthusiasts, achieved the best performance at 79% accuracy. GPT-4o from OpenAI came in slightly behind at 77%. For context, GPT-4 scored only about 40% on the same tasks. It’s progress, but still nowhere near the reliability accounting demands.
The tests covered transaction classification, journal entry creation, bank reconciliations, and month-end close procedures. As Blake pointed out, the problem compounds. “It’s not like you’re automating 80% of the work because you have to clean up that other 20% the AI messed up.” Those errors cascade through financial statements and create cleanup work that erodes efficiency gains.
David put it in relatable terms. “If you had a human employee and ten hours of the week their work was just wrong, you’d probably freak out.”
The gap between 79% and acceptable accuracy for unsupervised work remains enormous. AI can assist and accelerate, but it can’t yet operate independently in accounting.
Tech Firms Abandon the “Automate Everything” Dream
The accuracy issue explains why venture-backed accounting firms are abandoning their original models. Decimal, which raised significant capital and even acquired KPMG Spark’s client base, pivoted away from providing services directly. Instead, they franchise their technology stack to independent firms that handle the actual client work.
“You can’t have SaaS valuations and raise money when you’re a human service business,” David explained, listing the other casualties, including Bench, ScaleFactor, Visor Tax, and Botkeeper. “We’ve seen this over and over again.”
Pilot made a similar move about six months ago with its “local partners” program that lets small practices use Pilot’s technology rather than Pilot doing the work itself. The technology is valuable, but human expertise is still essential.
Meanwhile, traditional players are moving in. H&R Block’s new CEO wants to transform the company from a once-a-year tax relationship to a year-round partner offering bookkeeping, payroll, and business support. Collective is buying OpenLedger. Even a fractional HR provider Austin Alliance Group wants into the bookkeeping space.
This sparked an interesting debate between the hosts. When discussing whether AI will handle routine work while humans focus on advisory, David pushed back. “I think it’s the opposite. Humans will be more involved in the data entry and the compiling of data. AI is really good at just taking scattered numbers and data, unstructured data and summarizing it, which arguably is advisory.”
Blake disagreed, pointing to a real-world example. A San Francisco store let an AI agent named Luna make operational decisions. Luna understaffed during busy periods, over-ordered candles, and lost $13,000. “AI doesn’t have memory the way people do,” Blake explained. Without context and accumulated experience, AI struggles with strategic decisions.
Big Four Layoffs, Demotions, and Massive Fines
While tech firms pivot, the Big Four face their own challenges. KPMG cut roughly 100 partners from its US audit practice (about 10% of audit partners) after too few accepted voluntary early retirement. The firm calls it “multiyear rightsizing,” but as David asked, “Does audit demand ever actually decrease?”
The situation is similar in the UK, where KPMG and EY started demoting equity partners to salaried positions. “Getting to partner at a Big Four firm used to mean a job for life,” Blake noted. Now that security is disappearing.
PwC faces different troubles. They’re paying a $166 million fine related to their audit of the China Evergrande Group, the collapsed property developer accused of inflating revenue by $82 billion. PwC audited them for over ten years before resigning in January 2023. As David observed, they probably made far more than $166 million from the engagement.
PwC is also ending its fully remote option for US tax staff, requiring three days in the office starting July 2026. Going Concern speculates this might be a way to thin headcount without announcing layoffs. Remote workers either need to relocate or quit.
The NASBA Controversy: A Debate Over CPE Standards
One of the episode’s most heated discussions centered on a demand letter Blake received from NASBA regarding comments he made at an AICPA conference. While demonstrating how to use AI to create CPE courses, Blake suggested the traditional approach of creating learning objectives first, then content, was “backward.” He argued it made more sense to let experts teach, then create the objectives based on what they teach.
NASBA’s letter accused him of making “unfavorable, unprofessional, or inappropriate comments” and demanded he cease such remarks immediately.
“If there’s any place for a discussion about NASBA policies, it should be at a conference with 200 L&D people from all the big accounting firms,” David argued. The hosts expressed frustration that NASBA treats different pedagogical approaches as inappropriate rather than worthy of professional debate.
“The pendulum has swung too far towards regulation and too far away from learning,” David said, noting how CPE often becomes just checking boxes rather than actual education. Blake shared a copy of his response to NASBA on his blog. In it, he asks NASBA to explain why expressing a different educational philosophy constitutes unprofessional behavior.
Where the Shortage Hits Hardest
A new index from Sam’s List reveals which states face the worst accountant shortages. Nevada tops the list with just 1.75 accountants per 1,000 residents and 139 professionally prepared returns per accountant, the highest ratio in the study. Nevada’s accounting workforce also fell nearly 30% from 2019 to 2024.
“Sounds like it’s a state accountants don’t want to live in,” David observed. “Accountants probably don’t want that Vegas gambling lifestyle energy.”
While Nevada has the worst per-capita shortage, Texas needs almost 25,000 additional accountants. This puzzled the hosts, given Texas’s population boom from high-tax states. “Are the benefits just not that good, and accountants see through it?” David wondered.
On the flip side, Washington, D.C. has nearly 14 accountants per 1,000 residents, almost ten times Nevada’s rate. New York has a surplus of 27,000 accountants above the national baseline.
Looking Ahead
The picture emerging from these shows AI is transforming accounting but not replacing accountants. The 79% accuracy ceiling, the pivot of tech-first firms, and the Big Four’s struggles all point to the need to find the right collaboration between humans and AI.
For firm leaders, the franchise and partnership models emerging from companies like Decimal and Pilot may offer a more sustainable path than pure automation. For individual practitioners, the message is encouraging. While AI raises the floor on routine tasks, human judgment, experience, and adaptability remain irreplaceable.
Listen to the full episode of The Accounting Podcast for the complete discussion, including more details on the NASBA controversy, state shortage data, and whether Kentucky’s elimination of the 150-hour rule signals the beginning of the end for that requirement nationwide.