AI Tax Returns, EY Bonuses, and Deloitte's DEI Settlement

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! David Leary: [00:00:04] Accountants will lose their jobs if people at the top end management level are not doing ethical things, or if the firm's culture is not ethical. Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:20] Hey everyone, and welcome back to the Accounting Podcast, your weekly roundup of news in the profession. I'm Blake Oliver. David Leary: [00:00:26] I'm David Leary. Blake Oliver: [00:00:28] David. This week we're talking about E Bonusing staff. $100 million Deloitte paying $21 million to settle a d e case. I've got a story about using cloud Cowork to do two tax returns yesterday in record time. And you've got an interview with Jordan over at Cloud Accounting Staffing about offshoring and onshoring and how all of that onshoring. David Leary: [00:00:53] That's the big thing now. Blake Oliver: [00:00:55] Onshoring. Um, and, uh, before that, Before we get into all that, let's thank our sponsors, our sponsors. David Leary: [00:01:02] This week we have on page Thomson Reuters, Savant Labs and Cloud Accountant Staffing. Are you tired of payroll headaches getting in the way of the client experience that you want to deliver? Manual workflows creating bottlenecks, compliance, nightmares, and endless support calls that go nowhere. There's a better way for your team and your clients on pay as the payroll partner that accountants and bookkeepers actually love. Why? Because it's easy to use. Packed with value and backed by support that actually supports you. Their team gets rave reviews for being fast, expert and actually reachable when you need them. Onp handles the heavy lifting. You get a dedicated onboarding. You get a dedicated onboarding coordinator who sets up worker profiles and transfers your to date data from previous providers, all at no extra cost. Their seamless QuickBooks and Xero integrations eliminate manual journal entries, and they support any type of business you serve farms, restaurants, non-profits, you name it. I can handle the unique requirements without adding extra complexity. And on pay keeps pricing simple to everything your clients expect, from multi-state filing to off cycle payroll runs is included. No hidden fees, no surprises. To book a demo. Head over to The Accounting Podcast dot com slash pay. That is accounting podcast.io/onay. Blake Oliver: [00:02:20] Thank you on pay. And don't forget, dear listeners, please use those links when you go visit our sponsors websites. It helps them know that you found them through us and they really appreciate being able to track that. And welcome to our live stream viewers. We've got boring accountant here with two coffee emojis. I'm on number three already and we've got Benji who says, I love your podcast. Benji, thanks for listening. If you want to catch us live, go to YouTube, search for The Accounting Podcast, subscribe, hit that notification bell icon and you'll get notified when we go live, especially if you've got the YouTube app installed on your phone. Uh, tune in and you can chat with us and let us know what you think. All right, David, before we talk about E and their bonuses and this Deloitte settlement, I want to share a story with you about using cloud Cowork yesterday with taxes. I don't do a lot of taxes except our own tax returns. And I decided this year that instead of just working through it myself, which I did last year, I would use Co-work and see what it's capable of. I guess I did use it last year. I used maybe it was ChatGPT last year, but more in just a Q and A way. I was just checking my work with it in the sense of like, if I if I wasn't sure what I was doing when I went through the, the interview that you do. David Leary: [00:03:42] As a research partner last. Blake Oliver: [00:03:43] Year. Yeah, yeah. Like helping me try to figure out what a particular box was for instead of using the built in help, I could actually ask those questions and get answers, but I was still driving it all myself, you know, pulling the numbers from the GL. Uh, the trial balance. Right. Creating the work paper. Entering the numbers. And anyone who does this sort of work knows that's time consuming, even if you're fast at it. Right? It would have taken me days, you know. Day each probably to assemble all the paperwork and do the returns. And you know, I know a tax pro could probably do it faster, but hey, you know, it's if you're doing it yourself and you're not doing this all the time, that's about what it takes, right? And so I use Co-work to do it. And, uh, I wanted it to run it with me, monitoring it as much as possible. So getting Claude to do the work, getting the AI to actually do the work. And I was really, really impressed. So the first thing it did was it opened up the GL for each of these entities, uh, ones an S corp. And one is our partnership, uh, return for our media business. And the S corp is my personal. Blake Oliver: [00:04:54] And so the S Corp in zero for the GL and Earmark media are. Partnership LLC is in QuickBooks. So I got to see how it worked with both GLS. And the first thing it does is the first thing that any accountant would do, which is it goes. And it, it checks the numbers. It looks at the PNL and the balance sheet and the trial balance and tries to make sense of it compared to the prior year return and make sure that all balances and the S corp was fine because I had locked the period and there were no changes, but it got confused in QuickBooks, right? It thought there was like a change that you had made, but that was because of actually issues with QuickBooks reporting where cash and accrual were not like selected properly. Like there's some issue right now with the dropdown. And so the reports that was running were accrual instead of cash, even though it thought it was running cash. And then it couldn't make sense of it and it actually solved the problem, it realized there was a bug in the UI and it reran the correct reports. Tied them out to the prior return. So then it it pulls the trial balance, right. Blake Oliver: [00:05:59] It pulls the PNL in the balance sheet from both. And it created the work paper. So it asks me all the questions. Uh, that it, it, it needs to ask in terms of, uh, adjustments book to tax. And it did all of the book to tax adjustments in a spreadsheet in excel spreadsheet for each entity. And then I started with my S Corp and it, uh, I told it once I was happy with the work paper and its analysis and like what's deductible and what's not and what are we going to do with this? I said, uh, let's go into tax act. Let's do it. So it opened up Tax act business in a tab in Chrome. And it started working through the interview and it went through and it entered everything. And then it, you know, ran the checks that you get in the software. You know, how when you, when you, uh, enter everything. It then runs like error analysis and work through those. And then here's the part that really blew me away is it found errors in tax acts calculations. It it found mistakes that the software was making and it manually corrected them by changing the entries in the forms. And so the the. David Leary: [00:07:11] Now did it pause and like review this with you along the way or did it just go and do these fixes? Blake Oliver: [00:07:17] It just went and did the fixes and then told me what it did so that I could verify it. So the error it found was that Nondeductible expenses in Tax Act auto filled at an amount that was less than the amount it should have been. It ignored entertainment, which is 100% disallowed under section uh 274 A, and it corrected that value. So that would have been understated. So it corrected it. Schedule M one had no line for the entertainment add back after that. So it had to create a custom entertainment 100% Nondeductible line and enter that into the schedule M one it had it had defaulted distributions to $0 when the actual distributions were tens of thousands of dollars, and so left alone if it hadn't done that schedule K line 16 D, and the k one, box 16 D would have been blank, which would have been an error ending retained earnings auto computed at a slightly incorrect value. That's a serious one, because schedule L wouldn't have balanced if TaxAct hadn't overridden it. And then when it came to the state filing, there's a weird thing with the software where the name change box was like checked on the federal form and the and, and Claude found it on the state form and realized it shouldn't be checked. Blake Oliver: [00:08:42] And then it went back to the federal form and unchecked, that as well. There's an issue with the Arizona check box on filing selections that defaults to unchecked and resets every time you ran to the flow. And so the AZ state return would not have transmitted if it hadn't been fixed. There would have been an error with that. So like Claude Troubleshooted, all of this fixed it all and made sure that the, uh, schedule, uh, schedules M and L tied out, which is of course, one of the trickiest things when it comes to doing a partnership return, is getting that stuff to tie out. Right. And last year, I remember actually like trying to get the software to do it was a challenge. And Claude did it. And then I transmitted the returns both returns myself at the end of the process, and I had to go do one more check before I did that, downloaded the PDF of the return, ran it through like a fresh instance to make sure that everything tied out and it did a fresh analysis versus the values from the GL and the tax return and confirmed it. And all of this. It did it over the course of a few hours yesterday with me coming back and checking on it from time to time. Blake Oliver: [00:09:50] So it wasn't like instant because I had to keep coming back and I was doing other things. But like, i