EY cuts audit deficiencies to 5% with AI agents; firms must rethink staffing

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! Blake Oliver: [00:00:04] The staff are gone. Its managers, directors and partners and the firm of the future will basically be a team of those people overseeing a bunch of AI agents and maybe some administrative. David Leary: [00:00:17] Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:25] Hey everyone, and welcome back to the show. This is your weekly roundup of news in the accounting profession. I'm Blake Oliver. David Leary: [00:00:31] I'm David Leary. Blake, I'm going to I need to talk about some experiences I have with AI this week. But first, let's thank our sponsors. Um, sponsors. This week we have cloud accountant staffing, numeral on pay and Valtrex AI. So two new sponsors. So be sure to stay tuned to hear other ads today. Blake Oliver: [00:00:50] Are you tired of the endless search for qualified accounting talent? You're not alone. Growing accounting firms are struggling to find available and affordable team members when they need them most. Cloud accountant staffing has the solution with their revolutionary candidate portal. Unlike traditional staffing agencies that waste your time with sales calls, paperwork, and deposits, the Cloud Accountant Staffing Candidate Portal gives you instant access to highly vetted, qualified accounting professionals. No waiting, no hassle, just top talent right now. What makes this different? Speed and simplicity. While other firms make you wait weeks or months with Cloud Accountant staffing, you could interview someone as soon as tomorrow. Their boutique support ensures you're getting quality talent that's both available and affordable. That's exactly what growing firms need. The candidate portal puts you in control. Browse live candidates, make selections on your timeline, and build your offshore team without the traditional headaches. To find, review and book interviews with potential team members, all in less than ten minutes, head over to The Accounting Podcast dot com slash The Accounting Podcast dot promo forward slash CAS. David Leary: [00:01:53] Yeah, so I had two experiences with AI this week that, Um, one I'm kind of a ho hum opinion about, but I do think there's a warning for accountants here. And then a second one, I had an experience that we'll go into with you in AI. So first off, I'm turning 52 next week, right. And you have to do your yearly physical. Are you at an age where you're doing yearly physicals and blood draws every year? Blake Oliver: [00:02:16] Yet I should be you should I don't like going to the doctor. David Leary: [00:02:20] Okay, so I got my blood drawn and then they send the results. And all these doctors have these portals and they send you a little email, and I got an email and I'm like, I think this doctor's note might be AI because it was just too generic. It said, hello, your cholesterol numbers numbers are still pretty high. Dash not urgent. Had that dash right, the tell tale sign. But you can discuss with Emily at upcoming appointment diet. Low fat, high fiber, at least 30g of fiber per day. Exercise 30 to 60 minutes a day. Healthy weight. Like he knows, I literally go to orange Theory classes with my primary care physician. He knows I get exercise. He knows probably how much I weigh. I'm pretty sure AI sent this. And my thing is, I fear this is how accountants are going to use AI you're busy. I'll just have a reply to the client and it's just going to give a shitty, pointless response to the client. Right? The client's going to get a bad experience. Blake Oliver: [00:03:14] It won't feel human. It'll feel like why did why did I hire this person just to send me a templated email? David Leary: [00:03:20] Exactly. Blake Oliver: [00:03:20] Like, yeah. David Leary: [00:03:22] And so I don't do this to your clients, like treat your clients with the time and energy they deserve. If you want them to pay, you know, maybe you could do it with your free clients, but a doctor, you pay a lot of money for. And then the second thing this week, AI that's really got under my skin like it was you, your AI went into my database schema for all the ads you do for the show and change the database schema in our database. Arguably it was minor because I was able to fix it quick, but if your AI though didn't brag about doing it in an email it sent me. I would have never noticed, probably for another two weeks when math didn't work or something and I made a mistake and miscalculated or overpaid somebody, and then probably blamed our human salesperson for changing the database. Like it's it's crazy, right? Well. Blake Oliver: [00:04:11] David, your big mistake was giving me administrator access. David Leary: [00:04:14] Yes. I've downloaded graded your access. Blake Oliver: [00:04:17] So now I'm just a lowly editor and my AI plugged in acting on my behalf. Couldn't actually add a new field value, which apparently is what it did because we were trying to mark some ad slots as pending for 2027. David Leary: [00:04:29] It just created a whole new status of pending. I was like, where did this come from? Blake Oliver: [00:04:32] Yeah, yeah, no, it's a good I mean, it's a good point. I apologize, David, I, I was, uh, you know, touching, playing in your sandbox there and, uh, went too far. But I mean, it's a good lesson in internal controls, right? Is if you're going to give access to an AI agent, to a system that you use, you need to set up a login. Or if you know permissions so that it can't do stuff like that. Like the same way a human, you wouldn't want a human mucking around doing it. David Leary: [00:04:59] Yeah. Because the humans have locked down. But I thought like, because I think the thing is, Blake, like you would not have done this if it was you going the database, clicking around you pirate a bit. I probably should ask David before I just edit the field settings. Mhm. Blake Oliver: [00:05:15] So so what I did for my own accounting is in zero. I've got an AI agent doing the close in zero. The month end close. I created a login under our practice manager account just for the AI agent. It's called agent and it's agent at and that's the email address. And then that's the one that logs in with. So we can actually see what it's doing in the audit trail, whether it's going through the connector or through Chrome and it doesn't have administrator rights. So that's how I'm getting around that security. David Leary: [00:05:47] To lock things down. That's actually a good tip. I mean create set up. If you're going to set up agents to be on your team as little mini humans or whatever you want to call them, give them an inbox, give them a login, that's just them because that's the best way to audit it. You can see, oh, they logged in, they made this. And then you can control their data access. Blake Oliver: [00:06:05] Well, David, I've got a video here I want to play for you about financial reports and about when financial reports the companies put out like their annual financial reports used to be cool. And I didn't know this because I'm from a different era, I suppose. And now they're all just super boring, right? You download them from the internet and it's just a bunch of text. And maybe if you're lucky, there's some images, but this is kind of a cool overview of, of what it used to look like. Financial Reports Clip: [00:06:32] Corporations used to treat annual reports like modern art, but today it's just another spreadsheet. Pre-internet, these reports were the only touchpoint businesses had with investors. So it had to communicate success, innovation, stability. So they went all out. Beautiful graphic design, expensive paper, bespoke techniques. It was the corporate flex to make a coffee table book level report. Then two things happened. First, the internet made it so the physical report was no longer necessary. And then the 2008 financial crisis spawned strict guidelines on the way this data is presented. So in the eyes of these companies, it became too much of a risk to get cute with the design. But the story doesn't end there, because we're seeing a bit of a renaissance in this space, because this random data storage company realized people pay more attention to data when the design around it looks good. So now their entire content strategy is just making mock up designs for earnings reports, and they do respectable numbers on X, the story is exposing a fundamental truth about human nature that too many business people ignore, and that's that. If you want people to pay attention to something, the first thing you have to do is make it fun to look at. David Leary: [00:07:30] I don't think it has to be fun. It's the experience, right? The investors are the client of that report, and they gave them something they would have a good experience with, right? It wasn't. Blake Oliver: [00:07:42] Yeah. And it's a good reminder, you know, like for accounting firms, right? The reports that you deliver to clients like make those beautiful, make them want to look at them so that they're more likely to open them and not just disregard them sitting in their email. That was Lucas Mullen on Instagram. All right, David, now on to the news. I've got a story about taxing AI. As we've seen AI agents and LLMs improve over the last few years, there's been more and more talk about taxing AI because these AIS are going to put humans out of work. And now Bill gates is out saying that he wants to tax AI tokens and robots. His reasoning is that if you hire a person, you pay payroll taxes. If you buy a robot, you get to write it off as a business expense. So there's like an economic disincentive to hire people and an incentive to hire bots and depreciate them. David Leary: [00:08:38] Because tax policy dictates social policy. Blake Oliver: [00:08:41] So on a recent blog post on gates notes, he floated t