SEC Eyes Semiannual Reporting; OpenAI Enters Accounting Consulting

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript. Blake Oliver: [00:00:04] They pitted OpenAI's one model against hundreds of real physicians across six different medical reasoning tests, and AI basically won all of them. David Leary: [00:00:16] Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:21] Hello and welcome back to the Accounting Podcast, your weekly roundup of news in the profession. I'm Blake Oliver. David Leary: [00:00:27] And I'm David Leary. I'm gonna put my light on. Apparently the sun went behind a cloud and now it's dark in my studio. Blake Oliver: [00:00:33] We've got a lot to talk about this week, David. The true cost of the Iran war. The Trump administration said 25 billion. We covered that on a previous episode, but it might actually be hundreds of billions or trillions, depending on how you count it. That's an accounting question. We'll dig into that. Also, the SEC and FASB are preparing for semiannual reporting. This is something that's going to happen. This was a Trump idea that got floated. A lot of ideas from Trump don't happen. This one is looking like it's going to. Companies will be able to report twice a year instead of quarterly. I can't wait to hear your thoughts on that. You've got a story here about OpenAI going to compete with the big four in consulting, in AI consulting. And we had some unfortunate news from Xero founder Rod Drury. He has been caught up in a scandal. Uh, and we will dig into that as well. He had to give up his award for New Zealander of the year. So we'll talk about that and more. But first, David, let's thank our sponsors, our sponsors. David Leary: [00:01:38] This week we have Cloud Accountant Staffing on page CNR consulting Group and fishbowl. Blake Oliver: [00:01:44] 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 Account 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. 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 io slash SaaS. That's The Accounting Podcast dot io forward slash CPE A s. And now, David, let's talk about the semiannual reporting issue. David Leary: [00:02:57] Yes, this was an idea in other regions of the world. Do this twice a year. Reporting, semiannual reporting. But for us, it's always been quarterly. And so I've always wondered like, what's the impact of this? But now it's really going to be here. Blake Oliver: [00:03:12] And it really does sound that way. According to reporting from Accounting Today, featuring or covering the remarks of SEC and FASB officials at Baruch College's Financial Reporting Conference in New York. The biggest development is that they are saying they are actively preparing for an optional semiannual reporting regime, which would report which would let public companies report twice a year instead of quarterly if they choose. The officials are framing the proposal as a way to reduce disclosure overload, cut compliance costs and give companies flexibility while still preserving investor relevant information. Companies will be able to elect the option by checking a box on form 10-K for the following fiscal year. New registrants will have a similar election on the registration statements, and the SEC would create a new form ten S for semiannual reports, replacing the usual quarterly form 10-q. Cadence for issuers that opt in. Important to note this rule is voluntary, meaning companies that prefer quarterly reporting wouldn't need to change anything. And one of the reasons for this, one of the arguments in favor of this is that quarterly reporting doesn't necessarily give us any more information than would be helpful under like a semiannual reporting regime. And FASB Chair Richard Jones reinforced the point by saying that one of the key principles of accounting is this idea that immaterial information doesn't need to be disclosed. So if it doesn't really matter to investors. There's no need to disclose it. And why do we do quarterly reporting? All this extra work if we don't have to? And, David, you have made an argument in the past about this regarding it creates. David Leary: [00:05:05] Pressure on the street, right? The street creates pressure. And I'm not saying that it causes fraud, but I think there's this pressure to perform the previous quarter, outperform the previous quarter, outperform the previous quarter. And so instead of having your business models, which sometimes can't pivot and change and improve in 12 weeks, right. Or ideas that the company you're incubating maybe don't show results every 12 weeks. People play games with the numbers, right? And so, so maybe we'll get less manipulation with numbers because people can then instead spend six months focusing on actual transformational business changes in their business model that would change their Semiyearly month, its Semiyearly reporting. Blake Oliver: [00:05:49] Semi semiannual. David Leary: [00:05:51] Semiannual reporting numbers. I mean that's my thing. But now we have a whole industry built around this though right? We do quarterly reports and we do. Blake Oliver: [00:06:00] But like this is a good thing if you think about it. Right. If it creates less work for accountants, if we don't have to report quarterly, we can do it semiannual. Like that frees up some time from tasks we're already doing. So in a world in which we don't have enough accountants, this could be a welcome respite, and it would create fewer deadlines too, which would help accountants, auditors at the big four, at firms that have to audit these companies, these public companies, and for their internal teams and their CFOs and controllers. So, you know, I want to hear more about whether or not this would really reduce like the usefulness of the information to investors. And if it doesn't, I say, why not? Why not remove complexity? Now, if only we could also do this for the tax code. All right, David, I want to hear about your one of your top stories this week, which is open AI is going to be doing consulting that could impact some of our listeners at the Big Four. David Leary: [00:06:56] Yeah. So this just broke, I think this morning. So open AI is launching a new enterprise focused venture called open AI Deployment Company. So it's a whole new business venture. They've raised $4 billion in its initial funding. And the business, they're going to help businesses, probably fortune 500, right, to implement and scale AI inside their organizations. The company plans to embed AI deployment engineers directly into client companies to identify high impact use cases and accelerate adoption. And a part of this launch, they also acquired a AI consulting company called tomorrow, TOMORO, and that adds them instantly. They gain 150 bodies to do this, this rollout. Um, and the companies that invested in this, you're looking at Bain Capital, Brookfield. Um, here are some of the other ones. Uh, SoftBank, McKinsey Sachs, Goldman Sachs. So it's kind of the typical players, the big money, who've already probably invested lots in AI and they need to see results. So now they're going to pay, they're going to push this out. Now let me read a quote from a website, leverage engineering led design, deep industry knowledge and AI and data driven insights to transform the technology platforms at the core of your business. Working alongside your team, we empower your organization and drive mission critical solutions. Whether you need to modernize existing systems or implement two new technology products and platforms. Through innovation, we can help you improve financial performance, accelerate new digital businesses and fuel growth. Kind of interesting, right? That's Deloitte's AI website. Like essentially, they're they're building the all the big four spent billions of dollars right to spin up these AI consulting branches of their firms, and now OpenAI is going to roll out a competing product. Blake Oliver: [00:08:51] I wonder if this means OpenAI is worried, because why would they be investing in consulting services if their product is so great? And maybe they're worried about Claude because anthropic has if you look at the charts, the adoption of Claude in enterprise and big businesses has just skyrocketed up while ChatGPT, OpenAI, they've kind of stayed steady. David Leary: [00:09:14] Well, this ensures if if if I'm Deloitte and I'm. My AI team is working with a fortune 1000 company to roll out AI, there's a chance I might present that company with 2 or 3 different tools. Yeah. I guarantee you the what's it called again? The OpenAI deployment company will only recommend open ChatGPT. They're not going to recommend anybody's tools. So you're right. It could be a hedge to make sure they're getting their foot in the door. But this is essentially a brand new business model the big four is creating for themselves, and it's going to be eight and alive by a competitor that didn't even exist 48 hours ago. Right? This competitor did not even ex