Change for the Better

Today, our guest is Donny Shimamoto. Donny is the founder and managing director of IntrapriseTechKnowlogies, which, “technologies” is not spelled like you’d think it was spelled. Maybe I’ll have Donny explain that to us. But I like the play on words with “IntrapriseTechKnowlogies.” He also has the Center for Accounting Transformation, which we’ll be talking about probably quite a bit today. He’s well recognized as a leader in this industry— Accounting Today, top 100 multiple times, multiple times on CPA Practice Advisor Thought Leaders, CPA Technology Advisors 40 Under 40—pretty much anything out there, he’s gotten an award or recognition from because he’s a great guy, and he honestly wants to help this profession. So, Donny, welcome to The Unique CPA.

Thanks, Randy. I’m honored to be here. I’ve seen your list of previous people, and I was like, “Wow, that’s—you know some people!”

That is, I honestly say, “How do I know these people? I don’t understand why—how all this got to this point where I can call up pretty much anybody in this industry, and they’ll take my call, if I wanted them to be on the podcast.” It just boggles my mind, and you are on that list. So I appreciate you being here and saying that. 

So today, there’s a few things we can go into. There’s a few things we really want to start talking about. But let’s go with your Center for Accounting Transformation. You have a tagline there or a mission statement—I don’t know if that’s technically what it is—but you’re looking to help transform the accounting profession, the business world, making the world better, and making the profession better with leading edge tools and technologies. It’s basically, you have this mission to make the world better. And there’s a few things within there I think we’re going to talk about today. But why don’t you give us a little background on that, the Center for Accounting Transformation, how this started, or how your whole mission started, and what your goal is?

Sure, sure. So yeah, and you hit on it, our goal is to improve the world. So that’s why our URL is ImproveTheWorld.net. And it’s dot net, because we look at it as the network, and so we’re creating the network of accountants and people that work in support with accountants. So one of the things we’re trying to do is be very inclusive. If you look at a lot of, like, the state societies and associations, they kind of create this, “Well, if you’re not a CPA, you can’t play in the game.” We believe that it’s the CPAs, and everyone that works with the CPAs, and the vendors that provide the technology, and the consultants that you know, do everything—it takes all of us to really move everything forward. And that’s really what we’re trying to do, is move everything forward. You know, part of our mission is not necessarily to convince people to change, but it’s to help accelerate change and transformation for those that want to go through it. So we’re really trying to be a resource—or maybe like a hub is a good way to think of it—for people that want to go through this transformation of the profession, which, you know, that also often gets a lot of question. 

So it’s, I often describe it as, it’s partly technology, which a lot of people know me originally as kind of a tech guy, but it’s a lot of changes in business processes. Like you being in tax, we’ve been doing a bunch of stuff around tax workflow and client portals and things like that. But then it’s also changes in business practices, so adoption of value billing, creating relationships and networks, like you being a specialist, I’m a specialist in the technology and innovation area. So having—especially smaller firms know who should they go to, who’s, you know, really valid, don’t just pick up Joe or Jane Schmoe off of the side of the street and be like, “you’re a tech person, let me work with you.” And it’s like, we don’t know, do we really want to trust our clients with just anybody, right? So finding other experts, like ourselves that have different disciplines is kind of a part of what we’re trying to do.

Yeah, that’s awesome. And it’s, I kind of feel like I have a similar mission, just from the standpoint that, you know, I’m trying to educate the profession through this podcast and other ways. And you’re helping with that, which I think is awesome. 

So with some of the things—and we can concentrate on a few that you’re doing—but I think there’s maybe two or three that we should probably go into today. And one of them is this whole ESG. Can you explain what that is? And then what you’re doing with that at the center?

Sure so ESG stands for “environmental, social, and governance” reporting. And it’s really come to the fore in terms of public companies right now, which often will make people think, “Well, you know, that’s for big companies, and, you know, why do I need to pay attention to that?” But when you look at what ESG is actually measuring, or it’s looking at, it’s looking at a lot of what in accounting, we would think of as the intangibles around a business. And when you look at not just the valuation on Wall Street, but even in a typical valuation, like a business valuation—so when it affects small businesses, the different areas within ESG actually play into, you know, the actual value of your business. 

To give some examples, there’s been a consolidation in the reporting frameworks under the SASB—so the Sustainability Accounting Standards Board. So it’s getting to the point where just like we have financial reporting standards, there’s going to be these ESG reporting standards. And there’s five major categories: So the environment, which is what most people think of when they hear sustainability, but it’s also leadership and governance, business model and innovation, social capital, and then human capital or talent, which, you know, everyone’s talking about the war for talent right now. 

Oh, yeah. So I’m not real familiar, so I appreciate the education. But I am not familiar. But I’ve talked to someone else on the podcast about being a B Corporation. Is there any synergies between those, or are they competing or working together? Do you know at all?

So the corporation, the B Corp, or “Benefit Corp” is, it’s sort of—I think of that as it ties into the governance side, because the with the B Corp, the way you make decisions is supposed to be more for the overall benefit of the public, rather than just the benefit of the shareholder, right? Because that’s kind of the whole thing about the corporation is it exists for the benefit of the shareholder. 

Right. Alright. And so the B Corp is that. So look at you! I just threw a question out of the blue at you and you were able to, you’re able to tell us what a B Corp is. Because I couldn’t even tell you what that is, I just know that it’s out there, and I don’t know if you’re familiar with John Sensiba from Sensiba San Filippo, a CPA firm out of California, but became a B Corp years ago, and now they have just a group in place to help advise companies on how to become a B Corp. 

So when you’re out talking ESG, is this advice you’re giving to companies—how to be within this ESG, how to be sustainable? How to have this governance, how to be good for the environment, everything? Are you advising on this? Or how are you guys tying in with ESG?

I would say right now we’re trying to educate, and that’s the biggest piece, because people are seeing it. And again, they’re kind of thinking, “Oh, that’s a public company thing, because you see the SEC starting to require sustainability reporting as part of it.” But when you when you look at the different areas that is involved, if you actually use the sustainability areas as a way of, for example, analyzing decisions, and kind of come up with, you know, different—a more balanced decision, maybe—which for some people might bring up better balanced scorecard, or, you know, because that that was the kind of that late 90s, that kind of came out. And then there was like conscious capitalism, and I feel like there was one other movement that kind of was looking at this, like, it’s not just about profit, right?

Right. 

So all of these things kind of had their own way of looking at it. And some people are saying like, “Oh, well, ESG is kind of just the next thing, where it’s just another one of these management frameworks.” And the biggest difference for my answer to that is no, because the intention on this is not necessarily just the management decision making analysis, there’s actually reporting, that’s tied into it. And the standards for reporting, like I said, are tied to the SASB.

This has gotten farther than these other movements in the past, if you want to say it’s a movement—it’s actually official reporting requirements now. 

Yep. 

Alright. So this is great. Well, how is this relevant, you know, to CPA firms and the companies you work with? How do you equate the ESG to what you need to deal with them?

So there’s two really major areas, especially as we look at our accounting industry now, and one of those is cybersecurity, which actually falls under the social capital area of ESG. So there’s two aspects under social capital—one is customer privacy. And that, you know, there’s been a lot of talk about that especially, we didn’t hear it as much as this year, but the last two years.

Oh, yeah.

With everything that was going on, right? The Cambridge analytical scandal and all that. And there’s still a lot of criticism around all social media, and what are they actually doing, right? With stealing our data and selling it to other people. So there’s that privacy aspect. And then tied into that, then is also data security. So that would be kind of one thing that I think firms really need to do, especially as we go into busy season, like firms need to protect taxpayer information. That’s a big one. And then the other one is DE&I, or Diversity, Equity and Inclusion, which is tying back into this whole war for talent that’s going on, and that’s under the human capital area, and ESG reporting,

Let’s expand on those. Let’s expand on cybersecurity first. Because we are going into tax season now, and that’s extremely important. As tax professionals, we’re dealing with a lot of very, you know, social security numbers, and bank accounts, and all this whatever, and there’s a lot of information that we need to protect and, you know, sending an email with someone’s W-2 on it is probably not the best thing to do. When we’re talking cybersecurity going into this next tax season right now, what are things first should be doing to make sure they’re protecting themselves, their clients, and obviously, their reputation?

So there’s a lot out there on that, right? But the core thing that we’re finding that tax—especially smaller tax practitioners—are missing, is having an actual information security policy, and the associated, you know, having their cybersecurity technology mapped into that. So that’s a gap that we actually just released some guidance, and we negotiated with some vendors to actually do some bulk purchasing, because a lot of these vendors for the cybersecurity, they want like a minimum of 25 people. And so their pricing is a minimum of 25. But we, under the Center for Accounting Transformation, went and said, “You know what, we have a bunch of smaller firms that we work with. Can we do some type of group purchase?” And so that’s what we’ve arranged. 

But the big thing that people are missing, and I don’t know if everyone noticed, when they were like renewing their PTINs and stuff, you actually have to check a box that said, “I have a written information security plan, and I’m actually enforcing that with all of my staff,” or even as a sole to say, “I’m doing it for myself.”

Right. 

And that’s a piece that we’ve been talking to people and they’re like, “Oh, no—I didn’t pay attention to that. Is there a template?” And it’s been, they’ve been asking for years and years, because I’ve been talking about cybersecurity probably at least 10 years now. They’re like, “Is there a template?” And I’m like, “Yeah, there’s a template. It’s from NIST. It’s designed for really big companies. Hopefully, eventually, there’s going to be one for smaller.” And that just never came out. So the other thing we worked on this summer was a template—one template for sole proprietors for an information security plan, and another template for kind of what we call small office or home office. Soho is the word we use.

We’ve created some template plans, and we’ve actually mapped it to these technologies where we’ve negotiated these bulk purchases so that firms can actually be in compliance with the IRS—it’s publication 4557—as well as you know, have that kind of that sense of peace of mind that we really are protecting, we’re not just kind of saying we are, we actually are protecting our clients’ data.

So these templates, then how is this available to anybody? Is this available to people that are coming in to this group purchase you did? How’s these templates work?

Yep, that’s, that’s pretty much it. So usually, what we are doing with this is we’re is for talking with people, kind of understanding what they already have in place, and then figuring out, do they really just need the template? Of course we’re selling it, but it’s nowhere near you know—normally, if you were to hire an independent consultant to just write a template for you, they’re normally gonna take one of these, like NIST ones that’s really heavy and designed for bigger, you’re paying like $10-15,000 to get a policy written. Instead, we’re kind of reverse engineering it. We’re like, “Here’s the technologies that makes sense for small firms, and we’ve written the template to kind of match that.” So we’ve gotten the price down to like a couple thousand instead.

Alright, because I’m guessing there’s a lot of people listening that think this is something I probably should do and haven’t done and so that’s why I asked that because, again—this episode I’m almost certain is going to come out right before tax season gets into full swing here. So I honestly, I want to, at the end we’ll make sure that people know how to reach out to you, because this will be one “peace of mind thing” that they can get off their plate, so they can concentrate on tax preparation and not be worried about these other things. So we’ll talk about that at the end then. So I appreciate you bringing that up.

Alright, so we’re going to try to give people peace of mind going into tax season with these types of things. Is there other things cybersecurity-wise that have happened recently that we should be aware of, that maybe we’re not, and we should, you know, have some other policies or something in place?

Yes, definitely. The other thing that’s driving the need for the policy, and that’s this is partially why we decided, “Hey, we’re not going to wait anymore for someone to come out with something, we’re going to create something,” is the FTC updated the Safeguards Rule, which this originally came out with Dodd Frank. And it’s, when you look at it, a lot of it will say it’s applying to financial institutions, which makes it sound like it’s banks and credit unions. But there’s two things that pull accounting firms into this definition of financial institutions. And one of those is the handling of wires. So like, if you’re providing outsourced accounting to a client, and you’re doing wires for them, then you get pulled into this one. But the big one for tax is if you’re preparing a tax return—like literally preparing a tax return—so there’s no question of whether or not any tax preparers are covered under this rule, and the change that came out, so the change was actually published in December of 2001. And previously, people may know of it as the Red Flags Rule, because that was kind of the term that was used when it first came out—it was a lot of like, recommendations. The big change that came with this update last year, was they switched from what was recommended, to now there’s like eight or nine things that are required. 

And this is one of those where they didn’t do a really good job of thinking about the different—thinking of the fact that this was going to apply to small accounting firms. 

Yeah.

So there’s some requirements there around some reporting, advice if you’re outsourcing your IT, things they need to provide reports to, like in the rule it’s written as “the board,” or equivalent, which means then if there’s multiple partners, that should be the partner group, or the sole proprietor. And you actually need to identify what they call a “qualified individual,” meaning someone that understands this stuff and can determine whether or not all the protections are in place and incidences are being handled correctly. So it was really kind of like, “Whoa, they are, you know, asking a lot of a tax practitioner.”

Right!

So, again, that’s kind of why we jumped in and said, you know, what, we better create—so we created the policy, we’re we’re in the process right now of actually writing up procedures that a partner or practitioner could follow on their own, and creating the templates for them to document how they’ve complied with these policies, so that they don’t get assessed fines and penalties if they were to have a data breach.

So it’s all based on a data breach. I mean, there’s all these rules out there, then, and I have to comply with it. And so what you have in place, then, it’s a CYA. One, I’m gonna do these things, but it’s also now I can prove that I’ve done these things. So I’m covering myself to make sure because that seems like if I’m sitting here doing forty tax returns a year, and there’s these things out there, I got—one thing you just made realize: I gotta stop doing my family’s tax returns. I don’t have anything in place that I probably need to, for this type of stuff. But that’s what we’re talking about is that, yeah, there’s rules in place, and you’re going to help people make sure that they’re following those rules in a step-by-step process to make sure that things are in place that are required to be in place.

Yep. And luckily, the FTC pushed back. So originally, it was going into effect on December 9 (2022), which, you know, we’re well past, and I’m pretty sure no one’s doing any of this stuff. That was, again, why we were like, “We better create something, because there’s gonna be a lot of people not in compliance with this.” But it’s been pushed back to June—so after tax season has given a little bit of time. And you know, the reaction we normally hear to that is like, “Well, then I don’t need to worry about it until after tax season.” But actually, the biggest exposure point is during tax season, because you’re so busy trying to get through stuff, you’re not checking your links, you’re not doing all this stuff. So we’re telling everyone, you know, even if you don’t fully roll out the policy, at least get the technology side in place before tax season, because it’s just that one additional layer, because you don’t want to deal with a data breach during tax season. And the last two years we’ve seen the most data breaches ever, and it’s because of everyone working from home, and all the phishing scandals and like, the bad actors are just out there right now fishing for stuff.

Yeah, no, I think that’s good advice. So I’m glad that we’ve got this out there. I think, let’s go to the one last thing then, and wrap it up, but the third thing that we talked about—or the second thing, I guess, under the ESG—was the DE&I, and how that ties into it. So you want to expand on that some? 

Sure. So that I think ties into the people aspect of what we’re trying to do. And it seems like everybody’s trying to find staff. And so a big portion of retaining staff is that they feel like they’re part of a firm. So that’s kind of the inclusion, right, in DE&I—diversity, equity and inclusion. And then I also like to tie in the concept of belonging. So I often will go with “diversity, equity, inclusion and belonging.”

I like it.

It’s inclusion and belonging when a staff member feels like they’re a part of the firm, they’re a part of the team, “I belong here.” That’s when they’re not thinking like, “Well, is there something better on the other side? Is there, you know, could I get more money somewhere else,” like with all this recession, and everything looming? You know, that feeling of belonging can keep people at a firm, rather than having them change. And there seems to be a lot of people, like especially larger firms, going after staff in previously remote areas, because now they’re allowing them to work remote, right?

Right. Yeah, I’ve heard that quite a bit. I can get New York wages while living in wherever, you know, a small rural community somewhere. Yeah, there’s no geographical limitations to hiring employees, for the most part, it seems—at least in our profession. So they’re working on that. So educating on that, then—are you doing this through webinars and podcasts? Are you out consulting on it? Or all the above?

Literally almost all of the above. So our focus right now, again, is on the education piece, and what we’re doing is we’re identifying the consultants that are actually working in this area. And this is another one, kind of like we were talking about the ESG, where people go “Well, that, you know, that’s big companies, because I’m a little two, three person firm, can I really have diversity?” And the answer on that might not be yes, but can you embrace practices that create inclusion and belonging? The answer to that is definitely yes.

Yes. Alright. Well, that’s awesome. 

So I love those aspects that we talked about. One thing, the last thing I want to talk about, because you and I have been talking about this a little and I think we’re gonna look to do a something together on this is the personal resilience, the mental health, that aspect of the world, but our industry as well. How are you working with that?

Yeah, well that’s one I’m glad to have you to partner with on this. And we’ve lined up a couple of others in there. You know, as I kind of think about what we were just talking about, a lot of this was like, “watch out for these things in busy season.” So watch out for cyber, watch out for staff turnover. And then the last one though, if people are seeing, is watch out for that burnout. 

Oh, yeah.

Watch out that you’re not overloading people, or you yourself. And I think that’s a really powerful message. Because with the staff turnover, the partners, right, whoever—the firm owner—ends up taking on the brunt of some of the coverage. And I know you’ve had some health issues in the past, I actually have just gone through—I had like shingles and I just had COVID. And part of that, I think was because I wasn’t taking care of myself physically, so my immunity was down. So this, this is a very real risk, I think, to firm owners themselves. So we’re trying to actually pull together, again, kind of a directory of resources and education around what are people’s options. So you’ve got someone I think that I can’t remember her name that had—

Courtney DeRonde—she’s done a presentation, like back to back with me. And she talks about basically, how to best utilize your time—“Full Focus System” is what she uses. And so, yeah, those are the types of resources you’re looking to accumulate to help people, right?

Yeah, so we’ve got Courtney lined up for that, and a couple of others that have those types of systems. We’ve been talking to a bunch of coaches—like executive coaches type—that help people just really think through and prioritize and really look kinda like, “How do I actually rebalance my life in this sense?”

Awesome. 

And then the last thing that we got, which is actually the thing that I’m most excited to see come out is, I’ve been working with a psychologist—a licensed psychologist—and helping him to understand. I had him talk to a bunch of CPAs that have gone through kind of burnout, and some of them that have stayed, and some of them that have decided, “Hey, I’m not going to do accounting anymore.” And so he started to create a counseling model for I’m going to put air quotes around “accountants in crisis,” where you’re at that point, and you’re having, like, you feel like you’re having, like, I don’t want to say a mental breakdown—hopefully no one’s at that point—but you’re really burning out and you feel it, that you there’s an actual counselor that you can talk to that understands what our industry is like, and what we’re dealing with.

Yeah, we have a personality that tends to—as accountants, in general—a personality that tends to think we need to help everybody. And by doing that, we always think we can outwork our to-do list and if we just work harder, and we work longer, and then we forget about the fact that just is gonna take a toll on us both physically and mentally. I love that idea that “accountant in crisis” counselor out there and available. 

Unfortunately, it’s a big deal. I’ve been doing this mental health presentation, and every time I do it, I have multiple people come up to me afterwards, basically, talking about the burnout. But as you said, hopefully nobody’s at that mental crisis stage. I’ve had plenty of people come up to me that are at that or in that stage already. And so anything I can do to help that not happen—and you have the same mindset—I think that is awesome.

And I think it’s like you just said, I think it’s important that we talk about it. That’s one of the biggest things, you know? It’s almost like the whole the badge of honor with billable hours. And it’s like, no, like, we need to take care of—we can’t take care of our clients or our family or friends or anybody if we don’t take care of ourselves.

Yeah, no, that’s completely, and I agree with you. And that’s one of the things I do on my presentation is like, you know, stop selling hours. Find a better way to bill and a better way to build a relationship with your clients. And I know that’s something that you talk about as well.

Yeah, well, and we’ve actually gotten Michelle Golden—or I should say River, I just called her by her former name—we’ve got Michelle River involved with our center too, so she has a course there on doing the, she calls it “advanced billing” rather than value billing. But that’s why it’s this mix of what we’re trying to do of different technologies, different business practices, all to drive and improve the profession as a whole.

Yeah, well, I love what you’re doing with the Center, I love the fact that you’re trying to make this a better profession. I think that’s awesome, because I’m a little concerned with the lack of people going in, and the lack of people staying in. And other things happening and just that, we could be a little bit in a crisis mode before long if we’re not already. So anything that you’re doing, that people can reach out to I think that’s great. 

Any last thoughts on what we talked about or anything I missed you want to add in?

No, I would just summarize again, you know, these are all things that you really need to think about as you’re going into busy season. So secure down those systems, get the technology and policies in place to kind of “CYA” like you said, because this is the risk period. Think about your people. And let’s prevent all that burnout this busy season.

I agree with that completely. Alright, so one last question that everybody has to answer before they leave the show is you know, we talked about all this stuff that you’re doing which is awesome stuff. And hopefully you’re taking care of yourself more than you said—you just mentioned you may not have been taking the best care of yourself. How about outside of work passions? What do you do that you enjoy, when you’re not trying to make the world better?

For me, it’s—I’m a foodie. So that’s where, especially now being in Vegas, you know, so many great foods and so many opportunities. I was sad I missed you at QuickBooks Connect. 

Yeah, I was hoping to see you.

But you know, everyone comes through. And so that’s my thing. Come out, and I’ll take you to some off-strip different restaurants that we can check out.

So I have an opportunity to go to Vegas in January and that’s about the time this show’s gonna come out. As of now I haven’t committed, but now you’re starting to make me think I at least got to go in for one night. There’s a conference there that I usually go to that I was going to skip this year and just send a couple other people to, but I’ll let you know if I’m coming, because I’ll definitely take you up on that that foodie aspect of things. Although I need to slow down on my food a little bit I think! 

Alright, so honestly, you have so much great information, and I’m hoping people are gonna want to find out more. If they do, how do people get ahold of you? Go to the website, the email address, what’s the best place to look up more on Donny and the company?

The easiest way to find me is always LinkedIn. And I also push a lot of articles and information out—not just stuff that I’m writing, but stuff that I find. I pushed your podcast out several times!

Thank you!

Like, “come and listen to this.” I just hope you’ll connect with me on LinkedIn. It’s Donny Shimamoto. Or my email is Donny@intraprise.us.

Alright, and they can find—you can Google search and you’ll find Donny, believe me—I did that this morning, and he pops up all over the place. 

So alright, again, I appreciate this. You and I think rescheduled once or twice—probably my fault. I’m glad we got it in today. We  had a great conversation, I enjoyed it a lot. So thank you, Donny.

I enjoyed it as well. Thank you.