Understand How the Profession REALLY Works

Today, our guest is Donny Shimamoto. Donny’s a CPA who’s got a lot of initials after his name, I’ll tell you that right now. He’s a founder and managing director of IntrapriseTechKnowlogies—also, the Center for Accounting Transformation. Donny is somebody that’s very influential in the profession. Accounting Today has had him on the  “Top 100” list for multiple years; CPA Practice Advisor, he’s a thought leader; been on the “40 Under 40” for CPA Technology—it’s kind of all over the board with getting recognition for all the great work he does for our profession. So this is not Donny’s first time on the show. He’s a returning guest. So Donny, welcome back to The Unique CPA.

Thank you, Randy. I’m honored that you asked me back again. 

Oh, believe me, I had a great time last time and you’ve got so much information and knowledge to share, which I know is something that you have passion for that there’s no way we want to do this again. And we’ll do it again after this when I’m sure to. There’s a few topics we want to talk about today. Before we get into that, you know, I mentioned your two organizations, Intraprise, and the Center for Accounting Transformation. Why don’t you give us a little more information on that, and on both of those, and what each one’s for, what you do with them?

Sure. So the first one you mentioned was IntrapriseTechKnowlogies. That is my firm. We are registered, we actually are a CPA firm. I’ve had it for over 20 years now. And what we originally did was we were kind of the technology specialists in a sense, we’re an advisory only firm, and we were doing technology advisory services for that time. But with everything that’s been going on, we’ve actually over the last five years, we’ve shifted the way that we describe that to “business transformation advisory services.” And the reason we brought in that is technology is really just a tool. So we address technology issues, we address process issues. And then especially with a pandemic, I have been addressing a lot of business practices issues. 

So you know, in our CPA world adopting things like value pricing, or subscription pricing, or a lot of different leadership styles, and employee engagement with hybrid work or remote work, we really kind of cover the gamut. And then we balance that with risk management. And it’s really looking at the broad picture of risks—not just cybersecurity, but employee engagement risks, turnover risks. 

I’m gonna say it’s almost a year and a half ago that I founded the Center for Accounting Transformation, because what we recognized was that there wasn’t enough resources for small and mid sized firms as well as controllers and CFOs and small and midsize businesses around how do you take these really big concepts like business transformation and enterprise risk management? And now things like ESG? And how does that apply to the small and mid size market. And so that’s really what the mission of the Center for Accounting Transformation is, is that we are looking specifically at small and mid size both firms and businesses and nonprofits. And then we’re engaging people like yourself, that and Tri-Merit that actually is serving or helping smaller practitioners or smaller firms actually serve these businesses. So that’s a quick peek at the center with a we’re going to be talking about some of the research that we’re doing and things but yeah, that’s what we’re doing.

Yeah. And I was very fortunate to be in one of the webinars or the presentations you did on mental health early—or was it late last year? I think it was. That was a lot of fun. So thanks again for having me on. And an important, in my mind, extremely important topic to discuss.

No, you know, I’m glad you reminded me about that too. Because from that webinar, your story actually had a caveat that we hear of what could happen to people, right? It sounds like a lot of talk, but you actually share your example. And from that, we’ve actually built on that. So we’re actually setting up an online community around personal resilience, and we’ve got you, Amber, and a bunch of the others that were on that original webinar that are sharing tips and articles, and we’ve actually reached out to a bunch of coaches and some additional therapists. So we’ve got a directory coming together—

Nice!

—around all the resources that people can have, you know, especially coming out of busy season, there’s probably some trauma that went on. It’s like “Okay, come and take a look and see what you need to do, to build, have your personal resilience for extensions and for the next busy season.” So yeah, they should come check us out and then kind of see some of the wisdom you’ve shared there.

Yeah, I’m going to be doing a webinar April 26, and I think we titled it something about Take Taxing Out of Tax Season – How to Avoid Burnout. Because it’s just, you know, like you just said, we’ve just come out of tax season, let’s not ignore maybe the feelings that we just had, right now, during tax season, let’s not, you know, put this in the back burner and say, “Okay, well, I’m gonna have new systems in place and new processes in place before next tax season,” because then you’ll never do it. So let’s get out in front of it right after tax season, when it’s fresh in your mind. And let’s start to figure out ways that we can be more efficient. So this is cool. I’m glad you’re doing this, I’m looking forward to, you know, being part of that going forward. So again, thanks for that. 

Alright, so let’s jump into a few topics that you and I had discussed last year that we thought would be really good to release after tax season. So there’s a couple of research projects you’re doing, this is through the Center for Accounting Transformation. And the first one I want to discuss is that you’re doing a research project around advisory services, looking to see where firms are, I guess, in their journey currently, and then how this journey that they’re going through is going to impact their clients. 

So I guess the first question is, what was the motivation around this? How did you come up with it? And then we’ll talk about the, you know, what do you what are you going to get out of it? So—the motivation behind this project?

Well, you actually mentioned to me before that you like my LinkedIn byline, which is “Improving the world, one accountant at a time.”

I love it. 

You know, it’s because I fundamentally believe that as accountants, we are the key to improving the world, by improving the way that both individuals and families and businesses make their decisions. And so through that, the other concept that we’re looking at in the Center is what role do accountants and auditors and tax professionals play in clients’ success? So because of that, we are doing this research study to look at the impact of firms. And part of the way that we’re looking at that is, is a firm more compliance focused, or is a firm more advisory focused? And based upon whether the firm is more compliance or advisory, what is the perception of the level of impact that they have on their clients? 

So we’ve actually got kind of a two pronged approach to the way that we’re approaching this. We’re actually serving firms, and then we’re serving the client side to look at, do these line up? Do we actually see that firms that are more advisory that their clients also say, yeah, they are critical to our success? So we’re actually quite luckily that Avalara has stepped up and is actually sponsoring this entire event. Yeah, so we’ve got funding behind us to help actually really make this a pretty big research project. So we’re doing quite an amount of outreach around this, and really just looking at what you know, what drives success?

And what’s the timeframe of this? When is this kickoff? And when do you expect to have all the data collected you need?

So the core time for this is really in May, we wanted to give people a little bit of time to recover from the busy season. And then to, you know, come in, these are super short surveys. But they really also for people taking them I think they give you a feel for where am I in this spectrum? And what things should I be thinking about. And then as kind of a bonus to firms. The other thing that we’re doing is we’ve also designed the client side of this survey, to be like a client satisfaction survey. So if firms are not currently doing client satisfaction, they can sign up to issue the survey to their clients. And we’ll actually give them a summary of this is what your clients think about your firm, and the impact that your firm is having upon their success.

Yeah, that’s pretty cool. I like that because, you know, I do a lot of talking about just tax advisory in general. But from that standpoint, there’s actually some data out there, and I’m gonna get my percentages pretty close, but I’m going to be a little off here. But I think it is around 73% of taxpayers, say in the surveys that they would pay additional fee to their tax advisor or tax preparer for this advice for this tax saving device for these app, whether it’s tax savings or tax compliance being more in compiled, whatever it is that they would pay more for this. And then on the tax preparer side or tax advisor side, it’s around 35% are actually offering these services. So there’s this huge huge opportunity there where you know, these clients want to pay for it. You’re not, some of you are not, you know, offering these services. And so man, it’s just in general one, you are that advisor you are that go to. And so your clients are going to pay you more for that services, it’s time to get that in there. Right. That’s my that’s my commentary on this. 

No, you know what you said—so what we’re doing is the start towards that. And I’ll share that in subsequent years, we’re going to dive deeper into each of the areas and I’m currently serving on the AICPA is, I think it’s a taskforce on, or it sorry, advisory board on the future of the tax profession, something like okay, so the AICPA is also looking at some of this whole concept of like, what really is the future of tax? And what does that look like? And they’re going to address some of that. And we’re at the senator planning to do some kind of parallel research around, well, what kind of tax services, which is the email I sent you, and you help me kind of figure out like, how should we categorize specialty tax services. 

So that’s one of the follow up surveys once if people participate in this first survey, then we’ll dive that little deeper into tax serve, if they identify as a tax person will dive deeper into the tax side and in a subsequent research, and really, again, what we’re trying to do in a lot of this research is to look at the very broad spectrum, very, even solo practitioners all the way through large firms, because we do have large firms that participate in what were the research that we do. And we’re trying to segment among these different areas to say, well, what is working for solo practitioners? What is working for small firms, what’s working for medium sized firms, what’s working for large firms, and then we’re actually engaging people to help share, like, what’s actually working. You know, and this is one of the things I love about our profession is that there’s the whole coopetition type of mentality, like we all kind of rise together. So if I share some of the way I’m approaching things I can learn from other people. And there’s more than enough going around, that we can all be successful. You know, we’re not just it’s not a zero sum game. And right, you brought up Simon Sinek before Yeah, I love that part of his philosophy, right? There’s more pie than all of us can eat individually. So if we collaborate, we all rise together.

Yeah, it’s, and I think I said this last time that you and I recorded a podcast, we have very similar ideas on things, which is why we get along so well, which is nice. But you know, and I think I’ve mentioned on this podcast before, but we’re hosting a conference at the end of August, where that’s one of the major themes is just collaboration. It’s just hey, we all like you just explained it perfectly. So I’m not going to reiterate what you said. But it’s, you know, our theme of our conferences, Bridging The Gap between the generations. And for me, that’s generations individually—people, but it’s also generations-firms. We got a hundred year old firm, and we got a five year old firm, we’ve got a firm with a hundred partners, we got a firm with three partners. And so just, you know, bridging the gap, and how can they all collaborate and work together. 

But then it’s also things that you’re passionate about, we’re prioritizing health in this conference, as well. And we want to help individuals, firms, find their own success, because everybody’s success is different, you know, and so you don’t have to compete with this firm over here. You know, just because you see them growing, and them doing this and then branching out. And not only just tax and accounting, but they’re going into HR and all that. So I’m really excited about that. 

Alright. Now, I keep going on these, you just get me think and you just get me going here, I got all these tangents. Let’s go back to the research project. And we’ll have to talk about when we’re done here, and you know, seeing if we can get you out to the conference. So yeah, so more on the project, then. So May is the time where this will be available. Is there going to be obviously a link at the Center for Accounting Transformation? Or where will people sign up for this or respond?

We’ve actually got a special link for your listeners. So the URL is link.improvetheworld.net/owntheunknown/uniquecpa.

I didn’t even know this!

Yeah, especially for you, because we want to see, and actually, if we get a lot of listeners, or we had a lot of respondents that come through you, we might do a special report just on listeners to this podcast. But yeah, that link will provide people and actually since we talked about resilience, make sure that our team adds a link over to the personal resilience information as well. And your webinar, so that we’ve got that and yeah, that the primary timeframe is May. It’s just because we’re trying to get stuff before everyone gets into the conference season. I will say that if we don’t see enough responses within that period, we will probably work through June as well. 

Okay. 

So just depending on when people hear this, you know, come check out again, it’s link.improvetheworld.net/owntheunknown/uniquecpa, and they can come and get access, or at least, sign up to get access to the research report.

Yep. And I think this podcast will be released on May 2, so right when it opens up, which is also my birthday, so—

Oh, great!

I think that’s the day it will be. But we could potentially move it forward a week too. So we’ll see. 

Alright. Now, is there a target number of responses you’re looking for, you know, when you’re if you decide to go till June, is there a target there, or just…?

That’s why we’re looking at that. So one of the differences, I think, in what the research that we’re doing at the Center, compared to a lot of others, a lot of others are doing marketing research—so, and I know I mentioned Avalara is our sponsor, and some people might be thinking like, “Ooh, that’s like frantically going to get all my information,” no. So we’re doing, and it’s actually a collaboration between ourselves the Center for Accounting Transformation, and CPA Trendlines. So we are doing, I’m going to call it like, “real research.”

Yep. 

And part of the way that we’re doing that is that we are actually working with, we have an academic collaborator, that is a PhD. And this one, he’s actually a well recognized professor, researcher, in the audit field. And so we have a partnership with academia. So they are the ones that actually do the research. And they make sure that our research will actually hold up according to scientific and journalistic standards, from a PhD standpoint, because of that—sorry, really long way to answer your question. 

No, no, keep going. 

We’re trying to make sure that we actually have a good number of respondents. So our target is a minimum of like, 200 people, you know, which will give us a good, that whole 90% confidence interval, you know, that kind of stuff from statistics. But we want as many as we can, because the more that we have, and then particularly the more that we have in the different segments of the profession. 

So you know, like I said, solos versus smaller firms, midsize firms, we want everyone to come in. Because the more data we have, the more validity that we have. And the more that we can do the subset analysis to really look at is there a difference in solos versus small versus medium versus large and what everyone is doing. So this is also why we’re partnering with a bunch of state societies and CPA firm associations and bunch of people are probably going to hear me on multiple podcasts, because we’re really trying to get a very broad segment of the profession as a whole. 

Well, we will definitely be promoting this a lot in social media, everywhere we can, especially when the podcast comes out. So you already said it, but I think it bears repeating or emphasizing the outcomes that you’re looking to measure. And so because I heard it once, and that’s it, I need to hear it multiple times for it to sink in. So let’s talk about those outcomes you’re looking to measure then again.

So the key one for this advisory research, the key things we’re looking at is we’re really looking at the impact that firm has—or a solo practitioner—but the impact that an accountant has on their client, and specifically on their clients’ success. So the questions asked a lot around what type of services are you providing? Are you more compliance or advisory? 

I can actually, the other thing we’re asking is like, what do you need to do to be more successful? Because what we’re hoping to do is to identify, what are firms thinking they need to be more successful, and then line up the right education for them to have that success? Meaning, you know, we’ll have more webinars, or we’ll create self studies, or can people like you like if they say, well, I need to be able to do more tax advisory? Well, we have people that know how to do that. And let’s get them in. So this is also to help drive both ours and state societies and CPA firm associations to help drive everyone’s curriculum so that we can get the right training into people’s hands. 

Alright. And so one question I have, because I think this seems to come up a lot. And you were saying advisory? Are we defining advisory—because I think everybody has their own definition of what advisory is, and sometimes it’s just like, they don’t understand what the term means. “Okay, advisory, well, isn’t that what I’m doing? What am I doing? I don’t know if I’m doing it.” How do we, you, get past that? Or have you thought about that?

Yes. So this one, we’re letting people just use their own because we’re, what we found is that there’s tons of different—and then to try and force people to one definition right now we think is going to be too difficult. 

Okay. 

So we’re starting with that. But, you know, we talked about this a little earlier. One of the things we’re doing is we’re starting to create a taxonomy of what is advisory services. And so we’ve been reaching out to experts like you, that are able to help us define the different areas within all of the different areas not just within tax, but all different areas that we that a firm may consult with a client on. And that’s going to be some of our forthcoming research on that.

Okay. That’s awesome. Because yeah, it’s when I’m talking advisory for me just personally, because it’s tax advisory, just because tax is what I do. I don’t, I don’t do any accounting. Well, I don’t even really do any tax, but I talk about tax. So, and I talk about tax advisory. And so for me, but I know for other people, it’s, you know, CAS, and other people, it’s, you know, financial advisor, whatever it is. So, okay, I like the fact that the people can determine their own definition of what advisory is. 

Alright, anything that we missed on this before we go to the next thing that we should touch on?

No, no, I think we covered quite a bit on this. 

Yeah. Well, that’s exciting. I really like it. Believe me, as soon as this data is out, I’m going to be quoting it left and right. So I am excited about it. Because it gives me more talking points to just, you know, talk, I’m gonna feel the talk about the importance of why you know, advisory, the importance of why advisory is so important. That’s a little redundant, but yes, that’s what I’m trying to say. 

Alright, so I mentioned that there’s two research studies you’re doing. And so man, you guys are gonna be busy. But the second one is really important as well. And that’s about staffing strategies, because we all know, we’re not finding people, people aren’t going into the profession, people aren’t staying in, whatever, you know, part of accounting and tax that we’re hoping that they do. Another one of my passions is to figure out a way to make this profession so exciting that everybody wants to get into it. And I think that’s yours as well, or one of yours. You’ve got many of them. But so let’s talk about this second research study you’re doing around the staffing crisis. So why don’t you explain what this is?

I’m going to bridge a little, because that is so important, which is making the profession more exciting and attractive to the next generation. And that’s part of why we’re doing this advisory services, one as well is because we think that advisory services, and then the want to help other people be successful, whether it’s an individual or family or a business, right business owner, we think that that’s part of the actual attraction to the profession and why like, it’s why I became an accountant, I wanted to help small businesses compete with big businesses. And so part of that that’s why we want to understand advisory, how do we accelerate exam advisory and firms? And that should help us then drive the attraction of people to help to help, you know, differ, the staffing storage that everyone’s talking about. 

So the staffing shortages? Or what’s it, what’s actually our staffing strategy? Survey is, you know, there’s a lot of surveys out there looking at like, who are you hiring? What are you doing? But there’s not one that was comprehensive and looking at what strategies are people using and what’s working. And so that’s the way that we’ve designed this survey, it’s, you know, we’re talking about, people are going, “Oh, that’s so long.” Both of these surveys are under 10 minutes for you to complete them. And there are things that you can just from the top of your head, you should be able to just go through and answer them really quickly. Because what we want is just we’re just trying to understand where is everyone doing? What’s working, what’s not working? And then we’re going to do follow ups afterwards to really understand okay, what are the best practices or what are the leading practices? 

So in this staffing survey, we’re taking a very broad look at the different types of recruiting people may do. We’re looking at outsourcing different styles of outsourcing offshoring versus offshoring, setting up separate companies, because we’re starting to see that occur even in smaller firms, which was interesting. And then we’re also looking at other things like automation, like are you adopting automation to reduce workload, which actually reduces your staffing need? So we’re taking a very, I think, broad look at the different ways. And then once we find out one, what is working, we will interview those firms to say like, okay, so what is actually working? What about the way that you’re approaching this is working or not working? We’re also going to approach firms that report failure, because we’re looking at one of the options is, we tried this and it didn’t work. So we’re going to be looking at that deeper, to go, well, why didn’t it work? Maybe it was the way they approached it. Or maybe we’re seeing a lot of firms to say, this doesn’t work. So then we can make a recommendation that says, you know, what, a lot of firms tried this. It didn’t work. We don’t recommend using this. 

And then the other piece that we’re looking at is a lot of the ones where firms say, I’ve heard of this, or also, I’ve never heard of this, and I’m interested in this strategy. How did this play out? And that’s where, as I mentioned, then we’ll create the education up to the firms that say, yeah, we’re doing it and it’s working. And we’ll create that, that education. And a lot of I’m becoming a really big fan of these panels like the one that you were on, that really just share successes and lessons learned, rather than, you know, your traditional “Okay, let me sit and listen to someone” lecture. So it’s going to drive more, again, kind of more of the programming that we’re doing and additional research in the area.

Yeah, again, back to our conference, we’re going to be doing a handful of panels there as well, we’re gonna have individual speakers but panels because I think that you get such a variety of information and knowledge from people on a subject when you have this panel that I agree with you completely. This survey, you said itself, then, in this case, 10 minutes, you’re saying, boom, you’re gonna get through it? Is it like, multiple choice pick a box as they’re filling an answer? I’m just wondering the mechanics of it.

There’s a lot of all of the above, most of it multiple choice purposely so that it’s easy for you to get through. But we do have some, you know, like we asked, “What could your firm do to be more successful?” And that’s just freeform, because you just you just tell us that. So we’ve got those, those where people can provide that input. But most of it is if someone just wants to go through it’s it’s mostly just multiple choice.

And so like, you know, what are you doing to address this staff shortage in your firm? Offshoring, technology improvements, working more hours? I mean, I don’t know what the multiple—do you recall what the multiple choice ones are in that category? 

Yeah. So a lot of it, for example, is the recruiting from full degree recruiting from associate’s degrees and using that to fill in the lower levels of the staffing, outsourcing onshoring or utilizing an onshore utilizing an offshore building our own offshore? So. But in each of those, we actually have a scale, which looks at the, what we always, we are in the center, we’ll talk about the journey for different things. So are you just investigating it? You’re trying to, you know, understand what it is? Are you actually planning it? Have you actually implemented it? If you’ve already implemented, are you refining it? Or have you decided you’re not going to use that strategy? And that’s one of the ones where we say, can you share with us why you decided not to strategy? 

Nice.

Or you’ve tried it and it failed? 

Yep. Alright. And so I think there—and I mentioned three things at the beginning. But there’s, I think there’s two more we’re probably going to want to touch on before we wrap up. And in fact, why don’t we touch on this one? Now, you and I think talked a little bit about ESG, when we had our last podcast, and we talked, you and I, ahead of time, a little bit about ESG. In fact, I had a discussion with Dan Hood about ESG recently on his podcast. He was on my podcast—one of the podcasts. And I’m still not all that educated on what it is. But so let’s get into a little bit, why this is—why it’s important. But is this going to affect everybody? Or is this just a big firm effect? Or are small firms gonna be affected by this? So why don’t you give us a little information on your knowledge on the ESG, that’s going on?

Sure. And just for those that may not be familiar, so ESG is “Environmental, Social and Governance reporting.” The way that I think of it is it’s the complement to the financial reporting. So a lot of people say, you know, financial reporting is irrelevant today. I actually think it’s not irrelevant, it’s actually table stakes. So without financial reporting, you wouldn’t be able to get loans right, you can’t complete your tax return. 

Yeah. 

So you need financial reporting, regardless, but it’s not seen as the only part of the picture. So the ESG paints the rest of the picture of what a company is doing, or an organization is doing. And it looks at these three major factors: the environmental impact, the social impact, and then the way that a company is making decisions and managing its own risk, which is the government, governance side. So, and actually, both have a lot of I think the big opportunity is that people are seeing like the SEC is starting to require reporting around this, internationally, there’s already reporting a lot of activity going on in ESG. But what we’re seeing is the trickle down effect. 

And so suppliers to public companies are going to now need to do these reports because part of what ESG does is it has these three levels of impact that it’s looking at so the first one is the direct it’s what is the company itself doing so if I were manufacturing what is my direct impact upon, for example, water, clean water, or the air carbon outputs. The second level of impacts is those that are indirect. So it’s coming from suppliers, right? So, because what they’re trying to do is make sure that okay, maybe me as the company is not having these impacts, because I’ve pushed it all into my supply chain, and so I look really good, but my supply chain is horrible, right? So the second order of impacts is being also included in the reporting. And then the third order is looking at the consumers and everybody else. So what’s really this broad right in that third one is going to be really hard to measure because you got to understand how your customer is actually doing things. 

Right. 

But so there should be there’s a trickle down that were, I think, already starting to see into the supply chains of public companies. The other big one is you’re seeing a lot of federal government mandates starting to come out around this. So any of the state and local governments, any of the government contractors, you know, people that are providing services to state and local governments are also going to start to have to do this type of reporting. So there can be quite a bit of trickle down. And the need to understand “What are we measuring? How do we measure it? What’s the proper way to measure it? How are we reporting on this type of stuff that’s all going to come back to our profession?” And then I actually the other ones, since tax, there were things and I’m gonna forget the name of the bill. In the in the last big tax act.

The Inflation Reduction Act? That one? 

Yes. So there are some tax incentives or credits or something that’s tied into that, which is tied into ESG reporting as well. 

Oh, wow. 

Right. So there’s actually a tie to all different parts of the profession on this.

Okay. And so you were saying public companies and this, so is this going to be I mean, when we’re talking about the impact to the accounting firms? Do you think this is gonna be more than larger firms that are going to be impacted with this? Or do you see anybody auditing financial statements now can start auditing ESG statements? What’s the future of accounting with ESG?

Yes, so there’s, there’s two major things with ESG. And the two major things is one, how do I report on this, especially if I’m reporting it up to, right, a supplier, so that could be even a sole proprietor person that is working for a public company for some right for something, they may need to report it upwards? So it might not just be auditing, it might be the reporting side, which, okay, small business might be using, right? Bookkeeping or accounting services from a even a sole proprietor or a small firm. So firms need to kind of look at their clients and say, like, does this client have any customers that are coming from public, or government, that may be an opportunity there? So there’s an advisory opportunity, and you see the guys are doing, right?

Yep.

There’s an advisory opportunity for firms to that need to get up to speed on this. And some of them are going, “Oh, that’s going to be really complicated.” It’s the same thing as like financial statements, right financials for smaller companies are simpler to do find ESG reporting for smaller companies is simpler to do than larger. And so there is an opportunity for smaller firms to get involved in this. And then there is also the opportunity for the audit side to come and audit the reports, there’s a lot of calls for that, especially if it’s going up to up to the SEC, right, or any of our international regulators. And then of course, again, I say two major, which is really the advisory and the audit opportunities. And then there’s the tax implications as well. So tax people should also be paying attention to this.

Okay, so this is something that keeps coming up in discussion. So we got it, we got to make sure we’re watching it. Another thing that you and I talked about before, but you I think it’s important to remind people about this, that there’s these new IRS cybersecurity requirements. Do you want to, you know, kind of give us an idea about that?

Yeah. And that’s also actually tied to ESG. So your data security, it actually falls under the governance aspect, because it’s, how do you protect the data of your stakeholders? And I purposely using the word stakeholder because it’s both clients, which, as a tax practitioner, you have access to a lot of social security numbers, right, and business EINs and things. And so the IRS has its expectations of what you’re doing to actually protect your client’s data that comes from IRS Publication 5447. And there’s a lot of requirements there. 

And what people I think don’t realize too, is that when you renewed there was a box where you said, “Yes, I’ve complied with all of this stuff,” or at least “I have my written information security policy.” Most people just try to check it off, and you may or may not actually be in compliance with that. So we’ve developed a lot of education around, what are some of the measures that need to be done. We also have developed some draft templates and we’ve identified other templates that are out there. So there’s some free templates that are out there, we charge a nominal fee for our template because we’ve actually looked at all the requirements, and we understand what a small firm looks like or even a sole practitioner looks like. So we’ve created a template that we’re selling, as well as a checklist for how you can do the compliance and just manage the clients yourself rather than having to do your IT person. 

And actually, that’s the other myth that’s out there is they’re like, why not just have IT do that? Most IT service providers do the operational aspects, but they don’t do the policy. And they don’t do all of the rest of the risk management, which is being mandated now by the FTC, safeguards rule change. 

Alright.

And that’s actually going into effect on June 8, or June 9. And, you know, when people go and read, if they go and google it, they’re gonna see where it says financial institutions, well, part of that definition of financial institutions is, you’re handling taxpayer data. So CPA firms or accounting firms and tax firms are considered a financial institution under this regulation. 

Now, there is an exception made for firms that are—and it’s, of course, it’s not coming to me right now—that are handling under a certain number yet. So a lot of small firms are not going to actually be subject to this. But when you look at the IRS requirements, which anyone having taxpayer information is subject to, and you look at the FTC, what they’re really doing is they’re recommending the best practices to mitigate your risk against ransomware and a data breach. 

So we’ve again, kind of taken a lot of that, and we’ve created these checklists. And we actually have an assessment that’s coming out so that if you already have these things, you can go back and look at the assessment. It’s a self assessment. So you go on, you fill out the questionnaire, and you’re able to figure out, have I actually hit all the points? Or am I missing things?

Okay. Alright. Well, yeah, that’s important. I’m assuming there’s some kind of penalties sitting in place if you’re not meeting these requirements. So obviously, we want to stay away from that.

There aren’t IRS penalties, but all the states have their fines and penalties if you actually have a data breach. 

Alright. 

That’s where that risk is coming from. And the thing that people have to remember is, it’s not the state that you’re doing business in. It’s the state that your clients—whether they’re individuals or firms—are doing business in. So if you’ve got an individual or a company that’s in multiple states, for some reason, you’re actually subject to all of those privacy laws, and could be subject to fines and penalties from all of those states.

Yeah, we don’t want that. Let’s be compliant. 

Alright. So kind of we touched on four topics that all seem to kind of intertwine today, you want to give us a kind of a quick summary of what we should make sure we’re aware of, what your surveys and everything tying together because that’s the most important thing. Well, they’re all important. But the thing that we really want to stress is the surveys and getting these research projects, participation, involvement.

Yep. So big quick summary, again, is that we’re doing these research surveys to really understand, what does the profession need to help accelerate advisory services, as well as accelerate these staffing strategies or applications, accelerate what’s successful in advisory services and what’s successful in the staffing strategies. And as I say that we actually have already done the research. So we’ve completed the research on the cybersecurity side that we did, research two years ago around hybrid work or remote work in cybersecurity risks. So we already have that paper that’s out there. If people want to look at that paper, we actually have in the research report, some of the things you should be doing to secure remote work or hybrid work. So we’ve got those things that are both being issued out as surveys as well as the report that’s being done. And then if firms need to actually assess whether or not they are in compliance, then we’ve got the self assessment that’s coming out as well as a bunch of education. 

I’ve got a webinar that I give that we’re giving away for free, because we believe that this is so important. You need to understand what your cybersecurity technology options are, and what risks they’ve mitigated or not mitigated. So we have that available to people to come watch, learn, understand and figure out what questions do you actually ask of your IT people to feel like you’ve got everything secured.

Nice. And then all this data and all the surveys, that’s all going to be on your website where we can get this information?

Yes, and we have that link for the listeners from The Unique CPA. 

Yep, we’ll have it in the show notes.

Yep. link.improvetheworld.net/owntheunknown/uniquecpa, and that’s this whole campaign we’re doing for the summer, is like we feel like you know, there’s a lot of unknowns out there. But what we want to do through our research is make them known. So what is successful? How are we actually dealing with the staffing crisis? And I don’t know about cybersecurity! Well, we’re going to help educate you and make sure that you own that and say, yes, I’ve got everything secure. 

And then, okay, so before we go, and we talked about this last time, I’m doing my final wrap up question, which is, and I think I remember your answer from last time. So you could say the same one. Or you could say a new one. Besides being a super cool guy and helping the profession. What do you do when you’re not working? What’s your passions outside of work?

I think last time you asked me—it’s the same. It’s, I’m all about food. 

I knew it. Going with food. 

In fact, I was, last night I was just hanging out with a friend that’s a pastry chef. And he was showing me his chocolate creations, which I don’t think a lot of people realize that chocolate actually falls into the pastry side.

Oh, nice. 

So he was showing me all these gorgeous decorations that he did like that, you know, that go on the cakes. And he created like cherries, like things that look like cherries from chocolate, like a four leaf clover. 

That’s awesome!

Like, beautiful. And I was like, Oh my gosh, I need to go have some chocolate. 

Yeah, yeah. Well, that’s cool. And I had a feeling it was food. Because that’s what we talked about last time. You and I gotta get together and you need to show me these food things that you’re enjoying. You and I gotta go up, and you order for me at a restaurant at some point in time, just so I can experience this stuff. 

So alright, well Donny, this was an awesome conversation. I’m really looking forward to at least being part of this research study from a standpoint of directing people to it. And I’m hopeful that we can get a lot of people to fill this out. Because I think the data and the outcomes and the information that’s going to be discovered from this is going to really help the profession and which is again, something that you really are passionate about, and I am too. So thanks for being here.

Well, thank you. Thanks for helping to get the word out.