Earmark Podcast | Earn Free Accounting CPE

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Elizabeth Beastrom: [00:00:00] Ai is never going to fully take the place or replace professionals, but AI enabled professionals and firms, they're going to outcompete and outperform because they're going to be able to do it faster, better and get to this advisory, which our clients want.

Blake Oliver: [00:00:15] Are you an accountant with a continuing education requirement? You can earn free Nasba approved CPE for listening to this episode. Just visit earmarked app in your web browser, take a short quiz and get your certificate. Hello everyone and welcome back to the earmark podcast. I'm Blake Oliver. Today I'm joined by Elizabeth Beastrom, president of tax and accounting professionals at Thomson Reuters, and Kirat Sekhon, head of Product engineering, tax, accounting and audit segment. We're talking about why this is such a pivotal moment for firms, how the talent crunch is accelerating automation, what end to end tax workflow really means from intake to delivery, and where AI is actually removing steps versus just adding new tools. If you're trying to figure out what to focus on before the next busy season, this episode is for you. Let's get into it. Elizabeth, welcome to the show. Great to have you with us.

Elizabeth Beastrom: [00:01:10] Great to be here.

Blake Oliver: [00:01:11] And great to have you as well. Thanks for being here.

Kirat Sekhon: [00:01:14] Yeah, thanks for having me.

Blake Oliver: [00:01:16] So, Elizabeth, you get to see firms across the profession of all sizes up close in your role at Thomson Reuters. I mean, I can't I can't think of another software company that's more embedded into accounting firms. Where are you seeing the biggest breakdown right now in the world of tax? We talk a lot on the accounting podcast and on this podcast about talent shortages AI disrupting firms. Um, there's there's so much that's up in the air. Private equity. What is what is, uh, what what are you seeing as being like, the biggest challenges for firms?

Elizabeth Beastrom: [00:01:56] I think just in the at the end of the day, how you're serving your customers. You know, you said it. The talent shortage, it's continuing. It's pervasive. Uh, less and less people are sitting for the uniform CPA exam coupled with more people retiring. So you're not getting people to do the work? Uh, the complexity has not, uh, become lessened. And so there's no shortage of complexity, which creates higher demand for the work. You don't have the people, you have higher demand. And then, as you mentioned, private equity coming in, which is an interesting wrinkle in this and their goals for efficiency and what they're trying to drive with the firms. But ultimately, you know, I think firms are working through how did they still have the customer at the center and delivering the most value for their customers in the most efficient way?

Blake Oliver: [00:02:42] Customer at the center. That's a big challenge for firms when we have like this, this people problem. Kirat, what are you seeing like in your role? Um, on the, on the, on the tech side of things like what are you seeing as big challenges?

Kirat Sekhon: [00:02:59] Yeah. So so I would say, you know, similar to Elizabeth, those challenges all hold true. But I think, you know, in addition to that, as you're getting new folks coming into the industry, granted, there's less and less they have higher expectations around the tools and ways of working than than what we've traditionally had. They expect to have more work life balance. This generation definitely expects that. They also expect to be using tools that are intuitive and are connected. Um, so that they have a better experience while they're delivering value to their customers. So I think those are two other interesting things that we're seeing with, you know, with the new, new enters into the industry.

Blake Oliver: [00:03:36] Yeah. Intuitive tools. Um, I'm hearing that like, young accountants don't want to come to work and be working with, like, desktop based software. And this has been like a big thing in tax forever. It's it's like it's it's. Why is that actually. Can you help me understand why tax software, like all the best tax software, has still been like desktop based for all these years when we've seen these amazing advances in cloud with like, general ledgers and that sort of thing.

Kirat Sekhon: [00:04:08] I think there's two parts to it. One is tax software tax calculation. Getting it right is not easy. And once you've gotten it right, you don't want to break it. I think that's that's one piece to it. Two is there hasn't been a huge appetite from our customer base to push to the cloud either. Right. They are happy with their software working the way it does. They trust it. They don't have to change their behavior and how they work across the firm. And so I think those two things have prevented us from moving as quickly, um, on the technology front. But that is changing. And those are.

Elizabeth Beastrom: [00:04:42] Creatures of habit, you know, and I was in the profession 30 years ago. And the term Sally, same as last year, still comes through. But you found a way to do it And you like to replicate that. And and change is hard. Change management is hard, especially when you have to introduce that to the firm when you're working 80 to 100 hours a week.

Blake Oliver: [00:05:00] Right? If it ain't broke, don't fix it.

Elizabeth Beastrom: [00:05:02] That's exactly right.

Blake Oliver: [00:05:03] And we're all too busy to fix things that don't need fixing. Um, but it's starting to get to that point, though, where it's like, it can't continue this way forever at this point. And I think it has something to do with what you said, Elizabeth, the customer at the center. Because the big problem with desktop based software is that it's it's hard to collaborate when you're on prem service servers or you don't have like a portal that clients can use. So can you talk about what Thomson Reuters is doing regarding putting the customer at the center when it comes to tax technology?

Elizabeth Beastrom: [00:05:39] Yeah, well, we're trying to we're trying to solve the problems that we highlighted at the beginning, which which is the talent shortage, which is the increased need for efficiency and getting more outputs more, more with less and doing it in an efficient way with a good return on that. And if you think the best way to do that, an AI has put an exclamation point on this is, you know, automate what you don't need to do the routine, the mundane tasks. You think about the gathering process in a tax return and all of the automation or rekeying. And I did that 30 years ago. You know, that's part of the reason that I left the profession is I was spending time on a lot of repetitive, you know, non value added in my opinion, tasks and making sure that those are automated and flow seamlessly. So it allows the professional am I, am I still allowed to use the word professional?

Blake Oliver: [00:06:30] I like to call us professionals, even though.

Elizabeth Beastrom: [00:06:33] I saw in one of your recent podcasts that we're professionals, I will still use the term professionals.

Blake Oliver: [00:06:40] Um, and for our listeners, we're talking about how the Department of Education reclassified, uh, accounting is not a not a profession for the purposes of student loans. But on this show, accounting is definitely a profession.

Elizabeth Beastrom: [00:06:53] I want to make sure I'm going to use the word professional because that's how I view us. So. But making sure professionals time is freed up for why they went into the profession initially to give advice, to serve customers, to help them.

Blake Oliver: [00:07:08] So, um, actually, I'm curious about that. Right. What was what was. Tell me more about that moment, like or what led you to leave the profession. You said it was being stuck doing mundane work or boring work or.

Elizabeth Beastrom: [00:07:22] You know where I saw that I added the most value in. And it's ironic, as I think of it now, but where we had to do management comments and you think of it and you're a first year or second year, you know, associate and you're tasked with coming up with ways to present to management the information that can help them improve their business. And if you think of it, you know, you're like, how am I going to be doing that when I'm testing cash in an audit or something like that. And that's where I found that I liked and had my energy and had the most value. And how I got there was I would spend time talking to my customers. We were on site, I would spend time and I would talk to different people. And, you know, some of my best, you know, inputs came from, you know, the people in accounts payable or accounts receivable. And I would go in detail and understand their process. And I came up with some of the best, not to toot my own horn, but come up with some of the best management comments and then you couple that we're going to tax and I'm doing input and essentially rekeying I wanted to do more and and you also your book for those of people that haven't read it, I'm going to do a plug on this because it's a really good book. Building a sustainable accounting firm I was lazy, I was a lazy CPA. I didn't want to spend my time doing work that I didn't think was necessary. Now, of course, I wish I would have at the moment had a way to automate that and come up with some of these solutions for automation, for the pain points I was feeling. But what made me want to switch was I liked the advisory. I liked having help and understanding the process and the businesses, and where I could add value in recommendations to help improve the firm or the company.

Blake Oliver: [00:09:00] So, Kirat, um, how is Thomson Reuters working to make that possible to to keep professionals like Elizabeth in the profession and not leaving out of frustration?

Kirat Sekhon: [00:09:15] Yeah. I mean, a big focus that we've been on this journey for a while. A big focus has been really looking at the low value, um, work or the better way to say it is the the heavy lift work that's not really providing that, that value to the, to the accountant in the moment. Right. Providing them great gratification for what they're doing. So things like, as Elizabeth pointed out, data entry. Right. Today with our products we automatically extract information from source documents, put them in a binder for review, and then automatically populate the tax software. That's a huge savings for a person to not have to spend the time worrying about doing all of that manual data entry, and they can actually focus on the return. So that's one space. An example of one space that we're we're really focused on ensuring that we we automate those, those types of jobs that are not necessarily, you know, getting the accountant excited about what they're doing. Right. So that's one two, it's about creating that connected ecosystem, the entire tax workload workflow from gather to to prepare to the calculation, to the actual review and return. How do we automate that entire workflow so that accountants are actually really only focusing on the places where it makes sense for them to focus, like reviewing the return, like doing some of the research and then getting into advisory with their customers. So that's that's the other big focus for us. Um, we have a number of, of net new capabilities that we launched at synergy this year, right, with the automated work text workflow as well as with ready to review. These are our future kind of future state vision for where the products are going to go to serve our customers.

Blake Oliver: [00:10:54] I'd love to dig in more to these solutions you mentioned. You mentioned sure. Prep data entry automation. So let's let's start with that. Let's talk about that for our for our listeners that don't know how it works or how that came to be, was that, um, was that an acquisition?

Kirat Sekhon: [00:11:14] Yeah, sure. Prep was an acquisition that we did. Elizabeth. What was it, three. Three years ago now? Yeah. 3 or 4 years ago. Yeah, three years ago. Um, so we acquired prep. Sure. Prep had this, uh, this capability of from gather, uh, to automatically identifying the various source documents, extracting the relevant information out of those source documents, put them putting them in a binder for review, and then the ability from there to actually populate the text software. So that was an acquisition three years ago, and we continue to invest heavily in refining and improving the accuracy and quality of that product. Given the advancements in technology, we can do so much more in that space now than what we could do before.

Blake Oliver: [00:11:57] So how does that work? Is it like I take the, uh, the documents I got from the client and just dump them in a folder and then sure, prep organizes it.

Kirat Sekhon: [00:12:09] Absolutely. So you upload the documents as part of a client record into the into our product. And from there, the documents are classified. And then from there, the extraction process happens and the population of the tax software happens. So yeah, it's all automated.

Blake Oliver: [00:12:25] And it goes into like what is the forgive me for being ignorant of this because I'm not a tax guy. Like what is the Thomson Reuters product that the, the sure prep is populating. Like where is that populating.

Kirat Sekhon: [00:12:36] Populating GST and its tax system tax and goal system tax and ultra tax.

Speaker4: [00:12:44] An important, important.

Elizabeth Beastrom: [00:12:45] Differentiation is it doesn't just work with our tax software. This is something that's been a large focus of ours, Blake, is that it is an open, curated ecosystem where if customers find value in part of their workflow, we want to make sure that we connect to it through API's or other ways. So, uh, sure. And the connections with go, system tax, GST and alter tax are amazing, but it connects with other tax software providers as well.

Blake Oliver: [00:13:12] Got it. So that's really nice to hear because a lot of times when a company like Thomson Reuters, like a big company, makes an acquisition of a smaller startup, they'll cut off those API connections, right? And force everyone to use the one system. But you're not taking that approach.

Elizabeth Beastrom: [00:13:29] We're not taking that approach at all. And also with acquisitions, you know, I think when big companies acquire a beloved product like Sure Prep or Safe Sons, which was another recent acquisition of ours at the beginning of this year. I think there's a thought like, well, you guys are going to break it. And everything we loved about working with a small, nimble, agile company, um, you're going to break and it's quite the opposite. So we took a fair amount of pride in sharing with our acquisitions, where we've made the integrations deeper and stronger while remaining in part of an open ecosystem. So it's something we're really quite proud of.

Speaker4: [00:14:02] Yeah.

Blake Oliver: [00:14:03] Okay. So which part of the end to end tax workflow would you put? Sure. Prep in.

Kirat Sekhon: [00:14:10] Sure. Prep is in that, in that um, kind of between the gather and prepare phases. If I think about the tax workflow today.

Speaker4: [00:14:16] I mean, frankly, if you break.

Elizabeth Beastrom: [00:14:17] Down the workflow kind of in high buckets, there's the gather, there's the prepare, analyze, deliver. Did I get those exactly right. But if you think of the work our strategy is to make sure around our tax engine, which is our top tax software go system tax and ultra tax, that we have strong foundational bookends around either end. So safe send is on the deliver. The e-filing side. That was our acquisition at the beginning of this year. And sure prep on the extraction gathering at the front end. So we have the strong bookends on either side of our tax engine.

Blake Oliver: [00:14:55] Got it. Okay. So yeah, we're gathering the documents from the client. We can use sure Prep to do that. Automate organizing the docs, taking the the numbers, putting them into the tax software. Correct. And then in the tax software we're you know, we're preparing, we are reviewing. And then we have to once it's reviewed approved, we got to deliver that return. And that is done with you said safe send.

Speaker4: [00:15:23] Yes.

Blake Oliver: [00:15:24] Tell me about safe send. That was another acquisition.

Kirat Sekhon: [00:15:26] Yep. Safe was another acquisition we did at the beginning of this year. And if you think about safes and sweet spot, it's all around that automated delivery and e-sign capability, right? So at the at the end of, you know, think about gather. That's where our customers are interacting with their clients. On the delivery side, it's the same thing, right. They need to deliver that return, get the signature, get the payments, get all that that stuff figured out and factored. And so what we've done with safes and as the that bookend of the workflow is enabled, higher amounts of automation to actually automatically deliver get the automatic e-sign from the customer. And so it's shrinking the amount of time that our customers are having to spend chasing their customers.

Blake Oliver: [00:16:09] Yeah, that I mean, compare that to what did you have to do in the past, Elizabeth, when you delivered a return before there was a safe send?

Speaker4: [00:16:17] Well.

Elizabeth Beastrom: [00:16:18] Trying to even get all the documents, let alone to, to to do the return, what was a problem in and of itself. So the gathering phase and then tracking down, you know, and again it was a long time ago, Blake, that I was in the profession as an active CPA of 30 plus years. But, you know, tracking down the signatures and ifile didn't even exist then. But, you know, then printing this all out and getting the returns to your clients, getting the signatures back and forth, and, you know, having the facts added to it was was a big discovery back then, you know, but it just the time that went through a lot of laborious steps that, you know, in the, in the big didn't seem like that's why I went to school and took the uniform CPA exam.

Blake Oliver: [00:16:57] Well, you say it was a long time ago, but I know there are still lots of firms out there that are printing and mailing returns and binders to clients and getting like signatures in the office like this is true is still the the situation today in the world of tax. And so it's exciting to see that like Thomson Reuters is building this this end to end workflow.

Speaker4: [00:17:20] I mean, I get I get.

Elizabeth Beastrom: [00:17:21] Excited about it because if you think about what we're delivering, whether it's, um, you know, a tax return or an unqualified audit opinion that our customers are delivering, that remains that what you still have to deliver at the end of it. But how you get there is what's substantially changing and how AI has accelerated and removed a lot of that, you know, mundane recurring tasks which again attract more people to the profession. It gets me super excited.

Blake Oliver: [00:17:52] Yeah. Is there any other part of that, like end to end tax workflow that you'd like to highlight from a tech standpoint?

Kirat Sekhon: [00:17:58] I think that's that that's the big piece, right. We've got the bookends right where our where our customers are spending time with their clients, really helping them automate those portions of the workflow from they're getting that information, flowing it into the tax calculation engine. So our customers can really spend time on that high value work. And then on the deliver phase. So I think those are the key kind of building blocks that we have today, um, to to delight our customers when it comes to the tax workflow, let alone set us up for what that future state will look like.

Elizabeth Beastrom: [00:18:28] But there's an extension of this, and I want to take us through this because we launched this in June of this year. Ready to advise. So if you think of that okay. You have the completed tax return now. Great. It's been filed. We have this information that says a lot about what you are understands you as a client. What are you going to do with that. And if you from our state of tax professionals report this year, two thirds of our customers want to make the shift into advisory. But how do they do that? You do that with ready to advise. So let Kierath walk us through the steps of ready to advise.

Kirat Sekhon: [00:19:03] Yeah. So from an advisory standpoint, right. We know firms have been moving into this direction for for many, many years because it is where they really want to spend time to provide additional value to their customers. And so what we what we did on the back of our acquisition late last year, which was material which is co-counsel for tax, we have developed a completely automated advisory product. Net new product offering that takes all this information that we have about your customer, the accountant's client, and analyzes it against various tax strategies so that our customer, based on their client's goals, based on their client's position from a tax perspective, can actually provide advisory, real time advisory advice on what our what their customer needs to do to hit their their goals and their targets.

Speaker4: [00:19:55] And what it does is it will.

Elizabeth Beastrom: [00:19:56] Quantify the savings. It will through an AI agent. It will ask you more information to get to to arrange. It will allow you to have that discussion where I can say, hey, Blake, I noticed, you know, from your 1120 s filing these things, these are some potential strategies that you should be taking. You know, look at this year. It will give a rough quantification. The AI agent will come back and say, can you get more information on this, and then what it will do is it will walk me through the steps of how to implement that strategy with you. Why is that really important? Think about the talent shortage. Think about the people that want to do that value added work, not the gathering and the non-recurring, and get them into where they can be advising clients early. This is a great way to onboard and train your new talent with the help of AI. So we'll outline the strategies and then it will help you produce an output for your client. These are the strategies we talked about. And then what you can do is you see it shifting from that a you know an hourly bill. This is how much for a tax return into a a year long advisory subscription. And you're providing value throughout the year.

Blake Oliver: [00:21:04] Yeah, yeah. If you are charging for preparing a return, the value that you can capture as part of your fee is really limited by what the market will bear. It's, it's it's a commodity in a way, right? I mean, but if you're doing that advisory, if you're like, quantifying how much money my clients are saving because I'm actually implementing or helping them implement like tax strategies to save money, they don't care about the fee. I mean, the fee for the return is so small compared to the tax savings. Like at least that's how I think of it, as.

Elizabeth Beastrom: [00:21:39] If you think of it. We have clients that just do tax returns, and they're proud about the number of returns they do a year. But I've talked to many, many of our customers about this. And one of their big frustration points is, you know, I might call my accountant and say, hey, tell me what his big, beautiful Bill do for me this year, which is code for don't charge me for this. So what you're doing is you're turning on my brain, you're tapping into, you know, um, going into to my knowledge base of 30 plus years of experience. And I'm going to walk you through this. I should get value for that. I'm helping you in a different way. And our current some of our current billing models are prohibitive for allowing that or being able to get the value for what you bring. It's your judgment. It's your expertise.

Blake Oliver: [00:22:23] Yeah. I'm thinking about my experience working with my tax preparer for my business. And it's funny because, you know, he's still bills for the return. But the value I get from him is not from the return. It's from the he's looking out for me and finding ways to save me money. So for instance, when when we started the earmark app and incorporated and did all that, we did it under his like because he advised us to do the C Corp so we could get the Shsps stock treatment and thus save potentially millions of dollars someday. Right? And it's like I can't even quantify. Well, someday I might be able to quantify the value of that, right? But like right now too, it's just like, um, like and that's why I'm willing to pay thousands of dollars for a tax return because of that, not because of the return. So it's like as a profession, how do we get away from charging for the return and, and move to billing for that, uh, that advisory relationship ongoing? Elizabeth, do you have any insights?

Elizabeth Beastrom: [00:23:35] It's it's it's a great question. And it's a shift that we're, you know, that's being worked through across the industry where a lot of our clients want to make the shift. But there's the notion of kind of a bird in the hand where it's like, well, this is this is income I have and I know what I'll be able to get. Um, but we have we have a product called Practice Forward where it's essentially, I call it foundational for making the shift into advisory. It's it tells you you're worth more than that. It talks about how you need to be charging for some of these services that you're providing, besides actually giving someone the tax return and helps you from a business development with some billing, some some basic, for management type tools to help set that up.

Blake Oliver: [00:24:18] But what's the name of that product?

Elizabeth Beastrom: [00:24:21] Practice forward.

Blake Oliver: [00:24:22] Practice forward. Okay.

Elizabeth Beastrom: [00:24:23] That was really kind of the foundational product for what we built the software for. Ready to advise off of them. Got it. Yeah.

Blake Oliver: [00:24:31] So you also mentioned ready to advise helps to upskill our staff to allow them to do advisory when they have less experience. Yeah.

Elizabeth Beastrom: [00:24:42] Because before it used to be that, you know, you would you would have certain jobs that were segmented by the level of your experience at the firm. And then you would you would move up the ranks automating those routine, you know, mundane non-value added tasks at the beginning, allows the new staff to be exposed to things earlier, and it helps with the onboarding from, you know, not just on one person and sharing that knowledge transfer. Let let AI help with that knowledge transfer and it has access to your firm documents. It has access to our best in class curated content with checkpoint. It has all of your firm documents that can help with this and the training and coaching. But, um, this is key for that shift to advisory.

Speaker5: [00:25:30] I think the key is on that.

Kirat Sekhon: [00:25:32] Point is to your point, Elizabeth AI is there to help that that new that new team member. Right. It's there to actually help them provide and provide guidance so that they're not having to do a lot of that heavy lift in the way that they've traditionally had to. And so that junior associates experience, paired with all the knowledge that there is available in generative AI today, those things two together in the advisory product is incredibly powerful. Um, and so so that also to Elizabeth's point, is enabling new joiners, new members in the firm to actually start in that advisory space more quickly than in the past.

Blake Oliver: [00:26:11] Yeah, they can. At least they can at least, uh, identify opportunities. Maybe they can't actually, like, they don't have the knowledge. I'm thinking of myself. Right. I was I left accounting as a manager, and I was not tax focused. I was doing outsourced accounting work. But a tool like this could have helped me identify possible opportunities among my client base for the tax team. If I had, you know, access. But I couldn't ever do that myself because I don't have the background.

Elizabeth Beastrom: [00:26:41] Well, and I would love to take this a step further, where bring this into the education program in universities and get people to understand this. And again, you know, I predict that that would bring more people into the profession where it's like, I could be doing this type of work. I go back to what I had as an undergrad and it it was basic tasks. It was, you know, even from an audit standpoint, everything I learned was that the firm I worked for. But I think there's a huge opportunity for bringing this into the classroom to help attract talent into the profession. Bring it into an introductory. You know, everyone in business school has to take an introduction to accounting class, bring some of these concepts in earlier, and how AI is changing that profession.

Blake Oliver: [00:27:23] I'm thinking back to my tax courses when I got my accounting, um, certificate. I'm a career changer. So I went back and got a certificate. I had to take some tax courses. Right. Like individual tax, corporate tax, partnership tax. And it was all about the rules. And I don't remember anything about strategy like. And I'm kind of amazed actually, because that is one of the most important things you do in a firm is minimizing the tax burden for a business or an individual. And yet here we are teaching just all the, the, the mechanics of how a return works, which is important. You need to know how like basis is calculated and how transactions affect it and whatnot. But like in the end, what are we being paid to do? I think a tax. Tax a customer a client is really looking for us to minimize that tax, help them pay the least amount of tax they legally can. Yeah. Um, I have lots of thoughts about accounting, education and and what's missing there, but I hadn't really thought about it from the tax perspective. I've always thought about it from the financial.

Elizabeth Beastrom: [00:28:41] Tax and audit.

Blake Oliver: [00:28:42] Yeah.

Elizabeth Beastrom: [00:28:44] I didn't learn very much about audit in my introduction to audit class. Right. I learned it all at the firm. But give give more exposure to what accountants do. And the best piece of advice I had and I was I'll admit it, here I was a super senior. So I started out in engineering and it took me five years to graduate. I had a couple internships to help supplement both at a corporation as well as at a big six firm at the time. But the best piece of advice I was given was accounting is the language of business. And I was given this because I was trying to select a major and had gone from the Institute of Technology into the School of Business at the University of Minnesota, and it was really sage advice. Think of it because I was like, I have an accounting class, but I wasn't thinking of accounting as a profession. And it is the language of business. So when you couple that with what you just said, Blake, of coming up with strategies, what better way with the with the language of the business and understanding accounting to come up with the strategies. And that was what attracted me, is it is a language of business. And you can use that if you understand how financial statements are pulled together and how to interpret them and what that means. That's pretty powerful tool. And I think I'd like to just go back to that. It's the language of business and a part of how you define that strategy.

Blake Oliver: [00:30:03] Yeah. I don't know how you would run a business if you can't read a balance sheet. Yeah. You know, um, and understand how the financial statements are connected. It would be terrifying. Yeah. Um, I feel like, you know, just having that background in accounting makes me a much more responsible entrepreneur. Like, I don't feel like I'm just making it up as I go. When it comes to the money that I understand everything else, you know, that's. I'm making it up. But, um, you need that. You need that knowledge. You need somebody looking out for you who has that knowledge in order to be successful. Um, let's talk about let's talk about AI. Uh, there's a lot of hype about it. Everyone's talking about AI agents. Um, you know, you mentioned an application of it helping to identify tax saving opportunities. Tax strategies. Kira, what else are you focused on? Where do you see the biggest opportunities for AI at Thomson Reuters and just in general for the tax and accounting world.

Speaker5: [00:31:05] You know, I think that. Areas we've traditionally thought of it.

Kirat Sekhon: [00:31:12] Those boundaries have changed significantly with with where things are going with adjunctive AI at this point. Right. In the past, it's been AI is very focused on solving a very specific problem. But now we can think about AI as solving workbook problems, right? So it's a much broader, broader application. It's a much broader set of problems that we have the opportunity to solve. And so when I think about the tax workflow and I think about where things are going from a Thomson Reuters perspective, it's really about how do we leverage Agentic AI to use the tools that we talked about. Prep safe, send um, ultra tax system tax. How do we use adjunctive AI to use those tools, those products to actually automate the end to end workflow and really get to a point where the tax preparer is actually reviewing the final work product right, with some inputs along the way, because we understand that there will always need to be some inputs along the way. But as part of that, how are we creating that audit log so that the accountant knows exactly what I did do or didn't do, what decisions it made, what problems it had to solve, and so that you can have confidence in that final work product as you're reviewing it and and have confidence in the choices and decisions that were made. That's where things are going. And I think that's a phenomenal place to be right now.

Blake Oliver: [00:32:28] I'm so glad you said that about the audit log, because that's my biggest frustration right now with the tools that I'm using in the in the general ledger accounting world is we have, for instance, AI agents inside of zero and QuickBooks that will automatically reconcile transactions. And you can see which transactions were reconciled. And you can see a like single word that describes why. But I can't click in and see the A's thought. I want to know why it matched this transaction. And for some reason, developers don't expose that to us. And I want I want the full audit log because I know it's there. There's an AI conversation for each one of these transactions. Yeah. Why not. Why not give that to us? And I think.

Kirat Sekhon: [00:33:15] That's so important because, I mean, look, our customers expect that the work product of an accountant has to be 100% accurate. It cannot be wrong. Right. So without providing that audit log with the decisions and choices and confidence levels of the decisions that were made to the accountants, like we're missing the mark. So having that ability to actually audit what what AI did on your behalf is critical.

Blake Oliver: [00:33:36] Yeah. Yeah. I want like the confidence level too. That's a great thing that should be on everything. It's like, what's your percentage confidence. Ask the AI. What's your percentage confidence that you got this right. Yes. And so then I can filter for whatever was low confidence.

Kirat Sekhon: [00:33:51] Exactly. Absolutely. And that's a huge pillar of what we're building going forward is making sure that that's built in from day one.

Blake Oliver: [00:33:58] So the vision is basically like AI agents are gathering, like we sign up a client to do a return or something. They're gathering all the documents from the client. I'm imagining also like conducting the client interview or you know, that. What do they call it? The, uh, what is it firms send out to the client? Elizabeth. The questionnaire. Right.

Elizabeth Beastrom: [00:34:20] Like, I mean, yep. And it's going to resolve or if there's it's going to tell you if there's missing information. Again, a pain point that people would have to, you know, go chase you down for the documents that you didn't have. It would be very clear what's missing, what's needed, what's open.

Blake Oliver: [00:34:34] Yeah. My mom's my mom's tax firm. Like they still send her the paper organizer and she has to, like, fill it out by hand. And she's.

Elizabeth Beastrom: [00:34:43] And unless maybe she has a dynamic in a lot changes year over year. But a lot of that my parents have the same type every year. And they go through this same paper questionnaire.

Blake Oliver: [00:34:53] Um, but we don't need to do that anymore, right? Because we could, like, upload the prior year return and pre-populate a questionnaire based on what happened in the past. And eliminate a lot of these. Like, we don't need to ask stuff if we already know the answer.

Elizabeth Beastrom: [00:35:06] We like to think of it. We internally talk about killing the questionnaire. It's a pain point. It's not needed anymore with where we are from AI standpoint.

Blake Oliver: [00:35:17] So once we have the questionnaire right, that's then that's collecting information, collecting documents. Clients are uploading that stuff. And you've got sure Prep doing the organization categorization, filling the return. And then how do you see AI agents when it comes to the prep and review process.

Kirat Sekhon: [00:35:40] So so if you think about it, you've collected all this information right from from your clients. The AI agents have actually leveraged our products to extract the information, populate the information. And now, as the calculations are being run in a very simple use case, calculations are being run. There's a bunch of diagnostics that come out of the calc engine today, right? Decisions need to be made. Corrections need to be made. The AI agent is doing the analysis of the various diagnostics on your behalf, and it is taking action on that to ensure that at the point in time that you've gotten that work product, it's done all that it can do to make it a very simple review for you. So that's that's where you think about the agents are are not only doing the individual parts of the workflow, but they're connecting the workflow, and then they're actually taking action on your behalf when things are surfaced as an error or missing information or, you know, we couldn't figure out what to do with this specific calc because of these two conflicting things. We think that you should do X, Y, and Z, and we decided to do that on your behalf. Like that's the type of things that the agents are doing on behalf when it comes to the full workflow and specifically the calc and getting ready for that review.

Blake Oliver: [00:36:52] And then the review, I think I haven't tried this myself, but I feel like you could do this today is create like a ChatGPT project or a cloud project and create a system instruction set to review returns like. Here's a checklist of all the things that we review. And I feel like I haven't tried it with the latest ChatGPT model. But like as of as we record, this 5.2 is out there. And, you know, I'm just imagining flipping on the Pro model and uploading return. And it could go through that standard checklist and like look for all the common errors. I imagine it would do a pretty great job of first round review if we were comfortable, you know, giving our returns.

Kirat Sekhon: [00:37:35] If you were comfortable, what wouldn't it be better if that review was grounded in trusted content that's specific to the tax and accounting profession, which is what we bring with our co-counsel for tax and audit products. Right. It's grounded in checkpoint trusted content to actually provide that additional precision and quality of that review.

Elizabeth Beastrom: [00:37:57] Content to, you know, to put a finer point on it. We have, you know, between legal and tax, we have over 4500 SMEs that are have been practitioners, you know, lawyers or accountants that are designing the, the, the, um, guidance that is helping AI.

Blake Oliver: [00:38:16] So what we're talking about when we talk about checkpoint, which I've never used myself, but like that is the like library of analysis.

Kirat Sekhon: [00:38:23] It's the curated texts and audit professional content that we create here at TR, as well as content industry specific content. But it's it's very much focused on the tax and audit profession. And so.

Blake Oliver: [00:38:37] When.

Kirat Sekhon: [00:38:37] I'm what's coined by SMEs within Thomson Reuters, where that is their day job to ensure that that content is accurate.

Blake Oliver: [00:38:43] Smes. Um, subject.

Elizabeth Beastrom: [00:38:46] Matter.

Speaker5: [00:38:46] Expert subject.

Blake Oliver: [00:38:46] Matter. Okay. So so these are tax experts. Legal experts. Yes. They're they're they're looking at the laws practitioners. They're looking at the law. They're looking at the court cases the IRS guidance. And they are if I'm doing research on like what to do about a particular situation, I go into checkpoint and I'm getting that analysis from them. I'm finding the articles.

Elizabeth Beastrom: [00:39:07] But I would take it a step further. You're going you're going into co-counsel tax now. And you know, our subject matter experts. As soon as Big Beautiful Bill was released, they spent the weekend on it. What does it mean? So you'd go in there and you'd put in the chat. What does this mean for this client? You'd have the client docs in there, and it could come back and say, you know, for Blake and, you know, um, this this is the implications. What it mean.

Blake Oliver: [00:39:30] For his return? Yeah. For his taxes.

Elizabeth Beastrom: [00:39:33] Checking Blake and other clients that I know are like Blake. I could be responsive to those clients on Monday morning and go, hey, this just got released, and this is what we need to be looking out for you. And, oh, by the way, there's potential savings that are going to be triggered as a result of this.

Blake Oliver: [00:39:46] That's amazing. And that is so important because it's that's the difference between using just like ChatGPT and using a product where the AI is built and, and tailored for the job to be done, because ChatGPT has just been trained on the whole internet. So there's all sorts of garbage that has been trained on. That's not correct. All the misinformation out there or wrong analysis. Right. And you're training it or you're limiting the the AI agent to just the, you know, authoritative, expert driven, human verified material.

Elizabeth Beastrom: [00:40:22] Which could be your own firm's content as well as as our content. Right?

Blake Oliver: [00:40:28] Yeah, that's really exciting. So is that like, is that is that working now? Is that something that like, do you have AI. Can I can I, can I search with AI now. Can I do that.

Kirat Sekhon: [00:40:39] Yes, absolutely. Co-counsel for tax and Audit is out there and available today. And it is exactly those things.

Blake Oliver: [00:40:45] It will do what you said where it'll take like here's Blake's return. Let's see what the implications are of the new bill on this. So I can, like send him an email.

Speaker5: [00:40:52] Yep.

Blake Oliver: [00:40:53] That's really neat.

Elizabeth Beastrom: [00:40:54] That's what I love about this is I go to a lot of, um, uh, tech events and our own customer event synergy, which is in November every year. You know what? When we were demoing, um, co-counsel and, you know, Keith would do a brilliant demo of it. I could do a demo of this for you, and I'm not, you know, a technician by profession. I can go in. And what's great about it is other customers. We're telling customers to come over and, like, try this and put a question. And they were testing it out and it was blowing them away. So it's it from a time saving standpoint from increasing efficiency, from increasing accuracy. Check check check.

Blake Oliver: [00:41:36] So we're we're we're through now going back to the end to end tax workflow. Right. We're we're through the, um, the review analysis part of things. And then we get to the delivery and we already talked about like the safe send is delivering. We're getting the automatic e-signatures. And basically that's that's it. Right. Like that's that's the cycle.

Kirat Sekhon: [00:41:58] That's the cycle. But I think there's, you know, to Elizabeth's earlier point, there's a huge opportunity to figure out how advisory is driven directly from that workflow so that it's not an after action. It's a in the in the moment action.

Elizabeth Beastrom: [00:42:11] That's where the opportunity is. And I think that's where it starts. Where you know the name. Ready to review. It started by us actually in a conference room in Ann Arbor saying we just want to get to ready. We want so that the practitioner, the tax professional, has something where they can start applying their judgment and, you know, all of their years in the profession and what they know. Um, AI is never going to fully take the place or replace professionals, but AI enabled professional And firms. They're going to outcompete and outperform because they're going to be able to do it faster, better and get to this advisory, which our clients want. I fired my first accountant because all I unlike your accountant, Blake, all I was getting was a return. I'd be like, well, should we be doing anything different? It was nothing. On top of that. Right.

Blake Oliver: [00:42:58] And you're thinking, why am I paying all this money?

Elizabeth Beastrom: [00:43:00] That's exactly.

Blake Oliver: [00:43:00] I could do it myself in TurboTax.

Elizabeth Beastrom: [00:43:02] I could do it myself in TurboTax. But I just told you, I'm a lazy, now inactive CPA. So I'm like, I don't want to do it myself.

Blake Oliver: [00:43:09] So it's, um. It's an exciting time. It's for me, having started my career in outsourced accounting or client accounting services, when cloud was really hitting the market there, I saw the potential because I, I was a bookkeeper, and as soon as I implemented these automation tools, not AI based just, you know, cloud based, it cut my workload by like 80%. And so I had to move away from hourly billing. Had to move to fixed fees. Had to start doing more for my clients. Like talking to them about their financials versus just sending them the monthly packet. And I feel like AI is going to make the same thing happen now for tax and audit, because we're cutting the hours to do all that manual work. And so now there's the opportunity to no longer be tied to timesheets.

Elizabeth Beastrom: [00:44:02] Well, but imagine if you haven't made that shift in your mind and you're just thinking your value is providing you with a return each year. How terrifying for you right now where it's like, um, this is getting to be more commoditized. Work on the actual, you know, preparation of the tax return. Where will I add my value? What should I get paid for? And you just said it. It's AI is decreasing the time. So the customer is going to come back and go. It's taking you a lot less time to do it again. That's not taking into account all your years of experience or judgment that you're putting into this. So this is a perfect opportunity that you have to make that shift into advisory.

Blake Oliver: [00:44:35] You have to because on the lower end we're seeing the automated, you know, do it yourself software like move up market right then that's AI is going to help with that. Like more complex basically individual returns at this point I don't know any tax preparer running a modern firm who wants to be doing individual returns because the market has just gotten so commoditized, unless you're at the really high end of it. Right. But like just for anybody's regular individual return, like you can just go do TurboTax and or use any of these other tools. Right. And it's not that hard anymore. And the AI is going to make it even easier. Like I, I did my own return just to experiment, like I did a business return, uh, in one of these, like do it yourself softwares. And normally I wouldn't do that because I would there would be too many questions that I would have, and I'd have to go do a lot of research. And I'm a lazy CPA just like you, right, Elizabeth? I could do it. I could figure it out. But now I can just keep like, um, ChatGPT open in a different window and it's, you know, it's getting more and more accurate to the point where now I can figure out the things that would have taken me hours to research. Yeah, I.

Elizabeth Beastrom: [00:45:45] Would, I would say that there's still a lot of ten 40s out there, though, and having that information, you know, and think of, um, client accounting services the same way where a lot of times people don't want to do the bookkeeping, but if you have that bookkeeping, having that knowledge and access to that is powerful. Just as similar to the 1040 it's data, you know, on a return. But I think having that more information that you have and the more efficiently you can process that to get to advisory is only going to be a benefit.

Blake Oliver: [00:46:15] So yeah, if you can, if your tax software as a pro is automating all that like collection, populating, preparing the returns, so you're just reviewing it, then that again becomes actually a really compelling thing to do.

Elizabeth Beastrom: [00:46:28] Yeah, I want that data because then I want to be able to reach out to you or a bunch of people like you that you know, have similar characteristics and send something out that AI will generate for me. That said, I've noticed this. This change in Minnesota tax law has occurred. It could have, you know, a really big impact on your 2025 filing. Let's chat about it. And so.

Blake Oliver: [00:46:51] That is something that, like the TurboTax software is not going to do.

Kirat Sekhon: [00:46:56] Correct.

Blake Oliver: [00:46:56] For. It's not going to proactively reach out at this point anyway. You know, who knows what's going to happen in the future. But like in in the near term, that is something that humans are going to do. I think I hope and you know, if AI can can do the advisory someday, then we're kind of all out of a job. And so maybe we'll all just be on the beach somewhere. Right. So I'm not too worried about that.

Elizabeth Beastrom: [00:47:18] I still think they're going to need our judgment. We're professionals. Let's remember that. We talked about this. We're professionals. Our judgment matters. Um, but but it's going to allow a lot more work life balance make it a lot more attractive profession for people to enter into. And you know, the world as we knew it, the 80 to 100 hour work weeks as as the norm are going to be a thing of the past.

Blake Oliver: [00:47:42] Okay. So let's bring it, uh, let's bring it to back from this high level view of, of like what's possible and let's, let's, let's bring it down to reality. I'm a tax firm. I'm doing things kind of the traditional way. What are the things that you would have me focus on in the next, let's say, you know, 90 days to upgrade what I'm doing? Where should I focus?

Elizabeth Beastrom: [00:48:10] I would start with a conversation of you, of, you know, Blake, what are your pain points that you hate to do? And you would the customers and clients that I talked to rattle off a hundred things. It's like, well, how could we solve those? But and then and talk about practically automation and the advances specifically with AI and Agentic AI and how that can help. So have a conversation about your pain points. And I'm a big believer. Ai it. It can solve a lot of things, but it's not the answer to everything. Yeah, but there's a pretty high likelihood that you're going to go through and tell me about your pain points. And I, I or a talented person on my team is going to be able to say this, this is how we can solve that for you.

Speaker5: [00:48:52] Yeah.

Blake Oliver: [00:48:53] I think that's a great way to wrap this. Thank you so much, Elizabeth Kirat. I've been speaking with Elizabeth Bystrom, Kirat Sekhon from Thomson Reuters. Great to have you on and I hope to catch up with you again soon so we can, um, you can keep me up to date on everything going on with with tax automation and AI.

Elizabeth Beastrom: [00:49:14] We'd be happy to. Thanks for the time today. I enjoyed the conversation.

Kirat Sekhon: [00:49:17] Thank you.