There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Roger Harris: Hello again everyone! It's time for another federal tax updates podcast. This is Roger Harris and I'm joined by my sidekick and partner in this Andy Schwab from stormy Dallas, Texas, I hear.So.

Annie Harris: Yes, it is.

Roger Harris: Hopefully the, uh, Thunder and Lightning won't interrupt our podcast today. Thanks. Thanks [00:00:30] to everyone for listening. We're excited to have you, uh, listening to our podcast today because we have another really exciting guest, as we have done almost all our recent podcasts, which is great for us because I'm sure you'd rather listen to other people besides. Well, I won't speak for Annie, but me. So, uh, Annie, how about introducing our guest for today's podcast?

Annie Harris: Sure. Be my pleasure. Today we have Gauss Pearson with us, and he's a chartered accountant from New Zealand with [00:01:00] 25 years of public accounting experience, including 18 years as a partner with PwC New Zealand. He specializes in tax and private businesses. During his time as partner, he realized the difficulty firms had in understanding the hiring options available to them, so he joined and co-founded account tests in 2016, expanding the business from New Zealand to Australia, UK and the US. [00:01:30] Giles has a strong interest in improving accounting as a profession. Someplace that college students will want to begin their career. So it is my pleasure to welcome Giles to our Federal Tax Updates podcast. Kyle's, thank you for joining us.

Giles Pearson: Hi, Andy and Roger. It's great to be here and great to be talking about tax again, which I don't get to talk about too often. So this is cool.

Roger Harris: Yeah. Are you back in New Zealand and if so what time and what day is it? I mean, it's, uh, 4:00 on, [00:02:00] uh. Well, 4:00, no matter what day it is, but it's a, uh, a Monday. So how are you ahead or you're ahead of us, I guess.

Giles Pearson: Yeah. We're ahead. So it's 8:00 on Tuesday morning.

Roger Harris: Well, I wish I could ask you who was going to win some games or something, if you already know, but, uh, I'm sure you've done that before. Thank you. This is this is a really great topic because the industry has faced hiring challenges for a number of years. And and if you're going to go through that process, you want to try to make sure you get it right. And, uh, [00:02:30] Giles has come up with a way to help. Nothing's perfect, but to help make it make it better. So, um, I guess kind of. What what made you start this idea? Was it just the general challenges with hiring, or how did you go from taxes to testing?

Giles Pearson: Yeah. That's right. You know, look, we've all got a there's always a, like a seminal moment. That is the thing that causes you to do something. And, uh, you know, we'd had frustrations [00:03:00] for, as all firms do, for hiring people who who turned out to be, you know, not what, not what was on the tin. Um, and but but, you know, I had this particular experience, which, again, is probably not that uncommon where we hired this person who they just, they interviewed. Great. We really connected at interview their, their, um, their resume was, you know, exactly what we were looking for. And, and, you know, I really liked this person. [00:03:30] They started with us and it was just a train wreck, and we just couldn't work out what it was that we'd got wrong. And, you know, accountants are always a bit slow of perhaps making those hard decisions. That's one of the things that we're not that necessarily that good at. You know, we're conflict avoiders generally. So we struggled on with this person for some time, and it was a miserable experience for us and for them, you know, and eventually we had to let them go. And I guess that was it was that particular, [00:04:00] uh, moment that it was like, surely there's a better way. Um, and and you'd have thought PwC would have all the measures in place for these sorts of things, and they and they don't.

Giles Pearson: And it's or they didn't, and I suspect they still don't. Because, you know, this is not the way that firms have traditionally thought about hiring. It's been, you know, a really a really sort of if you like, a lax process. So we went out looking for some testing that we could use skills tests, you know, show me that you can do the [00:04:30] in this case, it was like a staff accountant sort of level. Show me that, that you're a staff accountant level. And we just couldn't find anything. You know, we trawled the world looking for, uh, for testing. And so that was a bit of a light bulb moment. It's like, surely somebody should create something that if I want to test for, you know, a staff accountant or a tax taxi or whatever. I can just pick one off the shelf and and deliver it to them with the knowledge that it's actually going to work. Um, and that it's, [00:05:00] you know, the science is there, and I've got my legal stuff covered and all the rest of it. And so that was that was the genesis, I guess, of the, the idea to start account tests.

Annie Harris: Yeah. I mean, I guess people submit a resume or post their resume online and you have a couple of conversations and interview, you know, maybe several people talk to them and then it's sort of like you roll the dice, you think you might be a good fit, but you're right. Without some sort of testing of knowledge or personality or you know, how they would fit [00:05:30] with the firm culture, um, what their strengths or their weaknesses are. It's really hard to know if the candidate's right or not. Right. And it's extremely expensive to pick the wrong candidate, as you as you mentioned. Yeah.

Giles Pearson: Well that's right. You know, and CPA Practice Advisor did a really interesting survey. It's probably about 18 months ago now, but I'm sure it hasn't changed about how many people lie on their resumes and and it's surprising. And actually the highest that the people who lie the most are the most qualified. Um, [00:06:00] maybe they've got more to lie about, but, um, you know, it's literally, uh, you know, 80 or 90% of people lie on their resumes, and, and most of them do it all the time. Uh, you know, and it's a question of sort of what is lying and what's what's a stretching of the truth. If you're talking about your, you know, experience or, you know, the sort of work that you've done, but, you know, resumes, I think particularly with AI makes it makes it even worse. Resumes are really nothing but a I'm [00:06:30] telling you that I'm, I'm sort of in your ballpark, but, you know, it's for you to find out. Um.

Annie Harris: Yeah. I guess other than like a degree or, you know, you are a CPA or you are an EA, or you graduated with a master's of everything else is just sort of fluff, I guess, I don't know. It seems it seems ridiculous because I remember being so particular with my resume. But you're right, with AI and the competitive market and certain fields, I can see how people fudge a little.

Roger Harris: And [00:07:00] it would seem to me, oh, go ahead, go ahead.

Giles Pearson: I was just going to say, if you if you've got kids, you know, and, and I've my kids are the age when they're applying for jobs. What do they do. They, they they get their resume. They get their the job description for the job that they're applying for. And they put them into AI and they go make my resume look more like this. Job description.

Roger Harris: Yeah. No, I can make you look perfect for almost any job, whether you're qualified or not. But and I think that one of the problems and I know I'm [00:07:30] guilty of and I think a lot of people we're not particularly great interviewers. So, you know, we don't we're not able to probe to, to really try to find out what's AI and what's the truth. And, and I'm assuming these tests. Well, first of all, I'm shocked that there wasn't I'm like you, I would assume there's a test somewhere. You know, that I can use or modify or do whatever. Um, but with the test probably digs deeper and better into the candidate than than [00:08:00] someone who's not a skilled interviewer. They're just going to really ask you to verify what's on your resume.

Giles Pearson: Well that's right. You know, and I think there's different tests for different things. And, you know, there's a limit to how much you might want to test somebody. But, you know, if you if you think about the three sorts of tests, you, you could potentially use, you know, skills. So, you know, prove to me you're in my ballpark on on the skills for this job. Technical knowledge, you know. And we can we can debate how much [00:08:30] people need to know versus how much they can look up. But, you know, there's a there's a there's an amount that people need to just have in their brains. Um, and then you've got personality, which is, you know, how they're going to fit with my team. How are they going to fit with, with, with coworkers and developing their career. Um, and particularly if they're, say, going to work remote. And then you've got that sort of, um, core ability, you know, raw, raw thinking power. So how do [00:09:00] they can they how can they problem solve? Um, you know, do they have the intellectual grunt to particularly to advance? So if you're looking at, you know, hiring interns or whatever, that's, that's probably a you arguably don't expect them to know that much, but you want to make sure that they've got the ability to learn.

Giles Pearson: So, you know, those are the sorts of testing that you that you can do. You're probably not going to want to use all of those for every candidate, because that's quite intense. But, you know, you you can then walk into an interview, arguably [00:09:30] say if they've done a skills test before the interview and go, I don't need to sit here and waste ten minutes of this interview trying to find out whether they're whether they've got the technical knowledge, because, you know, who's got the power in the in the interview now? It's probably the candidate for many especially the small well probably any firms up to you know, people who are you know outside the top ten, the candidates got the power. Um, [00:10:00] they've probably got multiple opportunities if they're good. Um, and you need to spend your interview time selling your firm. Why would you want to come work here? Not probing them on whether they, you know, can understand this piece of tax legislation or, you know, some auditing standard or something.

Roger Harris: Right.

Annie Harris: So what if you're just a really bad tester like, I feel like I would be super nervous if I walked in to a, you know, an interview. And all of a sudden there was like, a test that [00:10:30] they wanted me to take. Uh, I mean, I guess you'd give them a heads up ahead of time, but but how are the candidates, you know, from your in your experience, how do they react? Are they like, oh yeah, this is great because they also might want to be a good fit and make sure that they have the skills. No. I mean, if I was the candidate, I wouldn't want to go apply for a position that I was going to feel lost or, um, not do well in. But, you know, what are the candidates saying about this?

Giles Pearson: Yeah. Look, and nobody likes to be tested. I think, you know, personality [00:11:00] is one thing because there's no wrong answers. But, um, but, you know, ability or skills. Yeah. Nobody wants to be put on the spot. Um, but, you know, we we we have all been through the processes of doing these things. And it's to some extent it's it's there's an expectation. And the upside to the candidate is, is they're not going to be eyeballed by a partner or a senior manager in the interview and asked technical questions, which is probably worse if you if you don't know if you don't know the answer and [00:11:30] you're just sitting across the table from them, um, versus, you know, like for our tests, they're all done at home. So people can be prepared before they do the test, get themselves to the point where they're they're there, ready. And you know. Look, Annie, I think you're right. People sort of want to make sure that this is going to be a good experience on both sides. Yeah. And, um, I think, you know, certainly the firms tell us if candidates don't want to be tested, they're going. Well, actually, if they don't even want to tell [00:12:00] us where they're at, they're not that serious about wanting to work here.

Giles Pearson: Whereas, you know, I think the upside for the candidate, if you're talking to them is to go, you know, we just want to know where you're at. This is not this is not something that's going to cause you to get, you know, excluded from the process. Um, this is this is about knowing, you know, where are you at technically, for example, so that when you come work for us, we can make sure that that onboarding [00:12:30] process is actually going to be the best for you. If you need a bit of help, you're not quite there. That's great, because what that means is when you come work for us, we're going to think about your training plan. Who's going to mentor you? Um, you know, what are your first 90 days going to look like? And that's. So that's the way I think to turn it into a positive conversation with the candidate, um, rather than, uh, you know, just we're going to test you. And if you don't, you know, hit a certain score, you know. Yeah, [00:13:00] yeah, yeah. You know.

Roger Harris: You can't fail this. Well, I mean, maybe if.

Giles Pearson: You're a Big Four, you know for sure, um, you know, they can afford to do that and be afford to be picky, but.

Annie Harris: So how do you come up with the questions like, how do you make the the test? Was it just trial and error or.

Giles Pearson: Yeah, it depends on the test and it's and so look, that's my job I guess. And I'm still an accountant. Um, so you know, and so obviously when we started in New Zealand, it was sort of easy because [00:13:30] I knew, um, the environment really, really well. And, you know, I could write a set of tests to be fair, across corporate and, um, public accounting without without a lot of help, maybe other than the auditing ones. But, um, beyond that, I guess we've had help from, um, practitioners around the world and particularly in the US. Um, say with our tax tests, we've used expert groups of tax CPAs who've, you [00:14:00] know, mostly in smaller firms. So, so, so they're saying to us, you know, I might propose, here's a whole list of topics we could cover. What do you think? Um, and they'll come back and go, well, you know, we'd really love to know if candidates had a, had a good understanding of not so much the technology and, and things that the software does for them. But it's about, you know, where would this where would this particular item be in the return or you [00:14:30] know, one of the favorites is people understanding sort of what what does an S Corp election actually mean. How does that how does that change? Is, is is an S corp an entity? Do they even get that? It's not an entity. Right. And and things like that. So it's about some of that sort of conceptual understanding of, of how it all comes together. But you know, and, and the sort of questions that people a client might just flick you an email or a text or a or get on [00:15:00] the phone and ask you, you know, and that's the stuff that the practitioners are saying that they want to get where the people are at that right level.

Roger Harris: Yeah, because I'll show my age here. Um, I actually had to do tax returns by hand, which required you to understand how things worked. And if you understood how it worked, it made it easier to explain to a taxpayer why certain things were happening. And we've all become so dependent on tax software that I might not be able to explain [00:15:30] something. I just know how to enter it in the software, which is a completely different skill than actually understanding the transaction and being able to then take that understanding and communicate well to, to a customer or potential customer. So yeah, you know, forget about that. You know, unless I think because I remember I learned a lot about the tax code by just figuring out how to move it from one form to the other and what this form impacted [00:16:00] that form. Now I just put some numbers in and it sends it wherever it needs to go. And my only job is to make sure I understand the end result.

Annie Harris: Yeah. I mean, the software's even giving you diagnostics to help you along the way or marking boxes. You had this number last year. Don't forget it. I mean.

Roger Harris: Yeah.

Annie Harris: There the software's are really which is fantastic. I mean, it's fantastic that the software is so advanced, but but you're right, um, having that understanding of of why it's here and what does this mean? And, um, how to explain it to a client. It's [00:16:30] a whole nother story.

Roger Harris: Yeah. Given there was nothing, you know, when you looked and couldn't find anything, how long did it take? You know, because you really didn't have anything to work with. It wasn't like you had somebody else's test to try to make it work better for for your particular needs. But given there was nothing. I mean, how long a project was it to, to, to first of all, identify the lack of resources and then to, to start putting these things together or to if you had to come up with a new test. I mean, how long is, is the lead up to actually [00:17:00] having a test that, that you're comfortable with would work in the marketplace?

Giles Pearson: Um, you know, it's we're getting a little better at it, but it's probably at least six months. Um, well, one of the biggest problems we have, of course, is getting people in practice to actually help us. Yeah. Um, because everybody's really busy, and and I get that. And, uh, so when you say to them, you know, here's a, here's a question bank or can you go on and try this, you know, you can wait weeks, [00:17:30] um, for people to to help you, but, um. Yeah, the first tests we were probably took us a year. Um, and we didn't have a lot to work with. There were some tests out there, and there are still some other tests out there that. But they're, I guess no one, no one is 100% focused on public accounting. And that's the that's really is I think is our, our point of difference. But it does mean it's, um, you know, you, you end up [00:18:00] dealing with people in public accounting and, and all the things that we know about how, how hard it is to get people's attention. So, uh, it's a, it's a, it's a labor of love and, and but I, I think it's for the, for the profession.

Giles Pearson: I guess I'm part of my objective was to actually try and help firms, uh, get better, move faster. Um, and for partners to have a better experience because, you know, we haven't talked about [00:18:30] the cost of getting it wrong. But, you know, as as you would probably know the cost, accountants, accountants in public accounting earn good money. So so the the financial cost is not insignificant, but the emotional toll is, you know, we when you're in practice, you you want to serve clients. You want to work with them to help them solve their problems. Um, and you want to build your team. You don't want stress of having to deal with underperformers. [00:19:00] And and, you know, your team members coming to you going, you know, Roger's no good. Why why did you hire this? Why did you hire Roger? We should you know why. Why are you not dealing with this? And you know all all the angst that goes with that. So that's the the part, um, that I think, you know.

Annie Harris: The time, the time of onboarding and then who's training and who's mentoring. And, you know, I feel like a lot of times it's it's putting all the other work aside [00:19:30] to focus on this new hire to make sure that they are understanding their job role. Are they qualified? Training them software, you know, culture of the of the firm. And while you're doing that, something else is sitting on hold. So I don't know how long does it take for you to realize the person's a fit or not a fit? I mean, I imagine everybody would unless there was, like, something, you know, very wrong with the candidate, that you'd probably at least give them six months to try [00:20:00] to see how they're doing. So six months of time of working with someone if it doesn't go right and then you have to start over again. Um, that can be.

Roger Harris: Well, and then we're, you know, usually hiring somebody because we need them desperately. And it was competitive to get them. How bad does it have to be before we finally are willing to say this just isn't working? Because, you know, we're so busy. It's just we let bad hires go too long just because, um, [00:20:30] we need them to do something. They're doing something. You know that if they leave, I have to do is kind of our thought process. So we just. We let them stay and stay and stay. And that's what. That's the real. To your point, Giles, the cost of a bad hire. Yeah. Can can eat at us for a long time because we're just too slow to to realize we made a bad hire and that it might actually be better if I did it than to have somebody do it. And then I have to do it anyhow. Um, but we're very slow because it was such a hard time to [00:21:00] find the person. We know how busy it is. I mean, we're just we're not good at admitting we made a mistake.

Giles Pearson: No. And how much did we all learn at college about, uh, you know, mentoring people and coaching and all this stuff? You know, it's it's we we we trained to be technicians and that's. Yeah, there's a lot of people in the profession who who've had nothing, [00:21:30] no coaching about how to how to work with their team and get the best out of people. And, you know, we all need to learn more about that. And I think that's becoming increasingly, uh, what the profession is about. You know, the, the technical knowledge, uh, you need to you need to know enough to be dangerous. But the but, um, you you deep technical understanding is probably, um, something that is, is, you know, going to become increasingly [00:22:00] less important.

Roger Harris: Yeah. Because, I mean that there are ways to learn the technical part of our business. I mean, and a lot of it changes. I mean, we're sitting here in the US. I mean, whatever tax law, you know, today may not be the law, you know, a year from now. So you're in a constant learning mode when it comes to the technical side of the business. But you're right. I mean, gosh, I mean, how many HR courses or Anything about, you know, the value of teamwork. And we all could say the words, but do we really know what we're [00:22:30] talking about? And do we just get so engulfed in the, you know, again, the technical part that that we miss the maybe the most important thing and maybe that's why we're having a hard time hiring is because we're not we don't present a very good place to work in, uh.

Annie Harris: And the soft skills, communication, teamwork, um, delegation. I mean, all of those things really do encompass a good employee. And. Yeah, I didn't take a course on that. Um.

Roger Harris: Yeah. I mean, it's kind of like [00:23:00] you either had it or you don't, you know, and then that's dangerous because again, it because we're probably if we're not good working with our staff, we're probably not really good working with our clients either. You know, it's, uh, some of those are skills that translate beyond just your employees.

Annie Harris: Maybe that's why they maybe do so many group projects. You know, I hated those group projects. There was always somebody who wasn't holding up their part of the bargain or never on time with their part of the project. So that's what that was for. Now that I'm thinking about it. [00:23:30]

Giles Pearson: Well that's right. All there was the person who who, uh, just took over and, uh, and didn't listen to anybody else, and, you know, just railroaded the group down in a direction that they that they wanted to go.

Annie Harris: So is that the personality test? Can that kind of identify what kind of team player they are, or are they a leader, or are they a follower, or are they? Does the personality test really pull that kind of stuff out?

Giles Pearson: Yeah. That's right. And that's what I think that is, uh, probably, you know, increasingly [00:24:00] important. So what we did from the so we started with skills because that was the big gap, if you like, that, that we had. But then, uh, my co-founder Steve Evans has a background in testing and assessment. So that was sort of, you know, he was able to help us build the assessments and the reporting and all that stuff. But he's got a particular interest in personality and had spent, you know, 25 years delivering various personality assessments, um, through the, um, businesses [00:24:30] he worked with. So he, he worked with our psychology advisors to, to build a personality profile that's specific to accounting. So this was taking a study that came out of the UK, um, which identified seven factors for success for accountants in the sort of, um, modern environment. And four of those you could, uh, measure by using a personality profile. So those were, um, [00:25:00] ethics, relationships, um, thinking and coping. So, you know, you can sort of look at those and go, we can understand why those are, um, key factors to success. So we built a personality profile that focused on those particular areas. Is. And so what you so it's a big five model which is if you like the, the the the ones with the good science. Um, right. So you don't end up, to be fair, with a, you [00:25:30] know, categorizing somebody as a, as a, an animal or a color or whatever. It's, there's, there's like a there 14 factors that they, um, work through and we, we sort of built a profile covering those. Uh, but what you can then do is go, what is what is an ideal profile look like for different roles.

Giles Pearson: Um, so if you're familiar, say with the finder, minder, grinder, um, concepts. [00:26:00] So, uh, that's, you know, in an accounting firm, you've got finders being the people who find the find the work. Ultimately, uh, become firm leaders, uh, the minders of the client accounting managers. So they're sort of managing the work and managing the, the team. Um, and then the grinders being the people doing the work, the staff accountants and the, you know, senior tax associates. And so you can you can go, well, here's a model profile for each of those positions. Where do where does this person look like on, uh [00:26:30] on the personality profile they've filled in and where the where the biggest gaps. So what we do then is help people with the interview questions. Um, based on, you know, where the gaps and what are the things, what would you want to dig into with this person? Um, at the interview, because the any personality profile only tells you how somebody prefers to work. It doesn't tell you how they do work. So what do you where the interview really comes into its own is understanding [00:27:00] what are their coping mechanisms or, you know, what are how do they actually operate in practice, even though, for example, you know, if they're like me, they want to work in the back room and not talk to anybody all day? Um, that's what my personality profile says about me. But I know that I'm not. I can't be a success if I do that. So. So how do I then operate on a day to day level? And that's we help people with the questions on that. So it's about sort of that digging in.

Roger Harris: Yeah. [00:27:30] Because I found you sent us um, in preparing for this, you sent us, I think the results of a test that might have been yours, that was in all these different categories. And and I found it fascinating reading kind of the beginning of what this is supposed to. Maybe it's the saying this is the ideal person. Then it would say, this is kind of where we found you to fit in this thing. And, and I've one that's always thought that good [00:28:00] communicators can overcome a lot of things if you can communicate well. So, um, I'm not going to read what it said about you, but I found it fascinating under the, uh, communication style that it said emotionally intelligent leaders consider the weight of their words before speaking them. That's something a lot of people could learn in a lot of areas accounting or somewhere else, using tact and diplomacy when conveying sensitive information to others and striving to avoid making negative impression [00:28:30] on others. You know, that's I guess I read that to say that's what communication style you should have. And, and, and I found that particularly because, again, I'm a big advocate, that communication is important. But, uh, that first line about kind of think before you speak, you know, don't engage your mouth to your brain is engaged is a is a is great advice. And uh, and you can go through a lot of other areas. But I thought it was particularly fascinating. [00:29:00] And I'm sure I would love to be able to ask the people how they reacted to seeing how they perceived what the test I.

Annie Harris: Want to see. I want to take it. I want to see what my like, what it says, what I should be doing or how I'm doing, because it would probably indicate areas where I could use improvement, you know, be more like a personal development or team development skill. I could see the personality test being worked. You know, if you have a team of people working on a certain project, you know how knowing what their personalities [00:29:30] are like to see how they would react when in the team, that'd be cool.

Roger Harris: Would it be? I mean, to Annie's point, is this something that you would have you thought about giving it to your current employees just to kind of see what kind of mix and match group you actually have? Um, and can it be instructive and help people that you already hired? And maybe they've been with you for ten years and none of us are perfect, but learning something like that is is that a valid use for testing like this as well as hiring?

Giles Pearson: Yeah. [00:30:00] Look. Absolutely. So we started with hiring with this. But we have adapted the the test itself doesn't change what depending on what use you want to use it for, because it's just it's just a review of somebody's working style, but it's the reporting that you can change. So the one that you saw was what we call our pathway to partnership report. So that is absolutely for people who are, um, who are already working for you. It's really, [00:30:30] if you like, for emerging leaders in particular for anybody from um, sort of manager upwards, where it's a conversation opener, it's like, here's, here's where you sit, um, here's your preferred working style. Here's an ideal for a firm leader. Again, where are the gaps? Let's discuss with your coach or the managing partner or whoever you're working with. What are the what are some things that we can do to help [00:31:00] you get to where you want to be in the, you know, with the least amount of effort and stress, you know, and and when I took that and showed you the results. So that was my one. And I'm a long way away from the ideal in quite a few categories, as you would have seen.

Roger Harris: I'm sure we all are.

Giles Pearson: But you know, and and I still became partner at PwC. So clearly I was able to cope. But to be honest, if if we'd have had [00:31:30] something like that and a coach who could could help you talk through some of those things, it would have helped me develop my coping strategies a lot more easily. Maybe, um, targeted some some short training in some of those areas, which I never got. So I just ended up having to sort of bootstrap it, um, and, uh, learn it as I went. And the end result of that, of course, was, was that it was stressful. Um, because I was, you know, [00:32:00] um, trying to work it out on the fly, if you like, whereas to have some structure around it and to have a particularly if there's a coach who really understands these things. It can. And can, you know, you're meeting them regularly and can help you. I think it would you know, it can make a huge difference to people who are willing to, to open their mind to the fact that they're not they're not perfect. And there are better ways that they can, you know, work with people and they can learn from their mistakes. Because, you know, we all make mistakes. [00:32:30] So, you know, it's like, well, this didn't this didn't go well. You know, what's my learning? How how can I, you know, do that better next time. And, you know, to be honest, some people are good at that and will take on board that feedback and work with it. And some people just will will, you know, they'll a rhinoceros, they'll just put their head down and just. Yeah.

Roger Harris: Yeah.

Annie Harris: Constructive criticism is something hard for you know, some people take it well and some don't.

Roger Harris: So what I find interesting, [00:33:00] as you were talking, there's a you know, you designed this for the big firms, you know, to attain, you know, partner level. But we are having a huge problem in the smaller firms in our industry of succession planning. You know, what am I going to do when my time comes. And and we've always told people that obviously the easiest way to have succession planning is to have that successor internal to your firm. And this could help both identify in the hiring process [00:33:30] and identify after you have hired them. The people who might be both willing and able to to be a successor. So you could start that coaching and instead of having to go out in the marketplace and try to find a buyer, develop it and and use it for internal development. And and in looking through this, I'm sure you might tweak it some, but I think it could have great application even in in smaller firms that are, [00:34:00] you know, don't just hire somebody to get me through tax season, hire somebody to get me through 15 tax seasons, right? And then buy me out so I don't have to go through the 16th.

Annie Harris: Yeah. I guess when you find that perfect candidate, you know, it's competitive. I'm sure other people find that perfect candidate for themselves. And so now you're in a price war and a work life balance. War and A benefits, you know, this kind of thing. I think it's hard to be in the position of finding [00:34:30] that person for the longevity and being able to afford them.

Roger Harris: But I might overpay for the person who is in this, is in this for the long haul, and would love to one day, you know, move into my office and take over. I'd like to know who that person is. And so I treat them that way so they don't leave me because I've shown them no interest in their ultimate goals, which is to be in business for themselves. And yet I never identified that as part of their skill level or their desires. [00:35:00] And so they left me and went and bought somebody else's firm? And I'm. I'm out there trying to find a buyer, and I had one down the hall. So, you know, I don't know if I would tweak it, but I think I think I can see this as, as having multiple uses. Um, I gotta ask you this question. When you're talking about accountants, there is that stereotypical opinion of everybody. You know, how they how they view us. Um, are they right?

Annie Harris: You mean.

Roger Harris: Nerds? Yeah.

Annie Harris: Bean [00:35:30] counters?

Roger Harris: Yeah. No personality. You know, they're more backward looking than forward looking. They're not risk takers. They don't want to take risk. They'll tell you. They'll tell you one and one equals two. But they you know, they won't think about what it could be. You know, if it was something, you know, do the tests validate that or is that just a stereotypical.

Giles Pearson: Yeah. So so so is that the, uh, like the, the introverted accountant who looks at their own shoes and the extrovert [00:36:00] accountant who looks at your shoes?

Roger Harris: Yeah.

Annie Harris: That's right. Great.

Roger Harris: Yeah.

Giles Pearson: So, yeah, you go to you go to a party and tell them that you're an accountant. And it's like, the only thing worse than that is that you're a retired accountant.

Roger Harris: Yeah. Yeah. Nobody wants to talk to you because, well, this guy's no fun. Let's go. Let's go find somebody.

Giles Pearson: Not unless I've got a tax issue I want to talk about, but, you know. So you're. You're right in that, um, you know, look, accountants do have a personality, and it's it actually is not [00:36:30] that far different to, if you like, the norm. Um, so if you were talking salespeople, you know, that's completely, you know, that is quite different. But if you're looking at the norm, uh, it's an unsurprisingly, the differences are not so much around that extroversion introversion area. It's it's um, conscientiousness is is significantly higher amongst accountants. And you'd expect that. So, so you know, people who, um. You [00:37:00] know, look, want to want to look at the detail, want to get stuff right. Um, you know, that's sort of, uh, not surprisingly, um, but also the, the fact that, um, we are often not that change focused. So we're not, um, we're not necessarily as open to new things. Um, and again, some of those are, you know, some of those are strengths. Um.

Roger Harris: Oh, sure. Sure.

Giles Pearson: Because because we operate in an [00:37:30] environment where you don't want to be a risk taker and, and, you know, be trying something.

Annie Harris: And, you do want to get it right.

Giles Pearson: Yeah. Yeah. That's right. Um, so, you know, I think, uh, in, in general, we are we are pretty normal. We probably need to talk up what we do a little bit and, uh, you know, be be proud of the, the part that we play in, in society, you know, we're we're really important. Uh, resource. And so [00:38:00] often the only person that our clients can talk to about what is, you know, beyond their their marriage is probably the, the most, um, thing that's that that can make or break success for them.

Roger Harris: Yeah. I think that's why I focused on communication. I think sometimes we hurt ourselves in that all those things are are great strengths. But the way we communicate our knowledge, you know, when someone starts trying to explain to me by using code [00:38:30] sections of the IRS code and it's like, I'm sorry, can you just speak English to me? And I think sometimes our communication weaknesses, which is why I focused on that when I looked at that test, plays into the stereotypes, where our strengths are kind of masked because we're such poor communicators that you sit there and go, come on, man, tell me what you know. Answer my question. Don't, don't quote to me the IRS code. Because if I knew what the IRS code said, I wouldn't be here.

Giles Pearson: Well, [00:39:00] that's right. And and having actual conversations, rather than trying to communicate some of the stuff by email, um, you know, and I think and that's not an accounting thing, but I think you certainly you look at, at the, the college graduates now and this is, this is they are afraid to pick up the phone. Um, and that's, that's we can't afford to be there because I will, will eat our lunch if [00:39:30] it's if it's about.

Roger Harris: Exactly.

Giles Pearson: That that sort of more formal communication. It's it's that two way listening. Does this person understand what I'm saying to them? You know, being able to see the body language and, and and realize that actually this is not sinking in or they're not getting it and being able to circle around and go, I need to I need to explain this in a different way.

Roger Harris: Yeah. No, I think reading, being able to read people when you're talking to them and communicating in a style that [00:40:00] is comfortable and understandable to them, because email just words on a piece of paper or in an email,

Annie Harris: I mean, everything is texting. It's, you know, shooting a message here. You know, you don't even pick up the phone. You just text us or email and and now it's all these, you know, acronyms. It's not even full sentences. It's short cutting. You know, how to say, you know, certain things. It's, um, it's just very impersonal. Um, and I think that [00:40:30] when you're a business owner, you want to talk to somebody, um, not just get an email with, you know, your figures for this month, so to say. So I see that. I do see that.

Roger Harris: And I think it hurts. And even in, in coworkers, I mean, something that drives me crazy is to get a teams or a text or an email from somebody two doors down and you know, and it's going to take me longer to read it and respond to it than [00:41:00] if they had just walked, you know, 20ft and we could have a conversation. Um, you know, it's permeating our entire way. We work with others. And, you know, the only phone they're not scared of is the one they carry around with them all the time, you know?

Annie Harris: Yeah.

Roger Harris: Um, but, you know, I think that, you know, we've all, I think, got to guard against this inability to to have just person to person discussions. I think that's invaluable. And it's a skill that I'm afraid, uh, we're [00:41:30] losing to some extent.

Giles Pearson: Mhm.

Giles Pearson: But I will, will take over if we don't as a profession deal with that because um, you know, that's what uh, that's what that, that sort of personal relationship is. And if the, if the client doesn't want and value that personal relationship, they're probably not going to be a client for very long, and they will be attracted to, uh, an organization that can provide that information [00:42:00] via a, you know, a bot or whatever. And they're not people that that we can serve as a profession. But most people are not like that. And most people want somebody to lean on and talk to. And you know that as a profession, we need to embrace that. Um, because that is the only thing that we're going to have that makes us different from technology.

Roger Harris: Yeah, because technology is end of the day. If it comes to doing a tax [00:42:30] return or answering a question, I mean, our technology, I should all get to the same results. It's how the results are delivered that we need to separate ourselves, how how we ask the questions to get the right information and how we deliver the results. But we don't control the results. I mean, the results are whatever the math tells us they are, uh, or the law tells us it is. But we can, to your point, can differentiate ourselves and how we receive and return that [00:43:00] information in a way that I well, I won't say never can do because.

Annie Harris: Right.

Roger Harris: But today, it can't do it.

Giles Pearson: Not yet.

Roger Harris: Yeah. Not yet. Uh, before let me I want to have an interesting discussion about our tax systems in the US.

Annie Harris: And that's what I was going to say

Roger Harris: But before we get to that, because we've talked a lot about it, tell everybody about your company. How do they contact you? What's the you know, what do they need to know if this is something that they [00:43:30] want to, uh, to, to get in touch with you or your company, what do they need to know? And, you know, whatever you think you know, make your little sales pitch here. Before we move on to to comparing the the tax systems of our two countries.

Giles Pearson: So so what I'd say is if, if, uh, testing is something that you're interested in, jump onto our website account test.com. Uh, to to you. You can choose a test based on the job description that you've got. If you're talking about [00:44:00] skills, um, so we've got some help options on there to make sure that you get a test that's going to work for the candidate. Everything is done online. So you go in, you buy the test, uh, through the website, you get a link, you send the link to the candidate. The candidate does the test at home with their camera is on there, so they need to do it on a laptop. The camera's on. There's an AI that's watching them while they do the test, essentially making sure they don't cheat so they can't, um, [00:44:30] because, you know, this is this is the reality is, is, you know, it's it's very easy to do that. So, um, if they tab away, if they're looking away, they're looking at a different, um, uh, device or in fact, even is it the same person that I interviewed Who's doing the test?

Roger Harris: Yeah.

Giles Pearson: Yeah, yeah. Well, you know, it's this is the reality.

Roger Harris: Yeah.

Giles Pearson: So so you get that protection through the process of them doing the test to make sure that it was done, you know, in a fair [00:45:00] manner so that you can then have faith in the results when they've completed the test. Most of them are 40 minutes, um, 40 questions, 40 minutes. Uh, when they hit submit on that, within about a second, you'll get a report, uh, or link to the report coming into your inbox. And you can then have a look at the report with the resources that we've got, and also the Proctor report to tell you whether they did it in a fair manner. So it's all it's all designed so that you can do it really quickly.

Annie Harris: Yeah seems very [00:45:30] streamlined.

Giles Pearson: You know, and arguably if you've if you've say had a job out there, you've done a phone screen, you've got the testing done and you go to that first interview, you you can have all of that done within, you know, 2 or 3 days. And, you know, we would probably say if you did all this stuff before first interview, why would you need a second interview? What what are you going to uncover in a second interview that you couldn't have uncovered by a good first interview.

Roger Harris: And first [00:46:00] interview.

Giles Pearson: And you know, if you can, if you can follow that sort of process, you could be making an offer in a week or less than a week. And that's, you know, and Roger, you're talking about the fact that, you know, people have options and they, you know, why they're going to come work for you. If you've if you put the first offer in front of them and you can sell it in terms of the way that they can come work for you and what you're going to do for them. Um, you'd have to say you've got you should be in the in the box seat, [00:46:30] so to speak, in terms of having an opportunity to negotiate a deal with that candidate before somebody else does, particularly if you realize that they're actually very good and a really good fit for what you're doing is like, somebody else is going to work this out if I don't do it.

Roger Harris: But sometimes being first matters.

Annie Harris: Yeah.

Roger Harris: Get that offer in first. And they say yes. And you get them in your building and get them working for you. Then usually it's too late for that second or third offer. So. Yeah. So [00:47:00] count Test.com and everything pretty much right there for them.

Giles Pearson: Yep, yep.

Annie Harris: I will say the website is very thorough. A lot of information. Easy to navigate. Um, so if you're interested, just check out the website. You'll probably be overwhelmed with how wonderful the product is and the testing works, and how easy it is to get started.

Roger Harris: All right, let's move into this. This dream that has been talked about in the United States for years, that [00:47:30] people will no longer have to file a tax return. And everybody says that's impossible. So tell me how it works for you. What is what is filing a tax return or mean. In New Zealand.

Giles Pearson: So New Zealand is lucky in that it's you know we're we're 5.3 million. So you know a mid-sized sort of state level. Um, and it isn't there's no there's no state taxes if you like. Because because we're just one, one entity. [00:48:00] So that that makes it easier. Um, 90% of people in New Zealand don't file a tax return, um, because they if you're a wage and salary earner, um, maybe with a, some interest and dividend income. The only the, the Inland Revenue. So the I'll call it the IRS because that's what we it's the Inland Revenue Department here. But the IRS has all of that information because it's provided to them by the the banks and by the employers. So [00:48:30] at the at the end of the year, they will send you a, um, it's, it's, it's a, it's like a tax summary. It's like, this is based on the information we have, this is what we think that you owe or that we need to refund to you. If you agree with that, do nothing and we'll just send you the bill or send you the money. If you don't agree with it or have extra information that you need to provide, then obviously get in contact with us. Um, and, you know, tell [00:49:00] us what what's what's wrong. So that's 90% of the people. So the only people who are filing returns are people who have income that is, um, uh, like self-employed income, rental income.

Annie Harris: Right.

Roger Harris: A business of some sort.

Giles Pearson: And business business owners. Um, so so that makes it, um, in terms of what are accountants doing? Accountants are not doing individual taxes other than for people who've got, you know, rental rental properties.

Roger Harris: Yeah. [00:49:30]

Giles Pearson: Um, so, you know, everybody else is in business if you like. Um, there are no deductions. That's probably the biggest, the biggest difference. So there we used to have a few and 20 years ago the government legislated them away. So there was no deductions to claim. So from that point of view.

Annie Harris: That makes it easy.

Giles Pearson: Yeah, yeah yeah.

Giles Pearson: And to be honest, you know I look at I look at the your tax system and as a tax professional um it, [00:50:00] it, it brings a level of excitement because there's so many things that you can so many ways you can add value as a tax pro in the US because, because there's always different ways of looking at a problem,

Annie Harris: Because of the complexity.Of.The law.

Roger Harris: Yeah.

Annie Harris: Because it's ever changing. And, and one day you're doing this and one day you can't.

Roger Harris: So yeah. Because when you started description, I mean I'm sitting there thinking, well, the IRS knows how much everybody's W-2 is. They know how much the banks and interests are. It's all that. [00:50:30] There's two things I think there's a well, I don't think the IRS is technology is probably as good as what you have with your agency. There. Behind there. Then there's the distrust of a lot of people that they wouldn't get it right, or that somehow the government's going to rip me off or something before you even get to complexity. But the US, I don't know if it's 90%, but I would bet. And there's been this talk of why can't we do that? And I think some of it is just the politicians are never going to keep it simple enough. [00:51:00] You know, they just it's like right now, I mean, we're trying to figure out how to not tax tips and not tax overtime and not tax and make car interest on American cars deductible. Not because that's necessarily a good policy, but it won an election. So we've got now we've got to complicate our tax code for things that, you know, you guys just don't think about. Um.

Giles Pearson: I think the politicians in New Zealand have been very clear for a long time that [00:51:30] you don't drive social outcomes through tax policy. You separate the two. You collect the money and then target it at the places you want to send it to. You don't use the tax system to, and the tax system is often a very blunt instrument with these things, because you end up benefiting people who you want to benefit. And a whole lot of other people who you didn't want to benefit. Um, who can ride on the coattails of, of, you know, whatever you've done.

Roger Harris: So did your tax system [00:52:00] change dramatically during the pandemic?

Giles Pearson: No.

Roger Harris: Did it change at all? I mean, there's no telling how many laws and things. Unintended consequences, well-being. You know, I mean, well-intended maybe is a better way to say it. But, you know, the complexity. And to your point, the people who benefited that weren't intended to benefit from it. Um, I just I think it's a psychology, you know, and just a way of life. I don't know that. I don't think [00:52:30] technically what you have is impossible for us to do, but I'm just not sure we can ever get there as a society and accept that we're just going to let the IRS tell us how we did last year. I just, I don't, you know.

Annie Harris: Yeah.

Giles Pearson: But I think there's a role for the profession to advocate for some of these things. Um, you know, and for example, so, uh, checks. No, there haven't been checks in the IRS here, haven't [00:53:00] sent out a check for probably ten years, at least. Yeah. Um, so, you know, that's a simplification. And I know that's, that's coming now, September 30th or whatever it is.

Roger Harris: Yeah everybody's all mad about it.

Giles Pearson: Yeah

Roger Harris: They're furious. What do you mean? I can't get a check.

Giles Pearson: And, and and in a years time, people will go. Why did we even make such a fuss? Yeah.

Annie Harris: Well, I remember when e-file became a thing and nobody wanted to do it. And then all of a sudden, it's like I have to file on paper. I have to do what? I have to go to the post office. So, [00:53:30] you know, times change.

Annie Harris: Yeah.

Roger Harris: Yeah. I mean, it's, you know, I've been asked a couple of times to to testify before Congress, and I always tell them, I said, your goal should be to put me out of business. Uh, you know, thank you for not doing that. You. Actually, this bill will be like the, you know, the Accountants Employment Act, because there'll be just enough different that they'll need us more than ever. And, um, [00:54:00] look, I'm thankful for it. It's provided, you know, this company and me a great living, but it's not necessarily fair to for the average person to have to pay somebody a lot of money just to comply with their tax obligation. And I'm sure I just lost half of our listening audience by saying that. But, I mean, I think there's plenty of room for us to be profitable. And like you said, giving advice and helping plan and doing all those sorts of things and, um, not [00:54:30] being. Having to charge people outrageous sums of money to do something that the government already has all the information on, so you at least prove it's possible. I don't think it's ever going to happen here, but it is.

Annie Harris: Maybe not.

Roger Harris: You're proof that it's possible. So I'm not. You know, I can say you should go to put me out of business because I'm not too worried that they're going to ever do that. If anything, they're going to just enhance our, uh, needs. So.

Roger Harris: So all you listeners, you can come back next time and, you know, you can continue [00:55:00] to listen. I'm not going to advocate that we all get put out of business. It would be a wonderful world if we could make the same money and work less. But it doesn't look like that's going to happen.

Annie Harris: Well, Roger, I do think our next podcast is going to be a really good one. Just saying. Come back next time.

Roger Harris: Yes, yes, we will prove beyond reasonable doubt that the IRS and our needs are never going away. So now this has been great. Thank you. I mean, I think this is a this is a resource I hope our listeners will take advantage of [00:55:30] of what you're offering out there because hiring is such a big problem. And gosh, you really want to get it right. You really do want to get it right the first time if you can. You're never going to get it perfect. But, um, I think sometimes we our bigger mistakes is making a bad hire as opposed to not making one at all. Any final words? Any or anything we need to do?

Annie Harris: No, I really enjoyed this.

Annie Harris: Thank you so much for joining us. I know our listeners really enjoyed it just as much.

Roger Harris: Yeah. And it's great. [00:56:00] And, uh, go check out his website and, uh, thank you. And hopefully I don't again, I don't even know what day or time it is there, but I hope we didn't keep you up too late or cause you to miss breakfast or whatever is going on. But this has been terrific. And, uh, uh, thank you so much for for taking this hour and, uh, talking to our folks about it. And I'm sure you will have helped a lot of, uh, people in the profession make that next important hire. Higher. Well, thank you very much. And hopefully [00:56:30] we'll get to see you in person next time you're over here. I know we just missed you in Arizona, so hopefully you'll you'll be around January and we can get a chance to meet face to face.

Giles Pearson: Thanks, Roger. And thanks, Andy. It's been it's been a pleasure. And as I said at the beginning, it's great to talk tax again.

Giles Pearson: So I Don't get too many opportunities to do that these days.

Roger Harris: That's right.

Giles Pearson: Thank you.

Roger Harris: You're welcome back to talk taxes anytime. This podcast will talk taxes. I can promise you that.

Roger Harris: But thank you. And Annie as always thank you. It's [00:57:00] always fun to do these things. I hope that you enjoyed this podcast and tell your friends about it and bring them back. And, uh, thank you for listening. Andy Giles, thank you for joining me. And we will be back soon with another federal tax update podcast. Goodbye, everyone.