July 30, 2020

Announcing Gusto’s first ever People Advisory Certification. When you get People Advisory Certified, you’ll learn to combine your financial expertise with Gusto’s people platform to support clients and their teams—and grow your firm too. Get Certified.


Hi there. Remember last month when I said that On the Margins would go on hiatus again? Well, the time has come. OTM will be off in August, returning in September. I’ll try to bring you all a lousy t-shirt. No promises, though. And now, the newsletter.

Introducing People Advisory

I just came out of Gusto Next, our live event on the future of accounting, where we revealed Gusto’s first certification for accountants, and introduced People Advisory services. To mark the occasion, I also wrote a manifesto of sorts. The whole thing will publish next week, but I’ll preview it for you here:

We believe that People Advisory—a pioneering consultative service that focuses on serving businesses and their teams—can put any doubts about the profession’s relevance to rest. The focus and reliance on compliance services has hindered many accountants from building advisory practices, but practitioners still aspire to transform their clients’ businesses with their expertise and insights.

People Advisory as a service establishes a foundation where clients can outsource their compliance tasks, like payroll, tax filings, and payments. And in return, it gives accountants the platform they need to provide strategic advice, insights, and added value as the trusted professional—the advisor—they are meant to be.

One of the recurring themes
 of this newsletter has been the debate over advisory versus compliance services. Which path should accounting firms pick? How do they decide? Even if you believe that compliance services won’t be automated anytime soon, it’s not as if technology will stop trying to automate things. And then one day, you wake up, and your firm is a Blockbuster Video.

If you allow for that possibility, advisory services—those that do not rely heavily on technology—should be a reasonable hedge for an accounting firm. And that seems like a relatively conservative hedge. That is, even if your advisory services start slow and don’t earn much money in the beginning, they are likely to grow over time. The risk of loss is essentially the inability to grow that business, which assumes you’ll get worse at the advisory service as time goes on. That strikes me as a highly unlikely outcome for a motivated firm.

Conversely, compliance service improvement is driven by technology, they are becoming increasingly efficient, and that’s driving costs down. Even if a firm is motivated to get better at compliance services, it would need a critical mass of customers as time goes on, and unless you’re developing the technology yourself, that will be a tough row to hoe. 

People Advisory attempts to bridge the gap between compliance and advisory. Payroll is an increasingly automated function, and it will only become more so. However, People Advisory combines that efficiency with opportunities to provide businesses with insights, projections, and other advice specifically related to their teams, their people. All of those things require judgment, context, and nuanced thinking. The kind of stuff that technology won’t get good at for a very, very long time. 

(Alleged!) PPP fraud

I assume that many of you, like me, are fascinated by fraud. Yes, the mechanics of crime, but so much more the behavior and motives of the criminals. Why people commit fraud is especially puzzling when it is done so brazenly.

Here’s a Department of Justice press release detailing a good example. It describes allegations against David T. Hines who, in the course of applying for $13.5 million in PPP loans, “made numerous false and misleading statements about the companies’ respective payroll expenses.” His bank approved and provided Hines with $3.9 million, and Mr. Hines didn’t waste any time with the questionable behavior:

The complaint further alleges that within days of receiving the PPP funds, Hines purchased a 2020 Lamborghini Huracan sports car for approximately $318,000, which he registered jointly in his name and the name of one of his companies. In the days and weeks following the disbursement of PPP funds, the complaint alleges that Hines did not make payroll payments that he claimed on his loan applications. He did, however, make purchases at luxury retailers and resorts in Miami Beach.

These are the details
 that government authorities love to put in complaints, and oh how I love them for it. For example, the exact price of the Lamborghini was $318,497.53. It also detailed the large payments drawn on the Hines’s business accounts, not to employees mind you, but among other things: $4,622.40 to Saks Fifth Ave., $8,530 to Graff Diamonds, and two $15,000 payments to “Mom.”

As the press release says, “A criminal complaint is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law,” but this is exceptional “engaging in transactions of unlawful proceeds.” Nothing quite says, “To hell with it, I’m going for it,” like spending stolen money on an Italian sports car and paying back loans from Mom.

What I’m into this week

I live in Colorado where there are thirteen National Parks, including Rocky Mountain, Mesa Verde, Great Sand Dunes, and Black Canyon of the Gunnison. I’ve been to and highly recommend all four. However, after reading this depressing article about how many parks are getting trashed by a flood of tourists, and how that has been endangering local—including indigenous—communities, I recommend double checking the NPS website and local news to see what conditions are like. If things seem busy, or there are limited facilities, keep your distance until things blow over.

In the meantime, I recommend visiting state parks in your area (if they aren’t experiencing similar problems). There are over 10,000 state parks nationwide (versus 419 national parks), they are often far less crowded, and still offer the chance to be outside when being inside is still a dicey proposition.

Fresh from Gusto


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Caleb Newquist Caleb is Editor-at-Large at Gusto. In 2009, he became the founding editor of Going Concern, the one-of-a-kind voice on the accounting profession, serving in the role for 9 years. Prior to Going Concern, Caleb worked as a CPA for nearly 6 years in New York and Denver. He lives in Denver with his wife, two daughters, and two cats.
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