I am a proud Enrolled Agent. However, I’ve completely lost my cool with the Florida State Board of Accountancy.
Not wanting to get in trouble with the state, I sent them a simple question.
Can an enrolled agent produce financial statements based on Generally Accepted Accounting Principles? (GAAP is just basically the accrual basis of accounting.)
The response I got made my blood boil.
According to the board, an EA is not allowed to produce financial statements. I’ve been doing them for 24 years, but that is beside the point.
I am a federally licensed tax professional. How am I supposed to do tax planning for my clients if I don’t do financial statements?
I cannot do compiled, reviewed or audited statements, but I can certainly do financial statements based on the income method of accounting. I was not asking to garner an opinion. I was simply asking if I can do GAAP statements.
Along the same lines, why can CPAs and attorneys represent clients before the IRS?
CPAs take one or two tax classes, and only one part of the CPA exam focuses on tax. Further, most attorneys know nothing about tax.
I hear clients tell me all the time that the person who did their returns in the past had to be good because they are a CPA for a Fortune 500 company. What they don’t know is that person probably analyzes cash flow statements all day long.
I explain the difference between a CPA and an EA to a client like this: When it comes to accounting, CPAs are like your family doctor. I specialize in tax and am more like a surgeon.
That’s not to say that there aren’t some good CPAs out there. In fact, there is one who writes a daily blog that I read religiously. And I don’t want to say that all EAs are excellent.
I think what got me is that there I was trying not to break the rules, so I verify something with the state. And they tell me that I can’t do any financial statements.
I made up my mind. I am going to do GAAP statements, and if the state wants to censure me, I will show them that I asked first and then received a nonsensical answer in response.
CPAs, I get it. In order to sit for the CPA exam, you need to have 150 hours of college. To sit for the EA exam, you just need to show up.
However, I would bet that most CPAs couldn’t pass the Special Enrollment Examination (SEE) when I took it. That’s not to mention that I have a master’s in taxation.
I didn’t become a CPA because I had no interest in issuing an opinion on a financial statement. I wanted to do tax.