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Difference Between CPA and EA

accountingCPA vs EA

Is there any difference between a Certified Public Accountant (CPA) and an Enrolled Agent(EA)? Yes, the two are different in many aspects, but some people find it hard to distinguish between a CPA and an EA.

A CPA has a wider role when compared to an EA. A Certified Public Accountant should have a vast knowledge of accounting, auditing, business law, personal finance and taxes. On the contrary, an Enrolled Agent has to be knowledgeable about taxes, as this is the specialty area of an EA.

Another difference that can be seen between a CPA and an EA, is that the former has the right to prepare and sign financial statements, whereas an EA does not enjoy this right. Unlike an EA, a Certified Public Accountant can do financial statement audits.

In regards to the jurisdiction, a CPA falls under the state jurisdiction. A CPA may act only for tax payers in the states specified by the jurisdiction. On the other hand, an EA can practise in any state.

Well, another difference that can be seen between a Certified Public Accountant and an Enrolled Agent, is their education and exams. An individual should posses a degree to complete a CPA examination. The CPA examination includes four papers: Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation.

An individual can become an EA in two ways. An individual can become an EA if he has worked for the IRS for five years, or if he has taken the Special Enrolment Examination, which consists of three parts. The first part consists of questions on tax codes for individuals, the second part on tax codes for business entities, and the last part on Circular 230 and the Treasury Department guide.

Summary:

1. A Certified Public Accountant should have a vast knowledge of accounting, auditing, business law, personal finance and taxes. On the contrary, an Enrolled Agent has to be knowledgeable about taxes.

2. Unlike an EA, a Certified Public Accountant can handle financial statement audits.

3. A CPA has the right to prepare and sign financial statements, whereas an EA does not enjoy this right.

4. A CPA can act only for tax payers in the states specified by the jurisdiction. On the other hand, an EA can practise in any state.

5. An individual can complete a CPA examination, which consists of four papers. An individual can become an EA if he has worked for the IRS for five years, or by taking the Special Enrolment Examination, which consists of three parts.


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5 Comments

  1. A significant difference missed in this article is the required education for each year. An Enrolled Agent is required to take 24 hours of education annually and the class must focus on federal tax law. (Classes with a broader view, including state tax law, provide fewer hours for EAs than the length of the class.)

    While education requirements for CPAs can vary from state to state, generally a focus is not required. For example, a CPA can count as continuing education a class they take on Excel, or running their office.

  2. Article fails to distinguish other aspects

    1) EAs provide tax representation to their clients that CPAs often will not engage in since the focus of a CPA is publica accounting, not tax.
    2) Due to the state limitations, CPAs cannot market across state lines (an EA can). A multi state tax practitioner probably cannot practice nor hold themselves out as a CPA to clients outside their state
    3) EAs take an exam too and the pass rate is approx 60%.
    4) Normal accounting curriculum in colleges contain only 1 class in taxation (sometimes 2).
    5) Tax and public accounting are two different animals

  3. An EA is a tax professional by definition. All required annual continuing education must be related to taxation. An EA may also be experienced in other areas of accounting. A CPA may specialize 1 or more areas, such as: tax, audit, cost accounting etc. If you need a tax accountant and you interview a CPA make sure taxation is the area they specialize in, and ask how much continuing education they take each year specifically in tax courses.

  4. The 3 major advantages of an EA over a CPA are…

    [1] A CPA is licensed to practice within the state. An EA is licensed to practice over state border(s).

    [2] Less than 1/4 of the CPA Exam is about tax. 100% of the EA Exam is about tax. Even the continuing education for an EA is required to be all about tax. The continuing education for a CPA does not have to be about tax or even accounting.

    [3] At least 2/4 of the CPA Exam ( FAR & AUD ) are about GAAP & GAAS which are the principles & standards that regulate “over-“statement of financial soundness, in order to protect the intended primary audience of a CPA’s output ( lenders & investors ).

    The IRS cannot care less if you “over-“state your own profit, assets, or net worth. What the IRS regulates is “under-“statement of financial soundness ( per IRC, IR Reg, IRM, Rev Proc, etc.).

    The EA Exam is authored by the IRS itself. The intended primary audience of an EA’s output is the IRS itself.

  5. An EA is a tax professional by definition. A CPA may be skilled, and practice in, various areas of accounting – not necessarily tax. If an individual or business needs a tax preparer, or help with a tax resolution issue, they should look to the accountant’s individual skills and experience. Since having a CPA certification does not in and of itself denote a tax expert, they should ensure that the CPA specializes in taxation and has taken a significant amount of current continuing education in tax. Holding a current EA indicates tax knowledge, skills, and extensive current continuing education. It is unfortunate, and misleading, when people automatically assume that all accountants are CPAs. Most are not.

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