What can a CPA do that an EA cannot, and vice versa?

Question

A lot of the responsibilities of CPAs and Enrolled Agents appear to overlap, but could someone outline the key differences? When would I choose to hire one versus the other?

Answer 1

A CPA is actually a licensed professional who must pass the Uniform CPA Exam and is licensed with a State Board of Accountancy that has jurisdiction over him or her. In essence if the CPA messes up, he or she can be held accountable by a greater authority in order to protect the consumer. Also a CPA can represent his or her client before the IRS. For the most part an EA is similar except for having to pass the CPA Exam and being licensed by a State. An EA is accountable to the IRS and can represent a client before the IRS. The biggest difference between a CPA and an EA is that a CPA can do a whole lot more. CPAs are allowed to issue reports on financial statements such as audit reports while an EA can not.

Answer 2

Many of the responsibilities of CPAs and Enrolled Agents do overlap. For example, bookkeeping and tax work are both shared by each professional. Many states regulate the accounting profession regardless of the specific type of work one does, so be sure to check with your state's board regarding any license required.

One key difference in the two designations, is the issuance of an opinion on financial statements of an entity. Only a CPA may issue an opinion regarding the financial status of an organization, This opinion is in the form of a letter and varies depending on the findings by the CPA during an audit.

An EA is licensed by the Internal Revenue Service and his or her work is largely in the area of taxation.

The decision to hire one versus the other is dependent on several factors including specific type of work required, cost, and proper licensing on the part of the individual or firm. Be sure to check with your state board of accountancy or the IRS to verify the standing of the person you seek to do the job.

Answer 3

An Enrolled Agent is limited to representing taxpayers to the IRS. A CPA can do that as well, but a CPA's primary charter is to certify (opine) on company financial statements which an EA has nothing to do with.