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Discussion:Do you prepare you own Tax Return??

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BTax2010 (talk|edits) said:

7 December 2010
Seems like a no brainer and simple enough question, but I am curious. I didn't find any topics in the yellow box, so I thought I would ask....The reason I ask is partially due to my background as a loan officer. I remember we had to get two years tax returns in order to include self employment income. I seem to remember needing Audited Financial Statements in some situations, but I can't remember what those were.

I am curious because if I go to say buy a house in 2012 (which I am planning to do by the way), and I want to include my self-employment income, will the lenders accept my tax returns if I have prepared them myself? Wouldn't they want to see some independent verification of my income?

I guess they could file the 4506 with the IRS and pull the return that was actually filed, but that does not rule out the possibility that a person filed a fraudulent tax return....just putting my skeptics hat on....anyone have experience with this??? Would they require audited financial statements in this case??

AEM CPA (talk|edits) said:

7 December 2010
I doubt loan officers would think you would over-report your income to the IRS just to get a loan. Almost invariably, people who commit fraud under-report their income to the IRS, and inflate it on the financial statements. There's always the possibility that a return is fraudulent, but self-preparation, especially by a tax pro, can't be construed as evidence of fraud by a reasonable person. If they have a problem with it, just show them your backup - invoices, bank statements, etc. You won't have an issue.

DZCPA (talk|edits) said:

7 December 2010
Your self prepared returns are fine for last 2 years. They will need a current financial statement for the short current period. I usually add a Schedule C with the top year crossed out and then note the period it is for. Telling them you are an accountant will also help. All banks have different rules. The above has worked for most lendors.

AEM CPA (talk|edits) said:

7 December 2010
He's not an accountant. He's an EA.

BTax2010 (talk|edits) said:

7 December 2010
AEM, you are correct, they will require 2-3 months of all of your bank statements as well....so basically just have a solid paper trail....I am just curious because I was an LO back during the boom....I mean you had to be Vito Corleone for an Underwriter to reject your loan application then (and even then your chances of success were better than 75%).....now we've swung all the way over to the other end of he spectrum and even if you are as pure as the driven snow, it seems that a lot of folks are having a hard time getting financing....and not even self employed folks, but your everyday W2 wage earner with good credit and sufficient income....

BTax2010 (talk|edits) said:

7 December 2010
Yes, I am an EA, not CPA....either way Federal Prison is still not on my list for the sake of getting a loan....

AEM CPA (talk|edits) said:

7 December 2010
The fact that you are an EA will carry a lot of weight. A loan officer will recognize that your license is worth more to you than a loan.

Actionbsns (talk|edits) said:

7 December 2010
He's not an accountant. He's an EA.

It might be true that someone isn't a CPA, but didn't there used to be a classification such as PA for Public Accountant? If someone is doing accounting type work, but haven't passed the CPA exams and doesn't try to pass themselves off as a CPA, what would they be called?

Joanmcq (talk|edits) said:

8 December 2010
A PA was a license as well.

AEM CPA (talk|edits) said:

8 December 2010
To represent yourself as an "accountant", you must have a license issued by your state's Board of Accountancy, just as an attorney or doctor must. It's up to the state to determine the licensure requirements, different grades of licenses, etc.

AEM CPA (talk|edits) said:

8 December 2010
PA still is a license in some states.

Someone who is in the process of getting a license might be called an apprentice CPA, a prospective CPA, or a trainee, or something similar. Someone in an accounting department not pursuing a designation is a bookkeeper, a clerk, accounting staff (internally), or simply works in an accounting department.

JR1 (talk|edits) said:

December 8, 2010
That truly depends on the state, and I'm only aware of Texas and one in the East that tried to restrict the term accountant, and lost the Supreme Court case back in the early 80's.

Hgco (talk|edits) said:

8 December 2010
I guess my four year college degree stating Bachelors of Science in Accounting was a typo by the university huh? AEM, try a read of IRS Pub 17, the Chapter on Tax Benefits for Work-Related Education.

Bar or CPA Review Courses

Review courses to prepare for the bar examination or the certified public accountant (CPA) examination are not qualifying work-related education. They are part of a program of study that can qualify you for a new profession.


Or in other words, while a cpa is in fact an accountant, an accountant and a cpa are regarded by IRS as two separate professions. I do however recall, many ages ago, Newton Becker's position that his review course was deductible despite what the publication said. [Wow, what nightmare flashbacks that brought back!]

I can't legally,don't, and wouldn't call myself a cpa or pa, but I am an Illinois based accountant and also an Enrolled Agent (and CFP also for that matter).

TexCPA (talk|edits) said:

8 December 2010
In, Texas, according to

901.453

Only licensed CPA's in Texas can use the term 'accountant'

The TSBPA has really come down hard on individuals (bookkeepping business) that use the term 'accountant'

[1]

TexCPA 03:33, 8 December 2010 (UTC)

Szptax (talk|edits) said:

8 December 2010
Banks are touchy. Is this a commercial loan or for your home? The rules are different. Many years ago., when the rules were stricter, before they were relaxed and before they became impossible like today, we went to get a loan on a commercial property. The loan to value was less than 75%.Actually, it was about 60% and less than 100K. The requirement of one bank was a return prepared by a CPA. No biggie for me, since I am one and do the return. Independence was not mentioned. When the bank learned I was a CPA they wanted all sorts of "extras"... I could do the return, but get a compilation or pfs by an independent CPA etc. It got very expensive, and quite frankly the bank was completely unreasonable on the issue. We shopped around and found a bank willing to not make those stipulations. I think it was primarily due to the loan to value ratio amount of the loan we needed that the stipulations were not required. Additionally, I DID NOT want to sign a guarantee using the value of my home.

My advice - shop around, get copies of the lending program rules from different banks and see what works best for you depending on your situation.

Death&Taxes (talk|edits) said:

8 December 2010
There was an expression I like to use: Banks will lend you just enough money to fail.

I went through the wringer in 1998 when we bought in Columbia County, NY (30% down) but could not sell our residence for many reasons. Being an EA, I call myself a tax consultant and do little or no accounting (one write-up) but being incorporated made things dicey. The mortgage was approved two days before settlement.....and then before we could make a payment (M & T was the bank) the debt was sold to Chase.

AEM CPA (talk|edits) said:

8 December 2010
Hgco -

A BS in accounting doesn't make you an accountant any more than a JD makes you a lawyer.

Ukbones (talk|edits) said:

8 December 2010
Admittedly unaware of the rules, it irks me when I see all over the country in industry the term 'Accountant' liberally abused. If you haven't earned a CPA or CMA then I don't think it fair to refer to yourself as an accountant. A degree is merely preparatory and the standard at anything but top tier is mediocre. In turn, the 150 credit hour rule is just an extension of mediocrity and futile. It's futility hints to racketeering.

More professional exams, which are examined to a much higher bar and a strictly documented three year work plan would be far more beneficial to the profession. In fact, I'd rather hire an 'Accountant' who passed fourteen professional papers and was trained for three years who doesn't even hold a degree over any accounting undergraduate or a newly minted CPA under most states current regulations.

The law profession in the US is even more abysmal and disturbing.

Back to the topic. I work with an outside firm on certain tax returns.

BTax2010 (talk|edits) said:

8 December 2010
Szptax....your experience is closer to what I was expecting to be the case, especially now with lenders still being tight....It would not be a commercial loan, just a mortgage for my primary residence.....the mortgage banking firm I worked for is owned by a guy who has been in the biz approx. 40 years, and I could see him wanting a return signed off by an independent CPA, or audited financials along with the standard requirements for banks statements....

I am still over a year away so we will see what happens when the time comes...

AEM CPA (talk|edits) said:

8 December 2010
Notice he didn't do business with the unreasonable bank. A loan officer with any competence or intelligence will understand that all that matters is verifiable evidential matter to support your numbers. So self-audit, have the backup ready, and do business with a reasonable bank.

PatrickA5 (talk|edits) said:

8 December 2010
I guess some states have some regulations against being called an Accountant, but I've always considered an Accountant as any degreed person working in the field of Accounting. I know every company I worked for called their employees titles such as Accountant I, Senior Accountant, etc. When you look in the paper for jobs, it usually says Accountant (even if CPA isn't required). On the other hand, I don't normally associate being a Tax Preparer as the same as being an Accountant, even though I know a lot of people don't know the difference.

I know state CPA boards can be picky about things though. I was told by my state board last year that I couldn't put CPA on my H&R Block business card because Block isn't a public accounting firm. I then asked if I still had to pay my annual fee for a permit to "practice public accounting" since I couldn't call myself a CPA and my company wasn't a public accounting firm. Answer: Of course you do! That will be another $120 please.

Hgco (talk|edits) said:

9 December 2010
Hgco -

A BS in accounting doesn't make you an accountant any more than a JD makes you a lawyer.

AEM, You stand corrected. Prior to developing my own practice, I worked in positions in banking and public accounting (cpa firm) both as a staff accountant, and as an auditor.

AEM CPA (talk|edits) said:

9 December 2010
You weren't the "accountant" per se.

AEM CPA (talk|edits) said:

9 December 2010
Every one of us did the same thing, but strictly speaking, we were working for accountants and not accountants in our own right.

Hgco (talk|edits) said:

9 December 2010
No AEM, I wasn't "the accountant" signing off on opinions etc., but I was a staff accountant and a staff auditor (both public and internal respectively).

CrowJD (talk|edits) said:

9 December 2010
My returns are done by an illegal at H&AR Schlock (my understanding is that he's undercover Russian intelligence. Trained tax scholar in his home country). All I know is that he's got the secret 3 parte handshake all tax professionals share. Prudence (one shake). Duty (two shake) And Truth (third shake and a little tickle to the palm).

Death&Taxes (talk|edits) said:

9 December 2010
Too many years ago, the Philadelphia office of one of the Big Four (eight then) had a man named D on the staff who was almost legendary for failing the CPA exam, but who was the senior on a number of audits. Younger men (and they were all men then) would pass the exam, earn their certificate and then be told 'no room in the inn for them' so they would be farmed out to clients of the firm. 'There is no future for you here, but so and so needs a controller and we think you'd better take the job.' Meanwhile D would go on plugging his talents, and drinking with the hiring partner and being a general snitch.

I was an intern in college at the time, and it was seeing that situation that left me cold for public accounting.

Just curious, was 'D' an accountant? I worked with him once on an inventory count on New Years Day; he resembled the E8 sergeants I met a year or so later when serving Uncle Sam....the kind of person you detested in some ways, but knew that if you were in combat, you'd stay close to him.

PatrickA5 (talk|edits) said:

9 December 2010
"Every one of us did the same thing, but strictly speaking, we were working for accountants and not accountants in our own right."

I'd hate to be the person that told my wife she doesn't qualify to be called an Accountant (Controller, Fortune 500 company). That could get ugly.

JR1 (talk|edits) said:

December 9, 2010
Definitions. It would be much simpler if CPA's were known as Certified Public Auditors, which truly is what they're licensed to do and which better describes the primary function, by definition. There are many accountants who don't happen to work in the auditing world, but that does NOT make non-accountants, except as some state board protecting CPA's says so. There are accountants in industry, in the government (there must be, right?), in the non profit world, and in this tax world. All auditors are accountants. Not all accountants are auditors.

Lizzit (talk|edits) said:

9 December 2010
If you're a bookkeeper, you're not an accountant. Accountants juggle. Bookkeepers line up the balls for the jugglers. Accountant is a perfectly cromulent word to describe number juggling wizards regardless of what license they hold. Less geeky too.

Ukbones (talk|edits) said:

9 December 2010
There are controllers without even an accounting degree. The director of finance at a large oil company I contracted with was a biology major. Even an 'accounting manager' at a major defense contractor didn't major in accounting. None are accountants. Now, I would back down on anyone who had passed professional exams but forewent licensing.

I sometimes feel that I have more legal knowledge than many lawyers, but changing my job title to 'legal mastermind of the south' does not make me a lawyer. Or a doctor because I diagnosed my buddy with a cold. No matter how good I am at it.

Death & Taxes - you were put off of 'public accounting' because you heard some candidates were not kept on at the firm and offered positions with clients, while the unqualified but skilled arse kisser stayed on? You just described every big firm in the United States!

CrowJD (talk|edits) said:

9 December 2010
The government says every man can do his own taxes. Just look at Pub. 17 (and the 10,000 other pubs. it references). It's not rocket science for crying out loud.

By God, we have the information if we'll only use it!

Ukbones (talk|edits) said:

9 December 2010
You're right. Rocket science is easy!

Edited - didn't say what I mean't!

Ukbones (talk|edits) said:

9 December 2010
'It would be much simpler if CPA's were known as Certified Public Auditors, which truly is what they're licensed to do and which better describes the primary function, by definition.'

Why it would be simpler I don't know but I do know it's wholly incorrect.

Because a CPA can offer assurance (not to mention a myriad of other services that he has qualified to offer under strict conditions and examinations), your understanding is that this becomes the 'primary function', by 'your' definition.

If someone can, therefore they are!

'All auditors are accountants. Not all accountants are auditors.' Almost...

All auditors are accountants. Not all accountants (zero non-CPAs) are auditors. That's better.

All surgeons are doctors. Not all doctors (zero nurses) are surgeons. We've got it!

We are comparing nurses and doctors. Whether the nurse is as capable as the doctor is beside the point.

Death&Taxes (talk|edits) said:

9 December 2010
"Because a CPA can offer assurance"

Like Bernie Madoff's????

Fsteincpa (talk|edits) said:

9 December 2010
When dealing with an audit and looking at a clients records I would tell my staff that we are accountants not bookkeepers. Bookkeepers look for pennies, accountants don't.

And as for using the term accountant, Lizzit has it correct. Anyone who makes there career in the field of juggling/understanding/deciphering the numbers can be called an accountant in my book <unless barred by state rules>.

A title, or passing a professional licensing exam doesn't make you one either. I've met many a person who learned on the job and were intelligent enough to keep up with training and could outshine EA's or CPA's or anyone else you deem worthy because they passed an exam.

You are who you are because of what you do and how good you do it. Not because you passed some exam - see David's Bernie Madoff comment for that.

Ukbones (talk|edits) said:

9 December 2010
Any human, in any profession can at anytime use his resources to take it upon himself to break the law.

Ukbones (talk|edits) said:

9 December 2010
'A title, or passing a professional licensing exam doesn't make you one either. '

It indeed guarantees that you are an accountant (good or bad), you can attest, represent and no matter where you are in the country, no one can dispute your qualifications. It's called, 'a standard'. Regardless of skills, you either meet it or you don't.

I wouldn't read every law book on earth, work in a law office doing most of what the lawyers do, and be better at it, yet have the audacity to call myself a lawyer. You can participate in the practice of law (and accounting) but it makes you no more a lawyer if you haven't passed the bar than it does a certified electrician.

JR1 (talk|edits) said:

December 9, 2010
But there's a pretty big difference, historically. Doctors and lawyers have been for a very long time, regulated by those exams for admittance to practice. Except in the arena of public auditing, that has not been true of the accounting profession. The trouble comes when the state boards use their weight to try and regulate a previously unregulated area. State exceptions may apply if there are some who have consistently, even from when Mexico was Texas or Texas was Mexico or independent, depending on your point of view, regulated ALL accountants at ALL times and in all ways. But I seriously doubt that's the case for any. So just trying to bump the rest of us out of the room by redefining terms is more creating a reality as they want it, rather than what is and has been.

Ukbones (talk|edits) said:

9 December 2010
You are over simplifying 'auditing'. Sure, to practice Medicine and Law, you have to attain a license to practice (as you do 'auditing'). You can easily simplify those professions too by saying 'except in the arena of offering medical advice...' or 'except in the area of representing clients in a court of law...'.

So 'Except in the arena of public auditing, that has not been true of the accounting profession.' is not a fair starting point. Or maybe it made my point. To offer representation and financial advice to the public based on financial statements or the compilation there of, regardless of assurance, the CPA license needs to be attained. In industry the term '...ing +1) should be used instead of '...ant'. You may however, be an Accounting Master or Accounting Expert to the 10th.

I do agree with you that it's a little late for the profession to start throwing it's weight around. We have to start somewhere.

PatrickA5 (talk|edits) said:

9 December 2010
Maybe things are different on the other side of the pond, but here in the USA, you can be an Accountant without being a "Certified Public" Accountant - with a few exceptions for some states that have actually have some regs on the subject. Or, if you can show me a Federal Law that states what an Accountant is (and isn't) I will stand corrected.

Ukbones (talk|edits) said:

9 December 2010
Patrick, it is a little different in the UK but far from perfect.

My better half's good friend is an 'accountant' at Citibank. She got a degree twenty years ago. Never worked an audit, never prepared a tax return or represented anyone, never compiled financial statements and doesn't work in planning (management accounting). She reconciles wire accounts, approves journal entries on the AP side, supervises check runs and manages the the AP team. She is 'legitimately' an 'accountant'.

This is where we have fallen short.

Kevinh5 (talk|edits) said:

9 December 2010
An EA practice was indeed found to be practicing 'accounting' through their preparation of tax returns (Rainbow Tax Inc) by the Tax Court.

Pink Pearl (talk|edits) said:

9 December 2010
the first accountant...I was the 2nd one...[2]

Actionbsns (talk|edits) said:

11 December 2010
However, since Father Luca didn't pass the CPA exam, can he truly call himself an accountant?

My original point was that when a person is doing the job of an accountant whether for a client or a firm, and we can see that there a lot of people around that do this, what is the name to be used? It's only a name. Having passed the CPA exams is an entirely different matter. That allows a person to use the title CPA as in J. Jones, CPA and there's something special to that. But for us untitled people out there doing the same work, why can't we be known as J. Jones, Accountant? It's not misleading, in fact it says "I didn't go after the Certified part" for whatever the reason. Most of our clients refer to us as such, are we supposed to correct them every time they say that? I don't see why the CPA's of the world get their panties in such a twist over the use of the word as long as they can lay claim to "Certified Public" they will always have something the other's don't.

Death&Taxes (talk|edits) said:

11 December 2010
" Most of our clients refer to us as such, are we supposed to correct them every time they say that?" That's beautiful, Paula, and I know what you mean when clients of mine use that word, or add the three letters to it and I have to say, "No, I am enrolled agent." So what can you say? "Call me your bean counter"(?) or what. Maybe there is some other term of derision we can use, like calling a lawyer an 'ambulance chaser.'

Fsteincpa (talk|edits) said:

11 December 2010
Paula, It is not CPA's who are getting uppity about that, I have defended the use of the term accountant for you lesser individuals. ;-)

I believe it is the chartered accountants having the hissy fit.

Ukbones (talk|edits) said:

11 December 2010
Action - Can Bill Gates, the creator of Microsoft itself, call himself a Certified Microsoft Technician even though he didn't take the test? When an accountant performs bookkeeping duties, they are an accountant performing bookkeeping duties. When a bookkeeper performs bookkeeping duties, they are a bookkeeper.

Death - The title for unqualified 'accountants' who prepare accounts to trial balance are universally referred to as bookkeepers.

Fsteincpa - Chartered Accountants are not only superior to CPAs, we are also much better looking.

I like debating more than I care about who calls themselves an accountant or not. In industry there will also be leeway, however when offering services to the public, using the term 'accountant' is misleading.

If I take my business to an EA, I know he has met, at the very least, a standard in taxation and can represent me. If I go to a CPA I know he can attest to my financial information and or represent me. If you have neither but offer a version of both and refer to yourself (not necessarily your firm) as an accountant I have no idea where I stand.

Actionbsns (talk|edits) said:

11 December 2010
"If I go to a CPA I know he can attest to my financial information" UK, that's really the point. The "CP" part is what tips off the public to that aspect. Most small business don't require attestation or auditing work to be done, but they still require accounting work to be done, especially when the bookkeeper has screwed things up really badly or just isn't sure how to handle a certain item. Who was it that said bookkeepers worry about pennies? Just for the record, I never worry about pennies, so I must be an accountant. :)

BTW, other professions that have been bandied about here - the legal profession has a license for a "Para-Legal", not really a lawyer, but they can legally provide advice and counsel in limited areas and draw up contracts; the medical profession has a license for both nursing and for "Nurse Practitioner" which lots of doctors are using now, the NP can prescribe medications and act medically within the scope of that license. These are recognized and respected licenses within the industry and to the public.

Fred, I know that you are always on our side, that being the "Non Accountant". Maybe that's what we should be called, "J. Jones, Non-Accountant".

Death&Taxes (talk|edits) said:

11 December 2010
http://www.buzzle.com/articles/bookkeeper-job-description.html

The want-ads are an interesting place to see what employers want and often the 'B' people are refined by their duties:

Full charge bookkeeper, Accounts payable or accounts receivable bookkeeper. Rarely see the same when the employer looks for an 'A' person. Oh, and then there is that term beloved of Motel owners: "Night Auditor."

To see the 'A' without the 'CP' lets you know where you stand....too bad that if you form a S Corp you will miss the advice of JR, the prime exponent of same around here.

Ukbones (talk|edits) said:

11 December 2010
So, to summarize:

Action; "The "CP" part is what tips off the public to that aspect. Most small business don't require attestation or auditing work to be done, but they still require accounting work to be done, especially when the bookkeeper has screwed things up really badly or just isn't sure how to handle a certain item."

The public hasn't got a clue on the difference. If you were to say to your client that the job you have done for them isn't assurance that their statements are correct and you cannot attest to them even they wanted to, what do you think they would say? Secondly, to paraphrase, because most small businesses don't need attestation and many have terrible bookkeepers that you have to correct, this grants you the privilege of being an accountant. I think not. When a mechanic fixes another mechanics errors, he is still a mechanic. Not a mechanical engineer. The solution to your dilemma of job titles is 'J. Jones, Bookkeeper'.

Death; Aside from what employers want to title their employees (Product Infrastructure Coordinator/Window Cleaner, Combustion Consultant/Mechanic etc.) , the only points I could glean from your post was that if motel owners can use the term 'night auditor', it only right that we can use 'accountant'. Secondly, you state, if the person doesn't have CPA after his name, you know where you stand. On the second point I would say, Bravo sir. You inadvertently made my point!

Where is the line in the sand? At what point does one graduate from bookkeeper/accounting clerk, accounts assistant etc. to an 'accountant'? It surely has to be measurable and realistic for everyone! The CPA and CMA for the public/industry/consulting surely solves this.

I know JR1 is very knowledgeable (more so than I in many areas of taxation) but only because he literally consults with us. There is no risk involved. I can take what he says, free of charge, analyze it for myself and make an informed decision. I can't do that in the market place. Death & Taxes, I understand is an EA with 125 years experience. I read him, learn and know he is an expert. If I met him or JR1 without any background at all other than their qualifications along with experience I would hire D&T due to the backing. JR1 could be far superior to D&T in the matters I'm concerned with but based on a cliffs notes introduction, I don't know where I stand and the risk/reward isn't worth it.

Kevinh5 (talk|edits) said:

11 December 2010
or you could hire any of the multitude of CPAs here on this board who may know a lot about auditing and accounting, but not much about taxes. Some even teach accounting at the university level or are certified fraud experts. What does the business consumer want? If they want someone to help with the accounting or they need an attest function, they are best served to hire a CPA. If they need someone who is a tax expert, they might not want to hire a CPA, or at least not just any CPA. I would hire JR1 over most on this board if I needed my business taxes done.

Ukbones (talk|edits) said:

11 December 2010
All of the guys I frequently read, Kevin, Natalie, AEM, D&T, JR1, Dennis, Dave (too many to list) etc. are experts. I'd hire any of you because I KNOW you're experts.

Death&Taxes (talk|edits) said:

11 December 2010
I should have said "YOU" know where you stand, for I am not sure I would know. I might stumble on one of the Enron gang, or Madoff's man, or I might find a hero, like the person who turned down Tino De Angelis for the Ernst & Ernst firm during that time period.

http://en.wikipedia.org/wiki/Tino_De_Angelis

You hit the key when you say 'met.' Depending on your needs, the letters CPA or EA would give these people a leg up, a head start, if you will, but in speaking with him, you might find the person did not bring much to the table besides the ability to pass a test.

I am, or rather was, an expert rifleman. I hit 76 of 84 targets on the range at Fort Jackson to earn my Expert badge; the next year I knocked down 74 of 84 with 10 minutes of time to zero the rifle, but Good Lord, I'd be the last person you would want to accompany you into combat, and you would know this if we met at that time.

Mdubincpa (talk|edits) said:

11 December 2010
Too bad the expert tax preparers who happen to be CPA's are prohibited by law from referring to themselves as tax experts and/or any other type of experts.

I find it interesting that of all the licensed professionals only accountants have many others competing against them who are not licensed professionals. There are only about 1,274,000 CPA's in the US and more than 25 million non CPA's competing for their business. For example doctors, dentists, nurses, etc. must be licensed to practice and have no competition from any unlicensed equivalents. In NYS you even need to be licensed to practice as a midwife.

Just think if all tax returns were required to be signed by a CPA only, our compensation would be increase dramatically.

This is not to say that a CPA license in and of itself automatically qualifies you as an expert, quite the contrary as I have personally reviewed other CPA's work at times that left me wondering just how they ever passed the exams. I have also reviewed non CPA's work and at times have found their work to be exemplary.

For the record, I do file my own tax returns as I couldn't afford to pay the going CPA rates, LOL.

Mike Dubin CPA

Fsteincpa (talk|edits) said:

12 December 2010
Mike, I like that concept. I think we should push for that.

And Bones, I like the devils advocate position and the arguments that you make. Doesn't mean that I agree with them, but, they are good.

I believe that when you get to the using the data stage you become an accountant.

Bookkeepers generate the numbers, accountants analyze.

Accountants explain the numbers, dissect the numbers, forecast.

JR1 (talk|edits) said:

December 16, 2010
I think, in all fairness, that our current system is the way it is since that's how it's been! By that I mean, IF we were required to be licensed or certified, then all of us would be. Seriously. I would have wrapped up my CPA instead of just giving it a go and getting into taxes and letting it go. So the only reason that we have CPA's and non-CPA's is that we can. It does NOT differentiate much other than auditing certification, sorry if I re-offend some. When or if it becomes mandatory, all us Uuupr's/Yoopers (unenrolled, uncertified, unlicensed, professionals)will indeed become whatever we must be to do what we do.

CathysTaxes (talk|edits) said:

16 December 2010
I believe that many individuals/small businesses cannot afford the services of a CPA, but need someone who has more skills than a bookkeeper. Maybe the states could require non CPA accountants register taking a simplier test (much like the new IRS regulations for registered tax preparers VS enrolled agents). With the messed up books that I've seen, I would think that bookkeepers be required to have similar testing (especially owners or shareholders who decide to 'do' the books themselves).

Ukbones (talk|edits) said:

16 December 2010
A couple of points:

JR1 - "It (CPA) does NOT differentiate much other than auditing certification".

I'm not offended by this at all. It is inaccurate. You keep singing the song so I'll play along.

CPA's are examined and trained in areas such as Internal Controls, Planning, Risk, Financial Strategy, Cross Border taxation, Ethics, Regulation, Benchmarking, Foreign Currencies, Financial Modeling, Insolvency, to name a few. We are trained and examined in areas where business decisions are made based on our analysis. Forgive me if I take with a pinch of salt that you (you the untrained, not you personally) say you can do the same thing because you read a book. Then possibly practiced on your clients. That is of course if you did even read the topics in first place, which can't be verified.

CathysTaxes - "but need someone who has more skills than a bookkeeper". How do you prove to the public you have more knowledge than a bookkeeper? Fsteincpa's point has some merit; 'Bookkeepers generate the numbers, accountants analyze.'. However, what business owner will trust the financial health and base decisions on information that has been analyzed by someone with an unprovable skill set? Not prudent on the client side. So you provide a solution; 'Maybe the states could require non CPA accountants register taking a simplier test'. Why should it be simpler? It should be the same minus Auditing & Attestation and the training requirement wouldn't include assurance. Education should be a minimum of a Bachelors degree in Accounting. It begs the question, what is the point? If you're going to go 'that far', you may as well finish. Alas, in the UK, we do have part qualified accountants which allows industry and the public to know where they stand.

To trust your financial decisions and health to someone who doesn't have a degree in Accounting, is not an Enrolled Agent or a CPA/CMA and as far as you're aware, hasn't been trained by a fellow professional, then more fool you. There are always exceptions to the rule. Do you want to gamble on that pay off (which would hold no greater benefit than hiring a licensed professional in the first place)?

If I were seeking services with the eye of a layman, I would hire a bookkeeper for data entry and billing, AP and payroll etc. If I was thinking of expanding and opening two new locations and wanted a solid plan then I call the CPA or CMA. And so would you.

Death&Taxes (talk|edits) said:

16 December 2010
Bones, you have to educate industry.....here is a want-ad from today's Asbury Park Press

At this time, XXX is seeking a Junior Accountant to work along side our Corporate Controller in the F & A Department. You will work in our headquarters office located in XZXZXZ, NJ. If you have the required skills and experience as listed below, this opportunity could be a perfect fit for you.


Qualifications:

Bachelor’s in Accounting, or General College Degree 2 - 3 years relevant experience Deltek Vision or similar enterprise system experience a “plus" '

So, my friend, what is this "Junior Accountant?"

Accountant, unfortuately, has become almost a generic term for a multitude of jobs. Maybe the blame doesn't fall with industry but with the Asbury Park Press, which doesn't give the advertiser a wide variety of choices for category. Reminds me when the phone company that puts out the White Pages asks how I want to be listed.....I never let them use the Accounting word for, despite a BS in the field, it is not something I practice.

Actionbsns (talk|edits) said:

16 December 2010
"CPA's are examined and trained in areas such as Internal Controls, Planning, Risk, Financial Strategy, Cross Border taxation, Ethics, Regulation, Benchmarking, Foreign Currencies, Financial Modeling, Insolvency, to name a few. We are trained and examined in areas where business decisions are made based on our analysis"

Bones, this all may or may not be true, it really depends on the person. I've done my college level accounting courses and much of this was not part of the curriculum. In addition, I have several clients whose needs just don't extend to much of what you describe as "areas where business decisions are made". The accounting services provided by my office are what they need and what they pay for. I agree that there are certain levels of business and types of industries that will require the type of things you describe above, but the hairdressing salon in town, the plumbing contractor, the small restaurant owner - they just want to keep their heads above water, they want to be able to provide reliable, accurate financial data when it's required. As Cathy says, they can't afford the CPA who charges quite a bit more than I do and in the end, they really don't care or want to know anything about "cross border taxation". BTW, just because a person has CPA after their name, doesn't mean they have the skill set or the knowledge to be what you are advocating. That's an argument that has been entered into quite often on this forum. In the end about the only thing we do agree on is that the initials don't make the person into whatever it is they espouse.

Ukbones (talk|edits) said:

16 December 2010
I consult in industry and see this all the time.

I would deem a 'Junior Accountant' an 'Accountant in Training', 'Accounting Assistant I II or III (depending on qualifications)', 'Accounting Technician (a UK term for which you need the CAT qualification)'. Many feel entitled to not start at the bottom these days nor finish anything yet climb the ladder and claim the reward.

The whole purpose of being an accountant is to provide data to management and external sources that is accurate and a basis for decision making and compliance. Anybody unqualified to do so that assists is an assistant/technician etc.

Industry may get more leniency due to information not being available to external sources without passing through a CPA firm, in effect protecting said sources. That opens the door to call accounting employees whatever you want.

Action:

I was rebutting JR1, however as you bring it up, it doesn't depend on the person. These areas are on the CPA/CA exams. College level classes are besides the point. Firstly, you could have 80 credit hours in accounting, you're still not an accountant. It's not purely academic. Secondly, you made my point; what you covered in your accounting degree maybe different to what someone else covered. A profession has to be uniform. All professions are. This is why when you graduate you can't call yourself a doctor, lawyer or accountant (in some states).

Because your client doesn't need a particular service is also beside the point. In the context of analysis for decision making, they still want accurate, usable data by a professional who was trained under a fellow professional and demonstrated competence in said services. Right? Maybe not right, but most do.

You're only different from a bookkeeper by your definition of a bookkeeper. A bookkeeper can run financial ratios the same as you, may or may not have a degree in accounting, may or may not have been trained and may or may not provide accurate financial information for budgeting, cash flow and tax planning. I have no way to tell or differentiate them from you, other than the fact you call yourself an accountant and they don't.

I could crudely put it that you can't/shouldn't call yourself an accountant because your clients can't afford one. To say that your clients can't afford a CPA so they hire you to 'do the same thing' and that makes you part of the club is bordering absurd.

Flybynight (talk|edits) said:

16 December 2010
States have been generally been moving towards licensing in several professions. In my neck of the woods, you can no longer refer to yourself as an "engineer", even if you have a BS, MS, and Ph.D. in Mechanical Engineering if you are not a licensed Professional Engineer. Now, those same Ph.Ds are known as "specialists" or "technicians", but nothing else has really changed.

My opinion has always been that since certain "protected" professions have historically been protected (e.g. medicine, law), then only those that are licensed can refer to themselves as medical doctors or lawyers. However, other professions, such as engineering or accounting, have almost always allowed those who are unlicensed to call themselves engineers or accountants (even software engineers, who aren't engineers at all). If the states ever decide to protect the term engineer or accountant like they protect doctor or lawyer, then I'd be fine with that. Until then, I think the majority of clients know the difference between a CPA and an accountant or a P.E. and an engineer and we should just leave it at that.

Ukbones (talk|edits) said:

16 December 2010
If we just leave it at that, the states will lack motivation to change. Am I heading down the wrong path? Why isn't the CPA a valid entry point into the accounting profession?

"Why can't I call myself a Lawyer?"

"You haven't passed the bar"

"I can call myself an Accountant but can't balance my check book"

"Well, that's just the way it's done in these parts!"

Fantastico!

Flybynight (talk|edits) said:

16 December 2010
I know, I know, we Yanks are crazy; you can't even call yourself a barber without a license, but accountant or engineer, sure!

Heck, given the current economy, the CPA may be the only valid entry into the profession (at least for recent grads, who generally won't meet the experience requirements).

PatrickA5 (talk|edits) said:

16 December 2010
"CPA's are examined and trained in areas such as Internal Controls, Planning, Risk, Financial Strategy, Cross Border taxation, Ethics, Regulation, Benchmarking, Foreign Currencies, Financial Modeling, Insolvency, to name a few. We are trained and examined in areas where business decisions are made based on our analysis."

Crap! I'm a CPA and I'm pretty sure I don't even know what some of those big words mean! My guess is that none of my CPA friends (and I know a bunch) have been "trained" in hardly any of those areas. Are you sure you're not one of those Accounting professors that does big corporate "consulting" on the side?

Them thar CPA's you're describing sure do sound smart!

Actionbsns (talk|edits) said:

17 December 2010
You go, Patrick!!

Ukbones (talk|edits) said:

17 December 2010
Firstly, stop guessing. Secondly, I'm not a professor. That brought on a little chuckle. I do do (grow up), corporate consulting. But let's roll up our sleeves and move on.

Internal Controls, Planning, Risk, Fraud - CPA exam - Auditing

Foreign Currencies - CPA exam - FAR

Ethics, Insolvency - CPA exam - Regulation

Benchmarking, Budgeting, Financial Modeling - CPA exam - BEC

Your profile says 29 years as a CPA. CPA exam plus training, plus 29 years of experience, plus 29 years of CPE (or however long it's been required in your state) and you claim ignorance on these topics? What have you been doing? What have your CPA friends been doing? Not knowing the basics of Regulation and Audit? Explain yourself sir!

Maybe you mistakenly typed "Crap! I'm a CPA" when what you really meant was "I'm a crap CPA!". I know a few crap ones myself but they damn sure know the basics of auditing and regulation. Are you an honorary CPA?

You know, CPA in some northern towns in the UK translates as 'Certified Piss Artist'. You're not that type of 'CPA' are you?

I'm only joking Patrick. A target has been carefully placed on my back, fire away!

Flybynight (talk|edits) said:

17 December 2010
After 29 years of service at a large company, I would expect Patrick to have become specialized after all that time and likely have just done compliance or cross border taxation for the last 27 years.

In UK's defense, we were all examined and trained on these issues at some point, but that training may have become stale (or incredibly fuzzy) after years of non-use. For example, lawyers on a state bar exam are trained in law school and tested on constitutional law, real estate, torts, criminal law, criminal and civil procedure and contracts. However, let's just say that if you're accused of murder and choose me as your defense counsel, you might as well just strap yourself into the chair. However, that doesn't mean that we aren't tested and trained on those things, only that we've neglected to use those portions by choice.

CathysTaxes (talk|edits) said:

17 December 2010
UKbones, you mentioned something to the effect that if someone is going to go that far, why not go all the way.

Why can't there be different levels of professionals to handle different tasks? In many professions, there are levels, why not in the accounting/CPA/taxes? At least with enrolled agent and the new requirements for registered tax preparers, the tax field is covered with enough levels so any taxpayer who pays for the service is receiving it from someone who has at least passed minimum qualifications.

My BIL is a MD in internal medicine. He cannot perform surgery. He refers patients who need medical care beyond his license to another specialist. Why not have the state do something with bookkeepers and non CPAs with accounting degrees? My SIL is a CPA. She went into a partnership with an established business. Her partner is not a CPA, she is an accountant and an EA. Her partner was in business many years before my SIL hooked up with her.

Smaller businesses need competent services that they can afford. Too many of them try to do it themselves and screw up royally. I'm not against registration for bookkeepers and non CPAs. IMO, it adds to their professionalism.

My husband is not a CPA, but being certified by QuickBooks opened many doors to him.

Ukbones (talk|edits) said:

17 December 2010
Cathy - when I made the point of "if someone is going to go that far, why not go all the way." it was in reference to a shorter exam to enable the use of 'accountant' without the option of offering assurance. As there are only 4 papers on the CPA exam (which other than the CMA is the only option available), you may as well take them all as the difference between taking FAR, BEC & taking all four is very little. If it was the difference between say 4 papers and 14 papers and three years training then the point could be made.

Although we don't have the multiple accounting bodies to support it or existing boards quite sophisticated or motivated enough to implement it, I agree with you completely on certifications for different stages/levels of the profession. It makes sense. The UK almost has it. We have CAT (Certified Accounting Technician), CIMA (Chartered Management Accountant - Non practice/Non Assurance), ACCA (Chartered Certified Accountant - Non practice/Non Assurance), ACA (Chartered Accountant). You also have the option with CIMA and ACCA to gain a practicing certificate (allowing you to offer assurance services).

This essentially allows you to gain the level you need. However, in public accounting, ACA or ACCA/CIMA with a practicing certificate is the only option for most clients. Non practicing accountants have to be very clear on what they can't do and are very limited. Most are in industry, however all are skilled and trained to a high level and, very importantly, have to complete CPE each year. This has been overlooked in this discussion so far with unqualified practitioners. There is no requirement to continually educate themselves.

Kevin on this board is a big CPE advocate and I agree with him. It's how we advance after we are qualified that makes the professional good at his job. Many only do what they need to, others go above and beyond. If you don't have a degree, CPA, CMA or belong to any body requiring you advance through CPE then it just begs the question of competency in the market place and why states don't limit the terminology and service options of unqualified practitioners.

Actionbsns (talk|edits) said:

17 December 2010
This is an unwinnable argument. There are those of us who provide accounting services to our clients and do not hold ourselves out to be a CPA, but we are certainly more knowlegable of the accounting field than those who would be called only a bookkeeper. What we lack is a proper title that would make UK and his supporters happy. Maybe what we should all do is toddle off to the land of OZ, meet with the Wizard and be granted a proper title.

As far as CPE's to keep my knowledge and skills current, I have a lot of receipts and little bits of paper that say I have spent a lot of time, money and energy in that area, and so do a lot of other people on this board.

Like it or not UK, we do our jobs as well as some who bear the title CPA. The designation on its own only says that the recipient was able to pass a series of tests. I also hold the designation of CLU having passed ten tests with pretty high scores. However, I haven't worked in the insurance business for many years and I never add the letters after my name since it would indicate to the public that I could offer something I don't really have anymore - knowledge and skills in that area. There are a number of CPA's and other professionals as well, who also fall into this category. The public is better served by someone who is staying current in their field, than by someone bearing a few letters who hasn't even tried, and yet the letters speak volumes.

PatrickA5 (talk|edits) said:

17 December 2010
UK, just so you know - my 29 years of Accounting were almost all in the Oil & Gas industry for various large companies.

I never did any auditing, nor cared to. Nor, many of the other topics you discussed. You see, UK, there is a thing called industry - where a lot of Accountants (CPA or not) go to work and lead fairly productive, successful careers. Depending on which area you specialize in, there was no need to be a expert in many of the areas you mentioned. I know a lot about the accounting areas that I worked and basically forgot what I maybe used to know in the other areas. No, I didn't do much of my CPE in foreign currencies or cross border taxation - no reason to.

I did spend a great deal of time every year training the current crop of Big 4 auditors on the fundamentals of petroleum accounting (which I guess wasn't on the CPA exam). They would come in either directly out of school or if we were really, really lucky, they would maybe have a couple years experience. After working 18 hour days, most were questioning their sanity for actually wanting to do public accounting. Probably 80% were in industry within 5 years - many working for me.

Nope, wouldn't have a chance in hell of passing the CPA exam again. For the most part, it didn't do me any good having my CPA in my line of work. I only kept it because the company paid for renewing it and all of the CPE. That and I thought it might look good on a resume.

Actionbsns is exactly right. The letters (CPA, EA, etc) mean very little - other than at one time or another you studied hard and passed a test.

Death&Taxes (talk|edits) said:

20 December 2010
Check this out, U.K.

Discussion: Starting a cpa business. can i deduct the cost?

He hasn't filled out a profile at this time. I am not trying to say, "is this what you mean?" Sometimes I feel the same way when I read of newbies opening tax preparation practices with software, a personality and little experience.

JR1 (talk|edits) said:

December 20, 2010
Hold on. Only 2 or 3 of us got personalities, so those are used up, out of stock. So they have software. Oh, and letters.

Actionbsns (talk|edits) said:

20 December 2010
To quote Sheldon Cooper - "Bazinga!".

Kevinh5 (talk|edits) said:

20 December 2010
http://www.youtube.com/watch?v=XfL4-C8OCys

Ukbones (talk|edits) said:

20 December 2010
I don't know what Bazinga! means. Do you feel like you've won something? Like Bingo? Or like the urban dictionary says 'what a male says when he is cumming.' Google is unclear.

Death&Taxes (talk|edits) said:

20 December 2010
I love this:

http://www.youtube.com/watch?v=XMOmB1q8W4Y&feature=player_embedded#!

Lion taming!!!

Actionbsns (talk|edits) said:

21 December 2010
This might help:

http://www.youtube.com/watch?v=iaiCL27kKQU

Kind of explains Sheldon.

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