Finance

What is an Enrolled Agent (EA)?

An enrolled agent (EA) is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service (IRS) by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee

An EA is a federally authorized tax specialist that operates to provide advisory services to American taxpayers about matters concerning the IRS. Achieving “EA” status is considered the highest credential awarded by the IRS and is legally recognized throughout all U.S states.

As for occupational duties, enrolled agents are empowered to represent American taxpayers before the IRS on matters such as collections, tax appeals, audits, and any other tax issues.

Under existing statutes, EAs are able to provide advisory services and prepare tax returns for anything that is required to report under the IRS. They include entities such as individual taxpayers, corporations, trusts, and estates.

Enrolled agent, like attorneys and certified public accountants (CPAs /US CPA), have unlimited practice rights. This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before.

1. Enrolled Agents (EA) vs. Certified Public Accountants (CPA)

During tax season, services are offered by both EAs and CPAs, making selection increasingly difficult. Discussed below are the primary differences between EAs and CPAs, which should provide a better understanding of which professional is most suitable for the work required.

A. Education

EA Education: In order to become an EA, individuals must pass a three-part examination that covers individual and business tax standards and laws. EAs primarily focus on tax preparation and do not spend much time studying the accounting principles that CPAs do.

CPA Education: In order to become a CPA, individuals must complete university studies in accounting, meet practical experience requirements, and pass a four-part Certified Public Accounting exam.

B. Hourly Rate

EA Rate: On average, the hourly rate charged by an EA fluctuates from about $12 to $50 per hour.

CPA Rate: On average, the hourly rate of a CPA ranges largely from about $30 to $500 and is exclusively based on the amount of experience that the CPA holds.

C. Population

EA Population: The National Association of Enrolled Agents states that approximately 10,000 EAs are currently practicing in the United States.

CPA Population: According to the national databases of CPAs, there are approximately 650,000 CPAs who are currently practicing in the United States.

1. In the most basic sense, EAs focus on tax and professional services while CPAs focus on the generalized accounting principles and standards that are present throughout the United States.

2. Apart from occupational requirements, CPAs generally charge a much higher rate than EAs, and there are more CPAs in the United States than EAs.

3. An EA is the highest credential the IRS awards. A professional with this designation typically makes between $15,000 and $20,000 more than CPAs annually. You’ll want to seek out an EA for any and all tax-related issues. In fact, the IRS says they are uncontested experts on such topics.

2. Can you be both an EA and a CPA?

Another factor to consider as you choose your career path is the earning potential for both the EA credential and CPA license. While both the CPA and EA credential require tax knowledge, the EA is much more niche within the industry and geared more toward tax practitioners.

3. Steps to Become an EA

If an individual wants to become an enrolled agent, there are several requirements that must be met in order to gain that title. Discussed below are the steps needed to be taken in order to achieve the EA title.

1) Create an IRS Account: Go to the IRS’s website and register for an IRS account.

2) Submit IRS Application: In order to submit an IRS application, an individual will be required to present information such as name, address, date of birth, and any outstanding convictions or tax obligations.

3) Acquire PTIN Online: If an individual is not seen to have any outstanding convictions or tax obligations, they will be awarded a Personal Tax Identification Number (PTIN) immediately after application submission.

4) Suitability Check: Pass a suitability check, which will include tax compliance to ensure that you have filed all necessary tax returns and there are no outstanding tax liabilities; and criminal background.

5) Register for a Special Enrolment Exam (SEE) Prep: Before rushing into the test, it is recommended that individuals register for an SEE course that provides education for the three parts present on the SEE exam.

6) Register and Pass the SEE Exam: Once ready, individuals must register for their SEE exam, which consists of three major parts: individuals; businesses; and representation, practice, and procedures.

7) Gain IRS Experience: Once the test is passed, it is a requirement that all EA exam-certified individuals gain five years of experience working for the IRS.

8) Apply for Enrolment: After the experience requirement is met, individuals must apply for enrolment in order to finalize the certification. Applying for enrolment consists of background checks, training, licenses, employment experiences, and education history.

9) Continuing Education: Once the EA designation is awarded, individuals must maintain their title by meeting several conditions. Individuals with EA designations are required to earn 72 CPE hours every three years, use an IRS-approved continuing education provider, and review the enrolled

4. Benefits of Becoming an EA

Becoming an EA is a long and grueling process, but obtaining the designation provides many benefits, such as:

·        Competitive wages

·        Job security

·        An increasingly growing job market

·        Good standing with the IRS

·        Does not require a degree

·        Unlimited representational rights

Once you become an EA you must:

·        Renew your status as an enrolled agent every three years

·        Obtain continuing education

·        Renew your PTIN annually

5. Why Get an Enrolled Agent License?

The EA credential can verify your credibility, open doors to new careers, and attract work opportunities. Tax preparers, accountants, and those wanting to move into tax preparation can gain confidence with an EA license.

1.Earning Potential

When it comes to tax preparation, EAs can do many tasks a client needs. These professionals can argue tax law, discuss audits with the IRS, deal with the IRS collections department, and make appeals. Not everyone can provide these services, which puts EAs in high demand and a position of great earning potential.

2. National Credentials

The EA credential is a federal designation handed down by the U.S. Department of the Treasury. This allows you to work anywhere in the country. Alternatively, CPA licensure is state-specific with certain restrictions. Clients know that enrolled agents can work across state lines.

3. Job Stability

EAs enjoy steady work from individuals, tax-prep firms, law firms, accounting firms, and other corporations. Virtually everyone must pay taxes of some sort, and the ever-changing tax code means even more job security for enrolled agents.

4. Educational Requirements

The IRS does not require any specific educational background to become an enrolled agent. Applicants have to pass each section of the three-part exam and undergo a background check.

Aspiring EAs may find that an accounting degree sets them apart from their peers. Candidates who already hold undergraduate degrees may boost their skills and knowledge with a certificate in accounting or master’s in taxation.

6. SEE Exam Structure: Individuals

Part 1 : Taxation and Individuals

1.1 Taxpayer data (14 questions)

1.2 Income and assets (17 questions)

1.3 Deductions and credits (17 questions)

1.4 Taxation (15 questions)

1.5 Advising the taxpayer (11 questions)

1.6 Specialized returns (12 questions)

Part 2 : Taxation and Businesses

2.1 Business entities and considerations (30 questions)

2.2 Business tax preparation (37 questions)

2.3 Specialized returns (18 questions).

Part 3: Representation, Practices and Procedures

3.1 Practices and procedures (26 questions)

3.2 Representation before the IRS (25 questions)

3.3 Specific areas of representation (20 questions)

3.4 Filing process (14 questions)

Note: Test-takers must schedule four hours for each section. This includes 3.5 hours to take the test and 30 minutes for a pre-examination tutorial and post-examination survey. Candidates do not have to take all parts of the test on the same day or on consecutive days. They also do not have to complete the parts in any particular order. Prometric only offers the exam at its testing sites and not through off-site proctors.

7. Scoring the Exam

The EA licensing examination contains three parts, each consisting of 100 multiple-choice questions. Of those 100 questions, 85 questions count toward the test-taker’s score. The other 15 questions are experimental and are not scored.

Each question is marked right or wrong. No weighting system applies to the final score. The IRS uses a scaled scoring system for the SEE. This approach evaluates the total number of questions answered correctly against the number of questions on the exam.

The system converts this number to a scale that runs from 40-130. Test-takers must earn a scaled score of 105 or higher to pass. At the end of the exam, candidates receive a notification on their computer screen indicating that they have passed. They will not see their scaled score. The IRS only determines if a test-taker is qualified, not how qualified they may be.

Test-takers who fail receive their scaled score of 40-104 and diagnostic information indicating which areas need improvement. The system ranks a candidates’ performance in each exam area on a scale of 1-3. A score of one shows an area of weakness, while three indicates relative strength.

SEE Exam Scoring

8. EA Exam Fees

Each part of the SEE costs $185, which is due upon registration. This fee is non-transferable and non-refundable. Test-takers who fail the exam must pay the same fee to retake the test. To maximize the value of their investment, candidates should wait to register until they are fully prepared to take the exam. Candidates who pass the exam must pay a $67 enrolment fee when they apply to practice before the IRS.

9.Top Tips for Prospective EA Accountants

9.1 Review Prometric’s Sample Test Questions

Prometric is the testing and assessment company that offers the SEE on behalf of the IRS. The company provides a 100-question simulated SEE. This test also introduces candidates to the technology, functions, timed approach, and best practices relevant to the SEE. These resources do not cost money.

9.2 Commit to 150-200 Hours of Study

Becoming an EA requires one exam. Thus, the exam covers rigorous topics spread over three 100-question sections. Test-takers often spend more than 10 hours just taking the SEE. Effective preparation for this test requires 150-200 hours of study.

9.3 Go to the Source

The internet offers plenty of data and information about the SEE. Test-takers should be selective with their study resources. The IRS is the most accurate source of information about U.S. taxation. Data from other sources may be out of date or inaccurate.

9.4 Enroll in a Prep Course(EA Certification)

Community colleges and educational assessment companies offer online and in-person preparation courses for aspiring EAs. These programs may include computer-based lessons, study guides, lectures, or practice exams. Some programs offer access to learning aids, like digital flashcards or simulated exams. Others provide one-on-one support.

How long it takes to get EA certification depends on the candidate’s tax law and accounting knowledge. Well-prepared test-takers may pass the exam with little additional study. Other candidates may need several months of preparation time.

10. Is enrolled agent a good career?

Individuals who are considering a new career path may find that becoming an enrolled agent is the right choice. Offering excellent job security and the opportunity to have jurisdiction throughout the United States, the position of enrolled agent can provide a good salary along with a rewarding career.

11. Common Enrolled Agent Salary Ranges in the United States

1.Entry Level          $25,000

2.Mid-Level            $39,000-$52,000

3.Senior                  $68,000-$129,000+

12. EA Job Opportunities in India

12.1 Prospects of EA in India

An Enrolled Agent is a person who has earned the privilege of preparing US tax returns and also representing taxpayers before the Internal Revenue Service (IRS) by passing a three-part comprehensive IRS test covering individual and business tax returns. The course is really useful if you wish to continue any kind of US taxation jobs.

There is a wide scope of job opportunities for many who wish to pursue this field. Many opportunities lie in the US as the course deals with US taxation. Indian ITES – BPO and KPO industry servicing International and US Financial and Accounting domain is growing leaps and bounds.

All these firms including BIG4, require knowledgeable and skilled resources to service their US and International clients on US taxation. Enrolled Agent being highest credential awarded by IRS for US taxation practice; Job seekers with EA qualification are most preferred resources by these companies.

All fortune 500 companies which have their shared services, International Banks , Financial Institutions , Big 4 and other accounting companies need EA’s in their system . New FATCA (Foreign accounting tax compliance act) rules stipulate that all the Indian banks and Financial Institutions also need to submit reports on transactions entered by US investors. EA’s will be prime resource to handle these work process.

Enrolled agent will have opportunity to work in:

a. Big 4 audit firms

b. Accounting and taxation BPO’s & KPO’s

c. Shared service centers

d. International Banks & FIs BPO & KPO’s

e. Indian banks & FIs

f. Indian International companies.

12.2 Current Job Positions for EAs in India

https://in.linkedin.com/jobs/enrolled-agent-jobs

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www.upliftprofessionals.in

It is well known that country-wise variations exist in accounting standards and financial reporting in the finance and accounting domain.

In the USA the Financial Accounting Standard Board(FASB) assembled the prevalent practices and norms practised there in the shape of Generally Accepted Accounting Principles (GAAP) which indicates commonly accepted measures, principles and benchmarks upon compilation of accounting disclosures.

On the contrary, International Financial Reporting Standards(IFRS) are governed by the International Accounting Standard Board(IASB).

IFRS provides the guidelines and framework for reporting of financial events, transactions etc. according to the specific type of each event. It helps to impart and set a common accounting platform for global understanding and acceptance across the companies as well as the countries. Because of its proven efficacy, more than 144 countries accepted IFRS with a growing inclination of switch over from GAAP to IFRS particularly in limited growth settings.

GAAP is the norm to follow for inside out distribution of financial statements of a company. This include outstanding stock determinations, item categorisation, balance sheet, revenue identification etc.which act as benchmark for the investors. GAAP is mainly practised in the US based companies.

IFRS, on the other-hand, is considered as a marker of financial stability and transparency. This is the settings to help investors to draw calculated financial commitments. It is the financial accounting and reporting standard outside USA but followed by the European Union(EU) and some Asian countries also. IFRS is quite beneficial for those countries that involve in international financial transactions.

To sum up, the basis of two systems i .e GAAP and IFRS are rules and principles respectively. GAAP permits LIFO but IFRS discourage it, while both has compliance with FIFO and weighted average-cost method.Moreover, inventory reversal is totally forbidden in GAAP but allowed in IFRS under certain circumstances.

In conclusion, GAAP is a rule- based regional guideline while IFRS is an international principle based norm which allow more flexibility in a global scale.

For a better understanding you may write our experts at info@upliftprofessionals.in

Auditing and accounting contribute to being two crucial processes, which are associated with the financial activities as well as records of the business entity.

The crucial difference between Accounting and accounting is that Accounting involves the technique of reporting, maintaining, and recording the financial affairs of the business organization, which depicts the financial status of the company.

Auditing, on the other hand, contributes to being the systematic examination of all the books of the accounts along with the other financial documents of the organization, to gain a prerequisite understanding of whether the statement showcases the real view of the company.

Accounting vs Auditing

Accounting refers to the procedure of maintaining the prerequisite monetary records of a specific organization in a certain way so that they can lead a helping hand for the preparation of different financial statements and which will confer a true and fair view of the organization’s business.

They need to make financial statements, according to the regulatory authority guidelines. On the other hand, auditing contributes to being the assessment of financial statements and records which are prepared via the accounting function.

The ultimate motive is ensuring the reliability of different financial statements.

What is Accounting?

Accounting happens to be a unique language of business, which is essential in understanding the different economic activities of the entity.

It refers to the act of capturing the daily monetary transactions of the business as well as classifying them into different groups. Apart from this, the transactions are known to be summarized in such a manner that they can be found without any hurdles during the emergency, followed by the analysis as well as an understanding of different results of financial statements as well as communicating different results of the various interested parties.

The primary function of accounting is offering material information, primarily of the financial kind, to take the right decision.

The fields of accounting involve Social Responsibility Accounting, Human Resource Accounting, Financial Accounting, Tax Accounting, Management Accounting, and Cost Accounting. The ultimate goals of Accounting include:

1. Keeping proper records via Ledger, Subsidiary Books, Journal, Trial Balance, to name a few.

2. It includes evaluating different results from the specific records which are maintained via the Trading as well as the Profit & Loss Account

3. Conferring the required details, regarding liquidity and solvency position to the necessary parties.

4. Showcasing the financial status of the organization via the Balanced Sheet

What is Auditing?

The Audit contributes to being a methodological process to examine the financial details of the organization to provide the right judgment on the true and fair view.

Auditing contributes to being a vital unbiased investigation of various aspects of the transaction, which includes account books, receipts, vouchers, and different relevant documents for understanding the reliability and validity of the financial statement.

In addition to this, it is possible to detect deliberate manipulation, frauds, and errors in the accounts after undergoing detailed scrutiny. The auditor will be inspecting the transparency and accuracy of the financial details, compliance along with the accounting standards and checking out if the taxes have been paid properly.

After the inspection of financial records and accounting books, the auditor will be delivering a report.

It is possible to conduct the audit both externally and internally. An internal auditor conducts the activities of internal audit for the improvement of the internal accounting system and control systems.

The management of the company appoints the internal auditor whereas the shareholders appoint the External Auditor.

Difference between Accounting vs Auditing

Here is a list of the differences between accounting vs auditing:

1. By definition, accounting refers to the process to maintain the monetary records of the business in a certain way that it is useful for the preparation of financial statements which will confer a true and fair view of the business.

On the other hand, auditing refers to the assessment of the different financial records which are known to be prepared via the accounting function. The ultimate objective is ensuring the dependency on financial statements.

2. The primary categories of accounting include financial accounting, cost accounting, managerial accounting, Government Accounting, Social Benefit Accounting, Human Resource accounting. Auditing, on the other hand, can be subdivided into external auditing and internal auditing.

3. Accounting happens to be an on-going activity where the financial statements are known to be prepared annually and quarterly. Auditing, on the other hand, happens to be a periodic activity where the audit of the different financial statements is done for the majority of the companies. There are a plethora of businesses that are capable of conducting the audit quarterly or annually.

4. Bookkeeping happens to be the starting beginning of the process of accounting. Here, the different financial affairs’ records of the organization are maintained which is used for the preparation of the different financial statements.

Auditing, on the other hand, begins once the work of the accountant is done. As the financial statements have been prepared, the auditor begins after the completion as well as the accuracy of every financial statement has been verified.

5. The accountant happens to be a vital part of the company’s mid-level management. The responsibility includes introducing a true and fair view of the company’s financial position to different stakeholders.

The auditor, whereas, can be external and internal to the business. The internal auditor will be an integral part of the company’s mid-level management. In the case of the external auditors, the business should choose certified auditing firms that have become well renowned in the industry in such a manner that the level of auditor’s responsibility is more, as compared to the accountant.

The reports, they confer, happens to be the certification of all the work, which is accomplished by the accountant.

6. The daily activities of an accountant involve the preparation of different financial statements for the company, maintenance of proper documents, accountants books, business models, projections, to name a few. The everyday activities of auditors are inclusive of preparation of audit reports for different users, verification of different documents for the establishments of the audit trail, to name a few.

A CMA majorly plays the role of an accountant and financial analyst in the industry whereas a CPA is considered worldwide as an expert professional in public accounting and auditing.

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Our team consists of seasoned professionals and entrepreneurs from IIEST, IITs, London Business School, and ULCA who have decided to provide a strong backup to young ambitious students and professionals to reach their desired career destinations in an organized way.

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Finance is a critical part of our day to day life. Whether we are fulfilling our professional commitments or personal, finance finds its way into it. The importance of finance in a company is to make sure the business operates smoothly and to secure funds for the long-term goal. Finance professional’s play a vital role in any business. They analyse revenue and expenses in order to make an effective use of the company’s capital. They also provide advice to the management about project investment, planning the company’s budget and structure acquisitions to help companies grow.

Now, let us look at the common areas/ positions of Finance: Finance Analyst, Finance Executive, Chief Financial Officer, Finance Manager, Risk Analyst, Finance Director. 

Among all the Financial positions, “Financial Analyst” is the most popular career path. A financial analyst can work in junior as well as senior position within a company.

Who is a Financial Analyst?

A financial analyst runs a business on the basis of analysis. Being an analyst, they interpret data and recommend strategic decisions to the management on the basis of the data collected by them.  They also create a financial model to predict the outcome of the business decisions. The role of a financial analyst differs depending where it works. For an example within an investment bank, a financial analyst focuses more on business collaboration. The day to day activities of a financial analyst depends on the company where he or she chooses to work.  A financial analyst needs to be aware of the latest improvements and prepare financial models considering the developments in order to predict the present and future economic conditions.

Education required to become a Financial Analyst

A minimum bachelor degree preferably in finance is required for a financial analyst. One needs to have a strong understanding on subjects like: accounting, economics and statistics. Analyst who wants to earn a lucrative package and wants to enjoy greater opportunities might consider pursuing a professional accounting certification like : MBA, CFA or the US CMA. Advanced learning makes them more potential and mobile.

To become a successful financial analyst, one has to be motivated and must have confidence in their judgment.

Financial Analyst: Career Path

Working as a financial analyst is a very exciting career. As analysts they need to perform detailed financial modelling and work closely with the CFO to execute effective decision-making. A financial analyst enjoys faster growth than an average finance professional.

A career as a financial analyst offers job security, potential to earn more and opportunity to define the finance industry. The average financial analyst pay scale starts from INR 5 lakhs per annum plus perks and other benefits. With experience, when an analyst moves to a senior position the pay scale increases to INR 8 – 25 lakhs .  

With the passing days, the role of data analytics within the finance industry has made an immense growth. Professionals these days are using the knowledge of data science, machine learning at the workplace to manage the organisational risk factors and increase the efficiency of the decision based on facts.

In this blog, we will explore how data science is reinventing Finance. Ever since its emergence, Data science has helped to transform many industries. For decades, Financial professionals have been using data to extract valuable insights but with an advancement of data science, it has brought a new era in the Finance field. Automated algorithms and analytical tools are being hand in hand in the industries.

Understanding the term Data Analytics

Data analytics is all about using financial and non-financial data to help companies make better decisions. It is a process of collecting, transforming and modelling data in order to generate useful information.

Role of Data Analytics in Finance

Finance was always using data science even before the term data science was derived. Financial institutions are considered to be the first users of data analytics. Data analytics is used in finance industry in the following areas:

· Risk prediction: Data analytics act as a warning tool that helps companies to identify their risk cost and fraudulent cases. Companies are recruiting data scientists these days that are able to use machine learning tools to analyse transactions made by the companies.

· Managing customer data: With the proper usage of data analytical tools, financial institutions like banks are able to provide accurate information to their customers on time. Structured data help banks to operate efficiently on day to day activities. Financial transactions are operated smoothly with proper surveillance to avoid any fraudulent activities.

· Fraud prediction: For any financial institutions, fraud is a major concern. With growing transactions these days, fraudulence has also increased. With the help of data analytical tools, financial institutions are now being able to monitor the risks of fraud. One of the most common fraud activities is credit card fraud. The detection of such fraud activity is possible for the improvement in the algorithm’s tools.

· Personalized Productivity: With the advancement in technology, customers these days have developed an expectation of personalized services. In order to manage this service efficiently, data analytics techniques play a vital role in analyzing the customer services and interaction on different social platforms. Artificial intelligence is able to understand human emotions and interaction and are successfully transforming these activities into useful data for a company to use.

Financial institutions have widely adopted data analytics to provide better investment decisions with consistent returns. It allows companies to effectively identify risk and ensures customer security.

Manually written ledgers are now being replaced by programming languages like SQL, Python. The impact of data analytics will keep growing as financial professionals have identified its benefits and will thrive using these tools to increase the opportunities and financial rewards for the organisations.

Data Analytics Career in Finance

Data analytics professionals serve almost all industries. Financial companies rely on the analyst to provide accurate information on – budgeting, financial reporting, managing the risk activities and improving the investment opportunities. Companies are hiring professionals having sound mathematical knowledge with problem solving ability skills.

A combination of technical and soft skills knowledge allows a data analyst to process, interpret, and analyse data to solve a problem-solving and provide effective decision-making to its organisation.For more details please email us to info@upliftprofessionals.in