My name is Jacqueline L. LaBarge. I am a member of the National Association of Tax Practitioners and Legislative Chairman of the New York Chapter. There are 15,000 Members in our association nationally and 1792 of those live in New York State. I am here representing them today.

We want to ensure that the public has access to a variety of accounting services that are consistent with their needs at prices they can afford. We also want to ensure the Legal right of all accounting and tax professionals to offer their services on competitive and marketable basis. The following issues contained in these bills concern us.

Right to Use Earned Titles

Included in these bills are provisions that would make it a misdemeanor to advertise or use earned titles and credentials relating to accounting and tax related matters. We agree that only licensed Certified Public Accountants should be able to use the title and abbreviations of CPA. We can also understand the need to prevent the usage of abbreviations or titles which could be confused with CPA, such as CMA (certified managerial accountant) or CTA (certified tax accountant). But we feel the denial of the the right to use earned credentials and titles which are not confusing should NOT take place. Abbreviations such as EA (enrolled agent), ATA (accredited tax advisor), and ABA (accredited business advisor) will not be confused with CPA. The public generally can distinguish between these letters.

To deny an individual the right to use the term "accountant" when the person has performed these services for years or has an Accounting degree from a recognized institution is a slap in the face of the individual. Doesn't a Bachelor's degree in Accounting imply that the individual has succeeded in obtaining he accounting knowledge and skills necessary to graduate? Isn't this sufficient to permit the individual to call himself or herself an "accountant".

When an individual has shown proficiency by taking an examination through a recognized organization, shouldn't the individual be permitted to use their earned credentials? The "EA" designation granted by the Internal Revenue Service is an example of acceptable licensing. The IRS does not require licensing of tax practitioners in order to prepare tax returns or represent their own clients at an audit. The IRS does require a license for tax practitioners to represent taxpayers before the Audit Division if the tax practitioner did not personally prepare the taxpayer's return, as well as for representing any taxpayer before the Collection Division or at Tax Court.

Right to Prepare Compilations

These bills would deny us the right to prepare compilations for small businesses. If these bills were passed, the services would have to performed either by the small business owner, the small business owner's employees, or a CPA.

A "compilation" is defined as "a presentation of information in the form of financial statements, where the information is the representation of management or owners." Profit and Loss statements, Balance Sheets, and Statements of Cash Flow are examples of financial statements. These include formally presented statements with attached reports providing assurance of their accuracy. They also include less formal representations which are prepared to help management understand their business operations and where they currently stand financially.

Many small business owners rely on others to prepare (or compile) these statements. They represent a summary of the business owner's status based on the records furnished by the owner. Banks and other financial institutions will commonly use this information when making their preliminary financial decisions for a small business. They will also ask for an audit of the statements if they feel the need exists. To force the small business owner to use a CPA to compile the information and then hire another CPA to conduct an audit, forces the owner to incur more costs than necessary.

Income tax returns can include income statements for many small business owners, such as a Schedule C for a sole proprietor, a Schedule F for a farmer, or a Schedule E for a rental activity. These schedules contain the income and expenses of the business, farm, or rental activity. As such they are an informal Profit and Loss statement. Income tax returns prepared for corporations or partnerships contain the income and expenses of the entity's activities, as well as the balances in the entity's asset and liability accounts as of the beginning and end of the applicable year. As such, they are an informal Profit and Loss statement and an informal Balance Sheet.

The right to do "compilations" shouldn't be restricted to CPAs. Non CPAs have prepared (compiled) financial statements for small business owners for centuries before the CPA credential came into existence. These services should continue to be available to be performed by non CPAs. Income tax returns have also been prepared by qualified non CPAs for years and should not be included under these bills or other regulations.

Impacts

Two groups would be negatively impacted if these bills become law currently stand-. Small Businesses and Tax Practitioners. First, the small business owner, farmer, landlord, corporation, or partnership would be forced to either have a CPA perform these service or do them him or herself Using a CPA for these service will generally be at a higher cost when compared to a non CPA performing the services. Why should the business owner have to pay more for the same service? The small business owner could perform these duties personally instead of using an outside source. This requires the owner to take time away from the business in order to try to compile the records, prepare the statements, and evaluate the results. The business owner should be able to concentrate on the business, which is his or her expertise instead of being forced to take time away to work on the financial paperwork which he or she may not really understand.

The tax practitioner would have dramatic changes in the business. 1) This could result in some tax practitioners spending more time and money to obtain the CPA credential when the individual does not desire to perform the more technical or formal duties performed by CPAs such as formal audits, These extra costs would be passed on to clients. 2) This could result in the tax practitioner retracting the business to only work with individual tax returns which do not include Schedule C, Schedule F, or Schedule E, and stop preparing tax returns for corporations and partnerships. This would result in a decrease in income for the tax practitioner, which would have to be made somewhere else. 3) The retraction of the tax practitioner's business could force him or her into a different line of business.

Recommendations

Change the bills to ensure the rights of small business owners to choose who they want to use for their needed services.

Change the bills to ensure the rights of tax practitioners are not violated, permitting them to perform compilation services.

Modify the provision which restricts the use of earned credentials and titles so it restricts only those which are indeed confusing to the public as a whole, not every title or abbreviation which happens to have two or three letters, or uses the word accountant.

These changes will help these bills really protect the interests of the general public, and not just help one group of professionals create a legal monopoly which would not be in the interests of the general public.

Thank you for giving me the opportunity to state our objections to the proposed bills A.8600 and A.8789.