Archives for September 2013

Join IPA for The 2013 PRIME Symposium – IPA Launches PRIME Website

The 2013 PRIME Symposium

www.primesymposium.com

Enjoy Midwestern Hospitality

One-on-One Focused Time With Peers

A New Approach to Learning and Networking

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Mon. Nov. 4 Workshops 12:00 p.m. – 5:30 p.m.

Tues. Nov. 5 The PRIME Begins 8:00 a.m.

Wed. Nov. 6 The PRIME Adjourns 12:30 p.m.

 

Participation is first-come, first-served.  Only a few remaining spots available.

NOTE: The PRIME Workshops are limited to 50-guests [10 available] and the PRIME Symposium is limited to 100-guests. [22 available]

 We’ve created the symposium so leaders and key personnel can share knowledge and best-practices with others directly – by working within small groups in a relaxed setting. The lineup of speakers, facilitators and moderators is a who’s who of the profession. Roll up your sleeves and be prepared to participate. The PRIME is eligible for 16+ CPE credits. Half-day group workshops focused on key metrics, facilitated by MPs and the Platt Group, beginning on Monday, Nov. 4, at 12:00 p.m. All sessions are focused on key topics. See a summary of the agenda. All participants will be included in the group discussions.

Survey Says: Many Firms Struggle To Hit Targets As Profits, On Average, Dip This Year

While 2012’s headlines were cautiously optimistic about the potential momentum of the flickering lights of growth that were being seen more frequently around the country, results from this year’s Annual IPA Survey and Analysis of Firms reflects a continued mixed tapestry.

 A small number of firms have made significant revenue and net income progress, while many firms of all sizes saw profits remain stagnant or decline slightly this year. Across almost every revenue band, average profitability (net income as a percent of net revenue) drifted downward from last year, as is reported in more detail in the IPA National Benchmarking Report.

 Overall, firms last year were optimistic about signs of growth, and many leaders believe that their investments in new hires and technology made last year just haven’t paid off yet. Another possibility is that it’s just more difficult than in the past to hit profitability targets. It is critical to remember that although the averages have drifted downward, plenty of firms land on either side of that number, and big strides are still being made by a number of firms.

The 2013 INSIDE Public Accounting Most Admired Peers

The individuals represented on the IPA Most Admired Peers list were named by survey participants. 

These individuals received a significant share of the responses to the survey question: “Please name one peer in the profession that you admire,” in the IPA Annual Survey and Analysis of Firms this year.

IPA congratulates all the MPs, whose dedication and leadership is a credit to the profession.

Ken Baggett, CohnReznick

Rich Dreher, Wipfli

Steven Knebel, Maxwell Locke & Ritter

Gary Shamis, SS&G, Inc.

Jeffrey Weiner, Marcum

Platt’s Perspective: Five Years After The Lehman Brothers Collapse

Shortly after the 2008 Lehman Brothers bankruptcy led to the world financial system almost going over the edge, futurist David Pearce Snyder told an audience at the AICPA that “this is not your father’s recession,” and “it will be five more years before the economy returns to a new ‘normal.’ ”

So now, five years later, the obvious question is, “Are we there yet?” The quick answer is, “Not quite, but we’re making progress.”

The profession has made adjustments. Initial belt-tightening and layoffs occurred early and led to preservation of income for the firm. “Right-sizing” and getting rid of underperforming staff came next. Leaders learned how to calm a nervous team – they offered open, honest dialogue, and a plan for going forward. Stepping up accountability came next, leading to elimination of some under-performing partners. Mergers became the quickest method of growth, with many firms in the “buy” mode. This coincided not only with paltry growth among smaller firms but also the pending retirement of a generation of Baby Boomers, which fueled even more acquisition activity. Strategic business development efforts took hold in many firms, supplementing “opportunistic” growth with “intentional” growth. Sales training for partners re-emerged and recruitment efforts stepped up for the expected additional work, which has started in a number of areas around the country.

What we don’t yet know is how strong the comeback will be, and what a new normal will look like. Temporary employment agencies are reporting a surge in part-time and temporary positions in the marketplace, leading many to question whether there is confidence that growth is sustainable or concern that it is fleeting.

Firms that have institutionalized a “do more with less” mentality as well as a culture of making tough decisions and acting on them are showing strong growth and profitability. One in eight firms reported organic revenue growth of over 10% this year – that number was 63% in fiscal year 2007. Almost one-fourth of firms are reporting double-digit income growth this year – that number was 55% in 2007.

Now, as then, one-third of participating firms show profitability above 35%. Fees per employee among the IPA 100 – after all the adjustments in staffing – are now about $15,000 higher than they were in 2007. After the mega-mergers of the last few years, minimum fees to get into the IPA 100 are still hovering around $30 million, as they were in 2007, showing the next group among the IPA 200 continuing to grow and rebound.

Words like “normal” are fairly subjective, and we’re still too close to determine if things have completely settled into the “new normal” as Pearce Snyder suggested. But signs of growth are encouraging and more consistent than in the recent past, and the future looks bright for those who make bold, intentional decisions and refuse to settle for the status quo.

Survey Says…Long, Winding Road To Partnership

Hard and satisfying work, coupled with long hours and financial rewards, are the hallmarks of a career as an equity partner. While not everyone in the firm wants to or can become a partner, for those who strive to do so, two questions come to mind: “Is there an opportunity here?” and “How long will I have to wait for the opportunity?”

For fiscal year-end 2012-13, one of every three people who were admitted to equity partnership came in as lateral hires. At best, only two out of every three openings were available to “home-grown” seasoned staff/managers.

Additionally, 87% of firms indicated the path from entry-level staff to equity partnership to be at least 10 years, 60% expect at least 12 years, and 23% expect the wait to be at least 15 years.

For women looking to become partner, the survey shows that on average, regardless of whether they are in an IPA 100 firm or a smaller firm, five out of six owners are male, and that number hasn’t changed dramatically over the years.

Benchmarking Uncovers: Average Partner Age Continues To Rise

We’ve all seen the statistic that 10,000 people turn 65 every day in the U.S. As Baby Boomers reach retirement age, the economy as a whole, and the accounting profession along with it, are in transition.

This year, the average age of all IPA 100 equity partners is 51.4 years compared to 48.6 years four years ago. While this increase of 2.8 years may not seem significant, it’s important to look inside your firm for the reasons. It may indicate that not as many younger partners are being admitted to maintain the age balance. Tracking average partner age is a very important performance indicator and the increasing partner age may be a cause of concern over time if philosophies of succession are not well thought out, and adequate planning procedures are not in place.

Many firms are comfortable with an average partner age of 50, which produces a mix of experienced and seasoned partners with younger partners being prepared to take on even greater leadership rules in the future. What are some of the stories that an upward age trend tell, and do any of them relate to your firm?

Another trend uncovered through the survey is the increasing number of non-equity partners being admitted in lieu of equity partners. When that happens, the equity partner average age increases. One must challenge the reason for the spike in non-equity ownership. If one of the attributes differentiating equity versus non-equity ownership is “entrepreneurship,” (as many firms believe) then perhaps the age increase is a sign that over time the entrepreneurial quotient of your firm is being diluted.

In a closely related matter, the average age of the IPA 100’s CEOs/MPs has increased over the past five years, from 54.3 years to 56.6 years. While this increase may not be a concern in the firms that have defined succession plans, it could be an indicator in others that the next leader has not been chosen, is not in the pipeline, or is not ready to take the helm. This metric is one to monitor as a reminder that leadership development is an essential element of the succession planning process.

The 2013 IPA National Benchmarking Report is Now Available

The 2013 IPA National Benchmarking Report, based on fiscal year 2012-2013 data, contains information from more than 500 firms, and represents more than 20,000 partners and more than 230,000 staff.

The firms that participated in the IPA 23rd Annual Survey and Analysis of Firms represent an aggregate of $54.6 billion in net fees.

Order your copy today!

THE 2013 IPA NATIONAL BENCHMARKING REPORT SNAP-SHOT

Organic growth averaged 3.9% for all non-Big 4 firms.

Net income as a percentage of net revenue averaged 30.4%.

Average age of all equity partners is 52.1 years.  Tracking partner age is an important performance indicator.

One-quarter of firms indicate their partner agreements allow for non-CPAs to become equity owners. Five out of six of those firms have at least one non-CPA equity owner.

View  the 2013 Executive Summary and the Table of Contents of the IPA National Benchmarking Report.

Take advantage of your firm’s participation in the IPA survey, and order the IPA Financial and Operational Report Card .  This effective management tool allows firm leaders to quickly compare overall performance in 22 metrics to other firms of similar size, and get their management team laser-focused on areas that need improvement.

AICPA Survey Says Executives More Optimistic About Economy

Business executives are raising their expectations for hiring in the coming year, says the AICPA’s quarterly Economic Outlook Survey.

About 15% of respondents now say they are planning to hire in the next 12 months, up from 12% last quarter and 9% a year ago, MarketWatch reported. Another 19 percent say they have too few employees but are reluctant to hire.

“We’ve seen expectations on hiring and business expansion gain steadily throughout the year,” said Arleen R. Thomas, AICPA senior vice president of management accounting and global markets. “Our latest survey results support that but also show some renewed concern about prospects for the U.S. economy.”

The survey polls CEOs, CFOs, controllers, CPAs and other executives in accounting positions. The CPA Outlook Index within the survey is a comprehensive gauge of executive sentiment. Each component of the index is higher now than a year ago. U.S. economic optimism is up 21 points year-over-year, despite the fact that this quarter, U.S. economic optimism fell four points, in part due to concerns about health-care reform and political gridlock.

CPAmerica Celebrates 35th Anniversary

Eight firms in 1978 came together to create the accounting association, Accounting Firms Associated, Inc., and by 1990, the association had grown to include 43 firms. That same association went on to include 75 independent CPA firms and became CPAmerica International, which is celebrating is 35th anniversary.

“We are at an exciting time in the association’s development,” says Alan Deichler, president of CPAmerica. “Associations have drastically changed in the last 35 years and now more than ever we have the opportunity to contribute to our member’s growth and development.”

In honor of 35th anniversary of CPAmerica, the association planned to celebrate at its annual Leading Partners Retreat and Firm Administration Roundtable this month.

Bailey Admitted as Partner at Warren Averett

Charles Bailey has been admitted as an audit partner at Birmingham, Ala.-based Warren Averett (FY12 net revenue of $111 million).

Bailey, who will work from the Atlanta office, brings more than 22 years of experience in the retail, franchise and hospitality industries as well as commercial real estate.