INSIDE Public Accounting Releases The 2016 National Benchmarking Report

Strong Revenue, Steady Profits, Changing Service Mix Underscore the State of the Nation’s Public Accounting Firms

The nation’s accounting firms are experiencing the strongest growth in revenues since the recession, averaging 6.3% last fiscal year, according to the just-released INSIDE Public Accounting’s (IPA) National Benchmarking Report.

Order the 2016 IPA National Benchmarking Reportcover_2016_

In fact, 85% of the 540 firms that participated in IPA’s Annual Survey and Analysis of Firms experienced positive organic revenue growth. One in four firms experienced double-digit growth, and 4% of all participating firms grew organically at a rate of more than 20%.

Merger activity is still strong, particularly at the largest firms of $30 million and up. In this range, 45% reported at least one acquisition last year. Mergers have added an average of 3.1% to net revenue growth for the IPA 100 firms, the largest 100 firms in the country.

IPA’s National Benchmarking Report provides detailed information in 80+ pages of tables presented in nine different revenue bands and regional breakouts so firms can easily compare with other similar-sized firms.

This 27th annual report, the largest of its kind, is based on survey results from more than 540 accounting firms – a strong representation of the profession, including 225 firms under $10 million, 223 firms between $10 million and $50 million, and 69 firms above $50 million in net revenue.

“Firms are getting larger and adapting to changes in the business environment with new services,” says IPA Publisher Mike Platt. “The data shows partners are making more money too, growing at every level but especially at many smaller firms, where some leaders are quickly pivoting to emphasize wealth management or consulting services while taking full advantage of technology to increase efficiency and reduce office space costs.”

The data also reveals staffing challenges. Kelly Platt, IPA Publisher says, “The data shows that the IPA 100 firms specifically are losing a greater percentage of professional staff with 6-8 years of experience, and the percentage of staff with experience of two years or less is growing. It’s a job seekers’ market for professional staff with solid experience and deep expertise.”

The IPA National Benchmarking Report is used by managing partners, firm leaders, marketers, attorneys, firm administrators and business development directors to compare their firm’s performance against others, and to uncover trends, ideas and techniques to improve operations.

Some highlights:

  • Average net income per equity partner (NIPEP) in public accounting firms continues to rise, with gains over last year being made in nearly every revenue band.
  • Revenue per full time equivalent (FTE) is one of the strongest metrics available to show how well a firm is doing from year to year. Across all revenue bands, net revenue per FTE averages $179,297, up 2.8% over last year.
  • The $50 million-$75 million firms are showing the strongest increase in non-traditional services as a percentage of total revenue, with revenue divided nearly equally in three parts among tax, audit and “other” services.
  • Professional staff turnover rates in the largest firms (above $75 million) averaged 17.2% last year, with one in 5 experiencing turnover rates above 20%.
  • Average percentage of female ownership is at 17.5%, from 16.9% last year.

The report also covers partner compensation, administrative salaries, fees by niche, partner workloads, marketing costs, training requirements, realization, retirement plans and dozens of other metrics – both by revenue band and region of the country.

Some additional regional highlights:

NORTHEAST

5.5% – Organic Net Revenue Growth
7.3% – Organic Net Income Growth
16.3% – Professional Staff Turnover
$79,221 – Average Professional Staff Comp.

SOUTHEAST

6.6% – Organic Net Revenue Growth
5.8% – Organic Net Income Growth
11.8% – Professional Staff Turnover
$75,666 – Average Professional Staff Comp.

GREAT LAKES

5.1% – Organic Net Revenue Growth
7.6% – Organic Net Income Growth
13.2% – Professional Staff Turnover
$70,210 – Average Professional Staff Comp.

GREAT PLAINS

7.4% – Organic Net Revenue Growth
9.4% – Organic Net Income Growth
13.2% – Professional Staff Turnover
$74,980 – Average Professional Staff Comp.

WEST

7.2% – Organic Net Revenue Growth
9.4% – Organic Net Income Growth
15.0% – Professional Staff Turnover
$79,853 – Average Professional Staff Comp.

For additional insight into the results of the 2016 IPA National Benchmarking Report, access a complimentary copy of the full executive summary of the report.

Order the 2016 IPA National Benchmarking Report

The 2016 INSIDE Public Accounting Benchmarking Report ‘Executive Summary’ is Now Available

IPA presents the Executive Summary of its 2016 National Benchmarking Report, offered to all participants in this year’s IPA Survey and Analysis of Firms. Your contributions have made it possible to report on the state of the nation’s accounting firms. Thank you.

If you have not yet ordered the report tools for 2016, click here to order them today. Benchmarking is a self-improvement tool that allows firms to compare themselves with others to identify their strengths and weaknesses to learn how to improve.

Access your complimentary summary.

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INSIDE Public Accounting and ConvergenceCoaching Study Young Public Accounting Professionals; Release The Road to Retention

Given the importance of Millennials and Generation X to the future of the CPA profession, INSIDE Public Accounting and ConvergenceCoaching have analyzed input from more than 700 young professionals at CPA firms across the country, providing a focused look at what it takes to engage and retain these key team members.FrontCOVER_

You may download the Road to Retention Report.

An extensive survey was sent to young accounting professionals aged 21-40 in October, and the results have been analyzed to help firm leaders develop strategies to attract and retain this crucial demographic given that baby boomers are retiring in record numbers.

“We are excited by the insights gained by surveying young professionals in the profession. Some of the biggest insights gained include the continued pressure on the work hours expected and the young professionals’ desire for flexibility and work/life balance and the differences in motivators and engagement by gender and age,” says Kelly Platt, principal and managing editor at INSIDE Public Accounting.

“Firm leaders must continue to study the motivators and desires of their younger professionals,” says Jennifer Wilson, co-founder and partner at ConvergenceCoaching, LLC.  “This report will provide important insights into the things professionals most appreciate about their work – and leaders – in public accounting, and also highlight areas where they are less content,” continued Wilson.  “And, the report provides ideas for change that firm leaders should consider based on the feedback.”

HERE’S WHAT YOU WILL FIND INSIDE THE REPORT

  • 80% of respondents were from the all-important Millennial generation, aged 21-33, with 20% coming from the 34-40 age group. Male and female respondents were about evenly split at 51% and 49%, respectively.
  • 18% of respondents were from IPA Best of the Best firms. Their aggregate responses were broken out separately.
  • Key differences are outlined for CPAs and non-CPAs; men and women; younger and older professionals; and for respondents with varying levels of experience.

FINDINGS INCLUDE:

  • The most important factors that respondents say will determine whether they stay in public accounting
  • The most and least enjoyable aspects of work
  • What young professionals admire about mature professionals
  • Unique challenges encountered by young professionals
  • Information young professionals would like to be more exposed to
  • Biggest misconceptions about younger professionals (from their perspective)
  • Young professionals’ ideas to help different generations work better together

Learn what young professionals like and dislike most about their work, how they would change the workplace, their feelings about becoming a partner and the “stay factors” that would keep them in public accounting.

More than just numbers and graphs, the report also contains dozens of productive comments from young professionals about performance feedback, open communication and obstacles they face.

The report provides specific ideas on what firm management can do with this information to improve their firms and retain these future leaders. Some of these suggestions are inexpensive and easy to implement.

You may download the Road to Retention Report.

About INSIDE Public Accounting

INSIDE Public Accounting (IPA), founded in 1987, is published by The Platt Group. The Platt Group publishes both the award-winning INSIDE Public Accounting newsletter and the award-winning National Benchmarking Report. The Platt Group also consults with firms to help them become more successful. The Platt Group works with managing partners, CFOs and thought leaders across the nation to provide practical ideas, benchmarking data and information to take firms to the next level of improvement. For more information, to schedule an interview, or to inquire about presentations at meetings or retreats, please contact Chelsea Page at (317) 733-1920; info@plattgroupllc.com.

About ConvergenceCoaching

ConvergenceCoaching LLC is a national consulting firm dedicated to developing leaders and transforming teams through coaching and practice consulting – including retreats, strategic planning, and training. For over 16 years, ConvergenceCoaching has worked tirelessly to help develop CPA leaders build better practices, manage higher performance teams and achieve success. ConvergenceCoaching helps firms prepare for and manage change including those related to generational impacts as baby boomers transition out of leadership positions and the workplace, and as the Millennial generation transitions in. ConvergenceCoaching is helping to shape the conversation around anytime, anywhere work programs to address the increasing demand for flexibility and autonomy in the way professionals conduct their work. ConvergenceCoaching is committed to pioneering ways to support and embrace the next generation firm.

2016 Presidential Election is a Factor in Business Planning, Majority of Business Executives Say

A majority of U.S. business executives say the upcoming 2016 presidential election has an impact on their company’s business planning for the next fiscal year – but not when it comes to hiring or capital expenditures, according to a recent survey by the AICPA.

Sixty-four percent of CEOs, CFOs, controllers and other senior-level CPAs in U.S. companies polled by the AICPA in the first quarter said the outcome of the 2016 presidential election is a consideration or factor in their company’s business planning, budgeting or forecasting for the next fiscal year. Business executives ranked the election fourth in impact in this regard, behind potential changes in general economic conditions, the industry-specific outlook for survey takers’ businesses, and interest rates and borrowing costs. The election was tied in perceived impact with potential ramifications of the strong dollar, and ahead of volatility in equity markets.

“Company executives are clearly monitoring the potential business impact of the presidential election,” says Arleen Thomas, the AICPA’s senior vice president for management accounting and global markets. “But overall economic conditions and challenges for their particular industries are weighing more heavily in their calculations right now, and that’s likely why we’re seeing little election-cycle impact on such key categories as hiring or capital spending.”

Eighty-one percent of survey takers say the election is either not a factor in staffing decisions (56%) or that they plan to continue hiring at their current pace (25%). Another 13% said they will defer hiring until after the election, while 5% said they will reduce hiring before the election. One percent said they planned to increase hiring before the election.

For capital spending and business expansion, 80% said the election either will not be a factor (53%) or that they will continue spending at the current pace (27%). Another 10% said they will defer capital expenditures until after the election, while 8% said they will reduce it prior to the election. Two percent said they will increase capital spending before the election.

The election impact questions were included in the first quarter AICPA Economic Outlook Survey, general results of which were released earlier this month. The overall survey was conducted Feb. 9-24, 2016, and included 540 qualified responses from CPAs who hold leadership positions, such as CFOs or controller, in their companies. The overall margin of error is less than 3 percentage points. A copy of the full report can be found on aicpa.org.

RSM Launches Middle Market Economic Business Index

Chicago-based RSM US LLP (RSM) (FY15 net revenue of $1.64 billion) released the first RSM Middle Market Business Index (MMBI).

Developed in partnership with Moody’s Analytics, the MMBI is designed to accurately reflect business conditions in the U.S. middle market, while providing a statistically significant measure of the health and outlook for these businesses. Going forward, the MMBI will serve as a leading indicator for the middle market, a vital segment of the U.S. economy that represents more than 200,000 firms, 40 million jobs and one-third of private sector gross receipts.

“Until now, there has been no comprehensive index for the middle market, which is astounding, given the critical role it plays in producing the goods and services that fuel the U.S. economy,” says Joe Adams, MP and CEO for RSM. “Our investment in the RSM Middle Market Business Index reflects our steadfast commitment to the middle market and our belief that a deeper understanding of these businesses by policymakers and the broader business community will lead to positive outcomes for the entire economy.”

The inaugural edition of the index puts U.S. middle market business conditions at 116.6 in the first quarter of 2016, a 1.4% uptick from the fourth quarter of 2015.

The MMBI is a culmination of more than five quarters of primary research and analysis via RSM’s Middle Market Leadership Council, quarterly surveys of a panel of 700 middle market executives managed by Nielsen. The MMBI is based on a subset of 20 questions from these surveys that are aimed at measuring changes in key performance indicators such as revenues, profits, capital expenditures, hiring, employee compensation, prices received, prices paid and inventories, as well as questions on general economic sentiment and corporate financing. Since RSM began surveying the middle market to develop the MMBI in Q2 2015, the index has shown promise that it can become a leading indicator for hiring, revenues and productivity once more time series data is collected.

“We’re seeing a market segment that’s optimistic about the direction of the real economy and a more confident U.S. consumer,” says Joe Brusuelas chief economist for RSM. ” What’s more, MMBI data and other research indicate that the major U.S equity indices are no longer indicative of real economic activity in the U.S.”

RSM plans to publish updated MMBI data on a quarterly basis and use the data and insights from each report to help consult and advise middle market executives on a range of important business issues and growth initiatives. For more information on the MMBI, visit RSM’s website. A comprehensive report on other business issues about which RSM has queried the panel over the last five quarters is forthcoming in April.

The 2016 IPA Firm Benchmarking Survey is Open For Participation – ACT NOW

Gain a competitive advantage and grow your firm with industry insight from the independent benchmarking leader in the nation.

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Your firm must complete the IPA Survey and Analysis form in order to participate in any of the internal operational surveys.

DEADLINES FOR SUBMISSION… FIRMS WITH FISCAL YEAR-ENDS OF…

…June 2015 through December 2015: May 2, 2016

…January 2016 through February 2016: May 16, 2016

…March 2016 through April 2016: June 3, 2016

Please CONFIRM PARTICIPATION.

 WHAT YOU NEED TO DO:

  1. CONFIRM participation in the IPA survey(s).
  2. Determine the key contact person or persons in your firm who will complete the survey(s). If you are not responsible for the completion and/or submission, please forward an email to the appropriate person or persons.
  3. Access the survey form(s), enable editing and save the survey form(s) using the ‘save as’ command.
  4. Review the “Welcome” tab on the survey form. If you need the IPA survey definitions tab in PDF, please let us know at survey@plattgroupllc.com.
  5. If your firm participated in the 2015 survey and you would like to obtain a copy of your firm’s 2015 submission, please contact the IPA office at 317-733-1920 or at survey@plattgroupllc.com. NOTE: IPA will not release any and all data without approval from the MP, CFO or CEO. Thank you for your understanding with this request. Once approval is received, we will provide you with your firm’s password-protected, prior-year submission for your reference.
  6. Answer all questions accurately based on your firm’s fiscal year-end data. An MP, CFO or CEO must review all data prior to submission.
  7. Complete the ENTIRE survey to be considered for any accolades.
  8. Submit your completed survey no later than the date above for your fiscal year end.
  9. Submit your survey directly to IPA at survey@plattgroupllc.com. IPA will not accept scanned copies or PDF copies. Send the completed surveys in the original MS Excel document.
  10. If you wish to password-protect your survey submissions send your password in a separate email once you’ve submitted your final surveys to survey@plattgroupllc.com.

THE 2016 INTERNAL OPERATIONAL SURVEYS Firm Administration; Human Resources; Information Technology

  1. Your firm may participate in any or all of the Internal Operational (IO) surveys at no cost. If you plan to participate, please CONFIRM.
  2. Determine the contact person or persons in your firm who will complete the IO surveys. If you are not responsible for the completion and/or submission, please forward an email to the appropriate person or persons.
  3. Open the Operational survey folders, enable editing and save the survey forms using the ‘save as’ command.
  4. If you would prefer to have the surveys sent directly to you, contact our office at survey@plattgroupllc.com.

CONFIDENTIAL DATA – WHAT YOU CAN EXPECT FROM The Platt Group / INSIDE Public Accounting: All confidential firm data, including salaries, compensation, income, etc., will be held in strict confidence. Salaries, compensation and sensitive data, such as income, revenues by niche, etc., will NOT be shared or publicized. We take extreme pride in our ability to collect this data to assist the profession and are now celebrating 26 years surveying accounting firms across the globe.

Please contact IPA at survey@plattgroupllc.com with any concerns or questions. IPA conducts a thorough review of each survey submission for commonly missed areas and for any and all errors. IPA will contact the person / contact named on the submitted survey form for any and all clarifications / updates. Some data, such as firm name, MP(s) name, firm net revenue, and organic growth may appear in the IPA Newsletter (if accolades are given).

COMPLIMENTARY WEBINAR ON COMPLETING THE IPA SURVEY: If you’d like listen to a pre-recorded complimentary webinar hosted by INSIDE Public Accounting on the best practices for completing the SURVEY, click here.

BENEFITS OF PARTICIPATION

  1. The opportunity to be included in the largest annual management of an accounting practice (MAP) survey in the country. To be benchmarked with more than 500+ firms nationwide and potentially be ranked among this year’s top firms in the: IPA 100, IPA 200, IPA 300 and the coveted IPA Best of the Best Firms in the nation.
  2. If you participate in the surveys, you will receive a complimentary copy of the August 2016 issue of the award-winning INSIDE Pubic Accounting newsletter. This issue highlights the annual IPA 100 firm rankings, along with a detailed financial and operational analysis of the rankings.
  3. A electronic complimentary copy of the 2016 Executive Summary, of the IPA National Benchmarking Report. If you participate in any or all of the IO surveys, you will also receive a complimentary executive summary when published in late summer.
  4. You will receive preferred pricing on the 2016 IPA National Benchmarking Report, the IO Reports, and other benchmarking items.
  5. You will get preference for selection in articles written by IPA throughout the year, (an excellent opportunity to market your firm).

If you would like to participate please contact our office.

The 2016 IPA Accounting Firm National Benchmarking Surveys Are Open For Participation

FrontPageImageThe 2016 INSIDE Public Accounting (IPA) Annual Survey and Analysis of Firms is now open to all accounting firms in North America. The results of the annual survey is the IPA National Benchmarking Report, the IPA 100, 200 and 300 firms ranking, and the coveted IPA Best of the Best firms. If you would like to participate, please contact our office.

DEADLINES FOR SURVEY SUBMISSIONS – FIRMS WITH FISCAL YEAR-ENDS OF…

…June 2015 through December 2015: May 2, 2016

…January 2016 through February 2016: May 16, 2016

…March 2016 through April 2016: June 3, 2016

THE 2016 IPA SURVEY AND THE INTERNAL OPERATIONAL SURVEYS ARE AVAILABLE FOR COMPLETION.

Your firm must complete the IPA Survey and Analysis form in order to participate in any of the internal operational surveys. If you would like to participate, contact our office.

Gain a competitive advantage and grow your firm with industry insight from the independent benchmarking leader in the nation.

BENEFITS OF PARTICIPATION

  • The opportunity to be included in the largest annual management of an accounting practice (MAP) survey in the country. To be benchmarked with more than 500+ firms nationwide and potentially be ranked among this year’s top firms in the: IPA 100, IPA 200, IPA 300 and the coveted IPA Best of the Best Firms in the nation.
  • If you participate in the surveys, you will receive a complimentary copy of the August 2016 issue of the award-winning INSIDE Pubic Accounting newsletter. This issue highlights the annual IPA 100 firm rankings, along with a detailed financial and operational analysis of the rankings.
  • A electronic complimentary copy of the 2016 Executive Summary, of the IPA National Benchmarking Report. If you participate in any or all of the IO surveys, you will also receive a complimentary executive summary when published in late summer.
  • You will receive preferred pricing on the 2016 IPA National Benchmarking Report, the IO Reports, and other benchmarking items.
  • You will get preference for selection in articles written by IPA throughout the year, (an excellent opportunity to market your firm).
  • If you would like to participate, please contact our office.

Best of Best 2016

CONFIDENTIAL DATA – WHAT YOU CAN EXPECT FROM INSIDE PUBLIC ACCOUNTING 

  • All confidential firm data, including salaries, compensation, income, etc., will be held in strict confidence. Salaries, compensation and sensitive data, such as income, revenues by niche, etc., will NOT be shared or publicized. We take extreme pride in our ability to collect this data to assist the profession and are now celebrating 26 years surveying accounting firms across the globe.

Please contact IPA at survey@plattgroupllc.com with any concerns or questions. IPA conducts a thorough review of each survey submission for commonly missed areas and for any and all errors. IPA will contact the person / contact named on the submitted survey form for any and all clarifications / updates. Some data, such as firm name, MP(s) name, firm net revenue, and organic growth may appear in the IPA Newsletter (if accolades are given).

IPA ASSOCIATION PARTNERSHIPS: INSIDE Public Accounting is pleased to partner with the following associations to provide survey and benchmarking services for their member firms: The Alliott Group, CPAmerica International, DFK International, LEA Global, Moore Stephens North America and PrimeGlobal. Please contact The Platt Group / IPA with any questions at (317) 733-1920.

Join IPA For Complimentary Recorded Webinar on Best Practices for Completing the Annual IPA Survey & Analysis of Firms

View our recorded Online Webinar on Best Practices for Completing the IPA Annual Survey & Analysis of Firms.

Gain a competitive advantage and grow your firm with industry insight from the independent benchmarking leader. The IPA National Benchmarking Report is one of the most complete, independent, up-to-date sets of economic and management statistics available about the accounting profession.

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Take advantage of this online session to assist you in the completion of the IPA Survey and Analysis of Firms!

Download the IPA Survey Reference Guide.

The 2016 survey season is here. All invitations were sent. Contact INSIDE Public Accounting if you did not receive one.

Take advantage of this online session to assist you in the completion of the IPA Survey and Analysis of Firms.

AICPA Survey: Business Executives Foresee Less Growth in 2016

Business executives have sharply reined in expectations for profit and revenue in the coming year, with anticipated growth for those two key performance indicators now at their lowest since the end of 2012, according to the fourth quarter AICPA Economic Outlook Survey, which polls CEOs, CFOs, controllers and other CPAs in U.S. companies.

Overall expectations for revenue growth now stand at 2.9%, down from 3.3% last quarter and 4.7% a year ago, the survey found. Profit growth expectations, meanwhile, slid from 2.6% last quarter to 2%, almost half the rate from a year ago.

The dimmer projections are reflected in how business executives perceive their own companies’ prospects. Only 53% of survey respondents expressed optimism about their organization’s anticipated performance for the coming year, down from 59% last quarter and 67% a year ago. Optimism about the U.S. economy also fell since last quarter, although at a more gradual rate.

“We’re seeing rising concern about U.S. economic conditions and domestic competition,” says Arleen R. Thomas, the AICPA’s senior vice president of management accounting and global markets. “Those factors, coupled with a potential slowdown in the global economy, have contributed to a perception that growth opportunities are going to be more challenging in the near-term.”

The reduced forecasts haven’t had an immediate impact on the hiring outlook, however. Some 18% of business executives said their companies are looking to hire immediately, the same as last quarter. There was a slight drop in the percentage of respondents who said they had too few employees but were hesitant to hire (20% last quarter versus 17% this quarter). Overall, 53% of respondents said their companies had the right amount of staffing.

The AICPA survey is a forward-looking indicator that tracks hiring and business-related expectations for the next 12 months.

The CPA Outlook Index—a comprehensive gauge of executive sentiment within the AICPA survey— fell two points in the fourth quarter to 69, the fourth consecutive drop from a post-recession high of 78 in the fourth quarter of 2014. The index is a composite of nine, equally weighted survey measures set on a scale of 0 to 100, with 50 considered neutral and greater numbers signifying positive sentiment.

Survey Shows Accountants Want to Improve Business Skills

CPAs do not rank themselves highly in areas of critical thinking, leadership and relationship-building, according to a new survey of more than 600 CPAs in 30 states.

According to the survey, conducted by the Indiana CPA Society’s Center of Excellence:

  • 0% of senior/staff accountants ranked themselves high in critical thinking.
  • 35% of managers ranked themselves low in relationship building.
  • 4% of managers ranked themselves high in leadership.
  • Less than half of all CPAs ranked themselves high in communication skills.

The national benchmark survey, which was conducted earlier this year, asked more than 600 CPAs in public accounting to self-evaluate their level of proficiency in each of seven core competencies:

  • Communications
  • Leadership
  • Critical thinking and problem solving
  • Anticipating and serving evolving needs
  • Synthesizing intelligence into insight
  • Integration and collaboration
  • Knowledge sharing

Some comments from the survey:

  • “As a new partner who worked in the private sector, I am shocked at the lack of business acumen applied at the partner level. We need to think and operate as a business.”
  • “As far as the skills necessary (for a CPA), an analytical mind with a touch of persistence and the ability to follow through are essential. These skills are rare and seem to be becoming more rare when I look at the staff coming into the market these days.

The CPA Center for Excellence is offering several tools to help CPAs develop the skills they need.

A new Insight Toolkit for HR and Career Development, centered on the CPA Core Competencies, allows professionals to go to cpacoe.com/insight to take a

self-assessment to see how they rank against colleagues in the benchmarking results, the survey says.

Upon completion, they have the option to register for a complete 360-assessment that gathers anonymous feedback from supervisors, peers, direct reports and/or clients. These assessments can be ongoing, as part of a staff review or an engagement review. Individuals can use the personal online learning journal tool within Insight to document comments and progress, as well as the action plans tool for outlining how they will build their skills.