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.

Job 1 for CPA Firms: Recruiting Great People and Keeping Them Happy

By: Michael Platt, publisher, INSIDE Public Accounting

FrontPageImageRecruiting and retaining your largest asset, your workforce, has always been a challenge. But in an environment where unemployment in the profession is under 1%, where talented staff have many more options available to them, and where the Department of Labor suggests that by age 38 many workers will have as many as 14 jobs, recruiting and retaining top talent has quickly risen to “Job 1” for many firms.

Consider a few realities uncovered in the 2015 IPA National Benchmarking Report, which contains analysis from more than 500 firms:

  • Hiring freezes and layoffs during the recession added to the already noted shortage of experienced 5- to 7-year professionals. Some firms are paying professionals more and getting creative with benefits and perks in order to retain them. A few firms are going so far to ask staff what they would need to stay, and then freely giving it to them in hopes of retaining them.
  • The “white gloves” are off as firm partners and recruiters get more aggressive about courting seasoned staff from other firms.
  • Despite some moves to create more flexible work arrangements, professionals don’t see that manifesting itself at the highest levels. Only 1.8% of all equity owners work some form of alternative or part-time schedule, according to the IPA survey.
  • There have always been very valid reasons why an accounting professional needs to wait to have the maturity and business acumen to become a partner. According to the IPA survey, a newly hired staff member will invest, on average, 12 to 15 years in the profession before being admitted to partnership. During this critical time frame, many may choose a different path that they perceive to be shorter.
  • IPA’s recent PRIME Symposium generated interesting discussions as to whether the pendulum has swung too far in the direction of NOT sharing the financial upside of the lifestyle that a partner in an accounting firm enjoys. Among some Best of the Best firms, a strong plea was made to expose staff to the luxuries enjoyed by partners so they will see the financial opportunities available by “sticking it out” for the chance to get equity in a firm.

How IPA Can Help

Compare your firm to firms of similar size, to those within your region or to the Best of the Best firms, using the 2015 IPA National Benchmarking Report. It offers detailed information on more than 500 firms with over 80 pages of tables, graphs and analysis, along with in-depth analysis of the IPA 100, IPA 200 and Best of the Best firms. Order the full report today or read the executive summary .

Survey participants can also order the one-page customized Financial & Operational Report Card, an extremely valuable tool to help firm leaders get laser-focused on what’s working, what’s not working, and where the firm needs to improve. Consider inviting IPA out to your next partner retreat for a customized presentation based on your firm’s survey results in the context of a global view of what’s happening around the profession.

Benchmarking Numbers to Watch Related to Succession

By: Michael Platt, publisher, INSIDE Public Accounting

Mike Platt

Mike Platt

The 100 largest firms in the nation, the IPA 100, are telling us that succession is not their top concern. In fact, only 15% of the IPA 100 said it was one of the three biggest challenges facing the firms. While on the surface this may appear as a victory, other issues – staffing, growth and profitability – have nudged out succession as the top three sources of concern.

All those issues affect succession, of course. IPA has been able to analyze data from hundreds of CPA firms over the past 25 years through the IPA annual Survey & Analysis of Firms and the IPA National Benchmarking Report, one of the longest-running and largest MAP surveys in the accounting profession.

Numbers to Watch Among the IPA 100

Data tells us there are several metrics related to succession that accounting firm leaders need to watch closely:

  • Equity Partner Retirements: Of the 75 IPA 100 firms that provided information on retiring partners, 77% experienced equity partner retirements either last year or this year. That represents a total of 136 partners retiring in 2014 and more than 110 expected to retire in 2015. These firms include 2,840 partners, with retiring partners representing 8.7% of the total.
  • Newly Admitted Partners: Those same firms admitted 230 equity partners in 2014 – 70% more than retired. Expansion in the partner ranks is coming from both internal staff and lateral hires, which accounted for 42% of admitted partners.
  • Retirement Obligations: Retirement payouts, which reflect the annual financial commitment by the firm to retired partners, averages 1.5% of a firm’s total net revenue. Based on IPA data, retirement obligations as a percentage of net revenue are actually down over the last few years due to renewed growth in top-line revenues.
  • Average Partner Age: The average age of the partner group, at 52.2, is increasing, despite the naming of new (presumably younger) equity partners, and mandatory retirement clauses in effect for 75% of the IPA 100.

How IPA Can Help

Compare your firm to firms of similar size, to those within your region or to the Best of the Best firms, using the 2015 IPA National Benchmarking Report. It offers detailed information on more than 500 firms with over 80 pages of tables, graphs and analysis, along with in-depth analysis of the IPA 100, IPA 200 and Best of the Best firms. Order the full report today or read the executive summary. Survey participants can also order the one-page customized Financial & Operational Report Card, an extremely valuable tool to help firm leaders get laser-focused on what’s working, what’s not working and where the firm needs to improve. Consider inviting IPA to your next partner retreat for a customized presentation based on your firm’s survey results in the context of a global view of what’s happening around the profession.

How Does Your CPA Firm Measure Profitability?

By: Michael Platt, publisher, INSIDE Public Accounting

FrontPageImageAs we wind down the 25th annual INSIDE Public Accounting National Benchmarking season, we wanted to dig a little deeper into the questions on everyone’s mind: How profitable is my firm? How do I compare against my peers? Seems like a pretty basic question, and given the fact that we are part of a community of CPAs, you would think that it would be a pretty simple answer.

But you would be wrong. After reviewing over 500 surveys, talking with managing partners around the country, and fielding questions on this for months, it is quite clear that “profit margin” means different things to different people.

If profit margin (net income as a percentage of net revenue) is the gold standard of measuring profitability, the fact remains that there are many variables that firms consider when coming up with their “number.”

View the 2015 Best of the Best

View the 2015 Best of the Best

The biggest variable comes in defining what net income consists of. Traditional measurements of net income assume that net income is measured before any compensation, draw, bonus or salary is paid to equity partners. INSIDE Public Accounting has used this measurement in its National Benchmarking Report for years. Why? Because there is little consistency among firms. Consider these various compensation strategies:

  • Pay a small livable wage as a draw and motivate partners by splitting up a larger piece of the profits at the end.
  • Assume that the firm will be doing well and pay partners a higher wage during the year.
  • Take profits and fund a deferred compensation program.
  • Reinvest in the firm by taking some profits off the table.
  • Distribute all profits to equity partners each year.

The flaw in the traditional measurement of net income is that it assumes the cost of partner labor is zero.

Leverage, therefore, plays a big role in defining profitability based on this approach. In firms with lower leverage, where partners are responsible for a larger share of the billable time, profitability will be significantly higher than in firms with greater leverage. Does that mean a low-leveraged firm is “doing better?” Maybe not.

By promoting a manager (where cost of labor is counted as an expense) to an equity partner (where cost of labor is not counted as an expense), profit margin will increase, and net income per equity partner will decrease (everything else being equal). Is the firm doing better or worse as a result? We need to find a way to level the playing field so that leverage does not skew comparisons inside firms and between firms.

Sign up for the IPA newsletter.

Sign up for the IPA newsletter.

Many Ways To Calculate The Cost of Partner Labor

If partner labor is included as part of “cost of goods sold” in an accounting firm, it should give a clearer picture of true profitability. IPA’s National Benchmarking Report has used the traditional measurement of net income in determining profitability for years, but recently we began looking at this critical number in different ways.

Consider these three ways to measure a truer cost of partner labor:

Method 1 – Assign a flat rate per equity partner for a cost of their labor. If a senior manager costs the firm $150,000 a year, assign a flat rate for partner time of $200,000 per year as a cost of their labor. This is a simple, straightforward approach that approximates the cost of labor quickly and easily.

Method 2 – Calculate a cost to the firm of partner charge hours: For every charge hour billed by a partner, divide the billing rate by the selected billing multiple of the firm to determine the cost of labor for those billable hours, and only count the cost of billable time. For a partner charging $400 per hour, this would likely be around $100. The average equity partner may charge 1,000 hours, so the cost of that labor would be $100,000 per equity partner.

Method 3 – Calculate the cost to the firm of all partner hours: Presumably, non-charge hours are being spent productively and are of value to the firm, whether it is in relationship building, client acquisition, referral relationships, staff development and mentoring, etc. Take that same $100 and multiply it by total work hours of equity partners. For a firm with average partner work hours of 2,400, that would represent a cost of labor of $240,000 per equity partner. (Note: Often, partners wear their total work hours as a badge of honor, with some working 2,800 to 3,000 hours per year. The cost to the firm should reflect that total time commitment for a truer picture of partner labor, so $300,000 for those partners is not unreasonable.)

In my opinion, Method 1 is the simplest, and Method 3 is the most accurate. Method 2 discounts the value of non-charge hours and is not reflective of the value of labor provided by partners.

Adding this extra calculation to compare profitability from one year to the next internally, and in comparison to other peer firms, gives you a much clearer view of how well you are doing. It is well worth the extra time to get a much more accurate view of how profitable your firm is.

How IPA Can Help

The 2015 IPA National Benchmarking Report offers detailed information on CPA firm profitability, including a look at traditional profit margins as well as a measurement that includes a flat $200,000 labor cost to the firm per equity partner. The data comes from more than 500 firms across the nation and is presented by revenue band and by geographic region. Order the full report today or read the executive summary.