2008 Map Survey
National MAP Survey Indicates possible plateau in growth for firms
After a surge in recent years, demand for CPA services remains robust, but growth may be leveling off. That’s one of the many conclusions to be drawn from the 2008 PCPS/TSCPA National Management of an Accounting Practice Survey, conducted by the American Institute of CPAs Private Companies Practice Section and the Texas Society of CPAs. The findings of the highly regarded Survey—which are free to PCPS members and available for purchase by others--offer practitioners, especially in smaller firms, the opportunity to benchmark their financial results and practice management policies and procedures against those of other firms.
“It’s often difficult for small practitioners to know how they are doing compared with other firms of the same or similar size. The PCPS/TSCPS National MAP Survey makes that comparison possible,” said James C. Metzler, CPA, AICPA Vice President, Small Firm Interests.
The 2008 Survey found that while CPA firms continue to report healthy growth rates, there are signs that the profession may have reached a plateau in demand. The last Survey, conducted in 2006, showed a surge in growth and profits, undoubtedly due to the increased need for CPA services in the wake of the Sarbanes-Oxley Act and other new regulation. By contrast, the 2008 Survey found that firms are holding steady at high levels but not experiencing significant change in several important indicators.
Among the Survey’s findings:
- A total of 26% of the responding firms experienced growth of 10% to 19% (measured in gross fees) in the most recent fiscal year, roughly the same percentage as in the 2006 Survey.
- The net remaining per owner—the amount that partners can take out of a firm--averaged $247,147, up 8% over two years from $228,542 reported in 2006.
- Owners’ average hourly billing rate—at $171--was virtually unchanged from the last Survey.
- Net client fees per full-time equivalent professional were up 6% from 2006, to $195,670. Net client fees per partner rose 10% to $664,847.
- An average of 31.3% of firms said they had lost professionals in fiscal 2007. Although high, that number is down significantly from the 45.6% of firms that had lost professionals in the last Survey.
- Firms clearly need to address succession planning and professional training. Only 22% of all firms surveyed had a succession plan and only 10% of the smallest firms had a practice continuation agreement. Continuing professional education represented about 1% of firms’ expenses—or about 50% less than what they spent on promotion and marketing.
Metzler cautioned that although business may be good, it might be time to plan for a change in demand or a shift in the type of services needed. “Given the uncertain economy, practitioners should prepare for the possibility of fee competition and fee pressure from clients,” he said. On the other hand, businesses and lenders may call on CPAs for help in light of the troubled economy. “Clients may turn to CPAs for further services to help them weather tough times and banks may seek greater assurance from practitioners about the companies with which they do business,” he said. “Firms should consider both these possibilities in their strategic planning.”
For more information on the 2008 National MAP Survey, go to the PCPS Firm Practice Center at www.aicpa.org/pcps.
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