Benchmarking Survey Shows CPA Firms are Resilient

Source: Accounting Office Management & Administration Report

The table below is excerpted from AOMAR's CPA Firm Practice Management Survey 2010. The most significant thing about these results is that there are few significant changes between 2009 and 2010.

It is possible, however, that some statistical differences will not appear until next year's survey is completed. For example, leverage may be affected next year because staff reductions may not yet have caught up with the leverage data.

One area in which a significant change might have occurred, but did not, is "realization." More fee adjustments might have negatively affected realization, but in fact they showed little change.

Net income per partner increased by over 16 percent, a good sign.

• Leverage = Total personnel ÷ total number of equity owners.
• Utilization = Chargeable hours of the firm ÷ total personnel.
• Billing Rate = Standard fees ÷ firm chargeable hours.
• Realization = Net fees ÷ standard fees.
• Profit Margin = Net income ÷ net fees.
• Net Income Per Partner (NIPP) = Leverage x utilization x billing rate x realization x profit margin.

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From Accounting Office Management & Administration Report, Institute of Management and Administration, Inc., Newark, NJ, [email protected], February 2010, p. 1, "Exclusive Survey: Key Performance Benchmarks Show Challenges But Also Resilience in Firm Operations."