The INSIDE Public Accounting Practice Management Executive Summary
20 23
2023 PRICING
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Annual INSIDE
Accounting Practice Management Executive Summary of Accounting Firm Benchmarking SINCE 1990 2023 survey and analysis conducted by: INSIDE Public Accounting Published by: INSIDE Public Accounting The Independent Gold Standard
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TABLE OF CONTENTS TABLES NET INCOME 31 The Maister Formula 32 Net Income Summary 32 Change in Net Income 32 Income as a Percentage of Net Revenue 32 Income Per Equity Partner 32 Net Income Distributed 32 Realization 32 Income Per Work Hour 33 GRAPH: Net Income Per Equity Partner 34 GRAPH: Net Income Growth NET REVENUE 35 Net Revenue Summary 35 Revenue Change Organic 35 Revenue Change All 35 Revenue Per Equity Partner 35 Revenue Per Employee 35 Revenue Per Work Hour 36 GRAPH: Organic Net Revenue Growth 37 GRAPH: Net Revenue Per Equity Partner 38 Revenue By Practice Areas 39 GRAPH: Compliance vs. Non-Compliance 40 Revenue By Practice Areas 43 Pricing Models 44 GRAPH: Pricing Models 45 Accounts Receivable / Work-in-Progress EXECUTIVE SUMMARY 6 Preface MERGERS AND ACQUISITIONS 46 Firm Mergers and Acquisitions 48 Offices and Facilities BILLING RATES / HOURS 49 Firmwide Billing Rates 50 GRAPH: Average Equity Partner Billing Rates 51 GRAPH: Average Billing Rates by Professional Staff 52 Standard Hourly Billing Rate Multiples 53 Utilization 54 Professional Staff Charge and Work Hours PARTNER HOURS 57 Equity Partners Charge and Work Hours 58 GRAPH: Average Charge Hours Per Equity Partner 59 GRAPH: Partner / Staff / Entry-Level Compensation 60 Non-Equity Partners Charge and Work Hours excerpted from the full report
FIRM GOVERNANCE 76 Evaluations / Reviews 77 Firmwide Planning 78 Firmwide Strategy ADMINISTRATION / COSTS 79 Firm Costs as a Percentage of Net Revenue 80 GRAPH: Personnel Costs as a Percentage of Net Revenue 81 Firm Capital and Capital Requirements PARTNERSHIP 61 Equity Partner Compensation 63 Partner Compensation Formula Mix 64 Partner Compensation Credits 65 Partner Compensation Systems 66 Partner Ownership Percentages 67 Partner Retirement 70 Partner Termination 71 Newly Admitted Partners / Partner Requirements 74 Managing Partner Data 75 GRAPH: MP And Partner Age STAFFING 82 Partners Equity and Non-Equity 83 Professional Staff by Years of Experience / Total Firm Personnel 85 Outsourcing 86 GRAPH: Outsourcing 87 Outsourcing Future Plans 88 Professional Staff Licensing 89 GRAPH: Personnel With CPA License 90 Professional Staff Ratios and Turnover 91 GRAPH: Professional Staff Turnover 92 Professional Staff Compensation 93 GRAPH: Average Professional Staff Compensation 94 GRAPH: Ratio of Equity Partner to Professional Staff Compensation 95 Recruiting / Training FIRM MEMBERSHIPS 108 Association Membership STAFFING OUTLOOK 107 Revenue Growth Expected 107 Staffing Outlook Expected PROFESSIONAL MANAGEMENT STAFF POSITIONS 96 Business Development Director 97 Chief Financial Officer 98 Chief Operating Officer 99 Chief Information Officer 100 Controller 101 Firm Administrator 102 Human Resources Director 103 In-House Counsel 104 Marketing Staff 106 Training / Learning Director excerpted from the full report 5 INSIDE PUBLIC ACCOUNTING
The 2023 INSIDE Public Accounting Practice Management Report
excerpted from the full report
THE 2023 INSIDE PUBLIC ACCOUNTING PRACTICE MANAGEMENT EXECUTIVE SUMMARY Copyright ©2023 INSIDE Public Accounting 6
The annual INSIDE Public Accounting (IPA) Practice Management Report is one of the most complete, independent and current sets of economic and management statistics available about the accounting profession.
IPA names 60 Best of the Best firms above $10 million, 10 under $10 million and five in Canada. All Best of the Best analyses and averages included in the following tables are based on the 2023 top 25 scoring Best of the Best firms over $10 million.
For more than 30 years, IPA has conducted its Practice Management Survey, one of the longest-running and most comprehensive in the U.S. With 589 North American firms participating this year and a return rate of more than 90%, year-to-year comparisons are extremely accurate.
All commentary, data and tables exclude the Big 4, but include all other participating firms. Percentages cited in this report are based on participating firms that answered those specific questions. The number of responses for each of the revenue bands is highlighted on page 8.
IPA invites accounting firms to participate each January and keeps the survey open through early June. The information gathered is used to compile the IPA 500, a ranking of America’s largest firms, which is available on the IPA website.
The most precise comparisons are found in the IPA Practice Management Report tables, which segment firms by revenue bands, thereby eliminating dilution of averages due to a higher number of smaller firms participating.
The IPA Practice Management Report provides a detailed account of results from all survey participants. Data captured and highlighted in the report may differ from data previously reported in IPA Monthly as firms continue submitting data and clarifications after each of the monthly newsletter deadlines.
Following an analysis of all participating firms’ survey data, IPA names Best of the Best firms. Articles detailing the Best of the Best designation, regional breakouts and additional analyses appear annually in IPA Monthly and the IPA Practice Management Report.
Methodology
Each survey submission is reviewed and examined for any outliers or errors. If a survey submission appears to be incorrect or questionable, IPA will resolve the issue with the reporting firm.
While IPA does everything possible to ensure accuracy, the firms bear the ultimate responsibility for providing accurate data.
Throughout the full report, all data tables are presented in firm net revenue bands, geographic regions and, unique to IPA, the Best of the Best firm data. IPA does not provide data on any individual firm.
The averages included in this report are averages of data supplied by survey participants. Averages throughout the report are trim averages, providing the average of the 90% in the middle of the data set, excluding the largest and smallest 5%. In some instances, the averages may not appear to total correctly; this is a function of rounding.
excerpted from the full report
7 INSIDE PUBLIC ACCOUNTING
Firm Participation Summary
The population of firms that participated in the 2023 IPA Practice Management Survey includes the following breakouts by revenue bands and geographic regions.
More than 90% of firms that participated in 2022 also participated in 2023.
Firm Size By Net Revenue No. of Participating Firms All Non-Big 4 589 > $150 Million 40 $75-$150 Million 30 $50-$75 Million 25 $30-$50 Million 69 $20-$30 Million 72 $15-$20 Million 76 $10-$15 Million 97 $5-$10 Million 118 < $5 Million 62 Regional Firm Participation Southeast 155 Great Lakes 97 Northeast 106 Great Plains 107 West 124 excerpted from the full report THE 2023 INSIDE PUBLIC ACCOUNTING PRACTICE MANAGEMENT EXECUTIVE SUMMARY Copyright ©2023 INSIDE Public Accounting 8
2023 Select Data Of The INSIDE Public Accounting Top 500
The IPA 100 Firms Overview
The 2023 IPA 100 firms (Nos. 1-100) range from $27.9 billion to $48.8 million and account for $118.5 billion in revenue. Non-compliance is the largest segment of services among the group, averaging 44.0% of revenue.
Professional staff turnover was highest among the IPA 100 compared to their IPA 200-500 counterparts at 16.3% but slowed from the 18.7% last year. Nearly 84% of that turnover was from staff voluntarily leaving. Professional C-suite management is the norm in the IPA 100 with 73% of firms reporting they have a CFO as part of the leadership team and 87% reporting they have a Chief Information or Technology Officer. 56% report having a business development director on staff.
The IPA 200 Firms Overview
This year the IPA 200 (Nos. 101-200) range in size from $47 million to $23.2 million and account for $3.3 billion in revenue annually. Tax compliance is the largest segment of the service mix, averaging 38.1% of total firm revenue. The IPA 200 experienced turnover that was lower than their IPA 100 and 300 counterparts this reporting year. Average turnover was 15.2% for the IPA 200, with 84% of that turnover being voluntary.
100 2023 500 2023 400 2023 300 2023 200 2023 excerpted from the full report 9 INSIDE PUBLIC ACCOUNTING
The IPA 300 Firms Overview
The 2023 IPA 300 firms (Nos. 201-300) range in size from $23.1 million down to $15.0 million and account for $1.85 billion in revenue. Again, tax compliance is the largest segment of services among this group, averaging 43.0% of revenue. The IPA 300 wasn’t spared from staff turnover that affected everyone last year. Average turnover was 15.6% for the group, with 81% of the turnover being voluntary.
The IPA 400 Firms Overview
The IPA 400 (Nos. 301-400) range in size from $14.9 million to $9.3 million and account for more than $1.19 billion in revenue annually. Like their IPA 300 counterparts, tax compliance is the largest segment of the service mix, averaging 44.8% of total revenue. Staff turnover is lower than the IPA 300, at 14.9% for this group, with 87% of that turnover from staff voluntarily leaving as opposed to being let go by the firm.
The IPA 500 Firms Overview
The IPA 500 (Nos. 401-500) range in size from $9.3 million to $4.6 million and account for $709 million in revenue annually. Like their IPA 400 counterparts, tax compliance is the largest segment of the service mix, averaging 47.4% of total revenue. Staff turnover is lowest of all groups, at 13.0%, with 83% of the turnover being voluntary.
The IPA Top 500 Select Data
CATEGORY IPA 100 IPA 200 IPA 300 IPA 400 IPA 500 Organic Net Revenue Growth 14.4% 11.9% 10.3% 9.9% 9.9% All Net Revenue Growth 17.3% 14.1% 10.6% 12.1% 11.0% Net Income Growth 11.5% 12.3% 8.5% 11.5% 10.6% Net Income per Equity Partner $920,836 $749,849 $686,232 $646,165 $512,217 Net Revenue per Charge Hour $227.71 $198.85 $186.16 $182.96 $168.32 Net Revenue per Equity Partner $3,683,833 $2,676,510 $2,510,603 $2,142,823 $1,729,123 Leverage (Prof. Staff / Equity Partner) 12.0 9.3 9.2 7.6 6.3 excerpted from the full report THE 2023 INSIDE PUBLIC ACCOUNTING PRACTICE MANAGEMENT EXECUTIVE SUMMARY Copyright ©2023 INSIDE Public Accounting 10
Offices / Facilities
Space Plans For This Year
Average Total Number Offices Average Square Footage Average Sq. Foot Per Person Remain the Same Increase Decrease
SIZE (Net Revenues) All Non-Big 4 3 29,797 289 68% 20% 12% >$150 Million 29 443,594 220 19% 41% 41% $75-$150 Million 8 108,887 227 41% 33% 26% $50-$75 Million 5 67,401 238 72% 16% 12% $30-$50 Million 4 44,418 259 63% 14% 23% $20-$30 Million 3 33,552 284 69% 20% 11% $15-$20 Million 2 22,690 271 71% 19% 10% $10-$15 Million 2 18,013 306 69% 22% 8% $5-$10 Million 2 12,380 326 78% 18% 4% < $5 Million 1 7,172 368 81% 10% 8% IPA Best of the Best 4 71,175 251 46% 46% 8% REGIONAL DATA Southeast 3 27,607 291 64% 25% 11% Great Lakes 6 41,768 300 72% 19% 9% Northeast 3 32,442 266 69% 15% 15% Great Plains 3 30,956 320 65% 24% 11% West 3 25,841 278 72% 13% 15% excerpted from the full report 11 INSIDE PUBLIC ACCOUNTING
FIRM
2023 Regional Data From All IPA Participating Firms
The following data is compiled from all participating firms, highlighting the number of firms, growth, revenue per employee, revenue per work hour and staff turnover across the U.S.
SOUTHEAST
No. of Participating Firms: 155
Organic Revenue Growth: 10.7%
Revenue per Employee: $205,851
Revenue per Work Hour: $102.23
Professional Staff Turnover: 13.9%
GREAT LAKES
No. of Participating Firms: 97
Organic Revenue Growth: 10.7%
Revenue per Employee: $209,254
Revenue per Work Hour: $103.27
Professional Staff Turnover: 12.9%
NORTHEAST
No. of Participating Firms: 106
Organic Revenue Growth: 10.1%
Revenue per Employee: $216,378
Revenue per Work Hour: $107.87
Professional Staff Turnover: 14.1%
GREAT PLAINS
No. of Participating Firms: 107
Organic Revenue Growth: 11.0%
Revenue per Employee: $208,761
Revenue per Work Hour: $101.47
Professional Staff Turnover: 16.1%
WEST
No. of Participating Firms: 124
Organic Revenue Growth: 10.9%
Revenue per Employee: $220,978
Revenue per Work Hour: $108.60
Professional Staff Turnover: 15.0%
excerpted from the full report THE 2023 INSIDE PUBLIC ACCOUNTING PRACTICE MANAGEMENT EXECUTIVE SUMMARY Copyright ©2023 INSIDE Public Accounting 12
2023 Practice Management Benchmarking Tools
PRACTICE MANAGEMENT BENCHMARKING PACKAGE (PDF ONLY)
Includes National Practice Management Benchmarking Report, Internal Operational Report Package and the Financial and Operational Report Card
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