But can they cut any further?
Despite little or no growth, profits at some 80% of U.S. CPA firms are coming through the recession relatively unscathed thanks largely to early and aggressive cost-cutting, according to the 2010 National Management of Accounting Practice benchmarking survey conducted by the AICPA and the Texas Society of CPAs
“CPA firms really sharpened their pencils and carefully managed their expenses,” said James C. Metzler, AICPA vice president – small firm interests. “So while revenues were flat, CPA firms still came out ahead on profits.”
Eighty percent of the CPA firms surveyed reported either a decline in revenue, no growth or modest growth over the two years from May 2008 through June 2010, indicating “flat is the new up,” Metzler said.
“Firms are making partners more accountable for the revenue and the bottom line. It’s showing up in the survey statistics. We are seeing leaner, meaner accounting firms,” Metzler said.
“The next challenge for CPA firms will be how to maintain or increase that profitability,” noted Metzler. “Firms have managed expenses so closely the past two years that bottom line growth will have to come from new lines of service such as cloud computing and higher-value consulting and advice.”