Revenue grows 11%. Profit trails at 4%. Entry-level salaries not ‘competitive.’
By CPA Trendlines Research
CPA firm revenues are growing strongly, but profits and entry-level salaries are failing to keep pace, according to new survey data analyzed by CPA Trendlines.
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Although the average base salary for new entrants to the profession increased by $5,000 to $50,000 in the fiscal year 2022, this still lags behind comparable pay in fields such as engineering, the AICPA says in commentary accompanying the new 2023 National Management of an Accounting Practice Survey, adding "competitive compensation is crucial to firms’ ability to attract talent."
Key Benchmarks
Median Values, 2023 National Management of an Accounting Practice Survey, AICPA-CIMA
FY 2022 |
FY 2020 |
2-Yr chg.% |
CAGR |
|
Latest Year Net Client Fee Revenue |
$1,088,840 |
$876,614 |
24.2% |
11.5% |
Previous Year Net Client Fee Revenue |
$993,953 |
$867,000 |
14.6% |
7.1% |
Revenue Change Year Over Year |
9.1% |
4.2% |
||
Revenue / Partner |
$683,470 |
$556,654 |
22.8% |
10.8% |
Revenue / Professional Staff |
$189,695 |
$164,000 |
15.7% |
7.5% |
Profit / Partner |
$225,725 |
$207,506 |
8.8% |
4.3% |
Other key findings of the survey:
- Average compensation for different categories of positions within the profession increased in a range between 5% and 14% compared to fiscal year 2020.
- The use of value pricing, such as subscription-based services, continues to rise, with hourly billing as a share of revenue dropping to 65% from 70% since fiscal year 2020.
- Median hourly billing rates rose to $159 from $137, a 16% increase.
“Our data shows accounting practices taking steps to improve entry-level pay and firm culture, with some firms, for example, reducing chargeable billing hours for their staffs,” said Lisa Simpson, AICPA & CIMA’s vice president of firm services.
“We’re also seeing strong revenue growth in service areas beyond traditional tax and audit areas, such as client advisory services (CAS) and business valuation. A sharper focus on business model transformation continues to make the profession more attractive as a career.”
The 1,117 firms participating in the survey reported a fiscal year 2022 median growth rate of 9.1% in net revenue over the previous year, according to the 2023 National Management of an Accounting Practice (MAP) Survey. That rate eclipses the 4.2% growth rate from two years ago when firms were dealing with the impact of the pandemic.
The survey – conducted every two years by the AICPA & CIMA’s Private Companies Practice Section (PCPS) and CPA.com, the AICPA’s business and technology arm – is the profession’s largest practice management benchmarking tool. Results are pooled into seven different firm-size segments since the operations and focus of small to midsize firms can vary widely from larger ones.
The term “net remaining per partner/owner,” or net client fees minus expenses and before partner compensation is taken out, is what firms consider profit on a per-partner basis. That category climbed almost 9% from $207,506 in fiscal year 2020 to $225,725 in fiscal year 2022.
