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Demand remains but market changing for CPA firms

Demand for the services of Certified Public Accountants (CPA) in the US remains strong but profits have levelled off and economic uncertainty may require smaller firms to change their services, according to an American Institute of Certified Public Accountants (AICPA) survey.

The 2008 study comprised 2,722 CPA firms and was undertaken by the AICPA’s private companies practice section and the Texas Society of CPAs. Three quarters of respondents reported growth ranging from 1 percent to 19 percent over the two years from May 2006 through June 2008.

Designed to assist small CPA firms, the research found average net client fees per partner rose 10 percent to $664,847.

AICPA vice-president of small firm interests James Metzler said current economic uncertainty could result in greater competition of fees and pressure from clients. It could also present small firms with opportunities.

“Clients go to CPAs to help them weather a troubled economy, and banks may seek greater assurance from practitioners about the companies with which they do business,” Metzler said.

Retention of staff was one of several bright spots detailed in the report. On average, less than one third (31 percent) of firms said they had lost professionals in the 2007 financial year. This was a significant improvement from the last survey, when nearly 46 percent of firms reported losing professionals.

Staff turnover varied according to size. In 2008, the smallest firms experienced the least turnover, 8 percent for those with fees between $150,000 and $299,000. At the high end, roughly half of all firms with gross fees between $1 million and $1.99 million reported losing professionals, and 81 percent of those with $2 million or more in fees lost staff.

Metzler said the study revealed that more small firms were offering greater work-life flexibility, which had persuaded practitioners to remain at their firms.

The survey also found that succession planning and professional training continue to remain weak spots. Only 22 percent of all firms surveyed had a succession plan and only 10 percent of the smallest firms had a practice continuation agreement to protect their practices in the event of an owner’s death or a disability.

Nicholas Moody

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