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Accounting Growth Still Strong

The nation’s accounting firms are experiencing the strongest growth in revenues since the recession, averaging 6.3% revenue growth during the last fiscal year according to the INSIDE Public Accounting’s (IPA) National Benchmarking Report.

In fact, 85% of the 540 firms participating in IPA’s Annual Survey and Analysis of Firms experienced positive organic revenue growth. More than 20% of firms reported double-digit growth, and 4% of all participating firms grew organically at a rate of more than 20%.

Merger activity continues to be strong, particularly at the level of the largest firms - $30 million and up. In this range, 45% reported at least one acquisition last year. Mergers have added an average of 3.1% to net revenue growth for the IPA 100 firms, which are the largest 100 firms in the country.

Highlights from the report include:

Average net income per equity partner (NIPEP) in public accounting firms continues to rise, with gains over last year being made in nearly every revenue band.

Revenue per full time equivalent (FTE) is one of the strongest metrics available to show how well a firm is doing from year to year. Across all revenue bands net revenue per FTE averages $179,297, up 2.8% over last year.

The $50 million-$75 million firms are showing the strongest increase in non-traditional services as a percentage of total revenue, with revenue divided nearly equally in three parts: tax, audit, and “other” services.

Professional staff turnover rates in the very largest firms (above $75 million) averaged 17.2% last year, with one in five experiencing turnover rates above 20%.

Average percentage of female ownership is at 17.5%, also an increase over last year’s 16.9%.

With most CPA firms reporting solid gains in revenue and profitability, the rest of 2017 will focus on innovating practice management and expanding efforts to enhance employee retention.