Academic journal article Journal of Accountancy

2012 MAP Survey: Signs of Recovery: Revenue Growth and Partner Compensation Rise among Accounting Firms

Academic journal article Journal of Accountancy

2012 MAP Survey: Signs of Recovery: Revenue Growth and Partner Compensation Rise among Accounting Firms

Article excerpt


Accounting firms aren't all the way back to where they were before the Great Recession, but they are making progress. That's one of the many findings of note in the 2012 National Management of an Accounting Practice (MAP) survey, sponsored by the AICPA Private Companies Practice Section in association with the Texas Society of CPAs. The biennial benchmarking poll, conducted from May through August, generated responses from more than 2,300 U.S. accounting firms.

Those responses paint the picture of a profession slowly but steadily regaining ground lost in the biggest economic earthquake since the Great Depression. The survey results also reveal divergent trends in partner and staff compensation, increased adoption of fixed-fee pricing, and the growing importance of leveraging technology to accounting firms of all sizes.

This article and the accompanying charts highlight the top takeaways from the 2012 PCPS/I'SCPA MAP Survey. Full results are available at aicpa.orglpcps/MAP2012.


Nearly two-thirds (66%) of the accounting firms surveyed reported year-over-year growth in client fees, up from 55% in the 2010 survey but short of the 80% that reported client-fee growth in 2008. The magnitude of growth showed the same pattern, with the gains shown in the 2012 survey being larger on average than those recorded in 2010 but not back to the standards set in the 2008 poll, which stands as a good benchmark for recovery because it reflects financial results achieved before the start of the economic downturn. For example, 43% of the firms in the 2008 survey reported revenue growth of 10% or more, compared with 20% in 2010 and 24% in 2012.

The look back to 2008 also illuminates a couple of interesting patterns in compensation.

* Overall partner compensation jumped 10% from 2010 to 2012 and posted healthy gains in all of the revenue categories tracked in the survey (see Exhibit 1). Partner compensation averaged $188,500, mirroring the $188,572 averaged in 2008. The drop in partner compensation between 2008 and 2010 indicates that partners left some of their profits in their firms to help ensure stability during the height of the economic storm. With their firms now on more stable footing, partners took home more of the "accumulated" profits to compensate for the cutbacks they made in previous years.

* Staff compensation slipped a bit in 2012 after posting big gains in 2010 (see Exhibit 2). New professionals took the biggest hit with a 5% drop compared with 2010, though their average salary remains 27% higher than it was in 2008. That pattern, which held true across most firm sizes, appears to indicate that firms raised nonpartner salaries in 2010 to aid in staff retention, then allowed them to drift back down as part of an effort to equalize salaries back to the 2008 standard.

Another possible reason for the lower staff salaries is firms moderating pay as they commit to keeping on more employees. While the percentage of firms experiencing turnover remained essentially the same at 30%, the overall turnover rate dropped two percentage points, to 12%, and involuntary turnover including layoffs and terminations dropped by more than half. The biggest change took place at the largest firms, where the voluntary turnover rate was 3.6 times higher than the involuntary turnover rate. That's a reversal from 2010, when involuntary turnover was more common than voluntary turnover at all firms with revenue of at least $1.5 million, and either flat or marginally lower at the smaller firms.

Accounting firms, especially the largest ones, also appear to have made a conscious effort to tighten spending on their largest expense item, professional salaries (excluding owners). Firms with $10 million or more in annual revenue spent 29% of their income on professional salaries, down from 33% in 2010. …

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