A Peek Inside the 2013 'INSIDE Public Accounting' 100 Report
by Terri Eyden on
By Jason Bramwell
Preceding its annual National Benchmarking Report and the third installment of its top 200 accounting firms ranking that will both be released in September, on August 5, the Platt Group LLC, publisher of INSIDE Public Accounting (IPA), unveiled its twenty-third annual report of the nation's largest 100 firms.
"One of the things we pride ourselves in is the amount of data we collect in our survey. We really dig down as we're looking at the top 100 firms," Platt Group Principal Kelly Platt told AccountingWEB. "We have more than 300 data points that we ask. We're calling these firms, and there's a lot of hand-holding with the firms to make sure the information is accurate. I can say that our list is one of the most accurate top 100 snapshots out there."
IPA sends the survey to approximately 1,500 firms in early January, and firms have until June to complete it. For the 2013 survey, IPA received data from more than 500 accounting firms.
Some of the more than 300 data points IPA asks in its survey include:
- Revenue growth
- Net income growth
- Profitability percentages
- Utilization within the firm
- Income per equity partner
- Revenue per charge hour
- Revenue per employee
- Partner compensation
- Marketing costs
- Technology costs
- Personnel costs
- Personnel benefits
"The purpose of the survey and the ranking isn't just to identify where firms are on the list of the top 100, but to really dig deep into the metrics, the benchmarking, and the practice management information and data to help the firms improve," Platt Group Principal Michael Platt told AccountingWEB. "We've established quite a strong reputation for being a vault of information. The data comes in to us, we don't disclose it, and we don't use it for marketing purposes. We've been able to get to a point of trust with the firms where they're providing significantly more information to us."
Key Metrics among 2013 IPA 100
- Average revenue growth (excluding mergers): 5.2 percent
- Average net income growth (excluding mergers): 6.4 percent
- Average staff turnover: 14.8 percent
- Average profit margin (net income as a percentage of net revenue): 28 percent (down from 29.9 percent last year)
- Average pay for professional staff: $83,589 (up 3.1 percent from last year)
- Average partner billing rate: $391 (up 4 percent from last year)
- Average equity partner compensation: $578,243 (up 4 percent from last year)
The data is also used by IPA to put together its ranking of the nation's 200 largest firms, which starts where the IPA 100 ends – firms number 101 to number 200. However, the survey data is predominately used for IPA's National Benchmarking Report. This year, IPA received survey responses from 500 of the top 750 accounting firms in the nation.
"It's one of the longest-running benchmarking reports in the profession, and it's the reason why we do the survey," Kelly added. "The report contains more than 100 pages of data. We market it as the 'gold standard,' and it has been the gold standard for more than twenty years."
Organic Growth a Top Trend
The top 100 firms enjoyed steady growth in 2012–2013, according to IPA. While growth through mergers dominated the headlines, organic growth is making a healthy comeback as the firms expand and deepen their service areas and specialty practices.
"The firms that are growing the fastest tend to have a higher percentage of their revenues coming from nontraditional fees, such as business valuations, management consulting services, and wealth management," said Michael, who added that the big winners in growth this year were firms in California and New York. "These were the areas that were among the first to go when the economy went over the cliff, but we're seeing a lot of clients coming back and asking for a lot of those services."
For the 2013 IPA 100, organic revenue growth excluding mergers averaged 5.2 percent. Twenty-four firms, excluding the Big Four, reported more than $100 million in net revenues, and five firms reported net revenues in excess of $90 million.
The Big Four firms – number one Deloitte, number two PwC, number three EY, and number four KPMG – all showed strong gains in 2012, growing $3.5 billion in revenues, or 10.5 percent, for a total of $37.2 billion.
As has been the case for the past few years, stronger profit margins west of the Mississippi River continue to account for regional differences of the IPA 100 firms. With margins averaging 32.7 percent across the Great Plains and 32 percent across the West, profit opportunities are greater for these firms than their counterparts in the Great Lakes, Northeast, and the Southeast, according to Kelly.
Four firms debuted this year in the IPA 100:
- Louisville, Kentucky–based Mountjoy Chilton Medley LLP at number eighty-three
- Sacramento, California–based Macias Gini & O'Connell LLP, number eighty-five
- Roseville, California–based Gallina LLP, number ninety-four
- New York, New York–based PragerMetis International (a recent merger between Prager and Fenton LLP and Metis Group LLC), number ninety-seven
Due to two mergers among the twenty largest firms in 2012, two rebranded/new firms are included in the IPA 100:
- Number ten, Minneapolis, Minnesota–based CliftonLarsonAllen LLP, is the result of the combination of Clifton Gunderson and LarsonAllen
- Number eleven, New York, New York–based CohnReznick LLP, came about after the merger of J.H. Cohn and Reznick Group.
"As we're pulling out of the recession, firms that have been traditionally local are going to have more of a national footprint. We're seeing that reflected in the number of mergers in the past couple of years," Michael concluded. "One of the questions we're going to be researching is, are all of these mergers actually fulfilling the promise of growth and creating a better firm? Just because everyone is doing it doesn't mean it's the right thing to do."
Access the complete list of the 2013 IPA 100.
You may like these other stories...
CFOs and management accountants are playing an ever-increasing role in supporting the adoption of natural capital accounting in their organizations, according to a recent report.Natural capital – forests, rivers,...
Tesco says it overstated profit forecastStanley Reed of the New York Times reported that Tesco, the large British grocery retailer, disclosed on Monday that it had overstated its expected half-year profit by about $400...
In today's volatile marketplace, companies, regardless of their size, are dealing with more complexity than ever before. Global markets, which bring both new opportunities and new competitors, far-flung supply chains...
Upcoming CPE Webinars
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.