Highlights of the 2008 Public Accounting Report's Survey of National Firms
This year's survey held some unexpected results. Though revenue growth overall was healthy, the bulk of the increase was from tax practice, up 14.4 percent, compared to 8.4 percent growth in audit & assurance.
What factors contributed to the rise of tax revenue? Analysts conducting the survey believe much of the upward change is from transaction work, which ballooned in 2007 -- including efforts to comply with rulings such as FAS 109 and Fin 48 – and did not level off in 2008. Plus, many firms strengthened their tax resources by adding tax professionals, tax partners, or both.
The 14.4 percent composite growth in tax revenue is made up of double digit growth from each of the Big Fours, and also from four of the six non-Big Four firms. Among the Big Fours, Ernst & Young took over the number one spot with 17.9 percent growth, pushing PricewaterhouseCoopers (PwC) to number two. The combined tax revenue growth rates for all the Big Four firms (14.6 percent) beat the six non Big Four firms (12.7 percent). But, among all firms surveyed, the overall biggest growth in tax revenue was achieved by non-Big Four firm Grant Thornton, weighing in with an impressive 18.9 percent.
Audit & Assurance
Of A&A's 8.4 percent revenue growth, the Big Fours can claim credit for only 8.8 percent, while non-Big Fours tipped the scales at 10.5 percent. This is overall the lowest growth in A&A since 2003, and the first time in the prior three years that the non-Big Fours have dropped below 20 percent revenue growth in A&A. However, analysts were not surprised at the lower numbers, because A&A reached a peak of 24 percent in 2006 and has backed down since then.
Ernst & Young still maintains the biggest A&A practice in the National Survey firms. Deloitte had the fastest A&A growth rate among Big Fours, but overall, the highest overall growth was earned by newcomer to the survey, Reznick Group, with 14.9 percent. This makes the eighth year in a row that non-Big Fours have led the growth in A&A.
Revenue Per Partner & Nonpartner
Among the ten firms, non-Big Four Reznick led them all in per partner revenue ($5.4 million), with an increase of 9.1 percent. The composite increase for the ten firms was 7.1 percent.
Other highlights include:
Ernst & Young held the highest revenue per nonpartner professional at $375,000.
For all Big Fours, the revenue per nonpartner professional rose 4.1 percent, and the overall number of professionals rose 6.2 percent.
For non-Big Fours, newcomer Crowe held the highest revenue per nonpartner professional at $318,000.
Among all non-Big Fours, the revenue per nonpartner professional dipped 2.6 percent and the overall number of professionals rose 14.4 percent.