Fees and partner income grew at CPA firms last year, but the declining economy is likely to take a toll this year, according to a new survey.
The annual Rosenberg MAP Survey, compiled by consultancy Rosenberg Associates, found that firms with annual net fees of over $2 million experienced 10.8 percent growth in those fees last year, but that was down slightly from 11.4 percent growth in 2006. Average income per partner at these firms was $369,000, up from $350,000 in 2006.
Strong demand for services, increased leverage, rising billing rates and continuing technology efficiencies helped firms post a 5.4 percent increase in profitability.
However, Rosenberg predicts that 2007 will mark the end of a five-year boom in demand for CPA services after passage of the Sarbanes-Oxley Act of 2002. SOX work is beginning to decline and the economic slowdown is making an impact. The reduced need for staff to perform SOX work and the increasing numbers of accounting graduates are reducing firms' difficulties in finding people to fill open positions.
The survey also predicts that merger activity at small and midsized firms will continue at a heated pace as Baby Boomer partners look to M&A as an exit strategy. The swelling number of sellers is already creating a buyer's market. Fifty-seven percent of all partners at multi-partner firms are now over age 50, according to the survey.
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