Big Changes Facing Your Firm? New MAP Survey Results Can Help
Imagine your firm’s future if your monthly partner meetings become challenging. What if everyone offers different ideas about what your firm should be spending on office space or disparate opinions about compensation, billing and utilization rates going forward? What if you’ve got a merger, a retirement and the buy-in of two new partners on the table? Sounds like you need sound benchmarking data to help you make some important decisions
Fortunately, results of the 2014 National Management of an Accounting Practice (MAP) Survey conducted by the AICPA Private Companies Practice Section (PCPS) and the Texas Society of CPAs (TSCPA) can provide you with the information you need to make the right choices. The survey’s comprehensive benchmarking data on firm finances and practice management options allow you to compare your firm to those in the same market and of the same size. The survey can be a vital tool in your strategic planning and decision making, and the new platform enables survey participants to see their own confidential data pre-populated beside the comparative benchmarks. Watch this video for details. (The results provide rich data that all firms—even those that didn’t participate—will find useful. If your firm didn’t participate, you can still access survey reports, but you’ll need to compile your own firm’s data for comparative purposes. This video provides a tutorial.)
The following metrics, applicable to the above scenario, are included in all survey reports (National Summary; National, Regional, State and Personalized Comprehensive):
Office Rent. You can compare your actual office rent and other expenses to firms your size as a percentage of net client fees or total income. The State Comprehensive Report also includes data for your region of the country. With this information, you can evaluate the cost of office space in your target location or use it as leverage to renegotiate your current lease.
Billing and Utilization Rates. All reports include average billing rates and utilization percentages for partners and by years of experience for associates. By looking at the benchmarking data, you’ll gain clearer insights into your own firm’s metrics, feel assurance about what you’re doing right and be able to identify outlier data points that need to be addressed. Knowing those insights can help pave the way for deeper owner discussions that allow you and your partners to work together to improve the bottom line.
Compensation. Average compensation in dollars is shown for partners and by years of experience for associates. In addition, the reports list the percentage of firms surveyed that include various metrics such as years of service, administrative duties and personal billable time in their partner compensation plans. When you consider the compensation data with the average net remaining for partner/owners as percent of net client fees, you will be in a better position to determine revisions to your partner compensation plan when you bring in your new partners or merge with another firm.
Partner Agreement Terms. The survey data shows how common it is for firms to include terms for certain scenarios in their partner agreements. Because you need to add retirement provisions to your partner agreement and are considering merging with another firm, it will be helpful to know what percentage of firms your size include specific terms for partner buy-out, notification requirement prior to retirement, cap on maximum payments to retired partners and mandatory retirement age.
The metrics discussed in the above scenario represent just a handful of the more than 335 data points included in the survey. If you’re not sure which numbers to examine first, the survey report provides a list of Key Performance Indicators (KPIs). Once you’ve identified any outliers in your KPIs relative to the benchmarks, you can look into the possible reasons why your firm is different and determine whether changes are needed to get the results you’re looking for.
Visit the MAP Survey webpage at aicpa.org/MAPsurvey to find out how to access the free survey commentary or to purchase the survey reports. If you’re a member of the AICPA Private Companies Practice Section, you can download the survey reports at no charge.
Natasha V. Schamberger, CPA, Associate Director – Firm Services.