In Brief

The fifth annual NYSSCPA–Rosenberg Survey identifies trends from the national 21st Annual Practice Management Survey and provides a comparative qualitative analysis to participating New York CPA firms. The survey contains a wealth of quantitative and qualitative assessments of the current state of New York CPA firms, as compared to CPA firms across the United States. The quantitative portion of the Rosenberg Survey provides valuable analysis, actionable guidance, expert insight, and practical recommendations for CPAs. It also presents insights and assessments by some of the leading consultants to accounting firms in the United States.

The national survey provided seven takeaways for CPAs in public practice: 1) Revenue growth remained solid, and is up from the previous year, possibly because of complexity in applying the TCJA; 2) organic growth is also up, affirming that the accounting profession is more focused today on business development efforts; 3) income per equity partner was up by over 6%, and the profitability growth of 6.6% is catching up to the top line growth rate of 7.7%; 4) there is a slight increase in the percentage of partners over age 50 in the smaller firms, with the Rosenberg Survey’s Charles Hylan noting from his experience that partners at smaller firms are increasingly not retiring because the firm does not have a partner to replace them, they don’t want to retire, or they simply can’t afford to retire; 5) firms with the least audit work (i.e., the lowest quartile) actually outperform those firms with more audit work; 6) the percentage of female equity partners continues to grow, moving from 21% to 23% for all multipartner firms, but still lags significantly behind the percentage of female staff; and 7) the percentage of firms offering investment advisory services increased across all firm sizes.

This year, as in the past, the Rosenberg Survey continued to discover quantifiable differences between some national trends and trends in New York. This article will discuss those differences, present selected quantitative results, and excerpt insights from the experts.


The results of the 21st Annual NYSSCPA–Rosenberg Practice Management Survey are in. For the fifth consecutive year, the NYSSCPA has partnered with the Growth Partnership to provide results that are customized for New York CPA firms. The survey, conducted in mid-2019, is based on firm results for calendar year 2018. The following analysis focuses on overall national trends that all CPAs in public practice need to be aware of in the areas of revenue growth, merger and acquisition activity, leverage (partner-to-staff ratios), and demographics. Significant differences between the national and the New York survey are also highlighted. Given the small New York sample size, many of the below observations are qualitative in nature and directionally correct rather than statistically pure. Finally, shared observations from some of the leading expert consultants for CPA firms are excerpted in the sidebar. Exhibit 1 provides an overview of the survey results.

Exhibit 1

The 2019 Rosenberg Survey Results at a Glance (Based on 2018 Data)

Multi-Partner Firms

 $20M in Net Fees (34 Firms); $10–20M in Net Fees (75 Firms); $5–10M in Net Fees (97 Firms); $2–5M in Net Fees (70 Firms); Under $2M in Net Fees (20 Firms)

 per equity partner; $643,170; $479,451; $445,604; $332,717; $239,820

 growth: 2018—including mergers; 9.9%; 9.7%; 7.0%; 4.8%; 3.1%

 growth: 2018—excluding mergers; 6.9%; 6.6%; 5.9%; 4.4%; 2.7%

 growth projected for 2019; 6.9%; 7.0%; 5.9%; 3.6%; 4.1%

 per equity partner; $2,339,067; $1,813,824; $1,527,333; $1,031,407; $665,293

 per professional; $247,978; $223,868; $217,797; $216,496; $196,493

 per person; $200,610; $183,906; $178,746; $179,102; $165,422

 85.0%; 85.0%; 87.1%; 89.6%; 89.6%

 equity partner billing rate; $405; $343; $318; $295; $260

 net firm billing rate; $177.58; $157.18; $148.15; $149.46; $144.04

 equity partner charge hours; 1,034; 1,028; 1,156; 1,137; 1,241

 staff charge hours; 1,448; 1,486; 1,510; 1,409; 1,439

 to equity partner ratio; 8.7; 7.3; 6.2; 4.0; 2.6

 to total headcount percentage; 18.1%; 17.6%; 17.7%; 17.3%; 15.6%

 staff turnover; 18.7%; 15.2%; 17.0%; 16.6%; 13.3%

 %; 50.8%; 52.7%; 53.8%; 52.0%; 53.9%

 of A/R + WIP; 2.4; 2.6; 2.8; 2.8; 2.1

 salaries/benefits as % of fees; 48.3%; 48.9%; 44.8%; 42.5%; 37.4%

 expenses per person; $45,113; $39,900; $39,031; $40,474; $43,997

 as % of total fees; 36.0%; 30.6%; 24.7%; 17.6%; 15.8%

 fee per 1040 return; $1,936; $1,288; $1,024; $800; $942

 of firms offering investment advisory; 55.9%; 37.3%; 33.0%; 34.3%; 25.0%

 written marketing plans; 76.5%; 62.2%; 37.1%; 24.6%; 5.0%

 virtual (remote) work; 97.1%; 96.0%; 95.9%; 89.9%; 85.0%

 new partner buy-in; $182,070; $137,197; $178,586; $148,528; $245,583

 partner position at firms; 82.4%; 78.7%; 52.6%; 24.3%; 15.0%

 professional staff breakdown; 48%/52%; 45%/55%; 43%/57%; 41%/59%; 35%/65%

 of female partners; 17.5%; 21.9%; 23.0%; 28.3%; 17.5%

 acquisition in 3 years; 60.6%; 50.7%; 46.9%; 29.0%; 25.0%

 age of partners; 52.7; 53.6; 52.6; 53.1; 56.4

 of partners over age 50/60; 59%/19%; 62%/25%; 60%/25%; 66%/26%; 71%/41%

 committee for allocating partner income; 76.6%; 52.0%; 33.0%; 8.7%; 0.0%

 used for allocating partner income; 8.8%; 26.7%; 25.8%; 36.2%; 35.0%

 compensation system—% usage; 55.9%; 48.6%; 18.8%; 6.1%; 0%

 method—multiple of compensation; 62.5%; 54.0%; 50.0%; 37.0%; 7.7%
Average valuation of goodwill; 68.6%; 74.6%; 77.0%; 82.3%; 70.7%
% of firms making partner buyout payments; 97.1%; 74.7%; 66.0%; 50.0%; 30.0%
A/R= Accounts Receivable
W/P= Work in Progress

Revenue and Profits

Revenue growth nationally was up a solid 7.7%, compared to the previous year’s 7.0% (Exhibits 2 and 3). Projected revenue for 2020 across 10 regions in the United States is 5.9%; however, New York firms project slightly less growth at 5.1%.

Exhibit 2

Annual Growth: 2009 to 2018 (Firms over $2 million)

Exhibit 3


2018; 2017; 2016; 2015

 $20M; 9.9%; 9.8%; 9.8%; 11.8%

 9.7%; 8.1%; 9.4%; 7.0%

 7.0%; 7.8%; 6.8%; 9.7%

 4.8%; 5.0%; 6.5%; 6.0%

 firms over $2M; 7.7%; 7.0%; 7.8%; 8.1%

Profits, as measured by income per equity partner, were up from the prior year nationally. Income per partner rose from $441,000 to $470,000, representing a 6.6% increase. The increase in income per partner was also close to the increase in revenue. This is the first year in over a decade that income per partner growth closely paralleled revenue growth. According to the Rosenberg Survey’s Charles Hylan, “we always like to see an increase in profit which is close to or higher than the increase in revenue.” Hylan also says that the “quickest path to profitability is high leverage and high billing rates.”

In 2018, the five statistics that correlate closest to profitability were fees per partner, fees per person, staff-to-partner ratio, partner billing rates, and realization rates (85.0% in 2018 vs. 83.1% in 2017). Economies of scale obviously factor into why larger firms are more profitable than smaller firms, but Hylan also attributes increased firm profitability to engaging in marketing and practice development, attracting larger clients, attracting and recruiting staff, having the resources to train staff more effectively, working as a team, and adhering to a strong set of core values. Other factors include the higher level of profitability on nontax, nonattest clients, as well as an increased ratio of consulting and advisory services in the largest firms. In New York, income per equity partner was $538,000, significantly above the national average.


Staff-to-partner ratios (i.e., leverage) correlate closely with income per partner and therefore organic growth. As Hylan notes, the average ratio in firms with fees over $20 million is approximately 14:1, as opposed to local firms whose revenue is under $3 million, where the average ratio is slightly more than 2:1. As has been noted elsewhere, however, a high staff-to-partner ratio also correlates to increased turnover of professional staff, which is concerning given that many firms consider shortage of staff, lack of experienced partner-ready staff, and employee retention to be among their biggest challenges.


In firms with revenues greater than $20 million, there was an 18% year-over-year increase in staff turnover, from 15.8% to 18.7%. The highest increase, however, occurred among sole practitioners, at 30%. In New York, staff turnover on average was at 21%, and in two firms in the survey, it ranged between 29.7% and 30.5%. In all cases, however, staff turnover in firms over $20 million was the highest among all firm sizes.

Partner Age

Partners have become slightly younger, both in terms of average age and the percentage of partners over 50. Between 2005 and 2015, the number of partners over 50 continued to increase; however, from 2016 on, the average age of equity partners has decreased slightly. In the most recent survey, the average age of partners is 53.0 years for firms with net fees over $2 million; however, there has been a large increase in the percentage of partners over 50 in firms under $2 million (Exhibit 4). In fact, the average age of these partners is now at its historical highest (56.4). In addition, more than 61% of partners in these small firms are over 50. In New York, the average age is higher at approximately 55.0. One aberration is that, on the national level, firms with net fees of more than $10 million saw the average age of their partners increase slightly and had the highest number of partners over age 60. In the New York survey, the highest percentages of partners over 60 were also found in firms with net fees greater than $2 million.

Exhibit 4

Age of Partners

Average Age of Partners; % of Partners over Age 50

 2017; 2009; 2018; 2017; 2009

 $20M; 52.7; 52.7; 50.7; 58.9%; 60.9%; 52.6%

 53.6; 52.9; 50.7; 62.2%; 60.8%; 54.0%

 52.6; 52.9; 51.1; 60.4%; 63.7%; 60.9%

 53.1; 53.5; 51.7; 66.1%; 61.8%; 58.1%

 $2M; 56.4; 55.3; 52.7; 70.6%; 63.1%; 58.5%

 firms over $2M; 53.0; 53.2; 51.2; 61.2%; 61.7%; 56.3%

According to the Rosenberg Survey, a shortage of experienced, partner-ready staff is a perennial problem that firms seem unable to solve. Larger firms seem to have an easier time of it, he notes, because they have more to offer candidates in terms of training, mentoring, and advancement opportunities. Marc Rosenberg of The Rosenberg Associates suggests that the shift away from compliance services, along with technology advances, may be “the long-term answer to the shortage of traditional accountants—change the ecosystem so that firms needs fewer traditionally trained staff.”

A shortage of experienced, partner-ready staff is a perennial problem that firms seem unable to solve.

Mergers & Acquisitions

Mergers continue to have a huge impact on revenue growth, but there is already a significant downward trend. Merger growth as a percentage of revenue only increased 23% among all firms, a significant reduction from 39% in the previous year. This was particularly noticeable in firms under $10 million in revenue. Growth from mergers for New York firms was roughly the same as at the national level at approximately 24%.

According to Marc Rosenberg, the strategy to acquire firms has significantly changed over the years: “In the past, buyers’ interest in sellers was directly linked to the lucrative acquisition of smaller firms’ clients, along with the related profitability.” Today’s buyers, however, simply are not as interested as they used to be in traditional compliance firms with solid profitability. “Instead,” Rosenberg continues in his expert commentary on the survey, “buyers are seeking merger partners that are a good strategic fit.” He notes that a wealth management practice is attractive to buyers, as is consulting; a practice that comprises primarily write-up work is not. A firm that has amassed young talent will also be attractive to buyers, as will a practice that can provide access to new markets. As Rosenberg has observed in past years, a buyers’ market has emerged, as the hectic pace of mergers over the past 10 years has resulted in a crop that has already been picked over. According to Rosenberg, with “the deluge of baby boomer partners retiring, … coupled with notoriously weak succession planning, retiring partners are rapidly finding that the fallback solution to their exit strategy—selling to a larger firm—is falling away because buyers have become exponentially more selective in choosing merger partners—at a price.”

Female Equity Partners

The percentage of female equity partners in all multipartner firms increased from 21% to 23%. Rosenberg noted a steady increase between 2011 and 2018 of female equity partners in firms of all sizes; however, firms over $20 million still had the lowest percentage of female partners of all firms—18.0%—as well as the smallest year-over-year gains despite the fact that the female-to-male staff mix, at 52%, was among the highest of all firms. One possible trend identified this year is that for the first time, the ratio of female to male staff is actually decreasing in firms over $5 million in revenue. In New York, average growth of female equity partners was in double digits, approximately 19% of partners, which exceeded the national average. In New York, the 48% ratio of female to male staff may be a statistical aberration, explained by the fact that outlying firms in the survey had as few as 19% female professional employees.


While many predict that the application of blockchain and artificial intelligence will drastically change the profession, the results of this year’s survey do not suggest that this change is already underway. Roman Kepczyk of Rights Networks notes:

While Blockchain and Artificial Intelligence garner a lot of press and questions, the practical implementation of AI tools has not hit our clients yet … There is a surge in utilization of data import and transfer tools, beginning with the use of APIs [application interface programs] that pull data out of other accounting and business applications and import it directly into accounting products such as Quickbooks, Xero, and Intacct.

Other trends include greater outsourcing of processes to the cloud and work-flow tools that rethink and redesign current processes.

Financial Advisory Services

Nationally, there was a small increase in the number of firms offering financial advisory services across all firm sizes. Regarding how firms that do not offer financial services are to offer them in the future, this year the response was dramatic: “very likely” decreased from 15% to 0%, while “somewhat likely” was at close to 0% for firms below $20 million. It seems that if firms are not already offering financial services, there is little chance that they will start. Reasons why New York participants do not offer these services include the belief that there is a conflict of interest and a lack of knowledge in the firm.

Management Development

The Rosenberg Survey points to significant differences in revenue growth and profitability in firms that have strategic plans, formal partner development programs, and written marketing plans. For example, firms that formally develop their future partners realize an extra $17,000 on average in profit per partner after the firm has made the associated investment and have 29% higher growth rates. Firms that engage in a formal strategic planning process at least once every two years realize an increase in profits of $50,000 per partner and a 40% higher growth rate.

CPA firms that have formal marketing plans on average generate $60,000 higher net income per partner and have a 40% higher growth rate. The survey further recommends the following best practices for an effective marketing plan:

  • Client analysis—activities that help retain and grow existing clients
  • Referrals—activities to help identify and nurture key referral relationships
  • Prospects—activities that keep the firm top of mind with targeted prospects
  • Support activities—ranging from social media to speaking engagements, websites, and others
  • Enabling activities—activities that require investment and drive growth, including CRM systems, business development training, coaching, and others.

New Partners

There is a continuing downward trend in the number of firms asking new partners to make what would be considered “large” (i.e., more than $400,00) buy-ins. According to the survey, firms are having a difficult time finding new equity partners as the more senior partners age and transition out. With one exception, all New York firms in the survey had new partner buy-ins. In addition, there is a growing trend in the percentage of firms that have nonequity partners, especially in the larger firms.

Mandatory Partner Retirement

The survey reports an increase in the percentage of firms with mandatory retirement provisions, irrespective of firm size. According to the survey, retirement does not mean that partners must stop working, but that they must relinquish their equity to the partnership. All New York firms surveyed have mandatory retirement provisions. Retirement age ranges from 65 to 72 in New York (mean, 65).

Audit Practice Impact on Key Metrics

For the fourth consecutive year, the firms with the lowest percentage of audit and review work have the highest income per partner (Exhibits 5 and 6). The reasons are generally understood to be pressure on fees, inability to attract and retain qualified staff, and increased regulation. Many of the consultants in the Rosenberg Survey comment that the move from compliance to advisory services will yield many opportunities, including less reliance on attest and tax services, which face more and more challenges and regulatory scrutiny each year.

Exhibit 5

Audit Practice Impact on Key Metrics

Ranking by percentage of audit and review work done compared to the total fees; Percentage of total fees represented by audits and reviews; Annual net fees; 2018 IPP' 2017 IPP; 2016 IPP; 2015 IPP

 25%; 49.6%; $17,294,000; $482,637; $441,044; $417,560; $407,372

 50%; 22.9%; $11,919,000; $428,628; $423,058; $410,552; $396,709

 25%; 7.5%; $7,405,000; $526,043; $464,898; $472,395; $420,873

 firms over; $2M 25.7%; $12,134,000; $466,347; $438,015; $427,654; $405,416

= Income per Partner

Exhibit 6

Billing Rates of Partners within the Same Population Markets

Population Range; Upper 25% Partner Billing Rate; Middle 50%; Lower 25%
Average Partner Billing Rate; IPP; Average Partner Billing Rate; IPP; Average Partner Billing Rate; IPP
>2M; $455; $635,000; $346; $484,000; $265; $348,000
1–2M; $398; $538,000; $311; $369,000; $228; $284,000
250K–1M; $359; $645,000; $294; $380,000; $227; $341,000
<250K; $337; $463,000; $261; $289,000; $210; $278,000

             = Income per Partner

The Critical Path Forward

In many respects, this was a banner year for public accounting professionals. The Rosenberg Survey found evidence that more effective and efficient management, increased leverage, higher utilization rates, and an accelerated focus on higher nonaudit consulting and assurance practices has translated into higher income per equity partner, reversing a prior trend.

There are, however, clouds on the horizon for young accounting professionals. The pipeline of CPA test takers is dropping and firms are accelerating the hiring of non-CPAs in technology specialties at an increasing rate in firms of all sizes. A continuing issue, made even more critical today with staff shortage, is the high turnover rate in firms due to dissatisfaction with excessive work schedules in peak periods during the year.

Diversity seems to hit a roadblock as well. This year’s survey identified a declining percentage of female staff in firms of all sizes. In contrast, there is a steady but slow increase in the percentage of female equity partners.

Finally, those baby boomers interested in selling their practices are now receiving lower offers than before. Acquiring firms are being pickier and increasingly looking for specialty practice areas of high value. As a consequence, there is a growing number of local firm practitioners who are continuing to working past the traditional retirement age, but anecdotally, they still enjoy their work and connecting with their aging client base.

In short, this has been a healthy year for the accounting profession, but there are some headwinds that progressive firms will need to consider in the future.

The State of the Profession 2019 Opinions from the Experts

What kind of year was 2018? What were the major trends you observed? What were the issues you saw firms struggling with the most?

Terry Putney, Transition Advisors

We continue to be very active with M&A [mergers and acquisitions]. In 2018, we saw the continuation of a very frenzied pace of deals—no let-up whatsoever. This is clearly driven by the demographics of the profession on the sell side. There continues to be a significant number of midsize and smaller firms primarily owned by baby boomers that do not have the ability to provide for partner succession internally.

The number of sellers is increasing at a much greater pace than buyers. The obvious consequence is the market has shifted in favor of the buyers. In cases where an acquisition/sale is the deal structure, valuations continue to come down. One-time revenue is considered a premium majority of the time nowadays. We are seeing offers of below 60%, while 70% to 80% is common.

Carrie Steffen, The Whetstone Group

2018 was another relatively good year financially for most firms. We saw a lot of firms making investments in client experience and client retention programs. The concept of client experience is relatively new to the accounting profession, but in a landscape where competitive differentiation is based on client service, the process of surveying clients to ask what they value most about the relationship and then training people on how to deliver that consistently garnered a lot of attention.

Jennifer Wilson, Convergence Coaching

2018 was a solid year for many firms, with continued growth and profitability. In 2018, firms scrambled to manage the impact of the new tax act, revenue recognition, new audit reporting for nonprofits, and more. Most of the people we knew were at max capacity, wishing they had better leverage and more people to help drive the firm’s initiatives forward. There continues to be a growing divide between the firms that understand what’s coming and are investing in change and those who don’t, who are denying and/or resisting change, and who are holding their firms back as a result.

Chris Frederiksen, Frederiksen and Company

More firms used remote workers. When an employee had to move geographic location, perhaps because of the relocation of a spouse, firms did everything possible to keep that team member employed with a remote setup.

Based on your experiences this year, what are you seeing? What are the major trends? What are firms struggling with, and what are they working on as the year progresses?

Gale Crosley, Crosley+Company

A major trend at the top of the list is a commitment to consulting and advisory services. Successfully integrating technology and consulting people within the existing audit/tax firm culture is critical to future firm health.

Jennifer Wilson, Convergence Coaching

The traditional business model is under attack in so many ways, including terrifically short staffing, which is leading to record profits for many firms, but also the cause of burnout and a growing sense of hopelessness and turnover, too. Leaders are being forced to rethink traditional staffing models and are realizing many of the jobs inside their firms do not require accounting graduates or CPA candidates to do them. We are most excited by the emergence of the truly NextGen leaders and the potential that these people bring in shifting traditional norms and trying new things faster, which is required to keep pace with the dizzying pace of external change.

Carl George, Carl George Advisory

Tax reform—opportunity or burden? The prevalent theme throughout the 2019 tax opportunity season was “the hardest tax season that I have ever encountered.” System issues, cyber issues, tax reform, changing/last minute [regulations]. Those firms that embraced tax reform as an opportunity to provide (and charge for) high-value tax advice brought on by recent tax reform saw revenues increase significantly.

Roman Kepczyk, Right Networks

As the profession is transitioning to a consultative/advisor role, there has been a surge of adoption in the data visualization tools such as Tableau, Qlik, and Microsoft Power BI, with both CCH and XCM adopting the latter as their reporting tools; we see Microsoft Power BI being the eventual winner within the accounting firms.

Chris Frederiksen, Frederiksen and Company

Most of the firms I work with reported this as the most brutal tax season on record. This was caused by lack of human resources coupled with the need to spend extra time to comply with the new tax rules and to explain the changes to clients. The effects of the new rules varied wildly by client; a common refrain was, “I have always had a refund coming—now you tell me I owe taxes!”

Terry Putney, Transition Advisors

Four-partner firms with three of the partners reaching retirement age in five or fewer years (as an example) are going to be lucky to find any quality firm to talk to. If such a firm finds an interested party, the terms might be less attractive than they expected. It is advisable that firms look out at least 10 years and be realistic about their ability to provide succession. If you don’t have a robust partner development system in place now, you aren’t likely going to be able to acquire the necessary talent in time. Firms that have only five years or less time left before a significant turnover of partners occurs are in a much more desperate position in this market than they realize.

To participate in the 2020 Rosenberg Survey, please visit between January 1, 2020, and July 15, 2020. To purchase a complete copy of the 2019 Survey results, visit the same website at any time.