As has been the case in recent years, there continues to be a chasm in the performance levels among firms from top to bottom. Twenty-eight percent of the firms experienced revenue growth in excess of 10 percent while 36 percent of firms saw growth rates below four percent.

The current market for CPA firm services is very good, driven primarily by a healthy economy and the trickle-down effect of Sarbanes-Oxley. While only four percent of firms in the survey report meaningful revenues from Section 404 work, there is a much larger indirect impact: The large national firms are swamped with SOX work and are so strapped for resources that they are either letting go of their smaller clients or not going after smaller companies, or both. The result of this is that the smaller clients are moving to small and medium size CPA firms.

Marc Rosenberg, CPA, founder and creator of the survey, said: "The shortage of qualified labor continues to frustrate firms. Dozens of firms tell me they could get more business if they wanted it, but if they did get more business, they wouldn't have the people to get the work out. At least the results of their hard work are paying off with higher levels of earnings."

According to the survey, the annual billable hours of professional staff increased slightly, ending years of erosion. Annual staff billable hours in 2004 was 1,528, up from 1,506 last year. This figure was as high as 1,622 in 1999. According to Rosenberg: "There are two major reasons for this increase. First, the number couldn’t go much lower. Second, the increased amount of work coupled with the shortage of staff gave firms and their staff little choice but to improve their productivity. The continuing push into the digital office by CPA firms helped considerably to increase the efficiency of all personnel."

Other interesting findings from this year's survey:

• Only six percent of firms expect to outsource a significant number of tax returns in 2006, evidence of the continuing backlash among small and medium size firms in this controversial area.
• Ten percent of the firms are reporting meaningful levels of income from financial advisory services, quite an accomplishment for a relatively new service.  
• The average buy-out multiple paid to retiring partners was 80% of fees. 
• The average price paid to purchase small practices held steady at 100% of fees.
• Forty-seven percent of the partners at firms are over the age of 50.

The Rosenberg MAP survey includes the results of 249 firms, most of which range from $2-15 million in annual fees. Nearly 100 MAP statistics are measured. The survey can be purchased for $250: www.rosenbergassoc.com.