2012 MAP SURVEY Results for California Firms Presented by California Society of CPA's MAP Committee

SIZE OF FIRM SMALL FIRM$0 TO $499K MEDIUM FIRM$500K TO $1.49M LARGE FIRM$1.5M AND UP Presented by California Society of CPA's MAP Committee

NUMBER OF FIRMS IN CA WHO PARTICIPATED TOTAL262 FIRMS SMALL105 FIRMS MEDIUM 88 FIRMS LARGE 69 FIRMS Presented by California Society of CPA's MAP Committee

FIRM MEMBERSHIPS Presented by California Society of CPA's MAP Committee

FINANCIAL INFORMATION - GROSS SMALLMEDIUMLARGE A/R BILLED ( less allowance) 65,129172,5371,038,897 WIP ( unbilled less allowances ) 11,15041,276340,857 FIRM CAPITAL ( net capital ) 61,129162,0441,356,384 PRIOR YEAR NET CLIENT FEES247,127842,6225,759,863 BAD DEBT WRITTEN OFF, PY 2,09119,06585,389 Presented by California Society of CPA's MAP Committee

INCOME SMALLMEDIUMLARGE GROSS FEES EARNED 265,732890,2976,761,678 NET WRITE-UPS ( write-downs ) -2,523-26, ,608 NET CLIENT FEES EARNED 263,209863,7856,055,070 NET WRITE-UPS ( Downs ) % OF GROSS -3.1% -8.7% NET CLIENT FEES/GROSS FEES99%98%93% NET CLIENT FEES PER FTE PROF’L 205,831221,490239,916 NET CLIENT FEES PER PARTNER 276,979512,3561,192,113 Presented by California Society of CPA's MAP Committee

EXPENSES SMALLMEDIUMLARGE PROF’L SALARIES (excluding owners) 18,039153,1931,594,606 PARAPROFESSIONAL SALARIES 17,49943,085179,203 OTHER SALARIES (excluding owners) 5,91032,400308,838 OTHER EE BENEFITS3,85515,278166,352 DUES, LIBRARY3,67612,88448,777 CPE1,8284,30637,571 MALPRACTICE INSURANCE2,4998,81759,439 Presented by California Society of CPA's MAP Committee

EXPENSES (continued) SMALLMEDIUMLARGE RENT & OTHER OCCUPANCY COSTS16,92056,694350,521 INTEREST EXPENSE1,4043,63916,632 COMPUTER & TECHNOLOGY9,00622,849128,789 PROMOTION & MARKETING2,3496,90574,528 PAYROLL TAXES4,52822,178174,409 OTHER EXPENSES33,98090,452518,594 TOTAL EXPENSES125,776491,8953,863,271 Presented by California Society of CPA's MAP Committee

EXPENSES (continued) SMALLMEDIUMLARGE NET REMAINING FOR OWNERS138,280376,2922,263,769 NET REMAINING TO OWNERS145,514223,199445,687 NET REMAINING PER OWNER – HOUR $70$107$214 Presented by California Society of CPA's MAP Committee

Expense as % of Net Client Fees Presented by California Society of CPA's MAP Committee

Expense as % of Net Client Fees Presented by California Society of CPA's MAP Committee

Expense as % of Net Client Fees Presented by California Society of CPA's MAP Committee

As a % of Net Client Fees Presented by California Society of CPA's MAP Committee

ACCOUNTS RECEIVABLE Presented by California Society of CPA's MAP Committee

Percent of Fees by Service Presented by California Society of CPA's MAP Committee

Percent of Fees by Service Presented by California Society of CPA's MAP Committee

Percent of Fees by Service Presented by California Society of CPA's MAP Committee

Billing Methods Presented by California Society of CPA's MAP Committee

Estimated Bill Rate for $50,000 per Year Professional Staff Small$ 96 Medium$105 Large$103 Presented by California Society of CPA's MAP Committee

NUMBER OF STAFF – PROFESSIONAL FTE SMALLMEDIUMLARGE PARTNERS/OWNERS ( INCL. PT ) DIRECTORS ( 11+ YRS EXP. ) SENIOR MANAGERS ( 8-10 YRS EXP.) MANAGERS (6-10 YRS EXP.) SR. ASSOCIATES (4-5 YRS EXP.) ASSOCIATES (1-3 YRS EXP.) NEW PROFESSIONALS TOTAL PROFESSIONALS Presented by California Society of CPA's MAP Committee

NUMBER OF STAFF Non-PROFESSIONAL SMALLMEDIUMLARGE Internal Technical Support Administrator/Office Manager Paraprofessionals Clerical ( data entry, etc. ) Marketing Staff HR Staff Other Presented by California Society of CPA's MAP Committee

Average Chargeable Hours Professional SMALLMEDIUMLARGE PARTNERS/OWNERS ( INCL. PT )1,1761,3011,116 DIRECTORS ( 11+ YRS EXP. )1,6101,5801,171 SENIOR MANAGERS ( 8-10 YRS EXP.)1,1461,6421,377 MANAGERS (6-10 YRS EXP.)1,1351,5561,465 SR. ASSOCIATES (4-5 YRS EXP.)1,6421,5221,493 ASSOCIATES (1-3 YRS EXP.)1,5291,5111,524 NEW PROFESSIONALS1,6641,3631,382 Presented by California Society of CPA's MAP Committee

Average Chargeable Hours Non-Professional SMALLMEDIUMLARGE Internal Technical Support Administrator/Office Manager Paraprofessionals1,1591,3741,238 Clerical ( data entry, etc. ) Marketing Staff00 26 HR Staff Other Presented by California Society of CPA's MAP Committee

Average Billing Rate Professional SMALLMEDIUMLARGE PARTNERS/OWNERS ( INCL. PT )$188$239$286 DIRECTORS ( 11+ YRS EXP. )$167$166$262 SENIOR MANAGERS ( 8-10 YRS EXP.)$140$164$199 MANAGERS (6-10 YRS EXP.)$114$140$174 SR. ASSOCIATES (4-5 YRS EXP.)$109$118$137 ASSOCIATES (1-3 YRS EXP.)$ 74$ 93$113 NEW PROFESSIONALS$ 55$ 81$ 91 Presented by California Society of CPA's MAP Committee

Average Billing Rate NonProfessional SMALLMEDIUMLARGE Internal Technical Support00$126 Administrator/Office Manager$ 50$ 70$ 88 Paraprofessionals$ 77$ 93$ 92 Clerical ( data entry, etc. )$ 47$ 58$ 69 Marketing Staff0$ 50$ 88 HR Staff0$ 65$118 Other0$ 53$ 96 Presented by California Society of CPA's MAP Committee

Average Compensation Professional SMALLMEDIUMLARGE PARTNERS/OWNERS ( INCL. PT )$137,461$288,299$370,379 DIRECTORS ( 11+ YRS EXP. )$118,314$122,964$152,730 SENIOR MANAGERS ( 8-10 YRS EXP.)$ 66,991$103,235$108,423 MANAGERS (6-10 YRS EXP.)$ 57,660$ 74,022$ 83,495 SR. ASSOCIATES (4-5 YRS EXP.)$ 65,146$ 68,675$ 69,986 ASSOCIATES (1-3 YRS EXP.)$ 49,481$ 54,372$ 55,450 NEW PROFESSIONALS$ 48,089$ 40,487$ 46,361 Presented by California Society of CPA's MAP Committee

Average Compensation NonProfessional SMALLMEDIUMLARGE Internal Technical Support0$ 76,156$ 73,030 Administrator/Office Manager$ 43,257$ 50,735$ 66,075 Paraprofessionals$ 47,388$ 48,927$ 55,870 Clerical ( data entry, etc. )$ 37,188$ 38,216$ 43,399 Marketing Staff0$ 40,337$ 74,508 HR Staff0$ 55,369$ 79,746 Other0$ 45,004$ 81,482 Presented by California Society of CPA's MAP Committee

Utilization- Professional SMALLMEDIUMLARGE PARTNERS/OWNERS ( INCL. PT )56.5%62.6%53.6% DIRECTORS ( 11+ YRS EXP. )77.4%75.9%56.3% SENIOR MANAGERS ( 8-10 YRS EXP.)55.1%78.9%86.2% MANAGERS (6-10 YRS EXP.)54.6%74.8%70.4% SR. ASSOCIATES (4-5 YRS EXP.)78.9%73.2%71.8% ASSOCIATES (1-3 YRS EXP.)73.5%72.7%73.3% NEW PROFESSIONALS80.0%65.5%66.4% Presented by California Society of CPA's MAP Committee

Paid Time Off – Days by Category SMALLMEDIUMLARGE SICK DAYS VACATION DAYS OTHER (e.g., prof’l activities) AGGREGATE PTO Presented by California Society of CPA's MAP Committee

EMPLOYEE BENFITS Provided or Paid SMALLMEDIUMLARGE Cafeteria Plan9%27%67% Continuing Education54%86%97% CPA Exam Fees8%36%65% CPA Exam Review Course4%27%36% Graduate Degrees1%8%39% Dependent Health Insurance10%22%33% Dental Insurance13%49%64% Life Insurance15%23%68% Long Term Disability8%16%48% Professional Dues42%77%94% Professional Licenses38%77%91% Retirement Plan37%72%90% Health Insurance49%91%97% Voluntary Benefits (Life, LTD etc)5%8%35% None of These30%1%0% Presented by California Society of CPA's MAP Committee

Percent of Health Insurance Paid by firm Presented by California Society of CPA's MAP Committee

Partnership Succession Which of the following do you have in Place? Presented by California Society of CPA's MAP Committee

Malpractice Insurance Limit ALL CASMALLMEDIUMLARGE $1,540,352$ 845,185$1,289,872$2,804,451 Presented by California Society of CPA's MAP Committee

PARTNERSHIP AGREEMENT INCLUDES SMALLMEDIUMLARGE BUY–OUT100%82%91% CONDUCT100%61%74% DEATH100%85%94% DISABILITY100%73%87% EARLY WITHDRAWAL100%55%65% MANDATORY AGE06%30% NON COMPETITION048%61% RETIREMENT100%64%70% CAP ON MAX PYMT TO RETIRING PARTNER 03%26% NOTIFICATION REQU. PRIOR TO RETIRMENT 039%44% MANAGING CAPITAL ACCOUNTS039%31% Presented by California Society of CPA's MAP Committee

Partner Compensation Formula Includes SMALLMEDIUMLARGE Administrative Duties0%45%65% Client Billing50%55%77% Compliance with Business Plan0%14%16% Interest on Capital0%18%32% New Clients50%27%35% New Bus. From Present Clients0%14%32% Niche/New Services Developed0%5%10% Timely Billing0%50%58% Training/Mentoring0%14%19% Years of Service0%14%19% Personal Billable Time50%59%71% Post-Retirement Comp Formula0% 10% Presented by California Society of CPA's MAP Committee

Bonus/Incentive % of Total ALL CASMALLMEDIUMLARGE 3.7%1.5%3.1%7.5% ALL CASMALLMEDIUMLARGE 3.7%2.6%4.4%4.2% Average Annual Base Salary Increase Presented by California Society of CPA's MAP Committee

Technology – Does Your Firm? SMALLMEDIUMLARGE Have an Active Monitored Website56%76%96% Have a Client Portal28%44%61% Have a Blog11%8%12% Use Social Media26%22%41% Use Multiple Computer Screens60%77%96% Paperless Work Environment55% 75% Accept Credit Cards39%52%65% Remote Access to Network42%60%90% Use Cloud-Based Software31%32%36% Use Skype or Similar Service17%18%23% Deliver Tax Returns Digitally67%66%77% Promote Mobile Technology18%15%32% None of These6%1%14% Presented by California Society of CPA's MAP Committee