Tiburon Releases CPA Market Summary

Accounting

Accounting includes bookkeeping and write-up, which are declining businesses threatened by the ease of Quick Books.

Auditing

Auditing is becoming a smaller percent of large CPA firms’ revenues. Between 1977 and 1999, the share of big CPA firms’ revenues accounted for by auditing fees dropped from 70% to 30%. Conversely, large CPA firms’ revenues generated from other revenue sources increased from 30% to 70% in the same period.

In 2003, the Big Four CPA firms lost more public company audit clients

than they gained. Price Waterhouse Coopers lost the most public company audit clients out of the Big Four with 91 clients, followed by Ernst & Young with 76 clients, Deloitte & Touche with 65 clients, and KPMG with 51 clients. The vast majority of auditing is still done by the Big Four CPA firms. The Big Four CPA firms perform 90% of all audits for public companies while all other CPA firms account for the remaining 10%. Ernst & Young is the leader in accounting & auditing. Specifically, Ernst & Young generates $3.3 billion of revenues from accounting & auditing services, followed by Price Waterhouse Coopers with $3.0 billion, KPMG with $2.5 billion, and Deloitte & Touche, also with $2.5 billion.

Tax

Tax services are the leading revenue source for both solo practitioners and multi-owner CPA firms.

Revenues from tax services account for 52% of solo practitioners’ revenues and 46% of multi-owner firms’ revenues. H&R Block leads even the Big Four in tax service revenues. Specifically, H&R block generates $2.1 billion in revenues from tax services, followed by Ernst & Young with $1.8 billion, Deloitte & Touche with $1.6 billion, Price Waterhouse Coopers with $1.6 billion, and KPMG with $1.3 billion.

--- DECEMBER 3, 2004 ---

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Tiburon recently released a new research report titled A Synopsis of the CPA Industry & Highlights of their Models for Entering the Investments Business. This release provides a summary of the CPA market, including details on its market size & demographics. For instance, there are now 448,847 CPAs including 176,396 employed at 47,751 CPA firms. Stay tuned for the next release summarizing the highlights of the movement of CPAs into financial planning

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		Tiburon Strategic Advisors, a market research & strategy consulting firm serving the brokerage and investment management industry, recently released a new research report on the CPA industry. The CPA industry is experiencing significant volatility and many members are focused on expanding their services to address the investment needs of their existing clients. Tiburon’s report, A Synopsis of the CPA Industry & Highlights of their Models for Entering the Investments Business, provides detailed insights into the models utilized by these firms as well as profiles of over 100 CPA firms that have successfully entered the market. *More Information* Click the links below for more information on this and other Tiburon research reports: Detailed Table of Contents for this Report Order this and/or Other Tiburon Research Reports Read About Tiburon Research Reports Context Setting The CPA market is complicated, with 450,000 CPAs (175,000 in private practice) at almost 50,000 CPA
		firms. Another 40,000 Enrolled Agents also exist. The primary businesses of these individuals are accounting, auditing, and tax. The tax business is being reshaped rapidly, and consolidation, new services, and other trends are emerging. Market Size & Demographics To understand the CPA market, four topics are critical: Size of the CPAs & CPA Firms Market Dominance of the Big Four CPA firms Size of the EAs market Traditional CPA & EA businesses

	Size of the CPAs & CPA Firms Market There are 450,000 Certified Public Accountants, with growth having slowed over recent years. Specifically, there were 448,847 CPAs at year-end 2000 and that number has been increasing at a rate of about 3,000 CPAs per year since 1998. There were just 362,397 CPAs as recently as 1988.
		Of the 450,000 CPAs, a few more than 175,000 are in private practice or public accounting. Specifically, 39% of CPAs are in private practice as opposed to 61% of CPAs who have roles in business, industry, academia, etc. After making these numbers equivalent, the size of the CPA market appears even more impressive. Looking at the size of client facing professionals in various financial markets, CPAs take the lead with 180,000 CPAs in private practice compared to 160,000 Series 7 brokers with a book of business and 35,000 partners at fee-only financial advisor firms. Specifically, the largest share of CPAs is in business & industry. An amazing 207,367 CPAs are in business & industry, compared to 176,396 in private practice or public accounting. 19,300 CPAs are in government, 10,772 CPAs are in education, and 35,010 are either retired or work in miscellaneous fields. There are almost 50,000 CPA firms. Specifically, there were 47,751 CPA firms in 2000. Over three-quarters of CPA firms have one-to-five professionals. Specifically, 48% of CPA firms have one professional, meaning that they are the sole CPA in the firm. Another 38% of CPA firms have 2-5

		professionals, 8% have 6-10 professionals, 3% have 11-19 professionals, 2% have 20-49 professionals, and only 1% have more than 50 professionals. Almost 80% of all CPAs in private practice work at small and mid-size firms. Specifically, 79% of CPAs in private practice work at Group B firms, small firms, and sole proprietorships. The remaining 21% of CPAs in private practice work for the Big Four CPA firms. Dominance of the Big Four CPA Firms

	The Big Four CPA firms have 60,000-100,000 employees each, up to six times the number of employees in the largest Group B firms. Of the Big Four firms, Price Waterhouse Coopers leads the way with 97,109 employees followed by Deloitte & Touche with 73,810 employees, KPMG with 69,100 employees, and Ernst & Young with 60,713 employees. Of the Group B firms, BDO Seidman leads with 16,078 employees followed by Grant Thornton with 14,019, employees, and McGladrey & Pullen with 12,775 employees.

	The Big Four firms have 6,000-7,000 partners, three times the number of partners in the largest Group B firms. Of the Big Four firms, Price Waterhouse Coopers leads the way with 7,020 partners followed by Deloitte & Touche with 6,714 partners, KPMG with 6,600 partners, and Ernst & Young with 6,131 partners. Of the Group B firms, Grant Thornton leads with 2,256 partners followed by McGladrey & Pullen with 2,245 partners and BDO Seidman with 2,182 partners. Size of the EAs Market In total, the market of CPAs and EAs in private practice is over 200,000. Specifically, there are 176,396 CPAs
		in private practice combined with 40,000 enrolled agents in private practice for a total of 216,396 CPAs and EAs in private practice. Traditional CPA & EA Businesses There are three traditional roles for CPAs & EAs in private practice: Accounting Audit Tax

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Tiburon Strategic Advisors

Tiburon Strategic Advisors, based in Tiburon, CA, was formed in 1998 to offer market research & strategy consulting services to all types of financial institutions and investment managers:

The firm has served over 250 corporate clients and completed over 600 projects since its founding, and today, its knowledge base includes mutual fund distribution, separately managed account programs, alternative investments, wealth management, insurance products, banking services, the fee-only financial advisor market, the CPA firm market, the family office market, and various international markets.
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