That’s the headline from INSIDE Public Accounting based on the results of their 2026 Practice Management Report:
The report draws on survey responses from 605 North American accounting firms, spanning firms with less than $5 million in net revenue to some of the profession’s largest organizations. This year, organic growth fell to 7.0% from 7.7%, while total growth, including M&A, slipped from 8.8% to 8.3%.
Profitability moved in the opposite direction.
Net income growth rose to 10.4%, up from 8.1% last year. For IPA Executive Director Chelsea Summers, that divergence is central to understanding what is happening inside firms.
What’s happening, she says, is it looks like firms are “converting the growth that they do get into profits.”
It could have something to do with this:
At the same time, firms appear to be extracting more revenue from their existing capacity. Revenue per work hour increased to $116 from $110, while revenue per FTE rose 2.6% to approximately $226,000.
That productivity gain comes with an important caveat: Revenue per FTE has failed to keep pace with inflation for five consecutive years. IPA’s longer-term data shows inflation-adjusted and nominal revenue per FTE tracking closely through 2020 before beginning to diverge.
IPA’s article and podcast about this talks about some other stuff, like how CAS and IT consulting are growing, pricing trends, succession planning, blah blah. Keep an eye on IPA in the coming weeks, they’ll be digging into the Practice Management Report some more and giving us all a deeper look behind the curtain at firms these days.
In the meantime, feel free to litter the comment section with your thoughts on these figures.
