Detailed Survey Results 2Q 2015 Survey Background Conducted - - PowerPoint PPT Presentation

Detailed Survey Results — 2Q 2015

American Institute of CPAs

Survey Background

Conducted between May 12-27, 2015 Quarterly Survey CPA decision makers (primarily CFOs, CEOs and Controllers) AICPA members in Business & Industry only 570 qualified responses

American Institute of CPAs

Survey Highlights

CPA Outlook Index declines for US Economy and organization prospects, but plans for hiring and spending remain relatively consistent with Q1

• Overall index decreased from 74 to 72
• US economy optimism index component decreased 12 points to 68, after improving

significantly in Q4, 2014 and Q1, 2015

• The organization optimism and expansion plan indices continued easing from their

Q4, 2014 highs, declining from 76 to 73, and from 74 to 72, respectively

Revenue and profit indicators also ease, but spending plans strengthen

• Revenue and profit indicators decline 3 points each to 75 and 69, respectively
• Hiring component continues to be softest at 67, easing a point from 68 at Q1
• Spending continue to be strong, showing slight improvements over Q1

Optimism mixed across sectors

• Optimism in retail topped the charts this quarter making a leap to 85%, while

manufacturing, construction, and technology declined

• Expansion plans among smaller companies (revenues < $10m) fell from 59% to 47%,

and optimism among companies with revenues in excess of $1 billion also declined sharply from 77% in Q1 to only 53% in Q2

• Only 3% of companies overall expect to contract a lot over the coming year,

compared to 12% in Q1

American Institute of CPAs

American Institute of CPAs

CPA Outlook Index

The CPA Outlook Index is the composite of the following nine indicators at equal weights:

• U.S. Economy Optimism - Respondent optimism about the U.S. economy
• Organization Optimism - Respondent optimism about prospects for their own organization
• Expansion Plans - Respondent expectations of whether their business will expand over the

next 12 months

• Revenue - Expectations for increases or decreases in revenue over the next 12 months
• Profits - Expectations for increases or decreases in profits over the next 12 months
• Employment - Expectations for increases or decreases in headcount over the next 12 months
• IT Spending - Plans for IT spending over the next 12 months
• Other Capital Spending - Plans for capital spending over the next 12 months
• Training & Development - Plans for spending on employee training and development over the

next 12 months

A reading above 50 indicates a generally positive outlook with increasing activity. A reading below 50 indicates a generally negative outlook with decreasing activity. The CPA Outlook Index is a robust measure of sentiment about the U.S. economy that is supported by the unique insight and knowledge that CEOs, CFOs, Controllers, and other CPA executives have about the prospects for their own organizations, their expectations for revenues and profits, and their plans for spending and employment.

American Institute of CPAs

CPA Outlook Index (CPAOI)

2Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142Q143Q144Q141Q152Q15 CPA Outlook Index 61 59 62 69 66 58 64 69 67 63 59 66 69 69 69 70 72 74 78 74 72 61 59 62 69 66 58 64 69 67 63 59 66 69 69 69 70 72 74 78 74 72

American Institute of CPAs

CPA Outlook Index Component Indicators

Component 2Q14 3Q14 4Q14 1Q15 2Q15 ∆Q to Q ∆Y to Y U.S. Economic Optimism 67 69 78 80 68 12 01 Organization Optimism 75 78 80 76 73 03 02 Expansion Plans 76 79 81 74 72 02 04 Revenue 77 82 85 78 75 03 02 Profits 69 74 79 72 69 03 00 Employment 65 70 73 68 67 01 02 IT Spending 77 79 80 76 77 01 00 Other Capital Spending 70 74 75 71 72 01 02 Training & Development 70 73 75 70 71 01 01 Total CPAOI 72 75 78 74 72 02 00

American Institute of CPAs

CPA Outlook Index (CPAOI) vs GDP

4Q091Q102Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142Q143Q144Q141Q152Q15 CPA Outlook Index 52 55 61 59 62 69 66 58 64 69 67 63 59 66 69 69 69 70 72 75 78 74 72 Change in GDP 4.0% 2.3% 2.2% 2.6% 2.4% 0.1% 2.5% 1.3% 4.1% 2.0% 1.3% 3.1% 0.1%1.80%2.5% 4.1%2.40%-2.104.60% 3.90% 2.20%-0.70

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 10 20 30 40 50 60 70 80 90 100 GDP Growth CPA Outlook Index

American Institute of CPAs

American Institute of CPAs

Outlook for the U.S. and Organizations

Optimism for the U.S. Economy declines after reaching new highs

• The percentage of executives optimistic about the US Economy declined to 52% in Q2

from highs of 64% in Q4, 2014, and 68% in Q1 2015

• Continued economic growth, improved employment picture and low cost of capital and

energy were cited as reasons by optimists

• Lingering concerns about leadership/politics and about lack of real growth in economy

and employment were major issues for pessimists

Organizational optimism and expansion plans taper off

• Optimism about own company prospects decreased further to 58% down from 63% in

Q1, and 67% in Q4, 2014

• The percentage of companies expecting their business to expand also decreased,

easing to 61% in Q1, from 64% in Q2, after a high of 71% in Q4; however

• The percentage of companies expecting their businesses to contract significantly is
• nly 3% in Q2, 2015

Inflation concerns increase slightly

• Only 23% are concerned about inflation, consistent with Q1
• Concern about raw materials costs appeared as the most pressing concern this

quarter for 28% of respondents, replacing labor costs (26%) which has been the most pressing concern for the past several quarters

• Concern about energy costs (16%) and interest rates (21%) increased by 5 points and

by 3 points, respectively

American Institute of CPAs

Optimism & Expansion US, Organization, Expansion

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 US 40% 21% 28% 48% 33% 9% 19% 43% 34% 22% 21% 32% 49% 44% 38% 49% 51% 52% 64% 68% 52% Organization 51% 46% 51% 57% 54% 41% 45% 55% 54% 44% 41% 50% 57% 55% 57% 59% 61% 65% 67% 63% 58% Expansion 56% 54% 58% 66% 61% 53% 59% 61% 61% 56% 50% 58% 62% 62% 62% 63% 64% 68% 71% 64% 61% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

American Institute of CPAs

For your business, are you more concerned about inflation or deflation?

42% 24% 34% 55% 61% 38% 43% 37% 33% 32% 31% 36% 30% 35% 31% 29% 32% 38% 27% 23% 23% 6% 20% 14% 5% 4% 13% 11% 6% 9% 10% 9% 6% 7% 7% 7% 8% 6% 5% 10% 12% 10%

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Inflation or Deflation?

Inflation Deflation For your business, over the next 6 months, are you more concerned about the possibility of …?

American Institute of CPAs

Food costs Energy costs Raw material costs Labor costs Interest rates Other 2Q14 4% 11% 23% 38% 17% 7% 3Q14 5% 11% 23% 30% 25% 6% 4Q14 4% 14% 23% 34% 21% 4% 1Q15 3% 11% 20% 36% 24% 6% 2Q15 3% 16% 28% 26% 21% 6%

4% 11% 23% 38% 17% 7% 5% 11% 23% 30% 25% 6% 4% 14% 23% 34% 21% 4% 3% 11% 20% 36% 24% 6% 3% 16% 28% 26% 21% 6%

Inflationary Factor Representing the Most Significant Risk to your Business

Inflationary Risks and Costs

American Institute of CPAs

American Institute of CPAs

Key Performance Indicators

Outlooks for revenue and profit ease further from Q4 highs

• Expected revenue increase falls from 3.6 % to 3.2%; expected profit increase

declines 2.8% to 2.4%

Headcount plans, employee and benefit, and healthcare costs remained essentially constant

• Headcounts are now expected to increase by 1.5% over the next twelve months as

compared to a projected increase of 1.6% in the 1Q 2015 survey

• Expected increases in salary and benefit costs inch up a tenth to 2.1% in Q2

Anticipated healthcare cost remains constant at 5.8%

• Expected “other input prices” dropped a tenth to 2.0%, but continue to outpace

expected ability to increase “prices charged” which remained constant at 1.4%

Key spending plans also maintain Q1 2015 levels

• Increased spending for IT continues to be the strongest category and remained

consistent with Q1 at 3.1%

• Other capital spending plans also remained consistent with Q1 at 2.4%
• Expected increase in training spending recovered to 1.8% in Q2 after dropping to

1.6% in Q1

• Marketing spending plans increased from 1.6% to 1.8%
• R&D spending eased a tenth to 1.2%

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Key Performance Indicators Expected Growth in Revenue and Profits

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Revenue 1.8% 2.1% 2.4% 3.7% 3.4% 2.4% 2.8% 3.5% 3.1% 2.6% 2.1% 3.0% 3.1% 3.3% 3.6% 3.6% 3.8% 4.4% 4.7% 3.6% 3.2% Profit 1.8% 1.9% 2.0% 2.9% 2.5% 1.7% 2.4% 2.9% 2.6% 2.2% 1.4% 2.1% 2.4% 2.5% 2.7% 2.9% 2.9% 3.6% 3.9% 2.8% 2.4%

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Thinking about the coming 12 months, please comment on the probable change for your

• rganization for …

American Institute of CPAs

Employees, Salary & Benefits and Healthcare Costs

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Employees 0.5% 0.5% 0.6% 1.5% 1.1% 0.9% 1.2% 1.5% 1.1% 0.8% 0.5% 1.1% 1.0% 1.3% 1.2% 1.5% 1.3% 1.8% 2.1% 1.6% 1.5% Salary & Benefits 1.5% 1.6% 1.7% 2.0% 2.2% 1.9% 2.1% 2.0% 2.0% 1.9% 1.9% 2.2% 2.2% 2.3% 2.2% 2.2% 2.1% 2.4% 2.5% 2.0% 2.1% Healthcare 6.5% 6.6% 7.0% 6.7% 6.6% 6.4% 6.0% 6.2% 6.3% 6.4% 6.4% 6.3% 6.7% 6.8% 6.6% 6.2% 5.7% 6.6% 5.9% 5.8% 5.8%

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Thinking about the coming 12 months, please comment on the probable change for your

• rganization …

American Institute of CPAs

Pricing & Other Costs Average Change Expected

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Prices Charged 0.9% 0.8% 1.2% 1.4% 1.5% 1.2% 1.2% 1.4% 1.2% 1.2% 1.1% 1.3% 1.1% 1.3% 1.3% 1.3% 1.8% 1.7% 1.7% 1.4% 1.4% Input Prices 1.9% 1.6% 2.2% 2.6% 2.8% 2.3% 2.1% 2.1% 1.9% 1.9% 1.9% 2.0% 1.8% 1.9% 1.8% 1.8% 2.4% 2.3% 2.1% 2.1% 2.0%

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Thinking about the coming 12 months, please comment on the probable change for your

• rganization …

American Institute of CPAs

Spending Plans IT, Other Capital & Training

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 IT 1.4% 1.6% 1.8% 2.3% 2.6% 2.0% 2.7% 2.8% 2.8% 2.4% 2.1% 2.7% 2.8% 2.7% 2.9% 3.2% 3.1% 3.3% 3.3% 3.1% 3.1% Other Capital 0.7% 1.0% 1.4% 2.1% 2.0% 1.4% 2.2% 2.1% 2.0% 1.7% 1.3% 1.9% 2.2% 2.2% 2.1% 2.3% 2.4% 2.9% 3.2% 2.4% 2.4% Training 0.1% 0.2% 0.4% 1.3% 1.1% 0.5% 1.2% 1.4% 1.2% 1.0% 0.7% 1.3% 1.3% 1.3% 1.5% 1.7% 1.8% 2.0% 2.2% 1.6% 1.8%

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Thinking about the coming 12 months, please comment on the probable change for your organization for …

American Institute of CPAs

Spending Plans Marketing & R&D

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Marketing 0.8% 1.1% 1.1% 1.6% 1.5% 1.1% 1.8% 1.8% 1.5% 1.1% 1.0% 1.5% 1.4% 1.5% 1.5% 1.7% 1.6% 1.6% 1.8% 1.6% 1.8% R&D 0.5% 0.9% 1.1% 1.5% 1.0% 0.8% 0.9% 1.2% 1.0% 0.6% 0.6% 0.9% 1.0% 1.0% 1.0% 1.0% 1.0% 1.2% 1.3% 1.3% 1.2%

• 10.0%
• 8.0%
• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Thinking about the coming 12 months, please comment on the probable change for your

• rganization for …

American Institute of CPAs

American Institute of CPAs

Hiring Plans

Hiring plans ease slightly

• 55% of all companies say they have the appropriate number of

employees, which is 3% above Q1, 2915 and the levels at Q2, Q3 and Q4, 2014

• The number of companies with too many employees dropped a point

from 10% to 9%

• Roughly a third (35%) have too few employees
• The percentage of companies reluctant to hire decreased a point

from 15% in Q1 to 14% in Q2

• The number of companies planning to hire new employees

remained constant at 21%

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Overall staff situation relative to your needs

We have an excess number of employees We have approximately the appropriate number

• f employees

We have too few employees, but are hesitating to hire We have too few employees and are planning to hire Other 2Q14 9% 51% 20% 17% 3% 3Q14 9% 51% 18% 20% 2% 4Q14 9% 51% 14% 23% 3% 1Q15 10% 52% 15% 21% 2% 2Q15 9% 55% 14% 21% 1%

9% 51% 20% 17% 3% 9% 51% 18% 20% 2% 9% 51% 14% 23% 3% 10% 52% 15% 21% 2% 9% 55% 14% 21% 1%

Given current conditions, how would you characterize your overall staffing situation relative to your needs (i.e., do you have excess capacity or are employees stretched)?

American Institute of CPAs

American Institute of CPAs

Top Challenges Facing Organizations

Regulatory requirements/changes maintains the #1 rank Employee and benefits costs moved up another slot to the #2 most significant challenge this quarter Domestic economic conditions jumped up two positions to #3 from the #5 slot; however, domestic competition move down three notches to #5 after moving into the #2 slot last quarter Availability of skilled personnel maintained its 4th place ranking Developing new products/services/markets moved up one slot from #7 to #6, while domestic political leadership dropped from #6 to #7 Materials, supplies and equipment costs moved from the #10 to the #8 slot, switching places with changing customer preferences which dropped from #8 to #10 Financing availability/cost of capital difficulties made an appearance in the #9 slot

American Institute of CPAs

Top Challenges for Organizations

Please indicate the top three challenges for your organization

2Q 14 3Q 14 4Q 14 1Q 15 2Q 15

1

Regulatory requirements/changes Regulatory requirements/changes Regulatory requirements/changes Regulatory requirements/changes Regulatory requirements/changes

2

Employee and benefits costs Domestic economic conditions Availability of skilled personnel Domestic competition Employee and benefits costs

3

Availability of skilled personnel Availability of skilled personnel Employee and benefits costs Employee and benefits costs Domestic economic conditions

4

Domestic economic conditions Employee and benefits costs Domestic competition Availability of skilled personnel Availability of skilled personnel

5

Domestic competition Domestic competition Domestic economic conditions Domestic economic conditions Domestic competition

6

Domestic political leadership Domestic political leadership Developing new products/services/markets Domestic political leadership Developing new products/services/markets

7

Developing new products/services/markets Global economic conditions Domestic political leadership Developing new products/services/markets Domestic political leadership

8

Stagnant/declining markets Developing new products/services/markets Changing customer preferences Changing customer preferences Materials/supplies/ equipment costs

9

Changing customer preferences Stagnant/declining markets Materials/supplies/ equipment costs Stagnant/declining markets Financing (access/cost of capital)

10

Staff turnover Materials/supplies/ equipment costs Staff turnover Materials/supplies/ equipment costs Changing customer preferences

American Institute of CPAs

American Institute of CPAs

Industry, Region and Business-size Outlook - 1 of 2

Optimism mixed across sectors

• Retail trade topped the charts this quarter, making a leap in optimism to 85%, up

from several quarters with less than 70% of retailers being optimistic. Retail hiring also tops the charts this quarter with an expected rate of headcount increase of 4.6%, up from only 1.8% in Q1

• Wholesale trade also improved to 65% optimistic, up from only 54% in Q1.
• Manufacturing eased off from 63% to only 55% optimistic in Q2
• Construction fell off sharply after topping the charts at 83% in Q1 to only 64%
• ptimistic this quarter. However, the expected increase in headcount in

construction for the coming 12 months recovered to 3.2% after dropping slightly in Q1 to 2.7%

• Technology also dropped sharply to only 60% optimistic, after recovering to 80%

last quarter from a sharp decline to only 50% optimistic in Q4 2014. The hiring projection for technology also improved from 2.3% to 2.6%

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Industry, Region and Business-size Outlook - 2 of 2

Other Sectors

• Finance and Insurance optimism improved from 66% to 74%. However, the

expected headcount eased from 2.6% in Q1 to 2.0% in Q2.

• Mining and Natural Resources respondents are now projecting a .1% increase

in headcount for the coming 12 months after projecting a decrease in headcount

• f 2.9% in Q1

Regional differences in optimism are negligible; West declines most

• The Midwest continues to be slightly more optimistic that other regions at 60%
• The West declined in optimism from 67% to 57%

Expansion plans decline for largest and smallest of companies

• Optimism in the $10 - $100m range improved from 63% to 66%, and
• The $100m to $1b category eased only slightly from 67% to 65%;
• However, the number of companies with revenues < $10 million with plans to

expand declined from 59% in Q1 to 47% in Q2, and

• Only 53% of companies with revenues in excess of $1 billion expect to expand,

down from 77% in Q1 and 75% in Q4, 2014

• However only 3% of companies overall now expect to contract a lot, compared to

19% in Q1

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Organization Optimism by Industry

64% 62% 52% 59% 62% 67% 66% 69% 85% 0% 20% 40% 60% 80% 100% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Retail Trade

48% 58% 56% 48% 49% 61% 66% 54% 65% 0% 20% 40% 60% 80% 100% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Wholesale Trade

61% 56% 66% 66% 62% 72% 71% 63% 55% 0% 20% 40% 60% 80% 100% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Manufacturing

68% 56% 69% 80% 72% 58% 50% 80% 60% 0% 20% 40% 60% 80% 100% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Technology

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Organization Optimism by Industry

59% 54% 53% 62% 64% 76% 68% 72% 64% 0% 20% 40% 60% 80% 100% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Professional Service

59% 61% 56% 71% 64% 61% 71% 66% 74% 0% 20% 40% 60% 80% 100% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Finance & Insurance

60% 56% 55% 64% 69% 70% 64% 68% 65% 0% 20% 40% 60% 80% 100% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Real Estate

59% 59% 67% 73% 69% 69% 78% 83% 64% 0% 20% 40% 60% 80% 100% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Construction

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Organization Optimism by Industry

54% 52% 50% 43% 55% 71% 75% 56% 50% 0% 20% 40% 60% 80% 100% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Health Care Other

31% 37% 37% 34% 48% 50% 65% 49% 47% 0% 20% 40% 60% 80% 100% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Health Care Provider

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Expected Employment Change by industry

Thinking about the coming 12 months, please comment on the probable change for your

• rganization for Number of Employees
• 2.7%

2.1% 0.8% 2.4% 1.5% 3.2% 2.6% 2.0% 2.3% 3.6% 2.7% 1.8% 0.1% 0.7% 1.6% 1.9% 1.9% 2.0% 2.0% 2.4% 2.6% 2.8% 3.2% 4.6%

• 4.0%
• 3.0%
• 2.0%
• 1.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

MANUFACTURING BANKING PROFESSIONAL, SCIENTIFIC AND TECHNICAL … HOSPITALITY AND FOOD SERVICES (INCLUDING … HEALTHCARE - OTHER (PHARMACEUTICALS, … FINANCE AND INSURANCE HEALTHCARE - PROVIDER (HOSPITALS, … TECHNOLOGY REAL ESTATE & PROPERTY CONSTRUCTION RETAIL TRADE

Q2 Q1 Mining and Natural Resources

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Organization Optimism by Region

3Q14 4Q14 1Q15 2Q15 Midwest 66% 76% 65% 60% Northeast 68% 66% 68% 59% South 63% 63% 60% 56% West 62% 66% 67% 57%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Please select the rating that best describes your view for the economic outlook for your own

• rganization for the next 12 months.

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Expansion Plans by Business Size

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 < $10 million 47% 51% 54% 61% 53% 50% 54% 55% 58% 50% 44% 52% 53% 56% 56% 56% 59% 59% 65% 59% 47% $10 to <$100 million 56% 50% 55% 65% 59% 53% 56% 60% 59% 58% 52% 58% 63% 61% 63% 62% 65% 69% 72% 63% 66% $100 million to <$1 billion 61% 60% 61% 68% 69% 57% 62% 66% 66% 56% 53% 63% 63% 64% 62% 71% 65% 73% 72% 67% 65% > $1 billion 66% 63% 70% 77% 72% 60% 69% 65% 62% 54% 53% 68% 68% 68% 64% 69% 66% 71% 75% 77% 53%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 52% of all businesses expect to expand a little in the next twelve months 9% expect to expand a lot. 36% expect to contract a little or stay the same Only 3% expect to contract a lot compared to 19% in Q1 Please indicate whether you expect your business to expand or contract over the next 12 months

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Large businesses are most likely to have excess employees and most hesitant to hire

We have an excess number of employees We have approximately the appropriate number

• f employees

We have too few employees, but are hesitating to hire We have too few employees and are planning to hire Other < $10 million 9% 65% 10% 15% 1% $10 to <$100 million 7% 52% 13% 26% 2% $100 million to <$1 billion 11% 53% 17% 19% 0% > $1 billion 17% 53% 19% 8% 3%

9% 65% 10% 15% 1% 7% 52% 13% 26% 2% 11% 53% 17% 19% 0% 17% 53% 19% 8% 3%

Given current conditions, how would you characterize your overall staffing situation relative to your needs (i.e., do you have excess capacity or are employees stretched)?

American Institute of CPAs

American Institute of CPAs

M&A Activity

The first quarter saw more U.S. merger and acquisition activity than any similar period since 2000. Where does your business stand on M&A at this point?

53% 3% 14% 10% 6% 15% 0% 10% 20% 30% 40% 50% 60% NOT A PRIORITY FOR US AT THIS TIME NOT SURE WHERE WE STAND EXPECT TO MAKE SOME KIND OF DEAL IN THE NEXT 12 MONTHS HAVE HAD SOME PRELIMINARY DISCUSSIONS, BUT NO CONCRETE PROPOSALS ACTIVELY SURVEYING OPPORTUNITIES, BUT NO CONTACT WITH POTENTIAL DEAL PARTNERS OPEN TO DISCUSSIONS, BUT NOT ACTIVELY IDENTIFYING OPPRTUNITIES

American Institute of CPAs

Technology Investment

If your business is planning on increasing investment in technology over the next 12 months, what is the motivation? Please indicate top two reasons.

5% 9% 13% 16% 21% 37% 0% 5% 10% 15% 20% 25% 30% 35% 40%

NOT SURE NEED TO KEEP PACE WITH COMPETITION COST SAVINGS CLIENT OR CUSTOMER EXPECTATIONS MORE CAPABILITY FOR BUSINESS INTELLIGENCE AND INSIGHT PRODUCTIVITY OR EFFICIENCY GAINS

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Cash Holdings

Are you planning on reducing your corporate cash holdings in next 12 months? If so, to what degree?

15% 59% 11% 10% 5% 0% 10% 20% 30% 40% 50% 60% 70% NO - PLANNING TO ADD TO LIQUDITY HOLDINGS NO - MAINTAINING LIQUDITY HOLDINGS YES - A BIT YES - MODERATELY YES - SIGNIFICANTLY

26%

American Institute of CPAs

Plans for Cash

If you indicated yes that you plan to reduce cash holdings, what are your plans for the cash?

17% 6% 13% 17% 17% 19% 25% 45% 0% 10% 20% 30% 40% 50%

OTHER/NOT SURE STOCK BUYBACK SHIFTING TO LONGER-TERM INVESTMENT MIX BUSINESS EXPANSION/HIRING REDUCING DEBT ACQUISITION OR OTHER BUSINESS TRANSACTION DIVIDEND OR OTHER EQUITY DISTRIBUTION CAPITAL PROJECTS

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Money Market Alternatives

Are you exploring steps to shift your allocation from money market funds next year in response to pending regulation?

28% 4% 1% 3% 4% 59% 0% 10% 20% 30% 40% 50% 60% 70%

NOT SURE OTHER (PLEASE SPECIFY) EXCHANGE-TRADED FUNDS GOVERNMENT FUNDS SHORT-TERM BOND FUNDING NO, WE’RE NOT PLANNING ON SHIFTING ALLOCATION

American Institute of CPAs

American Institute of CPAs

Demographics

18% 36% 17% 12% 6% 4% 7% Size of Organization

$0 to under $10 million $10 million to under $50 million $50 million to under $100 million $100 million to under $250 million $250 million to under $500 million $500 million to under $1 billion $1 billion or more

11% 71% 0% 18% Type of Organization

Publicly Listed Company Privately Owned Entity Government Not for Profit

1% 1% 3% 62% 1% 29% 2% 0% 2% Position

CEO/President COO VP CFO CAO/CAE CIO Controller Director Accounting, Audit, Tax or Technology Manager Other

For additional information contact:

Kenneth W. Witt, CPA, CGMA Lead Technical Manager, Management Accounting kwitt@aicpa.org