Detailed Survey Results 4Q 2015 Survey Background Conducted - - PowerPoint PPT Presentation

Detailed Survey Results — 4Q 2015

American Institute of CPAs

Survey Background

Conducted between November 3-23, 2015 Quarterly Survey CPA decision makers (primarily CFOs, CEOs and Controllers) AICPA members in Business & Industry only 852 qualified responses

American Institute of CPAs

Survey Highlights

CPA Outlook Index declines two points overall, easing slightly across most measures

• Overall index decreased from 71 to 69
• US economy optimism index component declined three points from 67 to 64 in Q4

continuing the decline from a peak of 80 in Q1 2015

• The organization optimism index declined three points and expansion plan index

declined two points; both now stand at 70

Revenue and profit indicators decrease; spending and employment plans maintain

• Revenue index decreases two points to 74 and profits index decreases 4 points to 67
• Hiring component continues to be soft at 67, but improves a point from 66 at Q3
• Spending continues to be strong, although training spending eased another point

from 69 to 68

Optimism down across sectors;

• Retail trade optimism fell sharply from 65% to only 28%, after topping the charts at

85% optimistic in Q2. Retail hiring also fell to a projected rate of less than 1%

• Manufacturing hiring projections also fell sharply from a 3.8% increase in Q3 to only

.9% for the coming twelve months; however, construction hiring rebounded in Q4 to 2.5% after falling back to only 1.2% in Q3

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)

4Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142Q143Q144Q141Q152Q153Q154Q15 CPA Outlook Index 62 69 66 58 64 69 67 63 59 66 69 69 69 70 72 75 78 74 72 71 69 62 69 66 58 64 69 67 63 59 66 69 69 69 70 72 75 78 74 72 71 69 CPA Outlook Index - 69

American Institute of CPAs

CPA Outlook Index Component Indicators

Component 4Q14 1Q15 2Q15 3Q15 4Q15 ∆Q to Q ∆Y to Y U.S. Economic Optimism 78 80 68 67 64 03 14 Organization Optimism 80 76 73 73 70 03 10 Expansion Plans 81 74 72 72 70 02 11 Revenue 85 78 75 76 74 02 11 Profits 79 72 69 71 67 04 12 Employment 73 68 67 66 67 01 06 IT Spending 80 76 77 77 77 00 03 Other Capital Spending 75 71 72 72 72 00 03 Training & Development 75 70 71 69 68 01 07 Total CPAOI 78 74 72 71 69 02 09

American Institute of CPAs

CPA Outlook Index (CPAOI) vs GDP

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 CPA Outlook Index 70 72 75 78 74 72 71 69 Change in GDP

• 2.10%

4.60% 3.90% 2.20% 0.60% 3.90% 2.1%

• 10.00%
• 8.00%
• 6.00%
• 4.00%
• 2.00%

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 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 continues to soften

• The percentage of executives optimistic about the US Economy declined further from

48% in Q3 to 45% in Q4, down from highs of 64% in Q4, 2014, and 68% in Q1, 2015

• Continued, albeit slow, growth of U.S. economy, strength of dollar and low oil prices

were cited by optimists

• Global economic concerns about China and Europe, along with ongoing concerns

about regulation/leadership/political gridlock cited as the primary reasons for those with pessimistic views

Organizational optimism and expansion plans also decline

• Optimism about own company prospects fell six points from 59% to 53%, down from a

peak of 67% in Q4, 2014

• The percentage of companies expecting their business to expand decreased another

3 points from 60% in Q3 to 57% in Q4

• The percentage of companies expecting their businesses to contract significantly

remained relatively low at 4%

Inflation concerns remain low

• Only 23% are concerned about inflation, slightly lower than 25% at Q3
• Concern about labor costs continued as the most pressing concern for 37% of

respondents, followed by raw materials costs cited by 23%

• Concern about energy costs declined by 5 points in Q3 and remain low at 12%
• Concern about interest rates eased another 2 points to 22%

American Institute of CPAs

Optimism & Expansion US, Organization, Expansion

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

34% 55% 61% 38% 43% 37% 33% 32% 31% 36% 30% 35% 31% 29% 32% 38% 27% 23% 23% 25% 23% 14% 5% 4% 13% 11% 6% 9% 10% 9% 6% 7% 7% 7% 8% 6% 5% 10% 12% 10% 10% 11%

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 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 4Q14 4% 14% 23% 34% 21% 4% 1Q15 3% 11% 20% 36% 24% 6% 2Q15 3% 16% 28% 26% 21% 6% 3Q15 4% 11% 21% 36% 24% 5% 4Q15 2% 12% 23% 37% 22% 5%

4% 14% 23% 34% 21% 4% 3% 11% 20% 36% 24% 6% 3% 16% 28% 26% 21% 6% 4% 11% 21% 36% 24% 5% 2% 12% 23% 37% 22% 5%

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 profits both fall off

• Expected revenue increase declines from 3.3% to 2.9% ; expected profit increase

also declines from 2.6% to 2.0%

Headcount plans ease slightly; salary and benefit, and healthcare costs remained essentially constant

• Headcounts are now expected to increase by 1.0% over the next twelve months,

easing another three tenths this quarter from the post-recession high projection of 2.1% projection at Q4, 2014

• Expected increases in salary and benefit costs eased two tenths to 1.8% in Q4
• Anticipated healthcare cost eased from 5.8% in the previous three quarters to 5.4%
• Expected “other input prices” decreased another 1 tenth to 2.1%, and the expected

ability to increase “prices charged” also eased a point from 1.6% to 1.5% in Q4

Key spending plans mixed

• Increased spending for IT continues to be the strongest category, but declined

slightly from 3.0% in Q3 to 2.8% in Q4

• Other capital spending plans also eased a tenth over from 2.5% to 2.4%
• Expected increase in training spending remained constant at 1.4% after recovering

to 1.8% in Q2

• Marketing spending remained constant at 1.6%; R&D spending gave back the full

half point gain seen in Q3, returning to 1.2% in Q4

American Institute of CPAs

Key Performance Indicators Expected Growth in Revenue and Profits

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Revenue 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% 3.3% 2.9% Profit 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% 2.6% 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 for …

American Institute of CPAs

Employees, Salary & Benefits and Healthcare Costs

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Employees 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% 1.3% 1.0% Salary & Benefits 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% 2.0% 1.8% Healthcare 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% 5.8% 5.4%

• 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 …

American Institute of CPAs

Pricing & Other Costs Average Change Expected

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Prices Charged 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% 1.6% 1.5% Input Prices 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% 2.2% 2.1%

• 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

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 IT 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% 3.0% 2.8% Other Capital 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% 2.5% 2.4% Training 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% 1.4% 1.4%

• 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 organization for …

American Institute of CPAs

Spending Plans Marketing & R&D

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Marketing 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% 1.6% 1.6% R&D 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% 1.7% 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 concerns ease slightly from Q3 levels

• 53% of all companies say they have the appropriate number of

employees, which is up 1% from Q3, 2015

• The number of companies now saying they have an excess of

employees increased two points from 8% to 10%

• Roughly a third (35%) have too few employees
• The percentage of companies with too few who are reluctant to hire

decreased to 17% in Q4, after jumping to 20% in Q3.

• The number of companies planning to hire new employees

remained constant at 18%

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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 4Q14 9% 51% 14% 23% 3% 1Q15 10% 52% 15% 21% 2% 2Q15 9% 55% 14% 21% 1% 3Q15 8% 52% 20% 18% 2% 4Q15 10% 53% 17% 18% 1%

9% 51% 14% 23% 3% 10% 52% 15% 21% 2% 9% 55% 14% 21% 1% 8% 52% 20% 18% 2%

10% 53% 17% 18% 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 its place at the top of the chart, but is joined by domestic economic conditions which moved from #4 to #2, and domestic competition which also jumped two slots from #5 to #3 Global economic conditions is once again a greater concern, moving from the 10th slot in Q3 to #7 in Q4 Concern about stagnant/declining markets also increased, moving from #6 to #5 Employee and benefits costs fell from the #2 slot to #6 and the availability of skilled personnel eased from #3 to #4 Financing (access, cost of capital) returned to the “top ten”, now in the #8 slot Developing new products/services/markets eased from #7 to #9 Domestic political leadership also eased from #9 to #10

American Institute of CPAs

Top Challenges for Organizations

Please indicate the top three challenges for your organization

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

1 Regulatory requirements/changes Regulatory requirements/changes Regulatory requirements/changes Regulatory requirements/changes Regulatory requirements/changes 2 Availability of skilled personnel Domestic competition Employee and benefits costs Employee and benefits costs Domestic economic conditions 3 Employee and benefits costs Employee and benefits costs Domestic economic conditions Availability of skilled personnel Domestic competition 4 Domestic competition Availability of skilled personnel Availability of skilled personnel Domestic economic conditions Availability of skilled personnel 5 Domestic economic conditions Domestic economic conditions Domestic competition Domestic competition Stagnant/declining markets 6 Developing new products/services/markets Domestic political leadership Developing new products/services/markets Stagnant/declining markets Employee and benefits costs 7 Domestic political leadership Developing new products/services/markets Domestic political leadership Developing new products/services/markets Global economic conditions 8 Changing customer preferences Changing customer preferences Materials/supplies/ equipment costs Changing customer preferences Financing (access/cost of capital) 9 Materials/supplies/ equipment costs Stagnant/declining markets Financing (access/cost of capital) Domestic political leadership Developing new products/services/markets 10 Staff turnover Materials/supplies/ equipment costs Changing customer preferences Global economic conditions Domestic political leadership

American Institute of CPAs

American Institute of CPAs

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

Optimism down across all sectors

• Retail trade optimism fell sharply from 65% to only 28%, after topping the charts

at 85% optimistic in Q2. Retail hiring also fell to a projected rate of less than 1%, now ranked only above the mining and natural resources sector which is projecting a decline of 2.6%

• Wholesale trade optimism also declined in Q4 to 23%
• Manufacturing fell from 53% optimistic in Q3, to only 41% in Q4; manufacturing

hiring projections also fell sharply from a 3.8% increase in Q3 to only .9% for the coming twelve months

• Construction optimism fell from 64% in Q3 to only 51% optimistic in Q4.

However, the expected increase in headcount in construction rebounded in Q4 to 2.5% after falling back to only 1.2% in Q3

• Professional Services and Technology also eased off somewhat in optimism,

but employment is projected to be stronger for both sectors than seen in Q3

• Banking is also expecting to see a headcount recovery – now projecting a 1.4%

increase vs. the .9% decline projected in Q3, 2015

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

Other Sectors

• Finance and Insurance optimism declined from 65% to 49%. However, the

expected headcount improved slightly from 1.8% in Q3 to 2.1% in Q4.

• Healthcare providers and Healthcare-other sectors both fell off sharply in their
• ptimism in Q4 after showing some strength in Q3

Optimism declines across regions

• Northeast replaces West as most optimistic, now at 58%
• South falls below 50% optimistic to 48%
• Midwest and West also less optimistic than Q3, both now at 55%

Expansion plans fall off for smallest of companies, increase for bigs

• The number of companies with revenues < $10 million having expansion plans

declined from 61% in Q3 to 52% in Q4

• The percentage of companies with revenues > $1 billion recovered another 3

points in Q4, improving from 56% to 59%

• The $10-$100 million range of companies eased from 62% to 57%, and the $100

billion to $1 billion range of companies also eased from 60% to 57% in Q4

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Organization Optimism by Industry

52% 59% 62% 67% 66% 69% 85% 65% 28% 0% 20% 40% 60% 80% 100% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Retail Trade

56% 48% 49% 61% 66% 54% 65% 54% 23% 0% 20% 40% 60% 80% 100% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Wholesale Trade

66% 66% 62% 72% 71% 63% 55% 53% 41% 0% 20% 40% 60% 80% 100% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Manufacturing

69% 80% 72% 58% 50% 80% 60% 67% 52% 0% 20% 40% 60% 80% 100% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Technology

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Organization Optimism by Industry

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

Professional Service

56% 71% 64% 61% 71% 66% 74% 65% 49% 0% 20% 40% 60% 80% 100% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Finance & Insurance

55% 64% 69% 70% 64% 68% 65% 69% 48% 0% 20% 40% 60% 80% 100% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Real Estate

67% 73% 69% 69% 78% 83% 64% 64% 51% 0% 20% 40% 60% 80% 100% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Construction

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Organization Optimism by Industry

50% 43% 55% 71% 75% 56% 50% 67% 44% 0% 20% 40% 60% 80% 100% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Health Care Other

37% 34% 48% 50% 65% 49% 47% 69% 38% 0% 20% 40% 60% 80% 100% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Health Care Provider

American Institute of CPAs

Expected Employment Change by industry

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

• rganization for Number of Employees

0.9% 2.6% 3.8%

• 0.9%

2.3% 1.0% 2.5% 1.9% 1.1% 1.8% 1.2% 1.5%

• 2.6%

0.7% 0.9% 1.4% 1.5% 1.6% 1.7% 2.0% 2.0% 2.1% 2.5% 2.7%

• 3.0%
• 2.0%
• 1.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% RETAIL TRADE MANUFACTURING REAL ESTATE PROPERTY NOT FOR PROFIT HEALTHCARE PROVIDER TRANS & DISTRIBUTION TECHNOLOGY FINANCE AND INSURANCE CONSTRUCTION PROFESSIONAL SERVICES Q4 Q3

MINING & NATURAL RESOURCES BANKING

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Organization Optimism by Region

1Q15 2Q15 3Q15 4Q15 Midwest 65% 60% 61% 55% Northeast 68% 59% 62% 58% South 60% 56% 54% 48% West 67% 57% 63% 55%

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.

American Institute of CPAs

Expansion Plans by Business Size

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

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 48% of all businesses expect to expand a little in the next twelve months 9% expect to expand a lot. 39% expect to contract a little or stay the same Only 4% expect to contract a lot Please indicate whether you expect your business to expand or contract over the next 12 months

American Institute of CPAs

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 7% 57% 17% 17% 2% $10 to <$100 million 9% 56% 14% 18% 3% $100 million to <$1 billion 13% 46% 21% 20% 0% > $1 billion 14% 47% 22% 16% 1%

7% 57% 17% 17% 2% 9% 56% 14% 18% 3% 13% 46% 21% 20% 0% 14% 47% 22% 16% 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

Cyber Security – Finance Involvement

Given the rise in credit card breaches at major retailers and the threat of database breaches, phishing scams and other forms of cyber attacks, to what extent has the CFO and / or finance functions at your company been asked to take on more oversight

• r take responsibility for mitigating these risks?

21% 6% 16% 22% 35% 0% 5% 10% 15% 20% 25% 30% 35% 40%

NOT INVOLVED AT ALL HAS BECOME THE PRIMARY RESPONSIBLE DEPARTMENT SIGNIFICANTLY MORE INVOLVED MODERATELY MORE INVOLVED SLIGHTLY MORE INVOLVED

American Institute of CPAs

Cyber Security – Overall Concern

Thinking about your operations overall, how concerned is your business currently about the threat of database breaches, phishing scams and

• ther forms of cyber attacks?

4% 28% 29% 39% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% NOT AT ALL CONCERNED SLIGHTLY CONCERNED SIGNIFICANTLY CONCERNED MODERATELY CONCERNED

American Institute of CPAs

Cyber Security – Frequency of Attack

In the past two years, has your business been victim of a cyber attack of any kind?

15% 30% 55% 0% 10% 20% 30% 40% 50% 60% I DON'T KNOW YES NO

American Institute of CPAs

Cyber Security – Company Initiatives

How is your company responding to the increased threat of data breaches?

3% 12% 12% 23% 31% 56% 78% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

OTHER (PLEASE SPECIFY) WE HAVEN’T MADE ANY CHANGES WE HAVE ADDED POSITIONS TO HELP ADDRESS CYBER THREATS WE’VE RECENTLY SECURED OR INCREASED LIABILITY INSURANCE IN THE EVENT OF BUSINESS … WE HAVE TOUGHENED OUR POLICIES REGARDING THIRD-PARTY VENDORS TO ADDRESS POTENTIAL … WE ARE INCREASING OUR SPENDING ON CYBER SECURITY/FRAUD PREVENTION INCREASED EMPLOYEE AWARENESS AND ACCOUNTABILITY REGARDING PREVENTION OF …

American Institute of CPAs

Cyber Security – Spending Increases

In which category did your business record the greatest percentage increase in spending over the past year?

2% 8% 15% 20% 24% 31% 0% 5% 10% 15% 20% 25% 30% 35%

TRAINING CYBER AND SECURITY-RELATED TECHNOLOGY IMPROVEMENTS OTHER GENERAL TECHNOLOGY IMPROVEMENTS CAPITAL IMPROVEMENTS PAYROLL HEALTH CARE

American Institute of CPAs

Cyber Security – Media Coverage

There has been substantial media coverage of cyber threats recently. How accurately has the risk to businesses been portrayed? 8% 22% 22% 48% 0% 10% 20% 30% 40% 50% 60% THE RISK HAS BEEN OVERBLOWN THE THREATS ARE WORSE THAN HAVE BEEN REPORTED NOT SURE THE COVERAGE HAS BEEN PRETTY MUCH ON TARGET

American Institute of CPAs

American Institute of CPAs

Demographics

18% 29% 11% 11% 7% 4% 20% 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

19% 64% 4% 12% Type of Organization

Publicly Listed Company Privately Owned Entity Government Not for Profit

7% 2% 6% 34% 1% 23% 9% 13% 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 Cary Jones Associate Manager Business, Industry & Government Team cajones@aicpa.org