How ARPE boosts CPA firm efficiency and growth

Why are accounting firms valued on revenue, not EBIDTA? Because most firms aren’t in business to generate EBIDTA. We’ve long graded accounting firms based on average Partner compensation. Earnings per partner are great. But without reinvestment, the firm is just extracting value—not building it. It’s not generating long-term sustainability and increased valuation. In this day and age, firms have to find a balance between rewarding their people and re-investing in the business to stay relevant and sustainable. Be careful maximizing earnings per partner… Enterprise Value (EV) ≠ Earnings per Partner (EP) #growth #strategy #accounting

𝗦𝗵𝗮𝗿𝗲-𝗕𝗮𝘀𝗲𝗱 𝗖𝗼𝗺𝗽𝗲𝗻𝘀𝗮𝘁𝗶𝗼𝗻: 𝗖𝗼𝗺𝗺𝗼𝗻 𝗣𝗶𝘁𝗳𝗮𝗹𝗹𝘀 & 𝗣𝗿𝗼𝗮𝗰𝘁𝗶𝘃𝗲 𝗦𝗼𝗹𝘂𝘁𝗶𝗼𝗻𝘀 At CFGI, we frequently support both public and private companies navigating the complexities of share-based compensation. Some of the most common issues we see include: 1️⃣ Accounting for modifications – especially when automation tools are available but not fully leveraged. 2️⃣ System implementation missteps – getting it right upfront is far more efficient than untangling errors later. 3️⃣ Valuation inputs – ensuring assumptions used in fair value calculations are accurate and audit-ready. 4️⃣ Unusual award terms – employment agreements sometimes include provisions that unexpectedly trigger liability classification instead of equity. These challenges can lead to significant downstream impacts—whether it's restatements, audit delays, or system rework. The good news? They’re much easier (and less costly) to address proactively—before grants are entered into systems or before implementation begins. Whether handled in-house or with consultant support, proactive planning saves time, money, and headaches. If you’re evaluating your current accounting processes or gearing up for a system rollout, let’s talk. CFGI can help assess your setup and offer practical recommendations to avoid costly cleanups later. 📩 Feel free to reach out if you'd like to discuss your equity compensation accounting strategy. #CFO #Controller #ShareBasedCompensation #EquityAccounting #CFGI #FinanceLeadership #AuditReady #PrivateCompany #PublicCompany #AccountingAutomation

Non-GAAP earnings have become an important lens for investors to assess a company’s underlying performance. Unlike GAAP figures, these measures exclude non-recurring or non-cash items — such as stock-based compensation or asset impairments — to show how management views core operations and sustainable profitability. Among the most common non-GAAP metrics are - 🔹 EBITDA isolates operating profitability by removing financing, taxation, and non-cash expenses, offering a clearer picture of operational efficiency. 🔹 Free Cash Flow highlights the cash available for reinvestment or distribution after accounting for capital expenditures and working capital changes — a key indicator of liquidity and sustainability. 🔹 Pro-Forma Earnings exclude one-time or unusual items to reflect management’s view of normalized performance. When it comes to business valuation, EBITDA often takes centre stage. It serves as a consistent benchmark across companies with different capital structures and tax environments, enabling investors and acquirers to compare operating performance and apply valuation multiples more meaningfully. The SEC requires companies to present the most directly comparable GAAP financial measure alongside any non-GAAP figure and provide a quantitative reconciliation between the same. At the end of the day, non-GAAP figures are powerful tools — but only when paired with consistency and honesty. They don’t replace GAAP; they help us see beyond it. #CorporateFinance #FinancialReporting #Accounting #Controllership #Recruiters #Chennai

Benchmarking reports promise to show how your firm measures up on fees, profitability, and productivity. But with data often skewed towards larger firms, how can small practices and sole practitioners use them effectively? https://smpl.is/ae289

IFRS-18  The new presentation and disclosure standard is mandatory effective January 1, 2027, bringing the biggest shake-up to financial reporting in years. Here's what you need to know: 📊 Key Changes: • New required subtotals in P&L (operating profit, profit before financing & income tax) • Stricter rules on what goes in "operating" vs "investing" activities• Management  Performance Measures (MPMs) must be clearly defined and reconciled • Enhanced transparency requirements for unusual items • Clearer guidance on income statement aggregation and disaggregation 💼 Why This Matters: • Better comparability between companies • Reduced confusion around adjusted earnings • More standardized financial analysis • Improved investor confidence The transition might feel overwhelming, but early preparation is your best friend. Companies should start mapping their current reporting to new requirements now.

While this may appear quite intuitive in relation to current practice and the requirements of IAS 7, these changes are sure to introduce nuances that will require early engagement with our audited entities - especially impacting the way KPIs are considered.

Billings don’t equal cash flow, especially in service-based firms. In professional services, it’s tempting to measure success by billings or top-line growth. They look great on paper but they rarely tell the full story. Over time, I’ve learned that cash flow and profitability hinge less on revenue, and far more on the operational levers beneath it: time tracking, utilisation, cost structure, and realisation. When unbillable hours stretch, overheads creep up, or invoicing lags, cash gets trapped in the business. Margins thin. Flexibility fades. Growth starts to feel fragile. That’s why financial analysis for service firms needs to dig deeper than the P&L. The real insights come from understanding where time, cost, and cash truly flow. Here are four levers worth keeping a close eye on 👇 💡 Billable utilisation vs. actual hours worked Low utilisation hides capacity issues and drives up your real cost per hour. 💡 Realisation rate on billable time Logged hours aren’t the same as billed hours, discounts and write-offs quietly erode profitability. 💡 Overhead cost allocation If support costs aren’t properly allocated, it’s hard to see which service lines are genuinely earning their keep. 💡 Invoicing and receivables lag Slow collections lock up cash and limit your ability to reinvest or adapt. Focusing solely on revenue can mask the operational stress sitting just below the surface. Sustainable growth comes from managing the flow not just the billings. 📈 This article is worth a read if you’re looking to build a healthier, more resilient business model. 🔗https://lnkd.in/eVknbd4v #ProfessionalServices #CashflowManagement #Utilisation #ServiceProfitability #FinancialAnalysis #CFOInsights

Understanding IFRS 2: Share-Based Payments Made Simple! Have you ever wondered how companies account for employee stock options or shares given as rewards? That’s exactly what IFRS 2 covers and it’s more relevant than ever in today’s world of startups, ESOPs, and performance-based pay! What is IFRS 2? IFRS 2 tells companies how to measure and recognize transactions where they pay for goods or services with shares or options instead of cash. In plain terms: When employees get shares or stock options, it’s a cost to the company just like salaries. Key Points (Made Easy): Measure at Fair Value If employees receive share options, record the fair value (usually at grant date) as an expense. Expense Over Vesting Period If options vest over 3 years, spread the total cost across 3 years. If paid in shares equity-based If paid in cash liability-based (re-measured each period) Example: ABC Ltd grants 1,000 share options to employees, each worth $10. Total = $10,000 Vesting period = 2 years So, the company recognizes $5,000 expense per year for two years.  Why It Matters: Reflects the true cost of rewarding employees Increases transparency for investors Encourages responsible share-based incentive planning Do you think share-based payments motivate employees or create accounting headaches? Share your view below #IFRS #AccountingStandards #IFRS2 #FinancialReporting #AccountingSimplified #FinanceProfessionals #Auditing #AccountantsOfLinkedIn #CFO #FinanceEducation #ESOP #StockOptions #CorporateFinance #FutureOfAccounting

𝗪𝗵𝘆 𝗦𝗺𝗮𝗿𝘁 𝗙𝗶𝗿𝗺𝘀 𝗔𝗿𝗲 𝗖𝗼-𝗦𝗼𝘂𝗿𝗰𝗶𝗻𝗴 𝗕𝗲𝗳𝗼𝗿𝗲 𝗧𝗮𝘅 𝗦𝗲𝗮𝘀𝗼𝗻 Every firm says: “We’ve got enough staff.” But when February hits… those same teams are logging 60–70 hours a week. 𝗧𝗵𝗲 𝗿𝗲𝗮𝗹𝗶𝘁𝘆: capacity on paper ≠ capacity in practice. Your team can get the work done but at the cost of late nights, burnout, and missed advisory opportunities. 𝗧𝗵𝗲 𝘁𝗿𝗲𝗻𝗱: Forward-thinking CPA firms are co-sourcing now, not after the crunch. Even shifting 25% of recurring work offshore before tax season delivers: ⏱️ Faster turnaround 💸 30–50% lower operational cost 😌 Breathing room for your senior staff Think of it as building your tax-season safety net before the storm. 𝗤𝘂𝗶𝗰𝗸 𝗿𝗲𝗮𝗹𝗶𝘁𝘆 𝗰𝗵𝗲𝗰𝗸: Is your firm actually ready or just running on adrenaline every tax season? #Outsourcing #CPA #TaxPreparation #Accounting #AccountingTrends #WorkforcePlanning #AccountingFirms

IAS 38 Intangible Assets IAS 38 review could bring companies account for trillions in unrecognised intangibles in their balance sheets. This is particularly important considering the huge advances in information technology that continue to transform company operations around the world. Companies should be encouraged to talk more about their intangible assets in annual reports, investor presentations and board discussions.