Orange County’s accounting firms seem to be back in growth mode, as recent data show a return to hiring at the largest local firms.
The 42 largest firms in Orange County collectively notched a 4.7% growth in employment during the past year, breaking a three-year streak of job declines. The annual employment decreases seemed to point to a bottoming out, as the successive drops went from 7% to 5% and then to less than a 1% dip in hiring last year.
The yearly Business Journal list ranks accounting firms by the size of their OC offices. The firms on this week’s list combined for 4,072 employees, up from a year-earlier mark of 3,889.
More than half—at 24 firms—added jobs the past year, while eight firms saw drops. Nine firms said employment stayed flat. Totals for two firms were based on Business Journal estimates a year earlier and so were not compared to recently supplied data.
“Despite an uneven recovery and continued uncertainty, it’s clear that businesses are investing in their future,” said Dennis Parrott, Orange County managing partner for New York-based KPMG LLP. “That drives demand for relevant consulting businesses.”
KPMG stayed at No. 2 on this week’s list, with 408 employees in its Irvine office. The firm has 145,000 employees companywide, up by 7,000 from a year-earlier check.
The top four rankings were unchanged this year and again were comprised of the New York-based Big Four, which have offices here. Employees for the four made up more than 47% of the total number of jobs for the local industry.
No. 1 Deloitte LLP’s operation in Costa Mesa saw employment stay flat at 730.
No. 3 Ernst & Young LLP grew its Irvine office by 4% to 391, and Pricewaterhouse-Coopers LLP’s Irvine office saw a 7% increase to 386 in the No. 4 position.
Irvine-based Redwitz Business Solutions reported 207 employees, moving up to the fifth spot. The firm has seven local certified public accountants, down one from a year earlier.
No. 14 Haskell & White LLP in Irvine made good on its year-ago projection of possibly expanding its local office by 8% to 10%.
The firm now has 62 employees after adding five over the past year for a 9% growth. Haskell & White has 38 certified public accountants in Irvine for a similar 9% increase.
“What the numbers don’t tell you is that we were actually short-staffed during the busy season,” Managing Partner Wayne Pinnell said. “Our hiring statistics don’t reflect the work that those people pumped out.”
The firm recently wrapped up its fiscal year at the end of June, with a 13% increase in total revenue, versus a 1% uptick a year earlier.
“Right now, we have an increased load of employee benefit plans and nonprofit entities going into the summertime,” Pinnell said. “During the traditional busy season, we had picked up a few more clients and public companies. There seems to be a bit more activity generally [that likely was prompted by] pent-up demand.”
Some industries are faring better than others, he said.
“Real estate is still slow, waiting for valuations to come up. The green-type of ventures seem to get attraction, whereas some healthcare niche markets have cooled off a bit.”
KPMG’s Parrott said he has seen clients starting to spend more in information technology and data analytics.
“The cloud and everything surrounding the cloud, including tax, have become a key priority among business leaders,” Parrott said. “The tax applications need to be figured into the return on investment. Clients are turning to us to assist with that. Also we’re seeing a significant increase in the audit activity, (thanks to) increased mergers and acquisitions.”
Scott Appel, partner-in-charge of Hein & Associates LLP, also has seen “an uptick in mergers and acquisitions deals, capital-raising activities and some new business formations.”
Denver-based Hein & Associates debuted on this year’s list at No. 39, with 25 employees in its Irvine office reflecting a 56% increase. The firm has diversified its offerings, including additional transaction advisory services, as well as state and local tax consulting services, Appel said.
Mergers were again apparent.
No. 11 White Nelson Diehl Evans LLP in Irvine is the result of a combination between two Irvine-based accounting firms, White, Nelson & Co. and Diehl, Evens & Co. in October.
Managing Partner Dave Doran is heading up the combined firm, which also has offices in San Diego County. The combined firm has 105 employees here, after cutting seven jobs.
Some partners have observed that the accounting industry is now feeling the repercussions of a virtual halt to hiring a few years back.
“While we are adding people, it has been somewhat of a struggle,” Appel said. “Because the industry had significantly cut back on hiring in the 2008 to 2010 time frame, the experienced people we need just aren’t out there.”
Haskell & White’s Pinnell said there’s a shortage of senior accountants, generally meaning accountants with three years of experience.
“The accounting profession didn’t hire people coming out of school back then,” he said. “This past season was a scrambling point for a lot of firms to be able to find enough senior accountants.”
