The accounting profession is undergoing a reexamination of its efforts to address the lack of diversity, not only in the U.S. but in other parts of the world.
Last month, the Institute of Management Accountants, the California Society of CPAs and the International Federation of Accountants released a global survey of finance and accounting professionals (see story). It found that fewer than 60% of respondents of all backgrounds view the profession as equitable or inclusive. Only 58% of respondents across all regions and of all genders view the profession as equitable, and 59% view the profession as inclusive. Gender inequality continues to be a problem as well, with 42% of the female survey respondents indicating they have left a company due to a perceived lack of equitable treatment or inclusion.
The new report follows up on an earlier report released last year by the IMA and CalCPA, but takes more of a global approach with the participation of IFAC. It also includes over 70 best practices for fostering diversity, equity and inclusion, along with indicators and metrics to measure progress.
Among the recommendations highlighted by the IMA are a call to action for explicit DE&I language and guidance in ethics codes, as well as the role that DE&I plays in environmental, social and governance (ESG) issues.
“I’d view this as a response to the U.S. study and the regional studies, because we presented an inventory of actionable practices, and each of those more than 70 practices are mapped to the United Nations Sustainable Development Goals,” said Loreal Giles, vice president of research and thought leadership at the IMA.
The U.S. came up short compared to some other parts of the world. “We asked respondents across all of the regions we studied, did they view the profession as equitable or inclusive?” said Giles. “What we found was that females in the United States were least likely of every region we explored to view the profession as equitable or inclusive, and it was considerably less likely. For females in the United States, only 33% of our respondents view the profession as equitable, and only 37% viewed it as inclusive. That’s relative to numbers of 50, 60 and 70% across the other regions. I think that is a really powerful takeaway.”
Only 58% of the respondents across all regions of the world and of all genders view the profession as equitable, while 59% view the profession as inclusive. Respondents from the U.S. and Europe and the Mediterranean are less likely to view the accounting profession in their respective geographies as equitable or inclusive than those in Asia-Pacific or the Middle East and North Africa.
In terms of female respondents who left a company while working in the accounting profession because of DE&I issues, the results for the U.S. were more on par with other regions in some respects. “In the U.S., people were least likely to leave because of a lack of diversity, but as we looked at that for a lack of equitable treatment and a lack of inclusion, we found some of those results to be a bit more comparable,” said Giles. “As we looked at people who left the profession altogether in the U.S., female respondents in particular were least likely to actually leave the profession as a result of a lack of DE&I relative to the other regions that we explored.”
CalCPA has been carrying out several of the report’s 70 recommendations internally. “CalCPA is committed to leading by example both in word and in action,” said Heather Collins, senior director of DE&I, pipeline and engagement at CalCPA. “Some of the top actions that CalCPA is practicing include appointing dedicated staff to oversee and advance DE&I progress, establishing a member-led DE&I committee, as well as a volunteer DE&I working group at the staff level, and then having more diverse representation at both the executive team and the board level. From a CalCPA standpoint, we currently have a female CEO. Our executive team is more than 50% female. And then from a board of directors standpoint, we have a female chair, a female vice chair, a female secretary treasurer and a female past chair. Our board is nearly 50% female.”
Professional ethics ties closely into diversity efforts. “Professional accountants are uniquely positioned to champion diversity, equity and inclusion,” said Diane Jules, director of the International Ethics Standards Board for Accounting, which is affiliated with IFAC. “They already have an obligation under the International Code of Ethics established by the International Ethics Standards Board for professional accountants to really comply with five fundamental principles of ethics, which ultimately reflect the profession’s commitment to the public interest. Professional accountants are required to act with integrity, which means that they’re required to act fairly in all their professional activities. They’re used to having to comply with the fundamental principle of objectivity, while not succumbing to bias when making decisions as well as exercising judgment. These two principles really are relevant to the mindset that’s required to support DE&I programs. In addition, we have the fundamental principles of professional behavior, which require professional accountants to comply with laws and regulations.”
There are regulations around DE&I in many jurisdictions around the world and, if accountants become aware of failure to comply with those laws, they have a responsibility to act. “They can’t turn a blind eye to it,” said Jules.
Accountants are getting more involved in vetting the DE&I efforts of some of their clients as they get more involved in offering assurance services on environmental, social and governance reporting.
“We are seeing the role of professional accountants evolving, particularly in the ESG space,” said Jules. “Issues like diversity, equity and inclusion are quite subjective in nature and organizations are being called upon to be transparent about their DE&I data. Increasingly, professional accountants are being called to give and provide assurance on such data. And it’s going to be particularly relevant to comply with the ethical principles and the international independence standards to really ensure the reliability and the trustworthiness of that information.”
Increasing diversity can help attract more young people to accounting as the profession finds itself struggling to recruit enough talent to fill the pipeline during this era of the Great Resignation when so many industries are having trouble recruiting enough employees. Having a diverse workforce in accounting may inspire more students to explore the profession.
“We have heard from students that they need to see it to be it,” said Collins. “What’s happening in the classroom is that they’re not seeing folks who look like them. We’re encouraging firms to send their diverse talent into classrooms to share their story and help inspire the next generation of CPAs. We’re also encouraging academia to put their talented staff in front of students as well, so they can be role models for the students and inspire them to pursue the CPA.”
The report recommends promoting awareness of the profession as viable and a desirable career path for students. “To do that, we need to have a coordinated and robust communication, marketing and awareness campaign,” said Giles. “One of the key findings in our interviews is that students are making decisions much, much earlier than the college or the senior year in high school about what major they’ll declare in university. That means as an accounting profession, we need to start younger. In addition to having more diverse members of the profession in the college classrooms, it’s going down to high schools and, in some instances, middle schools.”
She compared the efforts to what has been done over the years to spur interest in the co-called STEM disciplines of science, technology, engineering and mathematics. “One of the good examples that we have across the globe is what the STEM field has done with a lot of the initiatives that they’ve implemented from an awareness perspective, as well as from reaching youth,” said Giles. “As we issue this call for collective action across the profession, then it’s important for us as a profession — be it pursuing the public accounting route or the management accounting group — to start younger and expose youth to the value and the diverse career paths that are available in accounting, put people that look like them in front of them, and ensure that they’re able to illustrate the benefits and even the path to entrepreneurship that accounting can provide.”
The groups hope accountants will be able to translate the recommendations in the report into concrete actions. “Step one is to take a look at the inventory that’s there and identify what practices they are already performing within their organization,” said Giles. “And when they look at those practices, ask if they are doing it the right way? There are proposed Indicators and metrics that are included. Step two would be looking at where the organization wants to go. What outcomes that we’ve included in the report align most with the strategic objectives of the organization? After they identify which specific outcomes they want to pursue, then look at the inventory and identify a handful of practices that align with those outcomes. We’ve called out 10 outcomes in the report. And then step three is identifying practices that are mapped to those outcomes that they can implement today. Translating this from the large report and distilling it down into specific actions people can actually digest might be helpful.”
The profession may need more of a coordinated marketing campaign to promote this message to attract a diverse workforce.
“As we think about the accountancy landscape, it could be quite complex in terms of how you get an activity like this coordinated because there are professional accountancy organizations at the national level within jurisdictions, and then there are some at the regional level, and then of course, there are international ones as well,” said Jules. “It’s very important that there is a consistent message that’s being delivered with respect to the importance of the profession’s greatest asset, which is the people. Diversity, equity and inclusion is an issue that affects people, and for that reason, it makes sense for the profession to really rally around that. I think the profession is well positioned to really emphasize its commitment to an ethical set of requirements.”