Less than half of accountants say the profession is equitable

February 22, 2021 1:45 PM

The accounting profession is struggling to build a fully equal and inclusive workplace — and that is causing diverse professionals to leave firms altogether, according to a new report.

Co-authored by the Institute of Management Accountants and the California Society of CPAs, the report, "Diversifying U.S. Accounting Talent: A Critical Imperative to Achieve Transformational Outcomes," found that efforts at retaining, promoting and including diverse talent — especially at the senior and managerial levels — are struggling, despite strides made in recent years on the recruiting and talent pipeline fronts. The report cited AICPA data that found for every 10 of the profession’s most senior leaders, nine are white, eight are male, and few openly identify as LGBTQIA.

Based on a survey of 3,000 current and former accounting professionals, the report found that less than half of all professionals (48 percent) polled consider the profession to be "equitable." It was also found that 43 to 55 percent of female, nonwhite, and LGBTQIA respondents polled have left a U.S. accounting firm due to a perceived lack of equitable treatment, with at least 30 percent of them leaving due to a perceived lack of inclusion.

Disparity in leadership diversity becomes even more apparent, the report noted, when the makeup of the accounting workforce is considered. Citing data from the U.S. Bureau of Labor Statistics and the AICPA, the report noted that female professionals comprised 61.7 percent of the U.S. accounting workforce in 2019, but only represented 23 percent of partners in CPA firms in 2018. The same figures for minority professionals were: Black — 8.5 percent/1 percent; Hispanic/Latino — 8.9 percent/2 percent; and Asian — 12 percent/4 percent.

"For years, I have been under the impression we have faced a 'diversity' problem across the profession," Loreal Jiles, director of research — digital technology and finance transformation at the IMA and one of the report's authors, told Accounting Today. "This research revealed [that] although we face a diversity problem, the bigger problem — that is, the source of the diversity problem — is a lack of equity and inclusion. ... DE&I-related issues contribute to one in five LGBTQIA respondents leaving the profession. For ... nonwhite racial and ethnic groups, that is one in 10. For females, one in 14. We are losing diverse talent at alarming rates because of the experiences people are having in our profession. That was the most shocking finding of all for me."

Anthony Pugliese, California Society of CPAs president/CEO (and soon-to-be CEO of the Institute of Internal Auditors), echoed these concerns over diverse professionals — particularly the one in five LGBTQIA professionals leaving the profession altogether.

"When you take into account the amount of time, money and effort spent by that accountant to become a CPA or CMA, they are choosing to leave their career despite the investment to find a more comfortable work environment," he told Accounting Today. "This is a huge talent drain and opportunity cost to the profession and the business sector. We have to come together to prevent this from happening."

"I believe when the culture within organizations changes to support DE&I, one of the benefits of that is that that there are more opportunities to not only recruit diverse groups into the profession but also retain them," Pugliese added. "Through the use of mentors and sponsors, these underrepresented groups can also be groomed and promoted to senior leadership roles, thereby helping to close the diversity gap. This further helps establish role models to attract younger students to the profession at the front-end of the pipeline."

More than 3,000 current and former U.S. accounting professionals provided feedback for the report's original data, featuring interviews of nearly 60 accounting, human resources, and DE&I practitioners and academics. All respondents self-identified as current or former members of the U.S. accounting industry, and were themselves of different experience levels, U.S. locations, and age.

The full report is available on the IMA's site here.

Why underrepresentation?

The IMA/CalCPA report found that nonwhite, female and LGBTQIA professionals each had their own experiences in why they perceive firm leadership to be unequal, but two frequently mentioned reasons included a perceived unfair recruitment process and unfair treatment from firm leaders in the workplace.

"I went to a majority white college on full scholarship and was top of that class," wrote a Black female professional interviewed in the report (all verbatim responses were anonymous). "I am a CPA. I consistently receive positive performance feedback. Yet I did not receive my first team leadership opportunity until 20 years into my career, and I don’t expect I will ever reach senior leadership.”

"The data says the diversity gap at senior levels exists because of inequity and exclusion," the IMA's Jiles told Accounting Today, adding that the data says the profession is underperforming in terms of DE&I for six reasons:

1. Diverse talent does not receive equitable access to the factors that contribute to career advancement;
2. Bias persists throughout many stages of the employment process;
3. Diverse talent is leaving employers and the profession at a faster rate than non-Hispanic white, male, non-LGBTQIA colleagues;
4. A portion of the profession does not believe that any action toward DE&I improvement is needed;
5. DE&I is not being treated as an issue that requires urgent attention; and,
6. A a lack of accountability for DE&I progress."

When diverse professionals leave due to a lack of DE&I

At least 40 percent of diverse professionals who left the profession cited a lack of equitable treatment as the reason.

"I left my last firm because I didn’t like the way my direct supervisor was being treated," noted an anonymous white male professional in the report. "She was a Black woman, and I saw how unfairly she was treated. I was rewarded for my strong performance, but she was evaluated on totally different standards.”

"I feel the profession is now seeing the value of good DE&I practices — as well as the opportunity cost of poor DE&I practices," said Pugliese. "We have a direct correlation between DE&I, the value of human capital and positive impact on the bottom-line. There is an ROI to DE&I — until recently, the profession was not seeing this widely, hence the delay in progress."

Equitable to some, not all

The report notes that white, male, non-LGBTQIA professionals are most likely to view the profession as inclusive and equitable, but the report also notes that the majority of the profession believes more must be done with DE&I — just over 10 percent of the nearly 1,400 open-text survey responses in the report believe that the profession is a “pure meritocracy,” and that further attention to DE&I is not only “unnecessary,” but “detrimental.”

Looking forward, the profession should be shifting its main DE&I focus from the recruitment of diverse professionals to the promotion and retention of diverse professionals.

"No single organization or person can drive positive change in DE&I for the entire profession," said Pugliese. "If we want to make true, positive progress, all of our stakeholders need to come together and collaborate on solutions and actions, not just thought leadership and talking. This includes accountancy bodies, CPA firms, corporate employers, community groups, academics, school systems and others to coordinate efforts, tap into resources and actually do something, not just say something."

"We have to 'go' until we have a diverse, equitable, and inclusive profession and measures in place to ensure the profession remains that way," said Jiles. "With the research indicating only half of respondents believe the profession is equitable and inclusive — and, on average, less than one-third of respondents of diverse groups sharing this view — we have a long way to go. The widespread progress that is needed will not be achieved overnight. We have to first acknowledge where we are today — the report helps with that a great deal. Then, we have to accept that we are on a journey. But, intentional, collaborative, targeted, and immediate action toward improvement will ensure the journey is accelerated in the right direction."