Every accountant knows that the numbers tell the story.Most industry people would agree that having a diverse workforce contributes to the overall growth and prosperity of the accounting firm. Recruiting a diverse workforce, then, makes smart business sense. National studies have shown that over the next 10 years, more than half of those entering the workforce will possess a minority background.
According to the U.S. Department of Labor and the U.S. Census Bureau, the projections for entrants coming into the workforce by 2012 will show a dramatic increase in minorities. This emerging group will make up close to half of the U.S. workforce's total entrants (see chart, page 24).
In fact, the projections for percentage changes in employment over the next 10 years reflect a dramatic increase in the U.S. workforce of people with minority backgrounds - with Hispanics and Asians predicted to experience the greatest individual growth.
All this comes at a time when the industry is struggling to find qualified staff. "Recent accounting-related legislation is having a significant impact at a time when the pool of qualified prospects is declining due to the 150-hour rule instituted by most states," says David Dunkel, chairman and CEO of staffing firm Kforce. "As a result, many hiring managers have more work than they can handle with current staffing levels and cannot find enough capable new hires."
Given that, it only makes sense for firms to expand their traditionally narrow recruiting pool, and reach out to groups that had previously been underrepresented in accounting.
In a recent report from the American Institute of CPAs, "The Supply of Accounting Graduates and the Demand for Public Accounting Recruits - 2005," the institute concluded that the percentage of accounting degree recipients of ethnic/racial backgrounds has held steady, with slight increases.
If anything, the report shows that in 2004, the percentage of Asian/Pacific Islanders hired by CPA firms was 12 percent of the total number hired that year, with Hispanics or Latinos at 8 percent, while African-Americans actually decreased two percentage points, to 3 percent. The total ethnic hiring was at 23 percent - up from 18 percent the prior year.
As for the staffs themselves, the study pointed out that accounting firms employing 200 or more members exhibited the most racial/ethnic diversity. And with more firms merging or planning to merge, that will only increase.
Upswing projected
Mention accounting to any layperson and you'll hear some misconceptions - mainly, that the profession is comprised solely of white males.
According to another AICPA study conducted a few years ago, women comprised 56 percent of new graduates hired by public accounting firms in 2004.
The same study described the breakdown of CPA firm new hires as 82 percent white and 18 percent minority (specifically, Asian/Pacific Islander, black, Hispanic, Native American/ Alaskan Native and "other").
The numbers, though, are improving rapidly, said Daniel Hobson, who was manager of the AICPA's Minority Initiatives Committee at the time the study was released. He noted that minorities in accounting were on the rise for not only undergraduate, but also graduate degrees. For example, in the academic year 2000-2001, minorities received 25 percent of accounting Bachelor's degrees, 27 percent of Master's degrees, and 27 percent of accounting Ph.Ds.
Behind each number, however, is a host of individuals whose stories communicate that, while it's getting easier for minorities to ascend the professional accounting ladder, it's still a difficult climb.
"Critical mass is key," said George Willie, former chair of the AICPA's Minority Initiatives Committee and former head of the Division of Firms for the National Association of Black Accountants. Willie immigrated to the United States from Jamaica 30 years ago in order to pursue his accounting education. "When the faces in the hallways of the large and midsized firms mirror the variety of the faces you see walking down the street, then we've achieved critical mass. As long as African-Americans or Latinos or Asian-Americans, or other cultures, are not exposed to accounting as a career choice, then we'll continue to experience a shortage of them in the field as a whole."
But change has apparently turned the corner in a number of areas.
Thomas Raffa, founder and managing partner of Raffa PC, in Washington, D.C., said that 65 percent of his accounting firm is comprised of women. "Actually, we are really a woman-owned firm, with three of our five partners being women. One is from Korea and another is African-American."
As to the split between Americans and those from foreign countries, he said that it's roughly 50/50 now, up from a 60/40 split two years ago.
"Ten languages other than English are spoken among our employees, and these include Korean, Hindi, French, Arabic, Urdu, Chinese, Spanish, Tagalog, Russian/Romanian and Patios," Raffa explained.
Moreover, he pointed out that his employees hail from 16 countries outside of the U.S.: Nigeria, Jamaica, the Philippines, Kenya, Guyana, Bulgaria, Romania, China, Ecuador, Korea, India, Syria, the Central African Republic, Pakistan, Russia and Lithuania.
However, Raffa stressed that in some respects it is harder to process minorities through the system because of 9/11 and the Patriot Act. "Everyone is skeptical today, and yet we still hold to the same standards in communications and educational background," he said. "However, the bottom line is that minorities offer great resources that many firms unfortunately do not tap into."
The Wichita, Kan., office of Grant Thornton is also being proactive in hiring minorities. Of about 50 employees, there are eight minorities at the firm, three of whom were hired last December from the Philippines. The others are Asian, Hispanic and a Pacific Islander.
Push for minority recruiting
Recently, Big Four firm Ernst & Young announced that for the eighth year in a row it has been named one of Fortune magazine's "100 Best Companies to Work For." The firm moved up in the ranking 13 places to No. 67 on the list of 100 companies, and ranked No. 21 on the large company list. Ernst & Young is the only Big Four firm that has been on the list for eight consecutive years.
The firm said that it is committed to an inclusive environment that is progressive, flexible and values the individual contributions of its people. Reflecting that, Ernst has also been a member of Working Mother's "100 Best Companies for Working Mothers" list for the past eight years, and received the Training Top 100 Award for the fourth year in a row in 2005.
It was also named to the Black Collegian Top 100 Diversity Companies list for the fifth consecutive year, and for the second year in a row was named by Hispanic Magazine as one of the Top 100 companies for Hispanic professionals. This year, Ernst & Young also achieved a Human Rights Campaign Corporate Equality Index rating of 100 percent, the first public accounting firm to attain that rating.
The accounting profession has been comparatively hands-off about the issue, at least until now. Seminar sponsors say that the diversity push isn't about quotas. A more heterogeneous workforce, they say, brings a deeper talent pool and a broader range of thoughts and perspectives.
Theresa Hammond, author of A White-Collar Profession, a book that chronicles the stories of the first 100 black CPAs, said that there are several reasons diversity has been sluggish in the accounting industry.
Big business, she pointed out, was resistant to integration even after the civil rights movement. "When the Arthur Young firm hired Robert Hill in 1961, making him the first black CPA at what was then the Big Eight, the firm checked with clients to make sure they were comfortable working with him."
Hammond noted that while the resistance of clients has always been cited as a reason for the low number of black CPAs, that might also be an excuse. In her book, she writes that half of black CPAs surveyed in one 1990 study said that lack of opportunity stemmed from bias on the part of their employer.
Offering encouragement
In 1969, the AICPA Council formally launched a national program to integrate the accounting profession.
It passed a resolution to encourage minority men and women of high potential to attend college and major in accounting, to provide educational opportunities for minority men and women to prepare them to enter the accounting profession, and to encourage the hiring of minority men and women in order to integrate the accounting profession.
Actually, the primary objective of the Minority Initiatives Committee was to implement the 1969 resolution of Council. Over the years, the committee and Council have recognized that minorities were not being attracted to or employed by the accounting profession in proportion to their representation in society as a whole. In response to this perceived challenge, the MIC has developed a comprehensive program of scholarship support and faculty development, and has implemented programs to promote the profession to minority high school students.
To effectively deal with minority recruitment, the MIC functions as an information center for the accounting profession. It has formed relationships with businesses and outreach organizations, such as NABA, the Association of Latino Professionals in Finance and Accounting, and the state CPA societies. These efforts focus on promoting and publicizing the importance of minority recruitment, coordinating scholarship activities, and encouraging the development of career awareness programs.
The committee also monitors pending and proposed legislation that could impact areas under its responsibility. The MIC, in conjunction with the AICPA Government Affairs Division, monitors legislation related to education, diversity and upward mobility.
In that respect, an increasing number of scholarships and programs strive to ensure equal minority representation in the accounting profession. The AICPA, NABA, the ALPFA, the Society of Women Accountants, the Illinois CPA Society and other accounting associations have been working hard to fill the minority pipeline.
Recently, Big Four firm Deloitte & Touche, Howard University and a group of stakeholders from public accounting, government and minority-owned accounting firms launched the Howard University School of Business Center for Accounting Education program, "We're About Success."
The educational center, based at the university's campus in Washington, D.C., offers a range of programs to support highly talented black/African-American accounting graduates as they begin careers in financial services.
Last month, 25 first-year black and African-American audit and tax professionals from Deloitte participated in the center's inaugural weeklong Leadership Skills Development program. Several senior audit and tax leaders from Deloitte and other firms led the participants through a series of courses focused on professional development, as well as preparation for the CPA Exam.
"Our involvement with the Howard University School of Business Center for Accounting Education reflects our deep commitment to foster a culture of inclusion through growth and development for our people," says Deloitte managing partner Barry Salzberg.
"This joint program is designed to help our new black/ African-American accounting professionals identify the challenges, choices and opportunities that may impact and facilitate growth in their careers," added Redia Anderson, Deloitte's chief diversity officer. "We are focused on continuing to expand the development of our business critical talent."
According to Frank Ross, director of the Center for Accounting Education at Howard University, "The concept of this center was designed to help increase the success rate of blacks and African-Americans in public accounting. The founding team felt it was best to design a program that brings the entire public accounting profession together to address the issues and help the younger professionals just out of college find ways to develop successful careers with their firms right from the start."
As part of a three-year commitment, African-American tax and audit professionals from Deloitte & Touche will participate in the program.
Location dictates staff
"We've been around for more than 50 years, and our name is an integral part of the community," explained Irv Diamond, a partner at REDW (formerly Rogoff Erickson Diamond & Walker), which has grown into the largest certified public accounting firm in Albuquerque, N.M. He said that the firm is broadly diversified. "Women and minorities are now partners. In fact, well over half the firm is made up of women. Because of our location, we get large numbers of minority staff such as Hispanics. The pool is exceptional and we encourage this with various scholarships, for example, to Native Americans."
In a profession where expertise, experience and service are the core, there is nothing more important than an excellent team, Diamond said.
"With some of the brightest minds in this profession, REDW's people truly are our greatest asset," he explained. "Our team members believe learning is a lifelong pursuit, and they continue to stay up to date in their industry and expertise through training and research. It is our ability to keep ahead of what is to come that allows us to provide vision for our clients. And it is that vision that leads to our clients' business successes."
In urban areas such as New York City, there is a greater penetration of minorities.
As a market, however, suburban Long Island is five to 10 years behind, primarily due to economic conditions such as the high cost of housing. However, the landscape of Long Island is changing, with statistics showing that, by the year 2020, more than one-half of the population of the region will be of either Asian or Hispanic descent. "This will certainly translate to a larger number of qualified minority accounting students for all Long Island-based firms," said Kenneth Cerini, a partner at Cerini & Associates, in Islandia, N.Y.
Cerini referenced a recent symposium that was attended by roughly 20 female accountants to focus on developing a mentoring program for women to help them address issues inherent in the profession.
One of the topics was the fact that about 60 percent of the people entering the profession are female, yet the number of women in upper-level management is probably less than 20 percent. "We will be exploring the same issue with respect to minorities in the profession later this year."
Cerini alluded to the fact that more of those entering the profession are minorities. "There are firms out there that are known as minority firms, with large portions of their staff comprised of African-Americans or individuals of Asian or Latin American descent."
He emphasized that his is a small firm of 16. "But it has always been our policy to hire the best candidates for the job, regardless of any factors such as race, religion or disability. Unfortunately, while we have had minority staff in the past, our staff currently is principally Caucasian, with the only ethnicity being Eastern European or Hispanic. We are not averse to offering individuals opportunities here with the firm; we unfortunately have not had a significant number of qualified applicants. I do believe, however, that over the next few years this will change, as more minority students choose accounting as a career path."
Houston-based PKF Texas mirrors that city's international marketplace, so that it has a diverse make-up that allows its people to speak the clients' languages. These total 23 and range from Mandarin Chinese to Farsi. "Houston is second only to New York in its number of foreign consulates," explained Karen Love, the firm's director of practice growth. "As a result, it is a truly international city, and one in seven workers in Houston itself works for a foreign-owned company."
The firm also recruits and retains managers from Texas A&M and the University of Houston - intrastate colleges that have attracted a number of international students. "Our structure is to understand our population growth," said Kenneth Guidry, the firm's president. "We have a firm culture and attitude to reflect where we work and live."
Even with the staffing problems today, Guidry noted that his firm hasn't had to restructure what it is doing. "Our efforts have always been to do what we do best and hiring the people who can address that. The proof is in the pudding, as revenues are up by 30 percent."
Richard Berkowitz, managing director of the Florida-based accounting firm of Berkowitz Dick Pollack & Brant, pointed out that over half of his staff is represented by minorities. "Miami has become a melting pot second only to New York City, and I still believe we may have one of the most diverse staffs of any accounting firm in the country."
Berkowitz said that the profession is jumping through hoops to find and keep people. "It is the best of times and worst of times, and keeping good people and dealing with the X and Y Generations, which have very different work ethics, is extremely time-consuming." He acknowledges that staffing is still a critical issue for most CPA firms. "Our firm is basically in a Hispanic community in South Florida, and this year alone, we've already hired nine new people, of whom five are Hispanic, and six are women." He maintained that the staffing patterns remain constant, and the firm is divided 50/50 between males and females. Moreover, he added that half the staff are minorities and half are non-minorities. "We're probably more diverse than most of our counterparts."
As to the future, Berkowitz perceives a tremendous influx of people from around the world into the U.S. market that he feels will solve some of the staffing problems.
"The word is going out that we need people - from any English-speaking country, especially," he explained. "We are recruiting on a global basis now, although that's still not enough to solve the problem. Firms still have to be creative."
