Diversity, Equity, and Inclusion Audits: Turning the Words into Actions
Jul 12, 2022

Diversity, Equity, and Inclusion Audits: Turning the Words into Actions

Amanda S. Marcy, CPABy Amanda Sue Marcy, CPA, DBA  

Not everyone has a full grasp of what diversity, equity, and inclusion mean in the workplace, and what the differences between the terms may be. Here is a simple analogy commonly used to illustrate the differences among the three: Diversity is being asked to the party; Inclusion is being asked to dance; Equity is how much space you get on the dance floor.   

Commitment to diversity, equity, and inclusion (DEI) should be integral to every organization’s culture because studies show that embracing DEI is good for business. A 2019 report by McKinsey & Company found that companies with executive teams in the top quartile for gender and ethnic diversity were 25% more likely to have above-average profitability with gender diversity and 36% more likely to have above-average profitability with ethnic diversity when compared to those in the bottom quartile for both.1 Despite the positives, the accounting profession continues to trend low in DEI efforts. The Institute of Management Accountants (IMA), California Society of CPAs (CalCPA), and International Federation of Accountants (IFAC) assessed the state of DEI within the global accounting profession, and found the following:2

  • There is a persistent diversity gap, with lower diversity across leadership positions compared to  the whole of the accounting and finance workforce (e.g. greater diversity across the profession than in leadership positions within the profession).  
  • Fewer than 60% of respondents considered the accounting profession equitable (58%) or inclusive (59%).  
  • About 63% of women reported experiencing inequitable treatment and exclusive behaviors, with one-third indicating these experiences impacted their career decisions, including leaving their employer and/or the profession entirely.

Reviewing data on diversity, equity, and inclusion effortsIn its 2019 State of Inclusion Survey, Deloitte found that many professionals are experiencing or witnessing bias on a regular basis, leading to decreased job satisfaction, productivity, and workplace engagement. Specifically, Deloitte’s survey revealed the following:3

  • Even though most professionals felt their organization fosters an inclusive and diverse workplace, 64% had either experienced and/or witnessed bias in the workplace within the past year.  
  • For those experiencing bias, 84% indicated it negatively impacted their happiness, confidence, and well-being.
  • Those experiencing or witnessing bias were more likely to report decreased levels of work engagement (70%) and overall productivity (68%).  

These findings show that it is critical that the profession act to advance DEI efforts. Many large accounting firms and corporate entities have, in fact, begun developing and implementing programs, policies, and initiatives to attract, retain, and promote diverse talent, and increase DEI accountability. The Big 4 and many public companies have started monitoring their DEI progress and voluntarily publishing their metrics.4 However, smaller firms may lack the necessary resources and expertise. As such, many professional organizations (including the AICPA and IMA) and public accounting and human resources firms have developed aids and services to assist companies with their DEI initiatives.  

Regardless of where a company is in its DEI journey, conducting a DEI audit is a great step toward progress. A DEI audit can give a company a holistic, unbiased assessment of the DEI conditions of its workforce. By scrutinizing policies, procedures, and practices, the audit provides opportunities for further DEI advancement. Companies have many options among the tools they can use and activities they can perform in conducting DEI audits, including diagnostic surveys, interviews, and focus groups; equality impact assessments; custom DEI research; pay gap analysis; and supplier diversity audits. DEI audits can be performed on a continual basis or as part of a special project. Companies can also choose to perform in-house DEI audits through a committee or an internal audit function, or they can engage an independent third-party such as a public accounting firm, human resources firm, or DEI advisory firm. Whatever the scope, diversity consultants suggest that in developing a DEI audit plan, companies should focus their efforts in four areas:5

  • Data -- Companies need to be able to generate, collect, understand, and analyze diversity data. A DEI audit can help a company assess its aptitude, specifically as it relates to designing and capturing data, as well as measuring and benchmarking important performance indicators and metrics and assessing their impact.  
  • Policies -- Companies need to have documented policies directing and reflecting their commitment to establishing and maintaining a company culture as well as leadership that embraces DEI. Through a DEI audit, a company can evaluate its suite of policies for effectiveness and identify opportunities to develop new policies or modify policies that may create DEI barriers.
  • Processes -- Companies need to have processes in place to attract, retain, and promote diverse talent. A DEI audit provides the chance to identify ways to improve internal processes relative to human resources and performance management to attract diverse candidates and create a diverse leadership pipeline.
  • Culture -- Employees need to feel that their organization and their leadership fosters a culture of DEI. A DEI audit allows employees at all levels to feel engaged in discussing their views on their company’s DEI efforts. Participating in surveys, interviews, and focus groups gives employees a voice regarding their DEI experiences at the company.

As mentioned above, the AICPA and the IMA have DEI toolkits and other resources to help guide companies in conducting audits encompassing these four dimensions.6  

Actions speak louder than words, and DEI audits provide companies with a foundation on which to build a path toward fully embracing DEI.

1 www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters  
2 www.imanet.org/insights-and-trends/the-future-of-management-accounting/diversifying-global-accounting-talent-actionable-solutions-for-progress 
3 www2.deloitte.com/us/en/pages/about-deloitte/articles/press-releases/new-deloitte-survey-finds-organizations-inclusion-efforts-may-not-be-addressing-one-of-the-biggest-barriers.html
4 www.imanet.org/insights-and-trends/the-future-of-management-accounting/diversifying-global-accounting-talent-actionable-solutions-for-progress
5 https://theewgroup.com/us/blog/diversity-audits-where-to-start  
6 https://us.aicpa.org/career/diversityinitiatives/tools-and-resources and https://www.imanet.org/insights-and-trends/the-future-of-management-accounting/diversity-and-inclusion-toolkit

Amanda S. Marcy, CPA, DBA, is an assistant professor of accounting at the Kania School of Management at the University of Scranton in Scranton, Pa. She can be reached at amanda.marcy@scranton.edu.  

For more on this critical subject, check out the Pennsylvania CPA Journal’s spring 2022 feature, “Build the Best Accounting Profession through Diversity, Equity, and Inclusion.”  

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Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.