By 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
In 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
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
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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