Diversity and Inclusion in the Accounting Industry 

Accountants make up a large portion of America’s finance workers, which includes workers from various backgrounds striving to occupy different positions within the field. However, an observable lack of both gender and racial diversity among accountants has drawn attention to the matter, causing many of the benefits of a diverse and inclusive workplace to be highlighted by both media outlets and academics alike. In turn, the importance of diversity in the accounting profession is being both recognized and remedied by large corporate firms in order to improve workplace ethics, and improve quality of work.

Corporate Intervention

The attention that diversity issues have been given by large corporate accounting firms indicates the importance of this matter.

Deloitte, a large accounting organization, has stated that it intends to drastically increase the number of Blacks and Hispanics in the workforce by 2025. Lara Abrash, CEO of Deloitte, has stated that accounting is considered the language of business, and those who are proficient in it have an opportunity to succeed in the business world. She says that racial and ethnic diversity is lacking among CPAs (Certified Public Accountants) in the field, and to remedy this, it will take decisive and bold investments.

The Deloitte Foundation Accounting Scholars Program will look to fund approximately $30 million in scholarships to fifth-year students acquire their masters in accounting, which will allow for financial disadvantage to play less of a factor. As a result, diversity will increase among accounting professionals (Pytell, 2021, 1). Additionally, Deloitte’s $75-million Making Accounting Diverse and Equitable (MADE) commitment aims to generate more advisory, auditing, tax career opportunities, and leadership pathways for students, and will help support them on their journey from high school to business professional to leadership in the profession (Pytell, 2021, 1).

According to Kavanagh (2008), Today, a cottage industry of consulting firms specializing in diversity management has emerged–along with a plethora of articles in academic and professional journals–to help corporate executives identify the keys to diversity and launch diversity programs in their companies.

As Kavanagh (2008) mentions, the concept of diversity has been made into an industry. As a result, firms are investing considerable amounts of money in order to ensure that they are diverse for their own benefit, and to also meet corporate requirements.

Firms now need to meet federally mandated Equal Employment Opportunity and Affirmative Action standards. In doing so, many of them have actually come realize the benefits of having a diverse workplace.  People from different backgrounds with an education in the same field provide insightful knowledge, various perspectives, and creativity to completing tasks that a non-diverse workplace can’t compete with.

Given the efforts put in by large corporate firms to improve diversity and inclusion in the field of accounting, the issue can be acknowledged as a very important one.

Ethical Judgements and Decision-Making

Professions like accounting are particularly reliant upon workers thinking ethically, since such work has so many loopholes. 

Roxas/Stoneback (2004) aim to explore the role of gender in ethical decision-making, and do so through a series of experimental scenarios that study the difference between male and females in a real-life business situation.

 In this particular article, a study that analyzes the responses of students from eight different countries to questions on their probable actions in ethical dilemmas is presented (Roxas/Stoneback 2004). The socialization approach argues that males and females have distinctive different values and traits due to gender creating different moral orientations and resulting in different decisions and practices (Roxas/Stoneback, 2004, 150). This speaks on the role of gender in making certain ethical decisions in business settings. More specifically, the correlation between gender and the response to the questions was calculated.

When asked if Jim should not acknowledge his error himself, but should admit fault when confronted, females tended to disagree more than males. This disagreement was particularly present between U.S males and females. Female were significantly more ethically sensitive. (Roxas/ Stoneback, 2004). Roxas/Stoneback (2004) presented their ethics studies on students from diverse backgrounds, targeting audiences that are learning about the importance of diversity in a workplace. Their study aims to find out whether women tend to be more ethical than men, and how racial/cultural background can play a role in understanding ethics alongside gender.

When observing the mean scores relating to aggregate degree of ethicalness among different backgrounds between the two genders, women were found to be more ethical than men. Yet, we see Women are 61.7% of all accountants and auditors in the United States, but make up just 27% of partners and principals.

Women today find themselves making up the majority of the accounting middle-class, are left doing work behind the scenes while men are mostly at the head of big companies, making important decisions, managing budgets, and attending board meetings.

Interview with Professor Paquita Davis-Friday

Having transitioned from corporate worker to professor, Davis-Friday (2022) views the diversity issues in accounting as having been improved more so with gender than with race. Davis-Friday (2022) believes that many of the diversity issues stem from the accounting profession’s general reputation issue, where not a wide enough demographic of people are attracted to the field, which causes a lack of diversity in hires. Meaning, that there is not enough exposure through education systems, and accounting is the kind of major that people inherit from previous generations, as the kind of work may not seem as attractive as other branches of finance. Generally, Davis-Friday (2022) speaks on her observation of the accounting landscape, and she has seen that efficiency and productivity is far greater among diverse groups in both the classroom and the office, than among non-diverse groups of people. 

According to Davis-Friday (2022), “Diverse teams perform better than non-diverse teams, because when everyone thinks the same way, they tend to miss specific details. Teams with more varied backgrounds yield better results. There is also a lot of evidence regarding gender diverse-corporate boards outperforming ones that are not diverse. For instance, boards that have women perform better because women make ethical decisions and are less risky, which does not discredit the importance of taking certain risks when necessary.”

Professor Davis-Friday also said that “Diverse teams in terms of gender and race perform better than homogenous teams, because with homogenous teams you tend to think so much alike that miss some of the nuances of a situation or case. Then, your outcomes are not that strong as those who come from different though processes, cultures, and genders.”

Davis-Friday (2022) also states that people who decide that more diverse candidates reduces standards is a short-cut. According to Davis-Friday (2022), “Only the desperate take that shortcut. I went to the University of Michigan, and the university has been sued twice because of people saying that the admissions policies discriminated against me. Courts have denied this and in fact, they said that looking at the credentials of people that are there, the university has taken a lot of factors into account, including whether you are a great basketball player or lacrosse player. So when you look at the totality of it, and you look at the numbers they put up, there is no question that the people who are there are credentialed to be there. So, perhaps there are educational institutions or firms that maybe take the short-cut and lower standards, but there is also plenty of evidence that holding high standards makes the institution better and makes people who are above the line want to come and go there. This is what happened at Michigan decades ago. You had. A critical mass of black and Latin people and you were going to be with other smart people. Nobody wants to end up some place where they feel the people around them aren’t very smart no matter what color you are. So, if the. institution takes that short-cut, it may fix things in the short-term, but long-term it won’t work. The institutions that have done well long-term, like Michigan, did not cut their standards, and got more very qualified people who wanted to apply because they saw they were going to be in the room with very smart people”. Basically, diversifying a workplace means playing the long game.

More Diversity, Better Quality

 Historically, accounting is a business steeped in tradition and conservatism. But, hiring people who think and act just like you limits your potential. You will enrich your business once you remove the traditional demographics that define who you hire and who you serve (Fogelman, 2018).

According to Rosenstock (2021), Forrester has recently reported that workers feeling like they belong is statistically proven to increase job performance by 56% and reduce risk of turnover by 50%. A series of studies conducted by McKinsey over the course of a few years found that companies with gender diversity among people in executive positions had been statistically proven to outperform those with less.

Companies in the top quartile for gender diversity were 15%, 21%, and 25% likelier (respectively) to outperform those in the bottom quartile (Rosenstock, 2021).

Conclusion

Throughout researching diversity and inclusion in the accounting field, there is a substantial amount of evidence that improving diversity can be very beneficial. For instance, the improvement of work quality, ethical decision-making, and large corporate firm investment all indicate that diversity is a significant issue in the accounting profession. Since it is tied to a more social-science issue, there will always be those that feel this is a movement towards political correctness and subsequent reduction of standards. However, this belief has been thoroughly discredited through the understanding of the difference between short-term and long-term achievements. Therefore, diversity and inclusion in the accounting profession is an important issue that requires real attention and improvement.