Connect with us

Accounting

DEI goes into stealth mode

Published

1 year ago

on

Diversity, equity and inclusion is on the chopping block at accounting firms.

In a February media flurry, big firms like Deloitte and KPMG said they were scrapping their DEI goals and initiatives amid the current political landscape. Deloitte US dropped its DEI programs and asked its employees working on government contracts to remove gender pronouns from their email signatures. KPMG deleted the annual “transparency reports” that it has published since 2020 that detail its efforts to increase representation of women and minorities within the organization. 

As big firms pull back, and presumably more firms quietly do the same, it can be easy to assume that this is the end of DEI as we know it. But things may not be as bleak as they seem, some leaders say. 

“You have to look at the profession through a number of different lenses to really understand the impact,” said Jina Etienne, CEO of Etienne Consulting.

Hiding spying concept

Staying the course, quietly

The wave of pullbacks — in the accounting profession and across broader corporate America — followed numerous executive orders issued by the Trump administration, including one order stating that the U.S. government would only recognize two sexes in all official documents and messaging, and mandating that “federal funds shall not be used to promote gender ideology” and government agencies should “ensure grant funds do not promote gender ideology.” 

In particular, firms that are government contractors, or firms with clients who are federal contractors, risk losing their funding by keeping their “noncompliant” DEI programs up and running. 

“Organizations probably can’t really boast about what they are doing anymore,” said Crystal Cooke, director of diversity and inclusion at the American Institute of CPAs. “It’s not in their benefit if they’re trying to protect the people in their workplace, because if they make too much noise that makes them a target.”

“I hear a lot about people saying, ‘Why isn’t everyone being loud and proud?'” Cooke continued. “I feel you don’t have to be loud and proud to show your actions and how you support this. If you still see that organization doing things that support programming, if the people who work there feel like they are still being supported, then they are achieving their goals. We can’t always shout things from the rooftops, especially in this environment, because we just don’t know how it’ll affect people who could be impacted. But that doesn’t mean the work’s not being done.”

Accounting is a risk-averse profession by nature. Firms may not want to expose themselves to the reputational risk, or the possibility of losing clients, by publicizing their DEI efforts.

“As accountants, predominantly in public accounting, you have to stay under the radar. We do not want to attract attention to ourselves and give rise to questioning the quality, the independence,” Etienne said. “The assurance work that we do will no longer feel like assurance if we were under attack.”

Many firms, Etienne speculates, will minimize the publicity surrounding their DEI programs while still maintaining them internally. Some firms may drop the name “DEI” and swap it for less politicized language such as “culture,” “inclusion,” “wellbeing” and “belonging.” 

“The letters in a sequence D-E-I have become a word. That word has a meaning. It is so much more complex and nuanced than that,” Etienne said. “I’ve always struggled with and invited clients to decouple the terms and really think about the body of work that is behind diversity, equity and inclusion because they’re distinctly different things.” 

“But everyone is responding to ‘DEI,’ which the term now has been co-opted,” she continued. “It has been co-opted to mean reverse discrimination — that people who are not qualified for jobs are getting jobs, and people who should have jobs don’t have those jobs — and it’s all coded for race.”

The silver lining

Accounting firms have a strong impetus to keep their DEI programs active. Amid the profession’s ongoing talent crisis — with fewer students studying accounting, fewer earning their CPA license and even fewer staying in the profession until they make partner — DEI taps into under-recruited demographics and, thus, expands the talent pool. DEI is also crucial when it comes to retaining talent, especially young people.

(Read more: What can small firms do about DEI?)

“I think firms are kind of caught between a rock and a hard place because clients are looking at this and they don’t want to alienate clients,” said Jennifer Harrity-Cantero, ESG and sustainability director at Top 100 Firm Sensiba. “But the accounting world over the last few years has really seen what DEI can do for employee satisfaction, for lowering turnover rates, for employee engagement — and that is something that is hugely valuable to accounting firms.”

DEI improves the bottom line, research shows. Companies in the the top quartile for gender diversity on executive teams are 25% more likely to have above-average profitability than companies in the bottom quartile, and companies in the top quartile for ethnic and cultural diversity outperformed by 36% in profitability, according to McKinsey.

Etienne sees an unexpected silver lining in the crackdown on DEI. In the past, she sensed an aspect of performative activism fueling firms’ DEI efforts. Following the murder of George Floyd by Minneapolis police in 2020, corporate America renewed its commitments to DEI initiatives, such as implementing diverse recruitment practices, increasing pay equity, establishing employee resource groups, and hosting trainings on topics such as unconscious bias and microaggressions. 

But in her work as a consultant, she has found, “Many leaders felt that the demonstration and the evidence of their commitment is the fact that they’re talking to me right now. ‘Yeah, I’ve hired you. How much more committed can I be?'” she said. “So I don’t think there was a deep understanding, or an interest in having a deep understanding, of how DEI is already woven into the ecosystem of an organization. It touches everything. But they didn’t want to do that.”

By removing the social reward of championing DEI, Etienne explained, “We can all stop patting ourselves on the back and putting pretty words on the website and saying, ‘Yay, yay, yay,’ and we can do the work.”

Related Topics:
Continue Reading

Accounting

AI-Driven Automation and Continuous Accounting Frameworks

Published

5 days ago

on

August 15, 2026

By

The accounting profession is undergoing a fundamental structural transition as enterprise finance departments shift from periodic month-end closes toward automated continuous accounting models. By integrating specialized machine learning algorithms directly into enterprise resource planning (ERP) platforms, chief accounting officers are transforming financial reporting from a retrospective exercise into a real-time operational asset.

The Shift from Periodic Close to Continuous Financial Reporting
Traditional accounting workflows heavily relied on manual data reconciliation, spreadsheet calculations, and multi-week closing cycles at the end of each fiscal period. In contrast, continuous accounting frameworks utilize automated software agents to process, validate, and post transactional data in real time as business activities occur.

Automated bank reconciliation tools cross-reference incoming bank feeds, invoice records, and purchase orders automatically. By resolving transactional variances instantly throughout the month, corporate accounting teams eliminate the traditional workload spikes associated with quarterly and annual closes.

Machine Learning in Audit Trails and Anomaly Detection
Advanced natural language processing (NLP) and machine learning tools are redefining internal audit and financial control environments. Automated systems analyze 100% of general ledger entries, identifying anomalous transactions, duplicate payments, and unauthorized journal entries in real time.

Rather than relying on random statistical sampling, corporate internal auditors can focus their attention on high-risk flags automatically surfaced by algorithmic monitoring platforms. This continuous risk assessment strengthens internal controls over financial reporting (ICFR) and significantly reduces fraud risk.

Evolving Roles for Accounting Professionals
As routine data entry and manual reconciliation tasks become fully automated, the skill set required for accounting professionals is shifting toward data analysis, system design, and strategic business advisory.
– Systems Governance: Accountants are increasingly responsible for monitoring algorithmic accuracy and managing data integration pipelines.
– Business Partnership: Finance professionals leverage real-time financial dashboards to advise operational leaders on margin management and working capital allocation.
– Regulatory Compliance Management: Accounting teams utilize automated platforms to ensure compliance with dynamic tax codes and international accounting standards.

Core Implementation Recommendations
1. Deploy Automated Reconciliation Tools: Integrate continuous transaction processing modules into existing enterprise ERP architectures.
2. Establish Algorithmic Governance Controls: Implement strict internal testing protocols to ensure automated accounting rules comply with GAAP/IFRS standards.
3. Reskill Accounting Teams: Invest in training finance staff on data analytics, workflow automation, and predictive financial modeling.

Continue Reading

Accounting

Global ESG Reporting Standards and Double Materiality Compliance

Published

2 weeks ago

on

August 9, 2026

By

Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

Continue Reading

Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

Published

2 weeks ago

on

August 5, 2026

By

Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

Continue Reading

Trending