Accounting
Commitment to DEI is a leadership imperative
The research is clear: Diverse teams and inclusive work environments produce better results.
A 2018 report from Deloitte revealed that diverse teams are twice as likely to meet or exceed financial targets, three times as likely to be high-performing, six times as likely to be innovative and agile, and eight times more likely to achieve better business outcomes than monochromatic teams. Research from CNBC also shows that 78% of the workforce says it’s important to work for an organization that prioritizes diversity and inclusion, leaving employers with happier workers and better retention.
Yet, despite all the well-researched positive attributes that a demonstrated commitment to diversity, equity and inclusion can bring to the workplace, the economy and to a person’s overall well being, DEI progress is stalling. In fact, leadership consulting firm DDI noted, “Many companies are taking steps backward, to the brink of a DEI backslide.”
This comes at a time when the accounting industry is grappling with a critical challenge: finding talent. Demographic trends and financial hurdles have led to fewer people entering the profession, resulting in over 135,000 anticipated job openings through 2031, according to the
We must prioritize DEI to combat the talent shortage. A
- Drive meaningful change by establishing DEI as a business strategy and embedding it in all parts of the business. This approach tells employees their leaders are committed. It establishes momentum and drives sustainability.
- Establish a DEI philosophy that is both human-centered and systems-oriented. The human element emphasizes the power of personal connection and equips individuals with greater awareness of bias and tools for interventions, while the systems approach ensures that biases in processes like recruitment, hiring and promotion get addressed.
- Identify problems and solutions that are unique to our profession and your organization. The accounting field must address systemic barriers that inhibit access to internships for students from underrepresented communities.
- Nurture an authentically inclusive workplace culture. We interviewed numerous young career entrants for the report. They consistently emphasized the importance of work cultures that make them feel valued, offer mentoring, maintain active employee resource groups, and make space for honest conversations about the differences.
- Hold everyone accountable. Organization-wide accountability, starting at the top, drives responsibility and ensures action. Measures can be as varied as manager performance objectives linked to DEI, transparency about setbacks, and all-employee celebrations of success.
In every industry, and especially in accounting, leaders have an inclusion mandate. As we work to leverage DEI strategies that support workers and enhance performance, let’s start by communicating shared values that most people can agree on: Diversity means we cast a wide talent net to hire a representative group of qualified candidates. Equity means we craft systems and processes that enable everyone to do their best. And inclusion reminds us to create cultures of belonging where all employees can thrive.
The Public Company Accounting Oversight Board and the Securities and Exchange Commission ramped up enforcement against auditors in the first half of 2024, but activity was more muted in the second half of the year, due to a key Supreme Court decision and multiple lawsuits against the PCAOB, according to a new report.
The
Together, the PCAOB and SEC imposed $52.2 million in monetary sanctions against auditors in 2024, an increase of 66% from 2023 and 2.5 times higher than the 2018–2021 average, when Jay Clayton was leading the SEC and William Duhnke was chairing the PCAOB.
2024 enforcement was driven mainly by the PCAOB, which brought 88% of total actions and imposed 68% of total penalties.
The Supreme Court ruling appears to have affected the PCAOB, as well as three similar but anonymous lawsuits filed under the pseudonym John Doe from two individual auditors facing disciplinary action from the PCAOB and one auditing firm under investigation. While the PCAOB imposed record-breaking penalties for the third year in a row, enforcement statistics saw an unprecedented decline in the second half of the year. An uncharacteristically low 33% of the 51 actions initiated by the PCAOB in 2024 were brought in the second half of 2024, a departure from the 76–86% in the second half of each of the previous four years. Only 2% of the penalties imposed by the PCAOB in 2024 were imposed in the second half of the year, in stark contrast with 2023, when 83% of total penalties were imposed in the second half of the year. PCAOB activity in the second half of the year was at its lowest levels of any point in recent years.
“Though PCAOB and SEC enforcement against auditors remained high in 2024, aggregate statistics don’t tell the full story,” said Alison Forman, co-leader of Brattle’s Accounting Practice, in a statement Thursday. “In fact, activity appears to have been substantially impacted by the Supreme Court’s SEC vs. Jarkesy ruling, which found that the regulator’s use of administrative proceedings to seek financial civil penalties for securities fraud was unconstitutional. We expect fallout from Jarkesy and similar constitutional challenges facing the PCAOB — as well as the new presidential administration — to dramatically shift the enforcement landscape moving forward.”
The findings on the PCAOB mostly align with a
The release of the two reports come amid speculation that under the Trump administration, enforcement and penalties at both the PCAOB and the SEC may decline further, and the
Ukraine, Iraq, Haiti and Bangladesh have been added to countries for tax year 2024 for which some requirements have been waived concerning foreign earned income exclusions.
Generally, U.S. citizens or resident aliens living and working abroad whose tax home is in a foreign country, and who meet either a bona fide residence test or a physical presence test, can choose to exclude from their income up to $126,500 for 2024 of their foreign earned income. Both the bona fide residence test and the physical presence test contain minimum time requirements.
The Internal Revenue Code defines the term “qualified individual” in regard to these taxpayers as either:
- An individual whose tax home is in a foreign country and who is a U.S. citizen and establishes that they have been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire taxable year; or,
- A citizen or resident of the U.S. who during any 12 consecutive months is in a foreign country or countries during at least 330 full days.
The Secretary of the Treasury and the Secretary of State have determined that such conditions precluded the normal conduct of business and affected taxpayers who left the Ukraine on or after Jan. 13, 2024; Iraq on or after Jan. 18, 2024; Haiti on or after Jan. 23, 2024; and Bangladesh on or after Aug. 5, 2024.
For example, an individual who left Ukraine on or after Jan. 13, 2024, will be treated as a qualified individual with respect to the period during which that individual was a bona fide resident of, or was present in, Ukraine if the individual establishes a reasonable expectation that he or she would have met the requirements of Section 911(d) but for those conditions.
The revenue procedure is scheduled for publication in the Internal Revenue Bulletin on March 24.
The Institute of Internal Auditors has released a
The IIA is asking for feedback on the document, Third-Party Topical Requirement, which will be open for
The Topical Requirements are part of the IIA’s broader International Professional Practices Framework alongside its Global Internal Audit Standards and Global Guidance. They don’t mandate that a specific risk area be included in audit plans, but provide practitioners with a set of baseline requirements for assessing key risk areas that impact organizations globally and are likely to be included in most audit plans.
The document was developed with input from internal audit practitioners and stakeholders globally, and offers a consistent and comprehensive approach to assessing the design and implementation of third-party governance, risk management, and control processes.
“We’ve developed a Topical Requirement on third-party relationships due to the pervasiveness of third-party risks for organizations today,” said IIA CEO Anthony Pugliese in a statement Thursday. “Particularly in light of geopolitical shifts that are driving global trade and supply chain disruptions, third-party relationships can present a number of threats to organizations including operational, reputational and compliance risks. It’s more important than ever that organizations today have a robust and consistent approach to assessing third-party risk management and control processes.”
The first Topical Requirement was
Participants can review the
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