Accounting
Keeping an eye on DEI at accounting firms
As the conversation around diversity, equity and inclusion continues to evolve, many accounting firms find themselves in a complex dance where the music occasionally skips a beat due to recent legislative actions in states like Florida, Texas and Utah. While these states have opted to cut back on DEI education, the corporate world has been slow to raise its voice, leaving DEI leaders to juggle the impacts of landmark rulings, like the U.S. Supreme Court’s take on affirmative action.
In today’s often-mercurial environment, DEI professionals can face apathy or active resistance, a reality highlighted by a
The costs of DEI burnout
Most leaders in the DEI space only last about three years. This short tenure highlights just how taxing the emotional and physical demands can be in this line of work. According to the Journal of Organizational Behavior, emotional labor, or the need to fabricate positive feelings and suppress negative ones, can lead to burnout and reduced job satisfaction, especially in roles where employees must continually advocate for underrepresented groups. This is exacerbated by corporate display rules, which dictate how emotions should be shown, placing an additional burden on DEI leaders to manage their feelings while promoting inclusivity. This “surface acting” — masking your true emotions — often leads to emotional exhaustion and eventually, burnout.
The odds are often stacked against our DEI leaders, making retention a significant challenge and hurdle for sustainable policies. To help these teams overcome internal obstacles like stereotypes, resistance and other societal pressures, firms should invest in frameworks that align with their DEI goals and provide support to their leaders.
Essential support strategies for DEI leaders
Here are three key pillars that accounting firm leaders can use to effectively support and retain DEI professionals:
- Strong advocacy and resource allocation: To support DEI efforts meaningfully, firms should cultivate strong internal advocates who understand the long-term nature of this work. They must also invest in resources — financial and otherwise — that allow DEI leaders to implement effective programs. Engaging firm leadership as champions of these initiatives can amplify DEI efforts across all levels of the organization.
- The learning and effectiveness paradigm: Research from Harvard Business School suggests that organizations with a “learning-and-effectiveness” DEI approach see better results than those that merely check boxes. This model values employees for their unique identities and encourages the integration of DEI values into all processes, from hiring to decision-making. For accounting firms, this approach can help shift the focus from compliance to true inclusivity, which is essential for long-term growth and employee satisfaction.
- Supportive flexibility: Providing flexibility, such as offering paid time off for DEI-related responsibilities or recognition for their contributions in performance reviews, can go a long way in helping these leaders focus on creating and implementing broader goals.
Practical strategies for alleviating DEI stress
DEI professionals are often an “army of one,” responsible for maintaining firmwide inclusivity goals. To manage the emotional weight of this work, consider these quick strategies to improve morale and reduce burnout.
- Celebrate milestones and wins: Recognizing even small achievements can boost morale. Studies show that marking milestones can have a significant impact on motivation and job satisfaction. Regularly reviewing DEI metrics to track and celebrate progress helps to maintain momentum and commitment, creating a cycle of positive reinforcement for DEI efforts.
- Encourage participation in DEI events: A strong network is essential for any professional, and this is especially true for DEI leaders. Events and industry connections provide fresh perspectives and insights that can inform DEI strategies. They also offer valuable opportunities to connect with others who understand the unique challenges of DEI work, helping professionals feel less isolated in their roles.
- Encourage emotional health: DEI work is emotionally taxing, and professionals need to establish boundaries for their mental well-being. Accounting firms can actively support DEI leaders by fostering a workplace culture that respects boundaries, promotes self-care and provides opportunities for delegation. A well-resourced DEI team can better handle the pressures of the role, ensuring a sustainable impact on firm culture.
Moving forward: A balanced approach to DEI
The journey toward inclusivity may be challenging, but the benefits are clear: a robust DEI strategy isn’t just good for employee morale — it’s essential for attracting and retaining talent. In fact, the vast majority of job seekers consider diversity an important factor when evaluating companies and job offers. A recent Glassdoor survey asked more than 4,000 employees or job seekers how important corporate investment in diversity, equity and inclusion is to them when considering a new job. Not surprisingly, 77% of Gen Z men and 76% of Gen Z women said it was somewhat or very important. But older workers felt similarly. In fact, both millennial men and women felt even more strongly about it, at 79%. Even Gen X (69% of men and 76% of women) and Boomers (56% of men and 70% of women) felt it was either somewhat or very important. So while news reports may posit that people care less about DEI in the workplace, the vast majority consider it important.
Creating a work environment that genuinely promotes diversity, equity and inclusion not only improves employee engagement but also contributes to innovation, job satisfaction and, ultimately, a stronger bottom line. Accounting firms that invest in DEI — especially in supportive structures for DEI professionals — are more likely to create a workplace where employees feel safe, respected and empowered, which is critical when competing for talent in today’s shrinking pool.
By acknowledging the challenges DEI leaders face and providing them with the resources, autonomy and support they need, accounting firms can cultivate an inclusive culture that attracts and retains diverse talent. As external pressures continue to shape the DEI landscape, firms that proactively support DEI efforts — and the employees leading the charge — will be better equipped to navigate these challenges, building a resilient, adaptable workplace where employees thrive.
With busy season upon us, it is vital for practitioners to take note that this is the time that accountants are most likely to make errors that can lead to lawsuits.
Given the time constraints, deadlines, and pressure of dealing with unfamiliar situations and new laws and regulations, it’s no wonder that tax pros make mistakes. Liability professionals confirm this with the observation that tax services are the most frequent cause of liability lawsuits against accountants, although not the most severe.
One factor involved in liability claims against accountants is “scope creep,” according to Stan Sterna, vice president and risk control leader at Aon, the program manager for the AICPA professional liability program.
Natasa Adzic/stock.adobe.com
For example, a tax engagement might result in failure to detect a defalcation: “The claimant alleges that the accountant agreed to look at internal controls, or that was the expectation,” he explained. “Whenever a client expects the accountant to provide advice that is beyond the scope of a tax preparation engagement, that results in scope creep.”
Scope creep can result from a casual conversation, or simply a misunderstanding at the time of the engagement. And the best way to guard against it is through the use of engagement letters — which has, unfortunately, always been historically low, according to Sterna.
“It’s the first line of defense of a professional liability claim,” he said. “But tax practitioners find various reasons not to use them — too many clients, clients will take it as a CYA measure, it’s a low-risk engagement, or ‘We’re friends and they would never sue me.'”
The engagement letter allows the accountant to define what is and what is not within the scope of the tax services the accountant is to provide, and aligns expectations.
“It should be signed by the client and reissued every year so you can regularly review services and client needs,” Sterna said. “If additional services are required, draft a separate engagement letter or amend the original to define the scope of and fees for these ancillary services.”
“Advise your client that they need to sign the letter before you can commence your tax services,” he advised. “That affords both you and your client the opportunity to ask questions about the nature of the services and clarify any confusion before starting any work.”
And if the accountant feels reticent about requesting an engagement letter for their tax services, “Simply tell them that it’s required by your insurance company,” advise liability professionals.
Hitting the deadlines
If your client misses a due date, any role you played as tax preparer will be front and center in a claim, Sterna noted. “The number of professional liability claims involving missed due dates has been rising,” he noted. “While civil enforcement funding has been scaled back, the IRS has increased staffing and enhanced its technology in recent years, ramping up enforcement and portending fewer penalty abatements.”
He advises practitioners to deploy a reliable form of docket system that tracks and alerts to due dates, respond-by dates, and project status.
“While many practitioners already deploy some version of a docket system ranging from the humble spreadsheet to the full-bodied practice management software that lists forms and due dates, things still slip through the cracks, particularly during busy season,” he said. “This is compounded by the myriad of statutory dates beyond annual, periodic tax compliance such as estate tax returns, income tax returns for estates, amended returns, and legislatively created deadlines. Your docket system’s reliability is only as good as your interaction with it, so be diligent in inputting accurate and timely information.”
It’s also important to be careful who you share client data with, Sterna warned.
“Remember that Section 7216 requires client consent before disclosing to a third party any information furnished in connection with the preparation of a tax return,” he explained. “Section 7216’s consent requirements are more robust, and very specific language is required if tax information, particularly for individual tax clients, is disclosed to parties offshore. Violating Section 7216 can result in criminal penalties.”
Sterna noted that the AICPA provides guidance on Section 7216, including a sample consent form available for download. “Remember, tax practitioners who are AICPA members or are CPAs in states where the AICPA Code applies to them must also comply with the AICPA Statements on Standards for Tax Services Section 1.3, Data Protection, which states that a CPA should make reasonable efforts to safeguard taxpayer data, including data transmitted or stored electronically.”
He emphasized that data and personal information from your client is highly sensitive and losing that information could expose you not only to monetary damages but regulatory action and reputational harm.
Cyber criminals, he noted, are opportunistic and exploit times when your guard is down, such as during busy season. To mitigate risk, he strongly advised using an updated antivirus software, and a multifactor authentication system to access your network. He also recommended encrypted email communications, and limiting access to client information to only those individuals with a clear need to access the data.
Lastly, as tax professionals work their way through busy season, they should be aware of any 2024 tax changes impacting 2025 filings, noted Sterna.
“Future extension of the TCJA, while not necessarily a busy season risk issue, is something that might need to be considered later this year,” he said.
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