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.
The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.
The
- ISA 620, Using the Work of an Auditor’s Expert;
- ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
- ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
- ISRS 4400 (Revised), Agreed-upon Procedures Engagements.
The IAASB is asking for comments via a digital response template that can be found on the
In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.
President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an
The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings.
Trump has
Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.
Food prices could rise by 2.6% in the short run due to tariffs, according to an
The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.
Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist
Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time.
“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said.
One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load.
“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai.
Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies.
“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.
However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area.
“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai.
As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales.
“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai.
While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves.
“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”
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