Connect with us

Accounting

Small accounting firms aren’t off the DEI hook

Published

on

Some smaller accounting firms are in denial that they have a major role to play in advancing diversity, equity and inclusion in the accounting profession.

One-third of micro and 13% of small firms say DEI is not a necessary part of their strategy, according to research by the Center for Accounting Transformation. Meanwhile, large firms think they are near the end of the DEI journey: About one-third say they are in the “refining” stage (measuring the impact and refining their programs/initiatives) or the “integrated” stage (DEI is interwoven into the operating fabric of their organization). Another 26% say they are in the “implementing” stage (implementing their initial programs/initiatives).

By and large, experts agree there is still much more work to be done on the DEI front. 

Donny Shimamoto, founder of CPA firm IntrapriseTechKnowlogies and the Center for Accounting Transformation, says that among small firms there is a sense of “this doesn’t really apply to us; this is for big organizations,” and “we can’t have representation; we’re too small.” 

So what can small firms do, with the limited resources they have, to advance DEI? 

Change, past future

Kimberly Ellison-Taylor, the former chair of the American Institute of CPAs’ National Commission on Diversity and Inclusion, says small firms should view their size as their strength: They have an advantage in that there’s less bureaucracy — they can make changes and implement policies in the office without getting caught up in red tape. 

She said firms should not underestimate the value of flexibility. Diversity encompasses race, ethnicity and gender, but it also includes parental status, neurodiversity, socioeconomic status, physical ability or disability, and more. Offering hybrid or remote schedules, or offering reduced hour requirements, can be a deciding factor for potential employees choosing between firms. 

“Play to your strengths and use that to get them to come and work with you,” Ellison-Taylor said. “It might not follow any conventional model that you’ve ever heard of, but why not start one?”

It’s important for DEI to be a tone set from the top.

“In order for staff to really have buy-in, they like to see that their leaders are actually bought into the various initiatives or the culture of the firm,” said Trevor Williams, audit partner and director of DEI at GRF CPAs in Bethesda, Maryland.

“There’s only so much growth that your firm can do if everybody looks like and thinks like the same cookie cutter,” Williams continued. “You can’t be successful in today’s environment with that type of belief.”

Diverse leadership brings different perspectives to the table. 

“If everybody has the same opinion, you’re not going to get the right answer,” said Lexy Kessler, vice chairman of the AICPA and mid-Atlantic managing partner of Top 100 Firm Aprio. “If you have people with different opinions and different backgrounds coming into conversation, then you get to the right answer.”

DEI can improve a firm’s bottom line. 

“We work in accounting. If we can start showing people that by continuing their efforts in inclusive initiatives in their firm — that the metrics will get better — I think that they will keep going with it,” said Sandra Wiley, president of Boomer Consulting. “But I think we’ve got to turn the attention to not just what some firm leaders would call fluff and talk about the numbers. Talk about profitability, talk about how many innovative ideas are coming up, talk about the collaboration between teams about engagement, and attracting and retaining good people.”

But it’s up to firms to make change happen. “You can’t wait and hope for the best,” said Anoop Mehta, past chair of the AICPA and current chair of the AICPA NCDI. “You have to put processes in place, and you have to be intentional about it.”

Experts say that now is not the time to pull back. Doing so risks alienating not only diverse talent but also the growing Gen Z workforce who highly value their companies’ stances on critical social issues. 

“Pulling back is only going to position your firm as being run by people that don’t care about this kind of stuff,” said Bonnie Buol Ruszczyk, president and manager of the Accounting MOVE Project. “They don’t care about their employees. They don’t care about reaching people outside of the majority of firm employees.”

Continue Reading

Accounting

IAASB tweaks standards on working with outside experts

Published

on

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 proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • 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 IAASB website by July 24, 2025.

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.  

Continue Reading

Accounting

Tariffs will hit low-income Americans harder than richest, report says

Published

on

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 analysis from the Institute on Taxation and Economic Policy.

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 imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

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 estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

Continue Reading

Accounting

At Schellman, AI reshapes a firm’s staffing needs

Published

on

Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

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.”

Continue Reading

Trending