Since the Trump administration’s anti-DEI executive orders came out, companies and organizations have been on the retreat when it comes to their diversity, equity, and inclusion programs. The accounting industry has been no exception. Deloitte and KPMG, which are government contractors, both rescinded aspects of their DEI initiatives.
The DEI backlash is “causing a lot of firms to…think about [their] commitment to a diverse, equitable, inclusive workforce” and how to balance that with their hiring practices while making sure they adhere to the law, Geof Brown, president and CEO of the Illinois CPA Society (ICPAS), told CFO Brew.
The changes to DEI are very recent, so it’s hard to say what long-term effects they might have on the accounting profession. If they prove long-lived, though, they might risk making the profession less inclusive, could do reputational damage to firms, and weaken client relationships.
DEI can address the accounting shortage: Even putting equity aside, less diversity could prove a problem. Historically, accounting has not been a very diverse profession. As recently as 2010, 91% of CPAs working at public accounting firms were white, according to the 2011 AICPA Trends report. In 2020, 77% were.
In the face of a widespread accounting shortage, the profession needs to do more to recruit students from different communities, Brown said. “We know that the pathway to meeting the profession’s talent needs is going to go through expanding the pie,” he said, “and you can’t expand the pie without making inroads into some historically underrepresented populations.”
Demographic trends, Brown says, show that the profession will need to reach out to diverse groups if it’s to thrive. While many CPAs are retiring, undergraduate enrollment is dropping, both in accounting and overall. It’s been on the decline since 2010, concomitant with a 23% drop in US birth rates between 2007 and 2022. The racial makeup of the college population has also shifted: In 2021, around 20% of US college students were Hispanic, up from around 11% in 2006.
And, Brown points out, ethnicity isn’t the only element of diversity the profession should consider. College students’ demographics are changing in a “number of dimensions,” he said, including marital status, socioeconomic status, veteran status, and more. He believes accounting has “a good opportunity to get veterans involved in the profession” as well as “parents who left the workforce.”
The political climate has professional organizations reevaluating their DEI programming as well. The AICPA is “reviewing diversity-based resources and programming to ensure compliance with new federal policies and requirements,” Crystal Cooke, director for diversity and inclusion at the AICPA, told CFO Brew in an email. “Outside of that, we are continuously monitoring developments so that we are acting within the requirements of the executive orders without reacting prematurely.” The organization will continue to provide accounting scholarships, she said, but didn’t mention whether it would make any changes to scholarship eligibility based on ethnicity.
ICPAS isn’t making any changes to its DEI programs yet, Brown said. The organization wants to “take a thoughtful and well-researched approach to making any decisions, and I think that’s consistent with a lot of what our peer state societies are doing as well,” he said.
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Essential skill. It’s important that accountants be culturally aware, Michael Paranal, an assistant professor of accounting at the University of Southern California, told us, because accounting is about more than just numbers. Accounting “is a trust business,” he said. “You wouldn’t hire an accountant who you don’t trust.”
Studies show, he said, that people tend to “trust those who demonstrate cultural understanding, who demonstrate that they align with their values. That leads to stronger relationships. That builds to repeat business and higher client attention.”
DEI is equitable: Brown pushes back against the idea that DEI programs are about giving people from certain groups unfair advantages. ICPAS, for instance, sponsors the Mary T. Washington Wylie (MTWW) Opportunity Fund, named for the first Black female CPA in the US, which funds scholarships, job application advice, mentorship, and internship preparation programs.
Those programs “give students the tools they need to be successful. They’re not getting hired because of their participation in that program,” he said, pointing out that MTWW alumni go through the same internship and job application processes that other candidates do and are vetted and reviewed in the same way.
Recently, the Trump administration announced it would investigate the PhD Project, a mentoring and networking program for prospective business faculty from minority backgrounds founded in 1994. Facing the potential loss of federal funding, some schools cut ties with the PhD Project. As of 2023, the PhD Project has helped 324 people become accounting faculty; that year, 42 accounting graduate students were part of the program.
At USC, Paranal and colleagues are gathering data “to prove that DEI is not discriminatory,” he said, pointing out that “there is no evidence” showing DEI is harmful.
Downgrading DEI has risks as well: Though the executive orders represent one risk to firms and organizations, watering down DEI presents others. Firms should be careful in their messaging to employees around any DEI changes, Brown said. “I think firms still have a responsibility to be transparent in terms of talking about their workforce,” including their staff and partner demographics, he said. “That will give their teams a sense of comfort” that their employers are “still committed to making sure all employees have opportunities to progress in their careers in a fair and equitable fashion.”
Employers need to weigh the reputational risks of rolling back DEI programs as well, Paranal said. Millennials and Gen Zers value social justice and inclusion, he said, and are “willing to walk away from projects or employment opportunities” that don’t align with their values. Firms can also look like they’re waffling if they reverse course on something like DEI too abruptly, or appear to be “bowing down to political pressure,” he said.
There’s a risk that people could say “Well, did that mean your DEI work was only performative?” he said. “And that dilutes the credibility of their leaders.”