From the President’s Desk

October/November 2014

Building a Bigger Pipeline:
Increasing Diversity in the Accounting Profession

The remarkable growth of the accounting profession in the past forty years ranks as one of the most dramatic occupational success stories in modern business history.

Between 1973 – the year the FAF and the FASB began operation – and 2013, the number of accountants working in the United States grew from about 760,000 to more than 1.8 million – an increase of nearly 140 percent, according to the U.S. Bureau of Labor Statistics. (Of those employed as accountants today, about 825,000 are licensed CPAs1.) That growth has created a large reservoir of new opportunities for young people entering our profession.

But there is another, less sanguine, side to this story that hasn’t been widely told – or understood. This aspect of the accounting story, in my view, is so important to the future of our profession that I wanted to devote this column to the issue.

Today, fifty years after passage of the landmark Civil Rights bill of 1964, African Americans and Hispanics – who together comprise about 30 percent of the U.S. population – represent just four percent of all partners in the accounting profession, according to data published by the American Institute of CPAs2. Caucasians still hold approximately 75 percent of the professional positions in accounting, and 90 percent of the partnerships.

While the accounting profession is expected to grow by 16 percent between 2010 and 2020, applications by minorities to accounting programs at colleges and universities actually are declining3. This is occurring while the number of minority-owned businesses is projected to skyrocket.

Clearly something is out of balance – and I believe it is up to all of us in the profession to work together to address this critical issue.

I know that many firms, associations, and other groups in our profession have been working for years to implement programs to increase the diversity of their organizations. It is an important effort – and one to which we at the FAF need – and plan – to devote more attention. But the notion of working collaboratively to help increase the pipeline of diverse talent into our industry as a whole is a new idea – and one that I believe deserves all of our support.

That’s why I want to call your attention to a pioneering report recently issued by the Howard University School of Business Center for Accounting Education, which is headed by Frank K. Ross. Frank is a longtime partner with KPMG who served as Managing Partner of the firm’s Washington DC office prior to his retirement in 2003.

The report, "Attracting Underrepresented Minorities to the Accounting Profession: Insights into Diversifying the Talent Pipeline," is an eye-opener. Written by Frank and two Howard colleagues, Jean T. Wells and Allyson T. Clarke, the report minces no words in its opening paragraphs:

Despite decades of intensive efforts, the accounting profession has not reached its diversity goals. One reason is the misperceptions about accounting as a career. Studies suggest that young people, including underrepresented minorities (URM), hold the profession in relatively low regard, do not understand what accountants do, and do not appreciate the career opportunities the profession offers.

It turns out that this lack of esteem is widely shared by parents and educators, the two groups with the most influence on young people’s academic and career choices. Improving the quality of accounting curriculum and expanding internship and scholarship opportunities are essential elements in creating a new, meaningful perception of the accounting profession.

To address these challenges, the Howard Center for Accounting Education created the Pipeline Working Group. The Working Group’s membership includes representatives from the AICPA, Deloitte, EY, KPMG, PwC, BDO, the National Association of Black Accountants, the Association of Latino Professionals in Finance and Accounting, the New Jersey Society of CPAs and other organizations. The Working Group set out to develop a profession-wide and profession-supported initiative to address the five areas outlined by the Howard study to diversify the talent pipeline, through the development and implementation of:
  1. A national marketing and awareness initiative highlighting the benefits and intellectual rewards of accounting as a profession, aimed at students who are making career choices.
  2. School-based programs intended to promote accounting as a high-value career choice, including business career academies, summer development programs, and other community programs.
  3. Initiatives aimed at helping minority students earn their CPA and other professional certifications.
  4. Internships and career exploration opportunities to provide high school and college students the means to become familiar with the accounting profession.
  5. Programs that both increase the number of accounting scholarships available to minority students and that more widely publicize scholarships that already are available.
“The profession cannot enjoy sustainable growth without a strategy to increase its attractiveness to larger talent pools,” Frank says. “The collaboration and support of firms, state societies, and institutions will determine the success and longevity of the pipeline initiatives.”

As leaders in the profession we are accountable for the future. As Frank suggests, education, partnerships and accountability will be the pillars of the diversity mission over the next 20 years.

How can you help?

Over the past few months, the FAF has begun to hold conversations with the Center for Accounting Education and the AICPA regarding the role that we – and other stakeholders – can play in the development of the diversity pipeline initiatives.

With the help of the Pipeline Working Group, the AICPA already has committed initial funding to and will lead the implementation of several of the proposed programs. The AICPA also is working to identify experienced accounting professionals to advocate for the initiatives and seek support from other organizations.

Through columns such as this, we think we can educate our stakeholders on the key issues facing the profession and invite leaders to share their ideas on how we can promote the five initiatives outlined in the CAE report. As a first step, we are reviewing plans to help build awareness about our profession among students and expand the opportunities we offer for young accountants or students considering careers in accounting.

The pipeline initiative represents a call to all in the profession to join a critically important conversation about our future. I understand the magnitude of influence this change will have on the future from both a personal and institutional perspective.

When I was in high school, the only thing I knew about accounting was that debits are bad – especially when the bank debits your account. It wasn't until my first semester at St. Francis University in Loretto, Pennsylvania that I learned from Professor Monborne in Accounting 101 that, "accounting is an art, not a science.” He had a big personality and more importantly, a big vision. He made "assets minus liabilities equals equity" so interesting – and showed us the importance of accounting to the larger world of business. Most significantly, he instilled in his students the belief that they could be an influential part of that world.

We need to ensure that young men and women – whether they are Hispanic, African American, or of another ethnic background – can have that same opportunity.

Promoting the success of the pipeline initiative is in the best interests of all in our profession. We have much work to do, and we at the FAF will do our best to do our part. We support and commend Howard University, the AICPA and all of the partners for being the catalysts driving this effort.

1Statistical Report – National Association of State Boards of Accountancy
22013 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits AICPA 2013
3Moore, Scott, 2013 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits, AICPA, 2013

FAF President and Chief Executive Officer

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