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Counting On a More Diverse Workforce

Big Four auditing firm Deloitte & Touche LLP USA may have found a way to address two of the top challenges for public accounting firms of the decade: finding and retaining qualified staff and recruiting new leadership.

Deloitte is going to campuses across the United States in search of its next generation of talented accounting professionals with a recruitment and retention program designed to finance the education of selected scholars, get their feet in the door at the company and set them on the path to a successful career.

The Future Leaders Apprentice Program (FLAP) began a year ago under the efforts of Kaplan Mobray, Deloitte’s U.S. diversity recruiting leader. Last year, Deloitte began going to colleges within the company’s seven regions, including 25 schools the New Yorkbased auditor has designated as sources for finding talented African-American, American Indian, Asian and Hispanic accounting majors, in search of FLAP recruits.

Deloitte is seeking scholars with good grades, leadership potential and demonstrated commitment to their communities. The company has recruited 52 FLAP scholars (including participants in FLAP junior scholars), with 35 now working at Deloitte offices across the United States, Mobray says.

FLAP has three components: Upon accepting a $5,000 scholarship for use toward undergraduate educational expenses or the fifth-year of study required to become a CPA, recruits agree to take a job with Deloitte. Once hired, the scholars participate in a twoyear leadership development curriculum that features seminars and opportunities to meet top executives. They also are matched with Deloitte mid- and senior-level managers who serve as their mentors and sponsors.

The leadership component is “designed to help new accounting professionals gain those esoteric skills outside of their regular job functions that lead to success,” Mobray says. The curriculum will help recruits develop the skills to serve Deloitte’s clients, bring value to the company, work in a team environment and become leaders, he adds.

With auditing executives retiring and recent legislation that requires U.S. companies to submit more reports on financial transactions, Deloitte and the other “Big Four” auditors — Ernst & Young LLP, KPMG LLP and PricewaterhouseCoopers LLP — are all understaffed and in search of their firm’s next leaders.

“I think all the firms are starting to address this (lack of mentors for minority associates). They (firms) are also finding ways to encourage minorities to sit for the [CPA] exam,” says Frank Ross, a retired certified public accountant and visiting professor of accounting at Howard University who heads up its business school’s Center for Accounting Education. Historically, diversity has been a challenge for the accounting industry, Ross and other experts say.

Opening Doors

In 2004, African-Americans, American Indians, Asians and Hispanics made up about 8 percent of professionals at public accounting firms, according to the most recent statistics compiled by the American Institute of Certified Public Accountants. Turnover at accounting firms in 2004 was higher among minority professionals, according to AICPA. “There are probably people at Deloitte that recognize retention is still the big issue,” says Dr. Theresa A. Hammond, associate professor of accounting and Ernst & Young Re- search Fellow in diversity studies at Boston College’s Wallace E. Carroll School of Management.

Learning how to successfully navigate a company’s corporate culture is important to succeeding at public accounting firms, which tend to have a hierarchal structure in which recruits come straight out of college, and successful employees get promoted every few years on a regular schedule to senior, then to manager, then to partner, Hammond says.

Historically, African-American employees have had to exceed expectations in order to be given a chance at promotions early in their careers. The rigid timing of CPA firm promotions may have resulted in talented African- Americans leaving the firm, frustrated by the lack of opportunity early in their career. Hammond thus described the climate in a typical CPA firm to the oversight subcommittee of the House Committee on Financial Services during a 2004 hearing on diversity in the financial services industry.

Members of the National Association of Black Accountants Inc. say the two-year leadership development component of FLAP is needed for minority accounting professionals to stay the course.

A February 2006 NABA membership survey found the development of “soft-skills” is key to career growth. Competence, self-confidence and the setting of expectations are the top three factors that lead to success, members reported. Establishing credibility and navigating corporate politics are challenges to success, the survey found.

Respondents also said they needed better communication, interpersonal, networking, organizational, time-management and networking skills — things that don’t relate to technical or industry-specific knowledge.

In response to its findings, NABA added a new component to its executive education series and has joined the Howard University Center for Accounting Education to conduct day- and week-long seminars to help accounting professionals at different stages in their careers gain the skills to take them to the next level.

Both organizations encourage minority accounting professionals to become certified public accountants early in their careers.

Meeting the requirements to become a CPA gives an accounting professional the authority to sign-off on a company’s audited financial statements and can open doors to top financial management positions, Hammond says.

Righting Historical Wrongs

In addition to the 150-credit hour course of study and passing the CPA exam, certification requires work experience at a CPA firm. Of the 8 percent of minorities working for public accounting firms in 2004, just 1 percent were Black.

In her book, A White-Collar Profession: African-American Certified Public Accountants Since 1921, published in 2002, Hammond related the stories of several African- American accountants whose dreams of earning the credential were deferred because accounting firms refused to hire them.

In the late 1960s, firms began to hire and promote African-Americans; then during the 1980s, in the midst of complaints of “reverse discrimination,” the percentage of African- Americans working for public accounting firms declined, Hammond says. There also was a dearth in the number of African- American accounting professors to provide role models and encourage students to enter the profession. Organizations such as The PhD Project have since helped to increase the number of minority business school faculty.

Deloitte’s mentorship component may help chip away the historical challenges the industry has faced retaining minority accountants.

Ross says firms are challenged with retaining a diverse staff for several reasons.

“The small number of African-American partners and senior executives in public accounting gives the perception that there is restricted access to these positions,” says Ross, a founding member of NABA. “There is little incentive to go through the rigors required if they are ultimately denied access at the top.”

In 2003, Ross retired from his post as the Mid-Atlantic area managing partner of KPMG’s audit and risk advisory services and managing partner of the firm’s Washington, D.C. office. Minorities made up five percent of partners and owners at CPA firms in 2004, according to AICPA.

Additionally, there is a lack of mentors “that will open doors and assign them to engagements where they can get the experience to grow,” Ross adds. “African-Americans don’t always get on high-profile engagements where they can gain the visibility and the experience necessary to compete at the highest levels.”

–Cassie M. Chew

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