PCAOB member Jeanette Franzel called on accounting firms to step up their efforts to promote diversity among employees.
“Progress in achieving diverse audit teams and firm leadership remains opaque and slow,” Franzel said in a speech at Baruch College’s Annual Financial Reporting Conference on May 4, 2017, in New York. “While the auditing profession faces a number of challenges and issues, diversity needs to be a top priority, backed with meaningful and impactful actions. In my view, this is a matter of priority for the sustainability of the profession.”
She called the overall situation “dismal.”
“The profession must focus on inclusion and increasing diversity in order to have the talent and capabilities to fulfill its important mission of assurance and investor protection now and in the future,” Franzel said.
During a question-and-answer session, Franzel was not able to cite specific causes for the accounting profession’s long-standing lack of diversity, but she said a possible solution may include active efforts on the part of accounting firms and accounting faculties at colleges and universities to encourage more high school and college students from minority groups to pursue careers in accounting.
“If I knew that answer, I could leave the board and charge [the accounting firms] them a high price to solve the problem,” Franzel said.
She credited accounting firms for recognizing the problem but added that more needed to be done.
“Similar problems exist in the financial services industry and at the top levels of corporations, but that’s no excuse to say we look just as bad as everybody else,” she said.
While Franzel acknowledged that the board does not have a mandate to regulate the employee make-up at accounting firms, she said that she views an engagement team’s diversity as being tied to the overall quality of an audit, and that she planned to keep bringing the issue up.
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