• Saturday, March 02, 2024

Business

Top accountancy body under fire for lack of diversity

ICAEW’s board remains predominantly composed of white directors

Representational image (iStock)

By: Pramod Thomas

THE Institute of Chartered Accountants in England and Wales (ICAEW) is under scrutiny for its failure to appoint black and minority ethnic directors to its board, reported ThisIsMoney.

The top accountancy body, representing one of the industry’s largest sectors, is also facing criticism for its apparent lack of diversity in top leadership roles.

Despite efforts within the accounting profession to increase diversity, ICAEW’s board remains predominantly composed of white directors, raising questions about the organisation’s commitment to promoting inclusivity.

This issue emerged amid recent controversies over the failure of major auditors, including PwC and EY, to identify problems in companies that later collapsed.

Critics argue that the profession needs to take more proactive measures to ensure equal opportunities for candidates from all ethnic backgrounds.

Prof Atul Shah and Prem Sikka emphasise that non-white trainees entering the profession often face challenges in career advancement, with some choosing to establish their own firms to avoid discrimination.

“I hear from many of my former students that there was no opportunity to progress. The only way they could get on was to get out,” Prof Sikka, Labour peer and professor of accounting at the University of Essex, was quoted as saying.

According to the report, lack of diversity in ICAEW’s top ranks has broader implications for the accounting profession. It undermines trust in the profession’s integrity, particularly in financial reporting and auditing processes.

The controversies surrounding company audits, such as the case of retail chain Wilko, intensify scrutiny on auditors’ abilities to identify potential issues.

In response to the criticism, ICAEW acknowledges the need for improvement and has become the first professional body to sign the Charter for Black Talent in Finance and the Professions.

The organisation is also committed to creating a five-year plan and setting targets to improve equality of opportunity for black professionals.

Beyond the charter, ICAEW is launching a black members community and other initiatives identified through focus groups with black members. These efforts aim to create a supportive environment for black professionals within the profession, fostering collaboration and opening doors to new opportunities, the body said.

The issue extends beyond ICAEW, as a recent study reveals that boards in the financial sector prioritise experience over diversity in director appointments. The research revealed a decline in the proportion of first-time female and minority ethnic directors among the UK’s top 150 FTSE companies, raising concerns about achieving gender and ethnic parity in leadership roles.

The government-commissioned Parker Review set targets for diversity in FTSE 100 companies, but the research highlighted a 44 per cent drop in appointments of minority ethnic non-executive directors, prompting questions about the future of diversity in leadership within the financial sector.

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