UK audit firms rapped over the lack of diversity

Accountancy firms advising large companies on diversity initiatives have been scolded by the UK’s auditing watchdog for not having enough ethnic minorities, women and disabled people in decision-making positions. The Financial Reporting Council (FRC) said in a statement that “the audit and accountancy profession is lagging behind business when it comes to the diversity of senior management”, with the majority of top roles still held by white men.

The FRC found that while women make up just under half of manager-level roles at UK accountancy firms, just 17 per cent were promoted to partner over the past twelve months, to October. Smaller organisations showed a similar trend.

“While women and ethnic minority groups are increasingly being appointed to middle management roles at accountancy firms, the firms — which ironically advise large corporations on their diversity and inclusion strategies — need to do far more to maximise their pipeline of future talent and promote women, (black, Asian and minority ethnic) and disabled employees to the top levels of management.” the FRC said.

The FRC also found a lack of available data on diversity in the industry it oversees, with one in three accountancy firms not collecting any statistics on the make-up of their workforce. Sir Jon Thompson, the FRC’s new chief executive, said: “The business case for improved diversity has been made and now it’s time for the audit and accountancy profession to take further positive action.”

To reduce the gap between mid and senior management, the FRC is urging organisations to sign up to the government’s Equalities Office pledge, known as the Men As Change Agents (MACA) initiative, which calls on businesses to take greater responsibility for creating more inclusive workforces.

The initiative, whose board met for the first time in September, championed the government-commissioned Hampton-Alexander Review to help ensure 33 per cent of senior managers at FTSE-level companies are women by the end of next year.

Of the so-called Big Four accountancy firms — Deloitte, EY, KPMG and PwC — only Deloitte has representation on the MACA board; its vice-chair Sir William Touche and special adviser on inclusion Emma Codd are both members.

MACA also aim to get at least one ethnic minority director in place at each FTSE 100 company by 2021 and on every FTSE 250 board by 2024 — as recommended by the Parker Review, led by Sir John Parker, the former chair of Anglo American, and produced in part with the help of EY.

On the matter of ethnicity, it was welcome news that International students will be able to stay and work in the UK for two years after graduating — a huge climbdown by the Government, which had previously restricted the period to four months. The rule change ends one of former PM Thresa May’s most controversial immigration policies, which critics argued would deter international students from applying to British institutions and would lead to the loss of bright students who could contribute to the UK after being educated in the country.

Prime Minister Boris Johnson said the new immigration route for international students was part of making Britain “open to the brightest and best from across the globe.”

It will also be seen as a move to show that Britain is still an outward-facing nation as the Government pushes ahead with its Brexit plans.

The new post-study work visa will come into effect for students starting courses at undergraduate level or above in 2020 and is open to graduates in any subject and for jobs in any sector. The Government said students will need to have successfully completed a degree from a trusted UK university or higher education provider with a track record of upholding immigration checks.

There will be no caps on numbers who can apply, and those with the visa will be able to apply to switch to a skilled worker visa if they find a job which meets the relevant criteria.

In a joint statement, the Education Minister Gavin Williamson and the Home Minister Priti Patel said the Government intends to increase the number of international students coming to the UK by 30 per cent by 2030. “International students are vital for our country and provide some of the most crucial skills we need across our workforce,” they said.

Adding: “They boost our economy and are a testament to our openness to talent.” The UK is currently second only to the US as a destination for international students, with nearly 460,000 coming to study at universities each year. (The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)