Engaging Internal Audit in Initiatives for Diversity, Equity, and Inclusion

December 6, 2022

Higher education is no stranger to the topic of Diversity, Equity and Inclusion (DEI) - if anything, higher ed institutions have historically been at the forefront of discussions about increasing access and success of underrepresented groups, and leveraging their classrooms and research to expand the view of future business leaders into the benefits of workplace diversity and equity. But DEI has garnered even more attention over the past several years. The disproportionate impacts of the COVID-19 pandemic and increased emphasis on racial inequality, social justice reform, corporate social responsibility, and the rise of Environmental, Social and Governance (ESG) reporting requirements have fueled a greater desire to address issues of DEI in higher education and ultimately improve the experience of students, faculty, staff, and the larger community.

The National Association of Diversity Officers in Higher Education (NADOHE) has placed an increased emphasis on Inclusive Excellence, which it views as transitioning from a singular focus on improving compositional diversity—who is present or absent on campus—to embracing comprehensive performance measurements linked to goals, objectives, strategies, indicators, and evidence.

Colleges and Universities are charged with three primary duties:

Minimize risk and negligence and ensure legal and regulatory compliance with diversity and equity issues in higher education.
Oversee, assess, and sustain campus policies that elevate equity, fairness, inclusion, and safety.
Develop, implement, monitor, and make recommendations for nondiscrimination and anti-harassment policies, processes, and practices associated with Equal Employment, Titles VI, VII, and IX considerations, Americans with Disabilities Act, affirmative action, and other applicable human rights protections.

In higher education, DEI applies to all aspects of college or university operations, including recruitment and retention of a diverse student and faculty population, fair and equitable hiring and promotion of employees, supporting minority-owned vendors in procurement practices, providing diversity awareness and unconscious bias training, and providing additional resources and support for traditionally underrepresented student populations and material covered in course curricula.
In recent years, many colleges have furthered their commitment to improving equity among their communities by establishing formal DEI strategies, programming, and procedures that align with their organization’s mission, appointing Chief DEI Officers and creating offices to shape and execute these strategies.
There is still much progress to make.

A 2022 Hanover Research study on DEI surveyed nearly 1,000 undergraduate students from across the United States and found that the majority of BIPOC (Black and Indigenous People of Color) students agree that those with diverse backgrounds, identities, and experiences do not have equal access to academic opportunities. While 69% of students agreed that the faculty and staff population at their institutions are racially and ethnically diverse, students at private colleges or universities were found to have a more negative perception of their institution’s support of DEI efforts than those at public institutions.

Exemplifying the onus placed upon universities to increase efforts toward DEI programming, third-party evaluators have now begun factoring diversity and equity data into their scoring metrics. The U.S. News and World Report rated the most ethnically diverse campuses across the country by assigning a diversity index score based on the total proportion of minority students (excluding international). The INSIGHT Into Diversity HEED Award, open to all colleges and universities across the U.S. and Canada, measures an institution’s level of achievement and intensity of commitment regarding broadening diversity and inclusion on campus.

Internal Audit’s Role in Enhancing DEI Actions

A higher education internal audit (IA) function can help to support the institution’s DEI efforts in several ways. As discussed in a panel session at ACUA’s 2022 AuditCon, DEI continues to be an area of exploration and, at times, uncertainty for college and university auditors, but there have been several strategies employed across institutions that could help your audit shop get started.

First, as an operating unit within the school, IA can help lead by example in examining its practices regarding DEI and working to strengthen practices where possible and align with the institution’s broader strategies and goals as needed.

Then IA should review whether your institution or system has established any strategies or goals regarding DEI across campus. If no such foundations exist, consider the ability for IA to play an advisory role and help leadership work to move the needle on setting DEI goals and measures, even if starting small with just a few focus areas (e.g., admissions, procurement or pay equity reviews).

Even without an institutional framework or goals, IA can still perform DEI-focused audits. This may include assessing compliance activities related to the number of diversity and equity laws in place regarding hiring practices, institutional program offerings or student services. With the increase in external metrics regarding DEI, IA could review the institutional data used and report for inclusion.
If goals, targets, and metrics have been established, IA can play a role in supporting the institution’s monitoring efforts, verifying those goals have been met, or looking at the overall management and structure of how such a program is enacted across campus.

AuditCon panelists also spoke about efforts to begin including considerations of DEI and overall institutional culture as a standard component of all audits. Similar to incorporating IT considerations into all audits conducted, these IA shops have started to leverage pre-audit control surveys to ask questions about the culture and processes of auditable units, including evaluating the diversity of staff and feelings of inclusion. This enables the IA function to identify non-traditional areas of risk and measure DEI effectiveness while providing valuable feedback to auditees to help promote DEI efforts and enhance morale.

One of the biggest takeaways from the ACUA panel was that there is no single right answer for how to incorporate DEI considerations into the work of IA. While conversations have begun to shed light on areas of DEI as a leading institutional priority and risk area, many audit shops are still uncovering how to include such topics within an audit plan. But no matter how mature your focus on DEI may be, there are ways to engage your IA team to help support or even drive DEI initiatives across campus.
DEI is an area that will continue to receive focus on campuses across the nation, with the goal of continual progress. In turn, DEI work performed by the IA function will continue to evolve and shift in alignment with your institution’s activities. IA’s willingness to engage with DEI topics will help your institution increase compliance and embrace inclusiveness with DEI measures.

About the Author

David Clark, CIA, CFE, CRMA

David Clark, CIA, CFE, CRMA is a Managing Director and leader of BDO’s higher education advisory practice with nearly two decades of experience supporting colleges and universities. He specializes in supporting institutions in all manner of areas related to strategy, governance, risk, and compliance. Prior to joining BDO, he served as a Director in the Risk, Internal Audit, and Cybersecurity consulting practice of another international accounting firm as well as a Senior Internal Audit Manager at one of the country’s leading financial institutions. He can be reached at dclark@bdo.com.

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