Attorney General Brenna Bird announced on Monday she joined a coalition of 16 state attorneys general raising concerns over potentially illegal financial reporting requirements by the “Big 4” accounting firms: Deloitte; Ernst & Young; KPMG; and PricewaterhouseCoopers. In a letter to the Big 4, the coalition questions their stated commitments for climate-related disclosures in financial reporting, contrary to their professional duties of integrity and objectivity. The firms stand to financially benefit from the additional reporting, with the increased costs of compliance being passed onto small businesses and consumers.
The Big 4 have committed to the activism-based disclosures as part of the Task Force on Climate-related Financial Disclosures. They are also founding members of the Net Zero Financial Service Providers Alliance, whose members committed to align their products and services with the Paris climate agreement’s goal of achieving net zero greenhouse gas emissions by 2050 or sooner. The Big 4’s climate activism may violate professional duties of integrity and objectivity by creating conflicts of interest.
“When Iowa companies hire one of the Big 4, they are looking for accounting expertise, not undisclosed political activism that is going to drive up their costs,” said Attorney General Bird. “If the Big 4 want to continue to do business with Iowans and Iowa’s companies, they either need to stick to just accounting or make good on their promise of transparency and fully disclose that they are demanding extra-ordinary compliance for their woke positions while raising rates on their customers.”
The Big 4’s climate activism may violate state consumer protection laws by making deceptive representations and omissions to customers about the firms’ independence when conducting audits. The Big 4 do not disclose their climate commitments, which is inconsistent with their stated commitments to independence, objectivity, transparency, ethics, and integrity. The Big 4 may have also violated state contractual provisions requiring compliance with state law, which could result in penalties and termination of the Big 4’s contracts.
Attorney General Bird joined the letter led by Nebraska, Texas, Alaska, and Florida. The letter was also joined by the attorneys general of Alabama, Arkansas, Idaho, Mississippi, Montana, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, and West Virginia.