At a conference, Securities and Exchange Commission (SEC) Chairman Paul Atkins strongly criticized accounting firms for having pressured the commission to adopt certain disclosure rules that do not necessarily reflect the traditional concept of materiality, issuing a stern warning to the firms.
While he did not explicitly say so in his remarks, he was referring to large firms, especially Big Four firms, that strongly supported the SEC’s rulemaking on climate disclosure during the previous administration. These firms would financially benefit by providing assurance services.
“Self-interest…is the one thing that is troubling; let’s just say about the last few years and some activities of the profession, the growing focus on issues and services that promote your own financial self-interest,” Atkins said at the AICPA Conference on Current SEC and PCAOB Developments in Washington on December 8, 2025.
The Biden-era climate disclosure rule adopted by the SEC when Gary Gensler was chair is on hold following a court ruling. With change to the Trump administration, federal government agencies abandoned everything related to environmental, social, and governance (ESG) matters. As for the climate change rule for public companies, the commission stopped defending the rule but has not yet formally rescinded it either.
“Basically our theme right now with respect to the profession is to get back to basics. We have to focus on things like integrity and objectivity, professional skepticism, which is the reason why we have auditors and accountants for protection of investors so they know how things are going. Honesty and fairness and independence to avoid bias and that sort of things. So, all that is really very important, challenging management judgment and what not,” the SEC chief said.
In further explaining the “self-interest” aspect of the profession, Atkins said that in the past five years or so, he was “really shocked at the focus … on things that I think would have completely subverted the importance of financial materiality and financial accounting. That’s some of the disclosure rules that were pushed forward at the SEC to the chairs… and that would have subverted [Regulation] S-X, S-K, of course, and ultimately U.S. GAAP.”
While the SEC scaled back its proposal, the March 2024 final rule requires larger companies to provide Scope 1 and Scope 2 disclosures. Scope 1 is direct emissions, and Scope 2 is indirect emissions from purchased energy. The SEC retained the assurance requirement for companies that disclose Scope 1 and Scope 2 emissions.
The regulator estimated the rule would increase spending by filers on external service providers like assurance firms by as much as $907 million a year.
Atkins: Will ‘Discount’ Firms’ Comment Letters on Climate
Such self-interest is “a real problem. And some of these comment letters that were submitted to the SEC are still on firms’ websites,” Atkins said. “So, I guess you still stand by that. So looking forward, we have a very heavy regulatory agenda coming up next year, but basically, you know, I will look with rather skepticism, I guess, and you know, discount some of the comments that come from the profession in this area.”
“So I think there has to be a real refocus, again, on the basics of financial accounting auditing,” he added.
At the end of the day Q&A, SEC Chief Accountant Kurt Hohl was asked about Atkins’ remarks.
In particular, the question concerned Atkins’ remarks that comment letters from the profession would be given less consideration, and how this approach could benefit the rulemaking process.
Hohl explained that when representatives from firms or companies visit the SEC to meet with the chair or others, Atkins “basically gave the same message to all the firms. And that is, ‘don’t let your pecuniary interests in rulemaking overcome your or outweigh the principles in which you basically stand by. And that is, he’s focused mainly on materiality of disclosures. And I think he’s mostly focused on the comment letters that came from the climate change rule proposals” which the firms supported.
He emphasized that this commission has inherited the climate change rule, and the SEC “is going to basically deal with the climate change rescission coming up soon.”
“I don’t anticipate that comment letters from practitioners and firms are going to be weighed less in the comment process,” Hohl said. “They’re all very important, and we encourage everybody to come in and talk to us, and we’ll weigh all those comments the same way.”
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