Bill Text: HI HB243 | 2016 | Regular Session | Introduced

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Bill Title: Public Accountancy; Out-of-State; Reciprocity

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2015-12-17 - Carried over to 2016 Regular Session. [HB243 Detail]

Download: Hawaii-2016-HB243-Introduced.html

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HOUSE OF REPRESENTATIVES	H.B. NO.	243
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII

A BILL FOR AN ACT

 

 

relating to public accountancy.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  The legislature finds that certified public accountants and accountancy firms sometimes provide services for Hawaii clients from outside of the State.  However, the board of accountancy does not currently have clear and specific authority to regulate out-of-state accountants and accountancy firms, nor are there clear limits in the law on the types of services that may be performed in Hawaii without a Hawaii license.

The purpose of this Act is to regulate out-of-state certified public accountants and accountancy firms by establishing clear standards, including a limited privilege to practice within the State, and by subjecting all certified public accountants and accountancy firms practicing in Hawaii to oversight by the Hawaii state board of public accountancy.

     SECTION 2.  Chapter 466, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§466-A  Substantial equivalency.

  (a)(1)  An individual whose principal place of business is not in this State and who holds a valid license as a certified public accountant from any state that the National Association of State Boards of Accountancy National Qualification Appraisal Service has verified to be in substantial equivalence with the certified public accountant licensure requirements of the American Institute of Certified Public Accountant/National Association of State Boards of Accountancy Uniform Accountancy Act shall be presumed to possess qualifications substantially equivalent to this State's requirements and shall have all the privileges of licensees of this State without the need to obtain a license under sections 466-5 or 466-7 of this chapter.  Notwithstanding any other provision of law, an individual who offers or renders professional services, whether in person, by mail, telephone, or electronic means, under this section shall be granted practice privileges in this State and no notice or other submission shall be provided by the individual.  The individual shall be subject to the requirements in paragraph (3);

     (2)  An individual whose principal place of business is not in this State and who holds a valid license as a certified public accountant from any state that the National Association of State Boards of Accountancy National Qualification Appraisal Service has not verified to be in substantial equivalence with the certified public accountant licensure requirements of the American Institute of Certified Public Accountant/National Association of State Boards of Accountancy Uniform Accountancy Act shall be presumed to have qualifications substantially equivalent to this State's requirements and shall have all the privileges of licensees of this State without the need to obtain a license under sections 466-5 or 466-7 if the individual obtains from the National Association of State Boards of Accountancy National Qualification Appraisal Service verification that the individual's certified public accountancy qualifications are substantially equivalent to the certified public accountant licensure requirements of the American Institute of Certified Public Accountant/National Association of State Boards of Accountancy Uniform Accountancy Act.  Any individual who passed the Uniform Certified Public Accountant Examination and holds a valid license issued by any other state prior to January 1, 2012, may be exempt from the education requirement in section 466-5.5 for purposes of this paragraph.  Notwithstanding any other provision of law, an individual who offers or renders professional services, whether in person, by mail, telephone, or electronic means, under this section shall be granted practice privileges in this State and no notice or other submission shall be provided by the individual. The individual shall be subject to the requirements in paragraph (3);

     (3)  An individual licensee of another state exercising the privilege afforded under this section and the firm that employs that licensee jointly and severally consent, as a condition of the exercise of this privilege:

         (A)  To the personal and subject matter jurisdiction and disciplinary authority of the board;

         (B)  To comply with this section and the board's rules;

         (C)  That if the license from the state of the individual's principal place of business is no longer valid, the individual shall cease offering or rendering professional services in this State individually and on behalf of a firm;

         (D)  To the appointment of the state board of accountancy that issued the individual's license as the agent upon whom process may be served in any action or proceeding by the board against the licensee; and

         (E)  To promptly notify the board if:

              (i)  Any disciplinary action relating to the individual's license is commenced in any state; or

             (ii)  The individual is convicted of any criminal offense in any state or country;

     (4)  An individual who has been granted practice privileges under this section who, for any entity with its home office in this State, performs any of the following services:

         (A)  Any financial statement audit or other engagement to be performed in accordance with Statements on Auditing Standards;

         (B)  Any examination of prospective financial information to be performed in accordance with Statements on Standards for Attestation Engagements; or

         (C)  Any engagement to be performed in accordance with Public Company Accounting Oversight Board auditing standards,

          may do so only through a firm that has obtained a permit issued under section 466-7(d) of this chapter.

     (b)  A licensee of this State offering or rendering services or using their certified public accountant title in another state shall be subject to disciplinary action in this State for an act committed in another state for which the licensee would be subject to discipline in the other state.  The board shall investigate any written complaint made by the board of accountancy of another state.  The nature and extent of the investigation shall be determined by the board in the exercise of its discretion."

     SECTION 3.  Section 466-3, Hawaii Revised Statutes, is amended as follows:

     1.  By adding four new definitions to read:

     ""Compilation" means providing a service to be performed in accordance with Statements on Standards for Accounting and Review Services that is presented in the form of financial statements and information that is the representation of management (owners), without undertaking to express any assurance on the statements.

     "Home office" is the location specified by the client as the address to which a service described in section 466-7 (d)(1)(C) is directed.

     "Principal place of business" means the office location designated by a licensee for purposes of substantial equivalency and reciprocity.

     "Substantial equivalency" is a determination by the board or its designee that the education, examination, and experience requirements contained in the statutes and administrative rules of another jurisdiction are comparable to, or exceed, the education, examination, and experience requirements contained in the Uniform Accountancy Act or that an individual certified public accountant's education, examination, and experience qualifications are comparable to, or exceed, the education, examination, and experience requirements contained in the Uniform Accountancy Act.  The determination is made without regard to the sequence in which the experience, education, or examination requirements were attained."

     2.  By amending the definitions of "attest" and "report" to read:

     ""Attest" means providing the following financial statement services:

     (1)  Any audit or other engagement to be performed in accordance with the statements on auditing standards of the American Institute of Certified Public Accountants;

     (2)  Any compilation or review of a financial statement to be performed in accordance with the statements on standards for accounting and review services of the American Institute of Certified Public Accountants;

     (3)  Any examination of prospective financial information to be performed in accordance with the statements on standards for attestation engagements of the American Institute of Certified Public Accountants;

     (4)  Any engagement to be performed in accordance with the government auditing standards, also known as the Yellow Book, issued by the United States Government Accountability Office; [and]

     (5)  Any engagement to be performed in accordance with the standards of the Public Company Accounting Oversight Board[.]; and

     (6)  Any examination, review, or agreed upon procedures engagement to be performed in accordance with the statements on standards for attestation engagements of the American Institute of Certified Public Accountants, other than an examination described in paragraph (3).

     "Report", when used with reference to [financial statements,] any attest or compilation service, means an opinion, report, or other form of language that states or implies the measure of assurance, if any, as to the reliability of [any] the attested information or compiled financial statements, and that also includes, or is accompanied by, any statement or implication that the firm issuing it has special knowledge or competence in accounting or auditing."

     SECTION 4.  Section 466-7, Hawaii Revised Statutes, is amended to read as follows:

     "§466-7  Permits to practice.  (a)  [A] Except as provided in section 466-A and subsection (d)(2) and (3), a license and permit are required to actively engage in the practice of public accountancy.  The board may grant or renew a permit to actively engage in the practice of public accountancy.  Permits shall be initially issued and renewed for periods of two years but in any event shall expire on December 31 of every odd-numbered year.  The board shall prescribe the methods and requirements for application.

     (b)  An applicant for the initial issuance or renewal of a permit shall have:

     (1)  A valid license;

     (2)  Completed continuing professional education hours, the content of which shall be specified by the board, which may provide for special consideration by the board to applicants for permit renewal when, in the judgment of the board, full compliance with all requirements of continuing education cannot reasonably be met;

     (3)  Completed an application;

     (4)  Paid appropriate fees and assessments; and

     (5)  In the case of a renewal, undergone and provided proof of having undergone the peer review process pursuant to part II.

     (c)  The board may grant a temporary permit to actively engage in the practice of public accountancy to any person who:

     (1)  Has attained eighteen years of age;

     (2)  Possesses a history of competence, trustworthiness, and fair dealing;

     (3)  Holds [a valid license of certified public accountant or of public accountant issued under the laws of another state, or who holds] a valid comparable certificate, registration, or license or degree from a foreign country determined by the board to be a recognized qualification for the practice of public accountancy in [such] the other country;

     (4)  Incidental to the person's practice in [such] the other [state or] country, desires to practice public accountancy in this State on a temporary basis; and

     (5)  Has completed an application.

[Such] The permit shall be effective for a period not exceeding three months, and shall specify the nature and extent of the practice so permitted.

     (d)  [All firms shall obtain a permit to practice.]  The board [may] shall issue or renew a permit to actively engage in the practice of public accountancy to any firm [which] that submits a completed application and demonstrates qualifications in accordance with this section and as prescribed by the board.

     (1)  The following shall hold a permit issued under this section:

         (A)  Any firm with an office in this State performing attest services as defined in section 466-3;

         (B)  Any firm with an office in this State that uses the title "CPA" or "CPA firm"; or

         (C)  Any firm that does not have an office in this State but, for a client having its home office in this State, performs any audit or other engagement to be performed in accordance with the Statements on Auditing Standards, any examination of prospective financial information to be performed in accordance with the Statements on Standards for Attestation Engagements, or any engagement to be performed in accordance with the auditing standards of the Public Company Accounting Oversight Board;

     (2)  A firm that does not have an office in this State may perform, for a client having its home office in this State, any review of a financial statement to be performed in accordance with the Statements on Standards for Accounting and Review Services and any compilation, as defined in section 466-3, and may use the title "CPA" or "CPA firm" without a permit issued under this section only if:

         (A)  The firm meets the firm ownership and peer review requirements specified by this chapter or board rule; and

         (B)  The firm performs services through an individual with a current permit to practice issued under this chapter or practice privileges under section 466-A; and

     (3)  A firm that is not subject to the requirements of subsection (d)(1) or (2) may perform other professional services while using the title "CPA" or "CPA firm" in this State without a permit issued under this section only if:

         (A)  The firm performs the services through an individual with a current permit to practice issued under this chapter or practice privileges under section 466-A; and

         (B)  The firm can lawfully do so in the state where the individual with practice privileges (if applicable) has the individual's principal place of business.

     (e)  Failure to submit the required fees, continuing education hours, or other requirements for renewal as specified in this section by December 31 of every odd-numbered year, shall constitute forfeiture of the permit.  Continued performance in the practice of public accountancy without a permit shall constitute unlicensed activity and the individual or firm shall be subject to sections 466-9, 466-11, 487-13, and 26-9.

     (f)  The board may restore forfeited permits to the individual or firm [which] that satisfies the following:

     (1)  The requirements of subsection (a), (b), (c), or (d) of this section; and

     (2)  Payment of required fees.

     (g)  A firm that is an applicant for initial issuance or renewal of a firm permit to practice under this section shall show that:

     (1)  If the firm has an office in this State, all partners, officers, shareholders, members, or managers residing in this State, or whose principal place of business is in this State, hold a current permit to practice issued under this chapter; or

     (2)  If the firm does not have an office in this State, notwithstanding any other provision of law, a simple majority of the ownership of the firm, in terms of financial interests and voting rights of all partners, officers, shareholders, members, or managers, belongs to holders of a certificate who are licensed in some state, and the partners, officers, shareholders, members, or managers whose principal place of business is in this State and who perform professional services in this State hold a valid permit issued under this chapter or the corresponding provision of prior law or are public accountants licensed under section 466-6.  Although firms may include non-licensee owners, the firm and its ownership shall comply with the rules adopted by the board.  An individual who has practice privileges under section 466-A who performs services for which a firm permit is required under section 466-A shall not be required to obtain a certificate or permit from this State.

     (h)  Any individual licensee and any individual granted practice privileges under this chapter who is responsible for supervising attest or compilation services and who signs, or authorizes someone to sign, the accountant's report on the financial statements on the firm's behalf shall meet the competency requirements set out in the professional standards for those services.

     (i)  Firms that are not in compliance with subsection (g)(2) due to changes in firm ownership or personnel, after receiving or renewing a permit, shall take corrective action to bring the firm back into compliance in a reasonable period of time, as determined by the board.  Failure to bring the firm back into compliance within a reasonable period of time shall result in the suspension or revocation of the firm permit."

     SECTION 5.  Section 466-9, Hawaii Revised Statutes, is amended to read as follows:

     "§466-9  Disciplinary action.  (a)  In addition to any other actions or conditions authorized by law, in accordance with chapter 91, the board may take any one or more of the following actions:

     (1)  Revoke a license or permit[;], or revoke or limit privileges under section 466-A;

     (2)  Suspend a license or permit;

     (3)  Refuse to renew a license or permit;

     (4)  Reprimand, censure, or limit the scope of practice of any licensee or firm;

     (5)  Impose an administrative fine not exceeding $5,000 per violation;

     (6)  Place a licensee or firm on probation;

     (7)  Require a firm to have a peer review conducted in the manner specified by the board; or

     (8)  Require a licensee to attain satisfactory completion of additional continuing professional education hours as specified by the board.

     (b)  In addition to any other grounds for disciplinary action authorized by law, any one or more of the following shall constitute grounds for disciplinary action:

     (1)  Fraud or deceit in obtaining a license or permit;

     (2)  Disciplinary action taken by another state where the license or practice privilege is canceled, revoked, suspended, denied, or refused renewal;

     (3)  Failure, on the part of a holder of a license or a permit to maintain compliance with the requirements for issuance of a license or a permit, or renewal of a license or permit, or to report changes to the board;

     (4)  Revocation or suspension of the right to practice before any state or federal agency;

     (5)  Dishonesty, deceit, fraud, or gross negligence in the practice of public accountancy as a licensee or an individual granted practice privileges or in the filing or failure to file a licensee's or firm's own income tax returns;

     (6)  Violation of any provision of this chapter or of any rule adopted by the board;

     (7)  Violation of any provision of professional conduct established by the board under this chapter;

     (8)  Conviction of any crime an element of which is dishonesty or fraud, under the laws of the United States, of this State, or of any other state if the act involved would have constituted a crime under the laws of this State;

     (9)  Performance of any fraudulent act while holding a privilege, license, or permit issued under this chapter; or

    (10)  Any conduct reflecting adversely upon the licensee's or permit holder's fitness to engage in the practice of public accountancy[.] while a licensee or an individual granted privileges under section 466-A.

     (c)  Upon application of any person against whom disciplinary action has been taken under subsection (a), the board, in accordance with chapter 91, may reinstate the person's license, practice privilege, or permit to practice [which] that was affected by the disciplinary action.

     (1)  The board shall specify the manner in which an application shall be made, the time within which it shall be made, and the circumstances under which the license or practice privilege may be reinstated; and

     (2)  Before reinstating, the board may:

         (A)  Require the applicant to show successful completion of specified continuing professional education; and

         (B)  Make the reinstatement of a license, practice privilege, or permit conditional and subject to satisfactory completion of a peer review conducted in a manner as the board may specify."

     SECTION 6.  Section 466-10, Hawaii Revised Statutes, is amended to read as follows:

     "§466-10  Prohibited acts.  (a)  Use of title "certified public accountant":

     (1)  Except as otherwise provided in subsection (d) of this section, no person shall assume or use the title or designation "certified public accountant" or the abbreviation "CPA" or any other title, designation, words, letters, sign, card, or device likely to be confused with "certified public accountant" or "CPA" or tending to indicate that the person is a certified public accountant, unless the person has a practice privilege under section 466-A or holds a current license of certified public accountant issued under this chapter and a current permit to practice issued under this chapter;

     (2)  No partnership or corporation shall assume or use the title or designation "certified public accountant" or the abbreviation "CPA" or any other title, designation, words, letters, abbreviation, sign, card, or device likely to be confused with "certified public accountant" or "CPA" or tending to indicate that [such] the partnership or corporation is composed of certified public accountants, unless each of the partners of the partnership who are in the practice of public accountancy in this State[,] and whose principal place of business is in this State, or each of the shareholders of the corporation who are in the practice of public accountancy in this State[,] and whose principal place of business is in this State, holds a current license of certified public accountant issued under this chapter and a current permit to practice issued under this chapter; and

     (3)  No person shall assume or use the title or designation "certified public accountant" or the abbreviation "CPA" or any other title, designation, words, letters, abbreviation, sign, card, or device likely to be confused with "certified public accountant" or "CPA", in conjunction with names indicating or implying that there is a partnership or corporation, or in conjunction with the designation "and Company" or "and Co." or a similar designation if, in any case, there is in fact no bona fide partnership or corporation existing under the laws of this State[.] or under the comparable laws of another state.

     (b)  Use of title "public accountant":

     (1)  Except as otherwise provided in subsection (d) of this section, no person shall assume or use the title or designation "public accountant" or the abbreviation "PA" or any other title, designation, words, letters, sign, card, or device likely to be confused with "public accountant" or "PA" or tending to indicate that the person is a public accountant unless the person holds a current registration of public accountant issued under this chapter and a current permit to practice issued under this chapter;

     (2)  No partnership or corporation shall assume or use the title or designation "public accountant" or the abbreviation "PA" or any other title, designation, words, letters, abbreviation, sign, card, or device likely to be confused with "public accountant" or "PA" or tending to indicate that the partnership or corporation is composed of public accountants, unless each of the partners of the partnership who are in the practice of public accountancy in this State, or each of the shareholders of the corporation who are in the practice of public accountancy in this State, holds a current license of public accountant issued under this chapter and a current permit to practice issued under this chapter; and

     (3)  No person shall assume or use the title or designation "public accountant" or the abbreviation "PA" or any other title, designation, words, letters, abbreviation, sign, card, or device likely to be confused with "public accountant" or "PA", in conjunction with names indicating or implying that there is a partnership or corporation, or in conjunction with the designation "and Company" or "and Co." or a similar designation if, in any case, there is in fact no bona fide partnership or corporation existing under the laws of this State.

     (c)  Representation of special knowledge:

     (1)  [No] Except as otherwise provided in subsection (d), no person shall sign or affix the person's name or any trade or assumed name used by the person in the person's profession or business with any wording indicating, suggesting, or implying that the person is an accountant or auditor, or with any wording indicating, suggesting, or implying that the person has special knowledge in accounting or auditing, to any opinion or certificate attesting in any way to the reliability of any representation or estimate in regard to any person or organization embracing:

         (A)  Financial information, attest service, or

         (B)  Facts respecting compliance with conditions established by law or contract, including but not limited to statutes, ordinances, regulations, grants, loans, and appropriations, unless the person holds a current license and a current permit to practice issued under this chapter.

     (2)  No person shall sign or affix a partnership or corporate name with any wording indicating, suggesting, or implying that it is a partnership or corporation composed of accountants or auditors or persons having special knowledge of accounting or auditing, to any opinion or certificate attesting in any way to the reliability of any representation or estimate in regard to any person or organization embracing:

         (A)  Financial information, or

         (B)  Facts respecting compliance with conditions established by law or contract, including but not limited to statutes, ordinances, regulations, grants, loans, and appropriations,

          unless each of the partners of the partnership who are in the practice of public accountancy in this State and whose principal place of business is in this State or each of the shareholders of the corporation who are in the practice of public accountancy in this State and whose principal place of business is in this State holds a current license of certified public accountant or of public accountant issued under this chapter and a current permit to practice issued under this chapter.

     (d)  Nothing contained in this chapter shall prohibit any person:

     (1)  Who holds a current license of certified public accountant issued under this chapter from assuming and using the title and designation "certified public accountant" or "CPA"; provided that if the person does not also hold a current permit to practice issued under this chapter, the person shall clearly indicate in assuming and using said title that the person does not hold the person's self out to be in the practice of public accountancy;

     (2)  Who holds a current license of public accountant issued under this chapter from assuming and using the title and designation "public accountant" or "PA"; provided that if the person does not also hold a current permit to practice issued under this chapter, the person shall clearly indicate in assuming and using the title that the person does not hold the person's self out to be in the practice of public accountancy;

     (3)  Who holds a temporary practice permit issued under this chapter from using the title and designation under which the person is generally known in the [state or] country from which the person received a valid comparable certificate, registration, or license for the practice of public accountancy;

     (4)  Who qualifies for a practice privilege under section 466-A from using the title and designation "certified public accountant" or "CPA" or from providing any service that may be performed by certified public accountants of this State without having to obtain a certificate or permit to practice, provided that the conditions set out in section 466-A are satisfied;

    [(4)] (5)  Who is not a certified public accountant or public accountant from serving as an employee of, or an assistant to, a certified public accountant or public accountant; provided that the employee or assistant works under the control and supervision of a person who holds a current license of certified public accountant or of public accountant and a current permit to practice issued under this chapter; and provided further that the employee or assistant does not issue any statement or report over the person's name except office reports to the person's employer as are customary, and that the employee or assistant is not in any manner held out to the public as a certified public accountant or public accountant;

    [(5)] (6)  Who is an officer, employee, partner, or principal of any organization from signing or affixing the person's name to any statement or report in reference to the affairs of that organization; provided that in so signing or affixing the person's name the person shall clearly indicate that the person is an officer, employee, partner, or principal of the organization, and the position, title, or office which the person holds therein;

    [(6)] (7)  Who is a public official or public employee from the performance of the person's duties as such; or

    [(7)] (8)  Who is an attorney at law from engaging in practice as such.

     (e)  Notwithstanding any law to the contrary, it shall not be a violation of this section for a firm that does not hold a valid permit under section 466-7 and that does not have an office in this State to use the title "CPA" or "Certified Public Accountants" as a part of the firm's name and to provide its professional services in this State, and licensees and individuals may provide services on behalf of the firm, provided that the firm shall comply with section 466-7(d)(2) or (3), whichever is applicable.  An individual or firm authorized under this subsection to use practice privileges in this State shall be subject to the provisions applicable to licensees under section 466-10."

     SECTION 7.  Section 466-34, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsections (b), (c), and (d) to read:

     "(b)  [All] Except for firms that are exempt from the permit requirement pursuant to section 466-7(d)(2) or (3), firms subject to this part and performing Hawaii attest work as of December 31, 2014, shall enroll in the applicable program of an approved sponsoring organization by December 31, 2015, notify the board of enrollment in that program, and have a peer review performed by December 31, 2017.

     (c)  [Any] Except for a firm that is exempt from the permit requirement pursuant to section 466-7(d)(2) or (3), any firm that begins performing Hawaii attest work after December 31, 2014, shall:

     (1)  Notify the board within thirty days of the beginning of the performance of attest work;

     (2)  Enroll in the applicable programs of an approved sponsoring organization within one year from its initial licensing date or the performance of Hawaii attest work that requires a peer review;

     (3)  Provide the board with enrollment information within one year of the date the Hawaii attest work was first performed;

     (4)  Have a peer review performed within eighteen months of the date the Hawaii attest work was first performed;

     (5)  Adopt the peer review due date assigned by the sponsoring organization and notify the board of the peer review due date within thirty days of its assignment; and

     (6)  Schedule and begin an additional review within three years of the previous review's due date, or earlier if required by the sponsoring organization or the board; provided that the firm shall be responsible for anticipating its needs for peer review services in sufficient time to enable the reviewer to complete the review by the assigned review due date.

     (d)  A firm that does not perform Hawaii attest work or that is exempt from the permit requirement pursuant to section 466-7(d)(2) or (3) shall be exempt from the peer review process."

     2.  By amending subsection (i) to read:

     "(i)  [An] Except for a firm that is exempt from the permit requirement pursuant to section 466-7(d)(2) or (3), an out-of-state firm performing Hawaii attest work shall comply with this part."

     SECTION 8.  Section 466-35, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  [A] Except for a firm that is exempt from the permit requirement pursuant to section 466-7(d)(2) or (3), a firm shall include, with the peer review compliance reporting form, the contemporaneous Hawaii supplement to the peer review report pursuant to section 466-36, if:

     (1)  A peer review report from an approved sponsoring organization does not include the selection of a Hawaii office or Hawaii attest engagement;

     (2)  The peer reviewer does not hold permits to practice public accountancy under section 466-7, and is required to have permits to practice under section 466-7, except inspectors for the public company accounting oversight board; or

     (3)  The final report resulting from any inspection by the public company accounting oversight board firm inspection program does not include the firm's Hawaii offices, if any, and Hawaii attest engagements in the scope of the inspection, and the firm is not required to enroll in another peer review program under section 466-34."

     SECTION 9.  Section 466-36, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  A firm that is required to undergo a peer review under this chapter and that is not exempt from the permit requirement pursuant to section 466-7(d)(2) or (3) shall engage the services of a practitioner or firm holding a permit issued under section 466-7 to perform the following procedures to supplement the peer review report:

     (1)  Obtain from the reviewed firm a list of Hawaii attest engagements included in the scope of the peer review, in accordance with the American Institute of Certified Public Accountants Standards for Performing and Reporting on Peer Reviews;

     (2)  Select engagements from the list of engagements obtained from the reviewed firm;

     (3)  Obtain from the reviewed firm, the reports, financial statements, work papers, and work product resulting from the attest engagements selected;

     (4)  Read and compare the reports, work papers, and work product to an appropriate disclosure checklist to evaluate the firm's compliance with professional standards; and

     (5)  Document all instances of noncompliance with professional standards detected while performing the procedures listed in this section."

     SECTION 10.  Section 466-38, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  [A] Except for a firm that is exempt from the permit requirement pursuant to section 466-7(d)(2) or (3), a firm shall submit to the board:

     (1)  A copy of the peer review report and the final letter of acceptance from the sponsoring organization, if the report has a rating of "pass";

     (2)  A copy of the peer review report, the firm's letter of response, the corrective action letter, and the final letter of acceptance if the report has a rating of "pass with deficiency" or "fail"; or

     (3)  A copy of any report or Part I and any other public portion of the report resulting from any inspection by the public company accounting oversight board firm inspection program together with documentation of any significant deficiencies, findings, and the firm's response."

     SECTION 11.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 12.  In codifying the new section added by section 2 of this Act, the revisor of statutes shall substitute an appropriate section number for the letter used in designating the new section in this Act.

     SECTION 13.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 14.  This Act shall take effect on January 1, 2016.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Public Accountancy; Out-of-State; Reciprocity

 

Description:

Authorizes out-of-state CPAs to practice in the State without a license under certain conditions.

 

 

 

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