Report Title:

Public Accountancy; Equivalent Experience; Ethics Education

Description:

Clarifies standards for equivalent professional public accountancy experience for licensure. Requires work experience claimed by license applicants to have been performed under direct supervision of a licensee with a permit to practice. Requires ethics education for licensees. Effective July 1, 2099. (SB120 HD1)

THE SENATE

S.B. NO.

120

TWENTY-THIRD LEGISLATURE, 2005

S.D. 1

STATE OF HAWAII

H.D. 1


 

A BILL FOR AN ACT

 

RELATING TO PUBLIC ACCOUNTANCY.

 

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

SECTION 1. The purpose of this Act is to clarify the standards for professional experience that may be substituted for professional experience in public accountancy in order to qualify for licensure as a certified public accountant, and to require ethics education for all licensees.

SECTION 2. Section 466-3, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Attestation" means the provision of the following professional services:

(1) An audit or other engagement performed in accordance with the Statements on Auditing Standards (SAS);

(2) A review of compilation of a financial statement performed in accordance with the Statements on Standards for Attestation Engagements (SSAE); or

(3) An examination or review of information performed in accordance with the Statements on Standards for Attestation Engagements (SSAE)."

SECTION 3. Section 466-5, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) A license and a permit are required to practice public accountancy. The board may license and grant the designation of "certified public accountant" to any person who [has met the following]:

(1) [Attained] Is eighteen years of age[;] or older;

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

(3) [Educational] Has met the educational requirements of this section or section 466-5.5;

(4) [Experience] Has met the experience requirements of subsection (d);

(5) [Examination] Has met the examination requirements of subsection (e); [and]

(6) Has completed four credit hours of continuing professional education in ethics within the two years preceding the date of application;

(7) Is in compliance with section 466-10; and

[(6) Paid] (8) Has paid the appropriate fees and assessments."

2. By amending subsection (d) to read:

"(d) Each applicant shall present satisfactory evidence of compliance with the experience requirement in the form of a certified statement from a present or former [employer(s) that] employer who directly supervised and reviewed the work of the applicant during the period of employment, and who was a certified public accountant holding a permit to practice accountancy during the period of supervision. An employer's statement shall certify that during the period of employment, the applicant [has met] acquired experience that satisfies one of the following experience requirements for [license:] licensure:

(1) Completion of one thousand five hundred chargeable hours in the performance of audits involving the application of generally accepted accounting principles and auditing standards earned while in public accounting practice; or

(2) Completion of two years of professional experience in public accountancy practice as defined in section 466-3[. Completion of experience]; provided that:

(A) Experience in private or government accounting or auditing work, deemed by the board to be equivalent to [professional experience] attestation, tax preparation, or tax consulting work performed by certified public accountants in the practice of public accountancy [practice] as defined in section 466-3, may be substituted for all or part of the two years of professional experience in public accounting practice[. The nature, variety, and depth of acceptable private or government accounting or auditing experience shall be defined by the board in its rules.]; and

(B) The experience equivalency provision of this paragraph shall be narrowly construed.

The statements on standards referenced in the definition of "attestation" in section 466-3 shall be incorporated by reference by the board pursuant to rules adopted under section 91 and shall be those developed for general application by recognized national accountancy organizations."

3. By amending subsection (k) to read:

"(k) The board may renew the license of a certified public accountant who completes a renewal application and fulfills the following requirements:

(1) Holds a valid and current license; [and]

(2) [Paid] Has paid the appropriate fees and assessments[.]; and

(3) Has completed four continuing professional education credit hours in ethics within the last two years."

SECTION 4. Section 466-7, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

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

(1) A valid license;

(2) Completed two years of professional experience in the practice of public accountancy as defined in section 466-3; provided that holders of Hawaii certified public accountant or public accountant licenses prior to December 31, 2005, shall be deemed to have met the experience requirement;

[(2)] (3) 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; provided that continuing professional education credit hours earned to meet the requirements of section 466-5(a) and (k) may be applied toward this requirement;

[(3)] (4) Completed an application; and

[(4)] (5) Paid the appropriate fees and assessments."

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2099.