Report Title:

Public Accountancy; Out-of-State Practice

 

Description:

Authorizes the limited out-of-state practice of public accountancy in this state provided that the practice is conducted through an individual with a permit or privilege to practice in this state.  Establishes a limited privilege to practice in this state for out-of-state practitioners.  (HB995 HD1)

 


HOUSE OF REPRESENTATIVES

H.B. NO.

995

TWENTY-FIFTH LEGISLATURE, 2009

H.D. 1

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 purpose of this Act is to:

     (1)  Clarify the rules governing practice in this state by firms and individuals licensed to practice public accounting in other states; and

     (2)  Insure that all certified public accountants practicing in Hawaii are subject to the disciplinary power of the state board of public accountancy.

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

     "§466-A  Limited practice by certain out-of-state firms.  (a)  A certified public accounting firm that holds a current valid license to practice public accounting in another state, has its primary place of business in that state, and does not maintain an office in Hawaii, may practice public accountancy in this state subject to the restrictions and conditions in this section upon giving notice to the board as set forth in subsection (c); provided that the firm's practice in this state is performed by and through an individual who either holds a permit to practice under this chapter or practices under a privilege under section 466-B.

     (b)  As a condition of practicing in this state pursuant to this section, the firm shall:

     (1)  Be subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this State;

     (2)  Comply with this chapter, chapter 436B, and with all applicable rules established by the board;

     (3)  Be deemed to have irrevocably appointed the regulatory agency of the state that issued the firm's license as the firm's agent, upon whom process may be served in any action or proceeding by the board against the firm;

     (4)  Cease to practice in this state and notify the board within ten days of:

         (A)  The entry or issuance of any criminal conviction or disciplinary order, including suspension or revocation of the firm's license; or

         (B)  The date the firm's license in the state where the firm's principal place of business is located becomes inactive, lapses, or is forfeited;

         and

     (5)  Cooperate with any investigation or inquiry of the board, timely respond to any board investigation, inquiry, request, notice, demand, or subpoena for information or documents, and timely provide to the board the identified information and documents.

     (c)  Notice of a firm's intent to practice public accountancy under this section shall be given to the board pursuant to section 466-A(a) using such forms and procedures as the board may require; provided that such notice shall be a public record and shall include a statement by the firm that it understands and consents to the requirements of this section.

     (d)  Upon a determination by the board that a firm has engaged in practice under this section for a length of time and to an extent that is effectively equivalent to establishing an office in this state, the board may notify the firm that it no longer qualifies for a privilege under this section.

     (e)  For purposes of this section, the "practice of public accountancy" includes the performance of professional services for persons or entities located in this state, regardless of whether the services are rendered through direct physical presence or through electronic communications.

     (f)  Failure to comply with this section shall subject the firm to disciplinary action by the board.

     (g)  The board may recover all reasonable costs incurred as part of its investigative, administrative, and disciplinary proceedings from any firm disciplined under this section.

     §466-B  Limited practice by out-of-state practitioner.  (a)  An individual who holds a current valid license to practice as a certified public accountant issued by another state whose principal residence and principal place of business are in that state and who does not maintain an office in this state may practice public accountancy in this state subject to the restrictions and conditions in this section upon giving notice to the board as set forth in subsection (d); provided that:

     (1)  The National Association of State Boards of Accountancy's National Qualification Appraisal Service has verified that the other state has education, examination, and experience requirements for certification or licensure that are comparable to or exceed the requirements for licensure as a certified public accountant of The American Institute of Certified Public Accountants/National Association of State Boards of Accountancy Uniform Accountancy Act; or

     (2)  The individual obtains from the National Association of State Boards of Accountancy's National Qualification Appraisal Service verification that the individual's education, examination, and experience qualifications are comparable to or exceed the requirements of this chapter for obtaining a permit to practice.

     (b)  An individual practicing under this section, as a condition of the privilege of practicing in this state shall:

     (1)  Be subject to the personal and subject matter jurisdiction and disciplinary authority of the board and the courts of this State;

     (2)  Comply with this chapter, chapter 436B, and with all applicable rules established by the board;

     (3)  Be deemed to have irrevocably appointed the regulatory agency of the state that issued the person's license as the person's agent, upon whom process may be served in any action or proceeding by the board against the person;

     (4)  Cease to practice in this state and notify the board within ten days of:

         (A)  The entry or issuance of any criminal conviction or disciplinary order, including suspension or revocation of the individual's license; or

         (B)  The date the individual's license in the state where the individual's principal place of business is located becomes inactive, lapses, or is forfeited;

         and

     (5)  Cooperate with any investigation or inquiry of the board, timely respond to any board investigation, inquiry, request, notice, demand, or subpoena for information or documents, and timely provide to the board the identified information and documents.

     (c)  An individual practicing under this section shall practice through a firm that holds a license under this chapter if, for an entity with its principal office in this state, the individual performs:

     (1)  A financial statement audit or other engagement in accordance with the Statements on Auditing Standards;

     (2)  An examination of prospective financial information in accordance with the Statements on Standards of Attestation Engagements; or

     (3)  An engagement in accordance with auditing standards of the Public Company Accounting Oversight Board or its successor.

     (d)  Notice of an individual's intent to practice public accountancy under this section shall be given to the board pursuant to section 466-B(a) using such forms and procedures as the board may require; provided that such notice shall be a public record and shall include a statement by the person that the person understands and consents to the requirements of this section.

     (e)  The board may, by administrative rule, provide that individuals licensed in certain specified states do not qualify for practice privileges under this section because the licensing requirements in such specified states are substantially below the comparable requirements in this state.  Individuals from such specified states may thereafter obtain practice privileges under this section only if the individual shows that the individual has personally completed education and experience comparable to that required under this chapter for residents of this state.

     (f)  Upon a determination by the board that an individual has engaged in practice under this section for a length of time and to an extent that is effectively equivalent to establishing an office in this state, the board may notify the individual that the individual no longer qualifies for a privilege under this section.

     (g)  For purposes of this section, the "practice of public accountancy" includes the performance of professional services for persons or entities located in this state, regardless of whether the services are rendered through direct physical presence or through electronic communications.

     (h)  Failure to comply with this section shall subject the individual to disciplinary action by the board.

     (i)  The board may recover all reasonable costs incurred as part of its investigative, administrative, and disciplinary proceedings from any individual disciplined under this section."

     SECTION 3.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

     SECTION 4.  In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 5.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect upon its approval and shall be repealed on June 1, 2012.