Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 1549, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to allow private or governmental accounting or auditing experience deemed equivalent to experience in professional public accountancy practice, to be applied towards the public accountancy experience requirement for the purpose of qualifying for a license, but not for a permit to practice. Both a license and a permit are required to practice public accountancy.

The Hawaii Society of Certified Public Accountants, Hawaii Association of Public Accountants, and numerous individual certified public accountants supported the bill with amendments. The Large and Mid-Size Business Division of the Internal Revenue Service, Small Business/Self Employed Compliance Division of the Internal Revenue Service, and several individuals opposed this bill. Comments were provided by the Board of Public Accountancy, Department of Taxation, and several individuals.

Your Committee finds that prior to 1997, chapter 466, Hawaii Revised Statutes, required that an applicant for a license to practice public accountancy have either two years of accountancy experience as an employee with a licensed public accountant, or 1,500 hours of auditing experience as an employee of a licensed public accountant.

Act 86, Session Laws of Hawaii 1997, amended the two years accountancy experience option, by authorizing the substitution of either private or governmental employment deemed by the Board of Public Accountancy to be equivalent to professional experience in public accounting practice.

As introduced, this bill simply repealed the alternative of "equivalent" private or governmental employment, thus, reverting to the pre-Act 86 requirements. The draft received by your Committee, S.B. No. 1549 S.D. 1, allows private or governmental accounting experience to be applied toward the experience requirement for the purpose of qualifying for a license, but not for a permit to practice.

Your Committee heard voluminous testimony on this bill. Many who testified preferred the stringent experience requirements of the pre-Act 86 law and asked that the bill revert to its introduced form. Some asked that the bill be held so that no changes would be made to the current, more flexible experience requirement. The current draft of the bill, which "splits the baby," was not well received by either the opponents or supporters of this bill.

Your Committee has amended the bill in favor of the more stringent experience requirement of the pre-Act 86 statutory language. The amendment returns the bill to its original form.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1549, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1549, S.D. 1, H.D. 1, and be placed on the calendar for Third Reading.