HB2827.DOC

HOUSE OF REPRESENTATIVES	H.B. NO.	2827
TWENTY-FIFTH LEGISLATURE, 2010
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 require firms engaged in the practice of public accountancy to undergo peer review on a regular basis, as regulated by the state board of public accountancy.

SECTION 2. Section 466-7, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) All firms shall obtain a permit to practice. The board may 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 as prescribed by the board[.]; provided that the board shall not renew the permit of a firm that is not in compliance with the peer review requirement under section 466-13."

SECTION 3. Section 466-13, Hawaii Revised Statutes, is amended to read as follows:

"§466-13 [~~Quality~~] Peer review [~~committee~~]. (a) The board [~~may~~] shall appoint a [~~quality~~] peer review committee to review the [~~publicly available professional~~] attest work of firms on a [~~random~~] periodic basis, without any requirement of a formal complaint or suspicion of impropriety on the part of any particular firm. All firms shall meet the peer review requirement of this section as a condition for renewal of a permit to actively engage in the practice of public accountancy pursuant to section 466-7(d). The identity of the person for whom the professional work is done shall be preserved in confidence. In the event the review discloses information that a firm has not met the appropriate professional standards, the board may require further investigation of the firm.

(b) The board shall adopt administrative rules to establish requirements and procedures for the qualification of organizations to conduct peer reviews and for the performance of peer reviews by such organizations. Such requirements and procedures may include:

(1) A process wherein an independent organization may conduct a peer review that shall be accepted in lieu of a peer review conducted by the board;

(2) Standards and requirements for peer reviews; and

(3) Standards and requirements to determine the frequency of mandatory peer reviews under this section, and the circumstances under which a firm may be exempt from the requirement of peer review.

Neither the proceedings nor the records of the [~~quality~~] peer review [~~committees~~] committee shall be subject to discovery. Except as hereinafter provided, no person in attendance at a meeting of the committee shall be required to testify as to what transpired at the meeting; provided that the statements made by any person in attendance at the meeting who is a party to an action or proceeding the subject matter of which was reviewed at the meeting, shall be subject to discovery."

SECTION 4. The state board of public accountancy shall adopt rules, pursuant to chapter 91, Hawaii Revised Statutes, establishing requirements and procedures for peer reviews of public accountancy firms, as described in section 466-13(b) in section 3 of this Act.

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

SECTION 6. This Act shall take effect upon its approval; provided that sections 2 and 3 of this Act shall take effect upon:

(1) The reenactment of sections 466-7 and 466-8, Hawaii Revised Statutes, pursuant to section 9 of Act 172, Session Laws of Hawaii 2009; and

(2) The adoption of rules establishing requirements and procedures for peer reviews of public accountancy firms pursuant to section 4 of this Act.

INTRODUCED BY:	_____________________________