STAND. COM. REP. NO. 3061

Honolulu, Hawaii

RE:    H.B. No. 2169

       H.D. 2

       S.D. 1

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which was referred H.B. No. 2169, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO PUBLIC ACCOUNTANCY,"

begs leave to report as follows:

     The purpose and intent of this measure is to establish a peer review process for public accounting firms that engage in attest work.

     Your Committee received testimony in support of this measure from the Hawaii Association of Public Accountants; Niwao & Roberts, CPAs; Hawaii Society of Certified Public Accountants Board of Directors; CW Associates, CPAs; and twelve individuals.  Your Committee received comments on this measure from the Board of Public Accountancy.

     Your Committee finds this measure proposes to require all public accounting firms to undergo a peer review on the firm's attest work every three years.  The ultimate goal of a peer review process is greater consumer protection for members of the public who rely on the attest work performed by certified public accounting firms.

     Your Committee further finds that this measure is a result of a collaborative effort between the Hawaii Association of Public Accountants, the Hawaii Society of Certified Public Accountants, and other major stakeholders in the accounting profession.  This measure embodies most of the intent and objectives of those who supported the original peer review measure, while also permitting peer reviewers and firms to comply with the professional standards for certified public accountants, and represents a workable solution to the State's mandatory peer review law.

     Your Committee notes for further clarification that the words "report" and "reports" as used in this measure mean one or more reports.

     Your Committee has amended this measure by making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2169, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2169, H.D. 2, S.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,

____________________________

ROSALYN H. BAKER, Chair