Hawaii-2011-SB743-Introduced

SECTION 1. The legislature finds that certified public accountants licensed outside of the State of Hawaii sometimes provide services for Hawaii clients from within and outside of the State. However, the board of accountancy does not currently have specific authority to regulate out-of-state accountants, nor are there clear limits within the law on the types of services that may be performed without a Hawaii license. Further, some out-of-state accountants compete unfairly with local firms by performing work within the State without paying Hawaii taxes. This creates an unfair situation for the Hawaii accountants that do properly pay their taxes.

The purpose of this Act is to prevent unfair competition by out-of-state certified public accountants by establishing clear standards, including a limited privilege to practice within the State, and by subjecting all certified public accountants to oversight by the State's regulatory agencies.

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 Regulation of the practice of accountancy. (a) Each individual or firm that practices public accountancy in this State, whether licensed in this State or in another jurisdiction, shall:

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

(2) Comply with the requirements of this chapter, chapter 436B, the rules of the board, and the same professional standards applicable to individuals and firms licensed pursuant to this chapter;

(3) If licensed in another jurisdiction and practicing in this State pursuant to section 466-B, be deemed to have irrevocably appointed the regulatory agency of the jurisdiction that issued the individual or firms' license as the individual or firm's agent upon whom process may be served in any action or proceeding by the board;

(4) Cooperate with any investigation or inquiry by the board, including by timely responding to any investigation, inquiry, request, notice, demand, or subpoena for information or documents and timely providing requested information or documents to the board; and

(5) Pay all applicable taxes assessed by the State.

(b) For purposes of this section, practice within this State includes the performance of professional accountancy services for persons residing or entities having their principal office in this State, regardless of whether the services are rendered through direct physical presence in the State or through communications from outside of the State.

§466-B Limited practice by out-of-state licensees. (a) An individual with a valid license to practice public accountancy issued by a state other than Hawaii, a territory of the United States, or the District of Columbia whose principal place of business is outside of this State and who does not reside or maintain an office in this State may practice public accountancy in this State subject to the restrictions and conditions of this section if the individual:

(1) Practices through a firm that holds a license and permit issued pursuant to this chapter; or

(2) Meets the criteria for licensure established by sections 466-5 and 466-5.5.

(b) An individual who practices public accountancy in this State pursuant to this section shall submit written notification, on a form to be adopted by the board by rule pursuant to chapter 91. Notice pursuant to this section shall contain, at minimum, a statement of the individual's intent to practice in the State, a statement of the individual's qualification to practice in this State under subsection (a), the Hawaii general excise tax identification number under which gross income from the individual's services will be reported, and a copy of the individual's license to practice certified public accountancy issued by the jurisdiction in which the individual resides or maintains a principal place of business. The board shall adopt rules to allow the submission of notice under this section through electronic or facsimile transmission and to allow the department of taxation to access the information contained in notices under this section for enforcement purposes. The limited privilege to practice granted by this section shall be effective immediately upon receipt by the board of a completed form and all of the information required by this section without any requirement of further action by the board.

(c) An individual who practices public accountancy in this State pursuant to this section shall practice through a firm that holds a license and permit issued under this chapter when providing or offering to provide the following services to an entity that has its principal office in this State:

(1) A financial statement audit or review in accordance with the Statements on Auditing Standards or the Statements on Standards for Accounting and Review Services of the American Institute of Certified Public Accountants;

(2) An examination of prospective financial information in accordance with the Statements on Standards of Attestation Engagements of the American Institute of Certified Public Accountants; and

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

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. New statutory material is underscored.

SECTION 5. This Act shall take effect on January 1, 2012.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	743
TWENTY-SIXTH LEGISLATURE, 2011
STATE OF HAWAII