The Hawaii legislature has overridden the veto of Hawaii Governor Linda Lingle and passed a strict mandatory peer review law for public accountants.

The new law is “unlike others in the nation,” according to Hawaii Association of Public Accountants president John W. Roberts.

The law, which passed the legislature on April 30, would require all CPA firms doing attestation work in Hawaii, regardless of their size or the location of their home office, to have their Hawaii office and Hawaii work product peer reviewed. There are to be no exemptions for international and multi-state CPA firms whose Hawaii offices are seldom selected for peer review because of their small size relative to the size of their other offices in the U.S.

The focus of the peer reviews would be educational and remedial. Punitive measures would only be employed in egregious circumstances.

All CPA firms would be entitled to due process and the right of appeal to reduce the risk that peer review could be abused as an anti-competitive tool against any firm.

The Board of Public Accountancy would have the discretion to allow time extensions due to hardship, such as military service, illness and other personal emergencies.

If the Board of Public Accountancy authorizes a third party to provide peer review services (such as a trade association), CPA firms, firm owners, or firm employees would not be required to join that third-party organization, and the same price for peer review services would be charged to both members and non-members.

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