Resources for Hawaii CPAs

Effective immediately, every CPA and PA in Hawaii is required to complete 4 hours of CPE in Ethics or Professional Conduct for their December 31, 2011 license renewal. This requirement may be looked upon by some as unnecessary, but the reality is quite the opposite – too many CPAs are simply out of touch with the Accountancy Rules and Laws that govern our professional conduct (HRS and HAR) as well as the AICPA’s Code of Professional Conduct (Code).

CPAs in other states that I’ve both taught and worked closely with have taken formal ethics training multiple times in recent years. Most will freely admit that their knowledge of the Code was scant prior to taking these classes. The main reason for this is that even when an ethics exam is required for certification, the exam is often viewed as an obstacle to certification rather than as an aid to insure professionalism.

My experience in litigation support has also taught me that lack of knowledge of the Code and state law is an Achilles heel for many CPAs. While expert in their fields, CPAs often fail to answer basic questions as to their responsibilities under the Code. And beyond that, many fail to know the legal relationship between state accountancy laws and the Code. As a result, they can be embarrassed and discredited despite their technical expertise.

When CPAs are required to take Professional Ethics CPE, the most common response is “Why?” No doubt you’re asking the same question. While I’ll concede that ethics is not the most stimulating topic, it does offer CPAs some solid guidance, particularly when you find yourself in a situation that causes you to ask yourself whether you’re doing the right thing. We simply cannot afford to guess as to what the rules say we can and cannot do as CPAs. And the reality is that our profession is standards driven, with Professional Ethics being one of those standards.

My recommendation is for all CPAs to resist viewing our Code of Professional Conduct as something for rote memory – i.e., Principles → Rules → Interpretations → Rulings; but, instead try to look at it from the prospective of “What’s in it for me?”

Smaller firms and CPAs employed by local businesses often feel a sense of detachment from the CPA mainstream. But when it comes to ethics, we all work under the same set of standards. The Code has a great number of relevant provisions which together are designed to protect all of our stakeholders, including the public, our colleagues, our clients and the organizations that we work for. The key is to revisit the Code and seek out those provisions that relate to your individual circumstances.

Professional Ethics should be viewed both as a resource and as a tool for survival. CPAs often face tricky situations that can be costly if not handled correctly. Do you guess as to what is the right thing to do, or do you tilt the odds in your favor – the choice is yours.

Hide this article.

The Hawaii Society of CPAs Welcomes New State Law Requiring Peer Review for Public Accounting Firms

May 20, 2010
The Hawaii Society of Certified Public Accountants applauds the Hawaii State Legislature for its approval of new legislation requiring for the first time that public accounting firms in Hawaii undergo outside peer reviews on a regular basis for auditing and attestation work.

“Passage of the law is a significant reform that will aid in the reliability and availability of the best possible professional accounting services in Hawaii,” said Wendell Lee, Hawaii Society of CPAs president. “We are grateful for the hard work by state legislators to bring this reform to reality and look forward to working closely with the state board of accountancy to implement the new law.”

Peer reviews are appraisals of the professional work of public accounting firms that issue audit or attest reports and are conducted by qualified and practicing public accountancy professionals who are not affiliated with the firm being reviewed.

The law requires peer reviews as a condition of certified public accountancy permits to practice in the State of Hawaii. It provides a mechanism for firms engaged in the practice of public accounting to undergo peer reviews every three years and grants the state Board of Public Accountancy appropriate power to define and regulate the peer review process.

Under the law, the peer review process is intended to be for educational or remedial purposes and is not punitive. However, if the review discloses information that a firm has not met the appropriate professional standards, the board may require further investigation of the firm.

“CPAs are highly trained, well-educated and tested professionals whose core mission is to work in the public interest and on behalf of the citizens of Hawaii. We welcome the new law and believe it will give the state board the appropriate authority to establish an effective, modern-day peer review process,” Wendell Lee said. 

The Hawaii Society of Certified Public Accountants (HSCPA) was first incorporated on October 20, 1932. Today, with a diverse membership of 1,475, the HSCPA is the only professional organization exclusively for certified public accountants in public practice, business and industry, government and academia. Membership comprises CPAs throughout Hawaii, the mainland and internationally.

Its purpose is to promote high standards of integrity and competence within the accounting profession and to enhance the value of a CPA.
http://www.hscpa.org/news/detail.php?news_id=154

A copy of the bill can be found at: http://www.capitol.hawaii.gov/session2010/bills/SB2501_HD1_.pdf

Hide this article.