The company said Wednesday the audit committee of its board of directors voted last week to fire KPMG and hire Ernst & Young as its independent registered public accounting firm -- which it did Monday.

In an SEC filing, Hoku said KPMG told Hoku directors before this summer's initial public offering of stock that it would have reported its financial controls were a "material weakness" had the company already been public.

"We did not have the appropriate financial management and reporting infrastructure in place to accurately and properly record and provide comprehensive financial information," Hoku said in its filing.

Hoku needed to deal with this before it went public.

"We retained a controller on a part-time consulting basis in July 2005, who became a full-time employee in August 2005," the company said.

Hoku stressed that KPMG's audit reports "did not contain an adverse opinion" and added "there were no disagreements" over accounting principles or procedures which, if unresolved, would have obliged KPMG to report them.

Hoku, which has a key piece of a contract to supply working hydrogen fuel cell systems to the Navy at Pearl Harbor, said it has authorized KPMG to respond fully to any inquiries about this matter from its new accounting firm.