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In: Accounting

Problem 4 Hart Insurance is a regulated insurance company. During the 4th quarter of 2014 the...

Problem 4 Hart Insurance is a regulated insurance company. During the 4th quarter of 2014 the company declared a dividend that was paid to shareholders at year end. Also, in the fourth quarter the company had to record a significant insurance loss associated with insurance coverage in an area hit by a major hurricane. As a result the company of the impairment and the dividend, the company had a retained deficit. However, state insurance laws prohibit paying a dividend when the company has an accumulated deficit.

Questions: Describe the ethical responsibilities of a CPA:

 Who is also the audit partner on the annual audit of Hart Insurance (i.e. what are the ethical responsibilities of a CPA who is also the audit partner on an audit engagement).

 Who is also the CFO (i.e. what are the ethical responsibilities of a CPA who also serves as a CFO for a company)?

 Who has also been hired by an attorney to investigate a potential violation of law on behalf of the board of directors?

The following case studies use the conceptual frameworks for members in public practice and for members in business that are embedded in new Codification of the AICPA Code of Professional Conduct. The conceptual frameworks were approved by the AICPA Professional Ethics Executive Committee in January of 2014 and it are effective beginning December 15, 2015. The AICPA Code of Professional Conduct (see reference above) includes both conceptual frameworks.

Expert Solution

DESCRIBLE THE ETHICAL RESPONSBILITIES OF CPA

Who is also an audit partner?

Mainly there are four code of ethics that a audit should follow:

integrity: As an auditor he has to uphold industry principle and guidlines.

objectivity: He should perform service free from bias,impartialities, and self serving activities.

confidentiality:He should share information only with authorised stakeholders.

competency:Continual professional development ensure him as auditor to remain current and knowlegdeble.

WHO IS ALSO THE CFO

Finacial records and periodic reporting

Ensure that material busines transaction are completey authorised and recorded in the company s books and records.Periodic financial communifiation is presented that allow the readers and users of communication.to understand the meaning significance of information presented.

compliance with applicable law and regulation

As an CFO he has to monitor the copmany s financial department with applicale federal , state , local law,rules and regulation.And identify and correct if thier is any deviation.

internal contols

Report the executive managers for any significance defficiency in internal contols of organisation that adversly affect financial data.

WHO IS ALSO BEEN HIRED TO INVESTIGATE ANY VILOTION OF LAW

Review the rule of the conduct that are the subject of investigation.

Provide the substantial response of each question and include any additional information that belive as relevant.

If he is unable to respond to the letter by request date call for an extension.Failure to respond within the extention time may constitute as failure to cooperate with investigation and hence, a vilotion of AICPA code of professional conduct.

ekkarill92 answered 2 years ago

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