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.