Question

I have a question about Case.
Here is the Case:

Hart insurance is a regulated insurance company. During the 4th quarter of 2016, 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 assoicated with insurance coverage in an area hit by a major hurricane.
As a result the company of the imparment 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 responsibilties of a CPA:
Who is also the audit partner on the annual audit of Hart Insurace(i.e. what are the ethical responsibilities of a CPA who is also the audit partner on an audit engagement).
--Is this mean that autit parnter shoulnd't be CPA? I don't understand the question.
Who is also the CFO( i.e; what are the ethical repsonsibilties of a CPA who also serves as a CFO for a company)?
- again, is CFO shoulnd't be CPA?
Who has a also been hired by an attorney to investigate a potential violation of law on behalf of the board of director?
- I don't understand this question.

Please help me. Thank you so much.

Answer 1

1.

The question says what are the issues if the same person is both the accountant and auditor of the company. The issue can be for example:if he is preparing the accounts he is only auditing it

2.

The question says what are the issues if the same person is both the accountant and the CFO. The issue can be for example there is no person higher than CFO so who would challenge the accounts if he himself is preparing the accounts

3.

The issue can be for example he would interfere in the legal proceedings, not provide accurate statements