Contemporary Auditing 10th Edition by Michael Knapp

Exercise 24

Suppose that you and a close friend are employed by the same accounting firm. You are assigned to the firm's audit staff, while your friend is a consultant who works on M A engagements. What would you do under the following circumstances: (1) your friend discloses to you highly confidential "marketmoving" information regarding a soon-to-be announced merger; (2) your friend not only discloses such information to you but also informs you that he or she plans to use it to make a "quick" profit in the stock market In your responses, comment on your ethical responsibilities in each scenario.