In The Fund of Funds, Ltd. v.Arthur Andersen & Co., Arthur Andersen auditors completed the audit of Fund of Funds with no problems encountered and issued an unqualified opinion. Shortly thereafter, essentially the same audit team began the audit of King Resources. While conducting that audit, the auditors realized that there was a significant contract between King Resources and Fund of Funds. The auditors continued with the audit and were surprised to find that King Resources had not dealt fairly with Fund of Funds by selling them property that was significantly overpriced.
Now the auditors were caught in a dilemma: they could tell Fund of Funds. Alternatively, they could refrain from telling Fund of Funds and hope that Fund of Funds would never find out.

Required
a. Discuss what course of action you would recommend the auditors should take and potential results of that action.
b. How could this situation have been avoided?
c. Discuss how this case differs from the Consolidata case described in the chapter in terms of disclosing confidential information. Why do you think the courts came to different conclusions for these two cases?