Rule 301 on confidentiality recognizes a fundamental public trust between the client and the auditor and reflects the manner in which all professionals conduct themselves. However, in certain instances the auditor may be required to communicate confidential information.

Required
a. Briefly explain the purpose of the confidentiality rule.Why is it important to ensure the client of confidentiality of information?
b. Under what circumstances is the CPA allowed to communicate confidential information, and who are the parties to which the information can be communicated?
c. Assume that an auditor is the partner in charge of two separate engagements, but during the conduct of the audit of Client A, the auditor learns of information that will materially affect the audit of Client B. Client B is not aware of the information (the inability of Client A to pay its debts).What alternative courses of action are available to the auditor? Would communication of the information to Client B be considered a violation of confidentiality? What guidance might the auditor seek other than Rule 301 in developing an answer to this ethical dilemma?
d. Is the auditor's report considered a confidential communication? Explain.