4. Your client, a French pharmaceutical manufacturer, is about to release a blockbuster new drug that inhibits the growth of certain tumors. While auditing this company, you happened to overhear research scientists openly discussing with marketing personnel this drugs benefits and anticipated sales revenues. You are aware that this pharmaceutical manufacturer carefully guards this information from competitors as well as the general public.

Based on the information you overheard, you believe that pharmaceutical patents held by an unrelated U.S. client will now become worthless. Under generally accepted accounting principles, intangible assets must be recorded at lower of cost or market when an impairment of value occurs. Should you consider the impact of this new French drug in valuing the patents of your U.S. client

8. During the course of auditing a telecommunication hardware company, you learned a great deal about typical credit terms and profit margins in that industry. You now have been hired by a small supplier of component parts to the telecommunications industry. This supplier has asked you to prepare its financial projections. In preparing these projections, you intend to assume that credit terms and projected profit margins will be similar to others in the same industry. By doing so, are you violating your duty of confidentiality to the large telecommunications hardware company?