Final answer:
The auditor has a duty to disclose fraud information outside the entity in specific legal and regulatory circumstances but not to a Wall Street analyst simply seeking future profit projections. The correct answer is option c.
Step-by-step explanation:
The auditor's duty to disclose information regarding fraud to parties outside the entity includes certain specific circumstances. The only option from the question that is not a legitimate circumstance for an auditor to disclose fraudulent information outside the entity is C) A Wall Street analyst inquiry regarding future profit projections. This is because such disclosure could violate ethical or legal obligations of confidentiality and is not typically required by law or for the protection of the entity's stakeholders.
However, auditors must disclose such information when there is:
- A court subpoena in conjunction with a fraud investigation.
- A successor auditor making inquiries during the client acceptance process.
- To comply with legal or regulatory requirements.
These disclosures are vital to upholding the integrity of corporate governance and ensuring transparency for the protection of investors and compliance with legal requirements. Situations involving court subpoenas or successor auditors fall under the exceptions where auditors are obligated to breach confidentiality in favor of greater ethical or legal responsibilities, while analyst inquiries do not.