Concept explainers
Refer to Exercise 8.32. From the data given on the compliance checks, estimate the proportion of the firm’s accounts that fail to comply with stated procedures. Place a bound on the error of estimation. Do you think that the proportion of accounts that comply with stated procedures exceeds 80%? Why?
8.32 An auditor randomly samples 20 accounts receivable from among the 500 such accounts of a client’s firm. The auditor lists the amount of each account and checks to see if the underlying documents comply with stated procedures. The data are recorded in the accompanying table (amounts are in dollars, Y = yes, and N = no).
Estimate the total accounts receivable for the 500 accounts of the firm and place a bound on the error of estimation. Do you think that the average account receivable for the firm exceeds $250? Why?
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Mathematical Statistics with Applications
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