Internal auditors are often used to review an organization’s financial statements, such as balance sheets, income statements, and cash flow statements, prior to public filings. Auditors seek to verify that the financial statements accurately represent the financial position of the organization and that the statements follow accepted accounting principles. Many errors that are discovered by auditors are minor errors that are easily corrected. However, some errors are serious and require substantial time to rectify. Suppose that the financial statements of 567 public companies are audited. The following table contains the number of errors discovered during the internal audit of each of 567 these public companies that were classified as “serious.” Number of Serious Errors (x) Frequency 0 237 1 93 2 52 3 40 4 80 5 56 6 7 Number of Serious Errors (x) Frequency Probability f(x) 0 237 1 93 2 52 3 40 4 80 5 56 6 7 Total 565 d. What is the expected number of serious errors in a company’s financial statements? Round your answer to four decimal places. e. What is the variance of the number of serious errors in a company’s financial statements? Round your answer to four decimal places. f. What is the standard deviation of the number of serious errors in a company’s financial statements? Round your answer to four decimal places.
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Internal auditors are often used to review an organization’s financial statements, such as balance sheets, income statements, and cash flow statements, prior to public filings. Auditors seek to verify that the financial statements accurately represent the financial position of the organization and that the statements follow accepted accounting principles. Many errors that are discovered by auditors are minor errors that are easily corrected. However, some errors are serious and require substantial time to rectify. Suppose that the financial statements of 567 public companies are audited. The following table contains the number of errors discovered during the internal audit of each of 567 these public companies that were classified as “serious.”
d. What is the expected number of serious errors in a company’s financial statements? Round your answer to four decimal places.
e. What is the variance of the number of serious errors in a company’s financial statements? Round your answer to four decimal places.
f. What is the standard deviation of the number of serious errors in a company’s financial statements? Round your answer to four decimal places. |
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