Focus Problem: Benfords Law Again suppose you are the

Chapter , Problem 6

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Focus Problem: Benfords Law Again suppose you are the auditor for a very large corporation. The revenue file contains millions of numbers in a large computer data bank (see 5). You draw a random sample of numbers from this file and have a first nonzero digit of 1. Let p represent the population proportion of all numbers in the computer file that have a leading digit of 1. i. Test the claim that p is more than 0.301. Use ii. If p is in fact larger than 0.301, it would seem there are too many numbers in the file with leading 1s. Could this indicate that the books have been cooked by artificially lowering numbers in the file? Comment from the point of view of the Internal Revenue Service. Comment from the perspective of the Federal Bureau of Investigation as it looks for profit skimming by unscrupulous employees. iii. Comment on the following statement: If we reject the null hypothesis at level of significance , we have not proved to be false. We can say that the probability is that we made a mistake in rejecting Based on the outcome of the test, would you recommend further investigation before accusing the company of fraud?