Auditors of Old Kent Bank Are Interested in Comparing the Reported

question 10

Essay

Auditors of Old Kent Bank are interested in comparing the reported value of customer savings account balances with their own findings regarding the actual value of such assets. Rather than reviewing the records of each savings account at the bank, the auditors decide to examine a representative sample of savings account balances. The frame from which they will sample is shown below.
-(A) What sample size would be required for the auditors to be approximately 95% sure that their estimate of the average savings account balance at this bank is within $150 of the true mean? Assume that their best estimate of the population standard deviation is $300.
(B) Choose a simple random sample of the size found in (A).
(C) Compute the observed sampling error based on the sample you have drawn from the population. How does the actual sampling error compare to the maximum possible probable absolute error established in (A)? Explain

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Definitions:

Beyond Reasonable Doubt

The standard of evidence required to validate a criminal conviction in most courts in the United States.

Medicare False Claims Act

A federal law aimed at combating fraud and abuse in the Medicare program by penalizing those who knowingly submit false claims.

False Claims Act

A federal law that allows individuals to sue on behalf of the government for false claims made to governmental programs and collect a portion of any damages awarded.

Sarbanes-Oxley Act

A U.S. law enacted in 2002 aimed at protecting investors by making corporate disclosures more reliable and accurate.