Question: Tom and Brents Alpine Outfitters conduct an annual audit of its financial records. An internal control policy for the company is that a check can be issued only after the accounts payable manager initials the invoice. The tolerable exception rate for this internal control is 0.04. During an audit, a sample of 300 invoices is examined from a population of 10,000 invoices, and 11 invoices are found to violate the internal control.
a. Calculate the upper bound for a 95% one-sided confidence interval estimate for the rate of noncompliance.
b. Based on (a), what should the auditor conclude?