Prep-Work Problem 12.2 Company X is reviewing compliance with its internal control policies and procedures. The internal auditors at Company X have a policy that average instances of noncompliance with internal controls should be less than 10%. If average instances of noncompliance with internal controls is less than 10%, the internal auditors at Company X conclude that internal control policies and procedures are operating effectively. In order to determine the effectiveness of internal control policies and procedures, the internal auditors at Company X drew a random sample of transactions from different areas on the financial statements and noted the percentage of instances internal controls were not followed. The results of this analysis are:

4 15 11 7 5 9 4 3 5 8

Can the internal auditors at Company X infer (at the 10% significance level) that the mean proportion of instances of noncompliance with internal controls is less than 10%?

More important then the answer is show all work and explain how you got to the answer.