In a 1993 article in Accounting and Business Research,Meier, Alam, and Pearson studied auditor lobbying on severalproposed U.S. accounting standards that affect banks and savingsand loan associations. As part of this study, the authorsinvestigated auditors’ positions regarding proposed changes inaccounting standards that would increase client firms’ reportedearnings. It was hypothesized that auditors would favor suchproposed changes because their clients’ managers would receivehigher compensation (salary, bonuses, and so on) when clientearnings were reported to be higher. The following table summarizesauditor and client positions (in favor or opposed) regardingproposed changes in accounting standards that would increase clientfirms’ reported earnings. Here the auditor and client positions arecross-classified versus the size of the client firm.

You will need to type in the FOUR pieces of data into Minitab,along with column headings LARGE and SMALL (firms). Data go intothe white cells in Minitab, starting with row 1. Column headings goin the grey shaded cells in Minitab. Do not typein the totals, as those are not new pieces of data.

a) Auditor Positions

	Large Firms	Small Firms	Total
In Favor	18	125	143
Opposed	9	25	34
Total	27	150	177

(b) Client Positions

	Large Firms	Small Firms	Total
In Favor	23	109	132
Opposed	15	30	45
Total	38	139	177

(a) Test to determine whether auditor positionsregarding earnings-increasing changes in accounting standardsdepend on the size of the client firm. Use ? = .05. (Roundyour expected frequencies to 2 decimal places. Round your answer to3 decimal places.)

x^2= _____ ; so (Click to select)Do not reject/RejectH₀: independence for auditor positionsregarding earnings-increasing changes.

(b) Test to determine whether client positionsregarding earnings-increasing changes in accounting standardsdepend on the size of the client firm. Use ? = .05. (Roundyour answer to 3 decimal places.)

x^2 =_____ ; so (Click to select)Do not reject/RejectH₀: independence for client positions regardingearnings-increasing changes.

(d) Does the relationship between position and thesize of the client firm seem to be similar for both auditors andclients?

	Yes
	No