An Auditing Firm Has Developed a Set of Criteria for Determining

Short Answer

An auditing firm has developed a set of criteria for determining whether a particular account (and its balance) is in error. Historically, they know that of balances that were in error, 75 percent were regarded as unusual. Assume Company A shows a history of only 10 percent of the account balances being in error and it also shows that 25 percent of the account balances were unusual. If in an audit, a particular account balance appears unusual, what is the probability that it is in error for Company A?