University of Louisville Professor Julia Karcher conducted an experiment to investigate the ethical behavior of accountants (Journal of Business Ethics, Vol. 15, 1996). She focused on auditor abilities to detect ethical problems that may not be obvious. Seventy auditors from Big-Six accounting firms were given a detailed case study that contained several problems, including tax evasion by the client. In 35 of the cases, the tax evasion issue was severe; in the other 35 cases, it was moderate. The auditors were asked to identify any problems they detected in the case. The following table summarizes the results for the ethical issue.

a. Did the severity of the ethical issue influence whether the issue was identified or not by the auditors? Test using α = .05.
b. Suppose the left-hand column of the table contained the counts 35 and 0 instead of 27 and 8. Should the test of part a still be conducted? Explain.
c. Keeping the sample size the same, change the numbers in the contingency table so that the answer you would get for the question posed in part a changes.

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Severity of Ethical Issue Moderate Severe 27 Ethical Issue Identified Ethical Issue Not Identified 26