Question

​​​​​​​In the last 10 years, there have been a number of high-profile incidents in which companies have adversely impacted investors and their own profitability because of measurement error or measurement bias in financial statements and reports. For this discussion, research such an incident within the last five years using credible news and financial publications (e.g., Bloomberg, The Financial Times, The Wall Street Journal, The Economist).

• Was the incident you chose an instance of measurement error or measurement bias? What action did the company take that resulted in error or bias?
• What were the consequences of the action?
• What steps, if any, did the company take to rectify the situation?
• What steps might the company have taken to improve accounting quality?

The company is UBER

Answer 1

Ans: i) As per the news in Business Insider India, UBER pay $ 20 million to FTC (Federal Trade commission) for Misleading drivers of potential earning. It was a measurement bias. In the giver case the company have inflated the Average earning per hour by a driver in a particular city whereas the actually result does not affirm such claims.

ii) Above Measurement bias resulted in more and more driver enrolled with UBER for earning higher earning per hour.

iii) The company has to rectify the information about average earning per hour and audit of data such from independent professionally qualified auditor or they can obtain data for processing such information from an independent reliable third party and assure that the correct information is supplied to the party.

iv) The company before making such assertion should evaluate the data used for making such assertion and the also considered the Independence and qualification of the personnel ( Management Expert) whose work is used to make such assertion.