Uber Admits Accounting Error

Uber Admits Accounting Error

The blunder that Uber made is a somewhat weird one especially in regards to the motive and the reason behind the error. Although errors are not uncommon in accounting, I find it quite absurd that the anomaly in computing drivers’ commissions occurred only in New York City. Moreover, taking over two years for the company to realize the mistake indicates that Uber does not do annual audits. At the same time, there seems to be an aspect of intentionality and lack of ethics in the entire story, especially going by the report that the company overstates drivers’ annual income. On top of this, the company violated the agreement it had made with drivers regarding calculation of commission (Brant, 2017). All these create the impression that the so-called blunder was intentional. However, the best option for preventing the dilemma caused by the error would have been to review required deductions before finalizing payroll. Much as there is a likelihood that the payroll personnel were not aware of the agreement between Uber and drivers, the error would have been averted if the company was keen on regular audits and cross-checking all accounts before they can be finalized. What this means is that once payroll personnel calculate drivers’ commissions, the records are handed over to the chief accountant who verifies that the calculations are correct. Every quarter, an auditor will scrutinize the books, this way, any calculation errors will be detected and corrected early enough.

Response to Heather

It is true that two years is a long duration for Uber not to notice an error of such a big magnitude. I also support your view that such errors can be detected easily with checking and rechecking. You state that it is necessary for Uber to hire people who are competent in book-keeping, and pose a question for the reader. Are you suggesting that you are also not sure of whether your preferred option is not the best solution, hence asking for help from the reader?

Reference

Brant, T. (2017). Uber admits it made an accounting error and will refund nearly $50 million to drivers. Entrepreneur. https://www.entrepreneur.com/business-news/uber-admits-it-made-an-accounting-error-and-will-refund/294831#:~:text=Uber-,Uber%20Admits%20it%20Made%20an%20Accounting%20Error%20and%20Will%20Refund,to%20The%20Wall%20Street%20Journal.