Daily deal website Groupon has announced a change to its earnings reports, having messed up the accounting to the point that its estimations were off by over $20 million. The revised report drops earnings by just under $15 million - to a total of $492.2 million - and increases overall losses to $65.4 million.
Apparently the reason for the recalculation was that the site's accountants hadn't accounted for money put aside in case deals had to be refunded. This has raised concerns among shareholders and investors about the company's ability to track its own finances.
Stating the obvious, Groupon explained in a filing to the Securities and Exchange Commission: "In connection with the audit of our financial statements as of and for the year ended December 31, 2011, we concluded there is a material weakness in internal control over financial reporting related to deficiencies in the financial statement close process.
"We have begun taking steps and plan to take additional measures to remediate the underlying causes of the material weakness, primarily through the continued development and implementation of formal policies, improved processes and documented procedures, as well as the continued hiring of additional finance personnel."
This isn't the only time Groupon has been wiping egg from its face in recent months. The last issue was due to many instances of a breach in advertising law which saw the Office of Fair Trading make complaints after an investigation, forcing the company to reevaluate the way it advertised its deals.
Source: The Register