Groupon runs into more squalls over 'weakness in internal controls'
Daily deals company Groupon surprised the financial world at the weekend by revising its financial results. The company disclosed a "material weakness" in its internal controls in failing failed to set aside enough money to cover customer refunds. This increased the company's losses in the fourth quarter by more than $20 million - to $64.9 million, from $42.3 million. In Britain earlier this month the company was referred to the OFT by the Advertising Standards Authority over complaints of exaggerated savings. The unexpected weekend move once again raised questions about the accounting practices of the newly public company, said the San Jose Mercury News. Shares of Groupon fell 6 percent in after-hours trading in New York to $17.29. They are down more than 30 percent since the company went public last autumn. Founded only four years ago, Groupon has become the giant in the world of daily coupons. Last year, investors rushed to buy shares, valuing the company as high as $20 billion. But Groupon has suffered a few hiccups since. Last summer, after criticism, it dropped a profit measure that excluded marketing costs. Months later, the US Securities and Exchange Commission challenged its methodology - and Groupon restated its profits. The refunds issue involves higher-priced offers such as laser eye surgery. Groupon gets more revenue on such deals, but there are also higher refunds. These refunds are for the life of the coupons, so those payments can affect an impact at various times.