Groupon Revisions Expose Risk

Coupon provider’s novel business model outpaces controls.

Groupon Inc.’s latest restatement, following accounting missteps last year, heightens concern about the reliability of the company’s financial reporting and raises questions whether auditors gave enough oversight to the coupon provider’s novel business model.

The Chicago-based company reported a “material weakness” in financial controls on March 30 and said fourth-quarter sales were lower than previously stated because of higher refunds to merchants. That cut revenue in the period -- Groupon’s first as a public company -- by $14.3 million to $492.2 million.

‘Extremely Unusual’

Restatements and disclosures of material weaknesses are rare this soon after an IPO because the Securities & Exchange Commission requires detailed checks on financial controls before a debut, said Lise Buyer, principal at Class V Group.

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