SEC Questioned Groupon Over Weak Financial Controls
The U.S. Securities and Exchange Commission asked Groupon Inc. (GRPN) to explain its accounting for coupon refunds and other aspects of its business after the daily deal site revised 2011 results and disclosed a “material weakness” in its financial controls.
In letters dated Aug. 2 and Sept. 25, the regulator asked Groupon to disclose more information about refunds, newer types of coupons for travel and music concerts and its contracts with local merchants, according to documents made available yesterday on the SEC’s website.
Groupon has taken steps to improve its financial governance since March, when it reported fourth-quarter results that were worse than previously stated because of higher refunds to merchants, and weakness in its financial controls. The company bolstered its board with new directors Daniel Henry, the finance chief of American Express Co. (AXP), and Robert Bass, a former vice chairman of Deloitte LLP.
Groupon also hired former KPMG LLP executive Brian Stevens as chief accounting officer.
In its correspondence, the regulator asked Groupon to make changes to how it reports certain aspects of its business. The SEC completed its review of Groupon’s filings, it said in another letter on Oct. 4. The agency didn’t rule out any further actions in the letter.
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