Groupon, the day-to-day sales website, has been forced to revise its accounting methods after incorrectly reporting fourth-quarter profits.
According to a Wall Street Journal report, the revision, which took place on Friday, March 30, resulted in a $14.3 million lowering of revenue for the period, and reduced the company’s net income by $22.6 million.
According to auditor Ernst & Young, the errors were described as a, “material weakness in its internal control,” meaning that Groupon was not processing refunds as negated income efficiently.
In the Wall Street report, Stifel Nicolaus, of Stifel Financial Corp., said, “This is bigger than an accounting and trust issue…the rationale for the accounting restatement opens up the possibility that Groupon’s addressable market will be more limited.”
Furthermore, this is not the first accounting error that Groupon has been involved in. According to MediaPost.com, the company also made miscalculations last year when questioned about revenue from the Securities and Exchange Commission. Groupon eventually cut their figures in half, leading to a loss of transparency for some stock holders.
For consumers such as University of Maryland sophomore Julie Thompson, this mistake won’t affect her Groupon shopping habits.
“Yeah, I probably will [continue to use Groupon],” says Thompson. “So many corporations lie about so many things, it doesn’t make it okay, but it’s not exactly surprising at this point.”
Groupon announced that it will work with another accounting firm to assist with calculations by the end of the year, according to the Wall Street report.