Groupon Lawsuit Focuses on Improper Accounting and Weak Internal Controls

A news story from Reuters discusses a recent lawsuit filed against the daily deal company Groupon.  It lawsuit alleges improper accounting for customer refunds as well as an insufficient internal control structure.  An excerpt from the Reuters article:

According to a complaint filed in federal court in Groupon's hometown of Chicago, the company overstated revenue, issued materially false and misleading financial results, and concealed how its business was not growing as fast and was not nearly as resistant to competition as it had suggested.

I'll remind everyone that allegations in a lawsuit is not tantamount to fact, but it is a strong reminder that finance organizations should never lose site of the blocking and tackling  of accounting operations.  A strong internal control structure isn't just about preventive and detective controls, although those are certainly important.  It's also about the overall control environment and the "tone at the top"; that is, how senior management creates and supports the overall culture around the integrity of its financial statements.