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According to Bloomberg, Groupon’s operating income and other accounting
trickery habits are being studied by the U.S. Securities and Exchange Commission, part of a routine review of the site’s IPO. Nothing out of the ordinary there.
But Groupon seems pretty transparent about the unreliability of their methodology. I guess this is to say “don’t rely on this information, we’re kind of making some of these numbers up” so investors can’t say they weren’t warned.
Check out this June 2, 2011 SEC filing:
Our use of Adjusted CSOI has limitations as an analytical tool, and you should not consider this measure in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
• Adjusted CSOI does not reflect the significant cash investments that we currently are making to acquire new subscribers;
• Adjusted CSOI does not reflect the potentially dilutive impact of issuing equity-based compensation to our management team and employees or in connection with acquisitions;
• Adjusted CSOI does not reflect any interest expense or the cash requirements necessary to service interest or principal payments on any indebtedness that we may incur;
• Adjusted CSOI does not reflect any foreign exchange gains and losses;
• Adjusted CSOI does not reflect any tax payments that we might make, which would represent a reduction in cash available to us;
• Adjusted CSOI does not reflect changes in, or cash requirements for, our working capital needs; and
• other companies, including companies in our industry, may calculate Adjusted CSOI differently or may use other financial measures to evaluate their profitability, which reduces the usefulness of it as a comparative measure.
Because of these limitations, Adjusted CSOI should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. When evaluating our performance, you should consider Adjusted CSOI alongside other financial performance measures, including various cash flow metrics, net loss and our other GAAP results.
Better yet, AQPQ explains the math behind ACSOI:
Groupon acknowledges that it is losing money when profits and losses are measured in accordance with Generally Accepted Accounting Principles (GAAP). The firm claims, however, that its profits and losses are more meaningfully measured by a metric they call Adjusted Consolidated Segment Operating Income (ACSOI).
How does this number differ from profits and losses that are measured in accordance with GAAP? ACSOI apparently includes all of the revenues, but only some of the expenses, that are recognized by GAAP. By excluding certain significant expenses, Groupon manages to convert its losses into profits.
So what is the SEC going to find? Accounting methods already confessed to by the perps? Big deal.
This is a new one.
We found out about an external recruiter impersonating PwC late yesterday and apparently it’s gotten on the nerves of the brass that they sent an email to let everyone know that you shouldn’t talk to strangers, even if they say they’re from PwC and know a bunch of internal acronyms.
External Recruiters Impersonating PwC Staff
There have been recent reports of an unethical recruiter attempting to collect PwC staffing information by presenting themselves as a PwC employee. This individual has proven to be very convincing and knows some of the PwC terminology to support their deceptive practices. One of PwC’s best defenses to this type of activity is to protect our information and to not readily disclose it without verifying the requestor and their need for the information.
What to do if you receive a request for staffing information
If you should receive a call from an individual requesting staffing information, e.g., names, staff levels, phone numbers, etc. , do not provide this information by phone and do not send it to an external e-mail address. Politely obtain the caller’s information and inform them you will look into the their request. Do not be fooled by the information displayed on your phone. The caller typically blocks their caller id and the firm has also experienced instances of phone spoofing where the phone displays a false PwC extension from a call originating from outside of the firm. You can verify if it is a legitimate caller by contacting the individual through their PwC office phone number or e-mailing their PwC account. If you determine the call did not originate from the PwC individual, please report the situation to your HR representative or e-mail the call information to [email protected] and a US Security representative will respond to you.
We’ve contacted the firm about this sly impostor and are waiting to hear back. In the meantime, if you’ve heard from this crafty character, send us the email or voicemail.