According to an Associated Press (News - Alert) report, the daily deals site Groupon Inc. has reported a loss for its fourth-quarter (4Q). But, the loss is bigger than initially reported because it needed to increase the amount of money it sets aside for refunds, said Groupon.

This error has weakened the company's first quarterly report since it went public in November. It has impacted the value of the shares, which have been falling since the disclosure. When going to print, the last sale was $16.24.

As per the AP report, Groupon promises to refund money to any user unhappy with a deal, an important part of its business model that has made it so popular. According to the report, the company is looking into revising this policy. However, wrote AP reporter Sarah Skidmore, “The need for the revision indicates it might not have the controls in place to adequately keep up with its own success.”

The company said that because it was selling online deals at higher prices during this period, it resulted in larger refunds. The AP report shows that the revision has lowered the company's quarterly revenue by $14.3 million and widened its loss by $22.6 million, or 4 cents per share.

For the quarter, Groupon originally reported in February a loss of $42.7 million, or 8 cents per share, even though its revenue had nearly tripled to $506.5 million as compared to the same quarter a year earlier.

Groupon's auditor Ernst & Young also flagged a weakness in the company's internal controls over its financial statement for the period in a regulatory filing Friday, wrote Skidmore.

Meanwhile, as per the AP report, Groupon is working to identify and correct the underlying problems causing this error. To address the issues, the company has added more staff members to the financial section. “This is not the first time Groupon has struggled to get its financial reporting in order. The company faced federal scrutiny before its initial public offering for the way it accounted for revenue,” wrote Skidmore.