This miscalculation of revenue was one of the major issues highlighted by these two business/accounting professors:<p><a href="http://blogs.smeal.psu.edu/grumpyoldaccountants/archives/281" rel="nofollow">http://blogs.smeal.psu.edu/grumpyoldaccountants/archives/281</a> "TRUST NO ONE, PARTICULARLY NOT GROUPON’S ACCOUNTANTS"<p>Their two other major concerns:<p>• Groupon's positive cash-flow is a temporary illusion:<p>"After downplaying the ACSOI, Groupon has begun touting its 2010 free cash flow of $72.2 million (operating cash flow of $86.9 million less property and equipment purchases of $14.7 million). Unfortunately, operating and free cash flows are driven solely by the fact that Groupon is dragging its feet in remitting coupon sale payments to its merchants. Had merchants been paid in a timely fashion, the Company’s free cash flows would likely have been closer to zero and possibly even negative. Seriously, in a competitive market space, how long does Groupon believe that it can get away with a 60 day payment delay (or longer) to merchants? Merchants simply cannot stay in business by providing services (even discounted ones), two months ahead of payment. Simply put, Groupon’s free cash flows aren’t real. They come from an unusual (and likely temporary) vendor financing model, and are not sustainable."<p>• Groupon's internal controls are inadequate to make their self-reported numbers credible:<p>"It is absolutely ludicrous to think that Groupon is anywhere close to having an effective set of internal controls over financial reporting having done 17 acquisitions in a little over a year. When a company expands to 45 countries, grows merchants from 212 to 78,466, and expands its employee base from 37 to 9,625 in only two years, there is little doubt that internal controls are not working somewhere. Any M&A expert will agree. And don’t forget that Groupon admitted to having an inexperienced accounting and reporting staff. Note that Ernst & Young supplied an audit opinion about the financial statements but not about the entity’s internal control system. E&Y instead points out, “We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.” So we ask how have these weak or nonexistent controls affected the numbers Groupon reports? Can we trust these numbers?"<p>Groupon's business-professor cofounder, Eric Lefkofsky, has dumped about $382 million of his shares in the prior private financings.