My answers are contextual; the refunds weren't relevant to the other post I made. In Groupon's case, it does both: it includes money contractually owed to a third party in its revenue, and it fails to reduce revenues by the reserves to cover refunds. Simply having a reserves liability is not sufficient; under GAAP it is supposed to segregate out the portion of revenues potentially subject to refunds which Groupon does not do.
Also, as to the SEC investigation, it could potentially be for both, as fraud would relate to the numbers in the 10-K filing and other filings with the SEC, in addition to financial and accounting deficiencies. SEC investigations are not criminal investigations--the SEC does not have to lay out "charges" prior to beginning its investigation.
> it includes money contractually owed to a third party in its revenue, and it fails to reduce revenues by the reserves to cover refunds
This is simply false. Not only does it net out reserves from revenue, it even nets them out from gross billings:
"Gross billings. This metric represents the gross amounts collected from customers for Groupons sold, excluding any applicable taxes and net of estimated refunds. We consider this metric to be an important indicator of our growth and business performance as it is a proxy for the dollar volume of transactions through our marketplace, net of tax and reserves."
All I said was that the SEC had not begun a formal investigation, which is fact. And I stand by my contention that "fraud" is probably the wrong description.
Also, as to the SEC investigation, it could potentially be for both, as fraud would relate to the numbers in the 10-K filing and other filings with the SEC, in addition to financial and accounting deficiencies. SEC investigations are not criminal investigations--the SEC does not have to lay out "charges" prior to beginning its investigation.