Groupon Inc. said Friday that its fourth-quarter loss was wider than initially reported because it needed to increase the amount of money it sets aside for refunds.

The disclosure weakened the company's first quarterly report since it went public in November, which already had disappointed investors, and added to its list of fumbles.

Groupon prominently promises to refund money to any user unhappy with a deal, an important part of its business model that has made it so popular. The need for the revision, however, indicates it might not have the controls in place to adequately keep up with its own success.

Groupon said that it was selling online deals at higher prices during the period. and that put it on the hook for larger refunds. The revision lowered the company's quarterly revenue by $14.3 million and widened its loss by $22.6 million, or 4 cents per share.

The company originally reported in February a surprise loss of $42.7 million, or 8 cents per share, for the period. It said at the time that its revenue nearly tripled to $506.5 million from 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.

Groupon said it is working to identify and address the underlying causes and said it may have added expenses to solve the problem, including the cost of hiring more financial staff for the quickly growing company.

The company's shares plunged in after-hours trading on the news.

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.

Groupon makes money by sending out frequent emails to subscribers offering a chance to buy discount deals for anything from manicures to ballroom dance lessons. The company takes a cut of what people pay and gives the rest to the merchant.

The company used to report all of its gross billings, not just the money it gets to keep, as revenue. After federal regulators questioned the practice, Groupon submitted new documents in September that showed that net revenue in the first half of 2011 was about half of what it originally reported.

The company's rapid growth, financial reporting difficulties, high marketing expenses and enormous employee base have caused some IPO experts to compare its ascent to the late 1990s tech boom _ and bust. Continued...