Hey gang, I’m in San Jose, California today to talk to youknowwho. How do you west coasters do it? You do realize that you’re three hours behind the *rest of the world*, don’t you? Anyway, you’ve still got time to submit some questions for BoMo, so jump over and try to avoid repeating any of the trolls asking how to get a job at PwC.

Big four auditors face breakup to restore trust [Reuters]
The world’s top four audit firms will have to split up and rename themselves under a far-reaching draft European Union law to crack downerest and shortcomings highlighted by the financial crisis. “Investor confidence in audit has been shaken by the crisis and I believe changes in this sector are necessary,” Internal Market Commissioner Michel Barnier said on Wednesday. Large auditors said the plans won’t improve audit quality, while smaller rivals accused Barnier of a climbdown. Policymakers have questioned why auditors gave a clean bill of health to many banks which shortly afterwards needed rescuing by taxpayers as the financial crisis began unfolding. Barnier said recent apparent audit failures at AngloIrish and Lehman Brothers banks, BAE Systems and Olympus “would strongly suggest that audit is not working as it should”. More robust supervision is needed and “more diversity in what is an overly concentrated market, especially at the top end”, he said.

Olympus Panel Said to Release Accounting Probe Report as Soon as This Week [Bloomberg]
Olympus Corp. (7733)’s independent panel investigating acquisitions and accounting by the Japanese camera maker may release findings as early as this week, a person involved in the investigation said. The committee plans to complete its report before Olympus announces earnings, the person said, asking not to be identified because the probe is confidential. The investigation is ongoing, so the report could be delayed, the person said.

Arrests in Olympus scandal could take weeks: lawyers [Reuters]
Even if criminal complaints are filed against former executives or others involved in the scam, which dates back two decades, arrests might not take place by end-year. This is partly to allow both suspects and prosecutors to spend the new year’s holidays at home, since the turn of the new year is Japan’s biggest traditional holiday, akin to Christmas in the West. Suspects can be held for a total of 22 days before either being indicted or released. “I think it would be hard to make arrests in early December and after December 10, they won’t take people into custody,” said lawyer Yasuyuki Takai, a former prosecutor. “It’s the turn of the year.”

PwC Reports Increase in Fraud, Cyber Crime [AT]
Overall, 45 percent of U.S. respondents from 158 companies reported their organization had suffered fraud in the last year, up 10 percent from 2009. Of those respondents, 40 percent were affected by cyber crime.

GOP Set to Back Payroll-Tax Cut [WSJ]
“I think at the end of the day, there’s a lot of sentiment in our conference—clearly a majority sentiment—for continuing the payroll-tax relief that we enacted a year ago in these tough times,” Senate Minority Leader Mitch McConnell (R., Ky.) said.

More Big Bank Troubles: Lower Corporate Tax Rates Mean More Writedowns [GOA]
The Grumpies admit that the banks are probably way ahead of the game: “[D]o we really think for one second that the big bank lobby will permit a corporate tax reduction without some special provision that protects them from the adverse consequences that we have projected?”

Macomb County tries to offset $5M accounting error [DFP]
The error — an approximately $5-million discrepancy that began in 2006 — was created by the county and missed during yearly audits. Commissioners expressed their displeasure with accounting firm Rehmann of Troy during a special Finance Committee meeting Nov. 22 by voting 8-1 to ask County Executive Mark Hackel to consider canceling the firm’s contract.

Bedbugs found in Seattle IRS offices [KOMO]
An IRS worker first spotted a single bedbug at the Seattle office in October. An exterminator trapped a second bug, and that was enough for IRS officials to send in the hounds.

IRS Dives into the Bonus Pool [CFO]
Reversing a position it had maintained for 36 years, the Internal Revenue Service ruled in November that a corporation can deduct the entire amount of its bonus pool even though incentive payments for some employees can’t be determined before the end of the year.

Rooney, first KPMG LI managing partner, dies [LIBN]
Gerald Rooney started the LI office with 30 professionals in 1966.

Norquist, Chamber press for repatriation [The Hill]
Your token GGN link.

American Airlines Parent Files for Bankruptcy [NYT]
The parent company of American Airlines said on Tuesday that it has filed for bankruptcy protection, in an effort to reduce labor costs and shed its heavy debt load. American’s parent, the AMR Corporation, was the last major airline in the United States to resist filing for Chapter 11 in an effort to shed contracts, a move that analysts said left it less nimble than many of its competitors. AMR intends to operate normally throughout the bankruptcy process, as previous airlines have done. The company doesn’t expect the restructuring to affect flights or frequent flier programs.

Diamond Foods says more lawsuits may come [AP]
Diamond Foods Inc., which is in the midst of an internal accounting probe and facing several related lawsuits, says it expects more suits will be filed against the company in the future. The company, based in San Francisco, is looking into allegations of improper accounting for crop payments to walnut growers. Diamond said earlier this month that its $1.5 billion acquisition of chip company Pringles from Procter & Gamble Co. would be delayed due to the investigation. It is slated to be Diamond’s biggest acquisition yet, more than tripling the size of its snack foods business.

Facebook Said to Plan IPO at $100B Valuation [Bloomberg]
Facebook’s $100 billion valuation would be twice as high as it was in January, when the company announced a $1.5 billion investment from Goldman Sachs Group Inc. and other backers. The IPO is far enough away that the details may change, said Lise Buyer, principal of the Class V Group, an IPO advisory firm. “It’s far too early to accurately predict where the valuation will be on deal day,” Buyer said.

PwC defends ‘honest mistake’ in JP Morgan audit disciplinary [Accountancy Age]
PwC fought for minimal sanctions yesterday after it admitted audit failures in the case of JP Morgan Securities Limited.
Appearing before a disciplinary panel, it argued JPMSL shortcomings were to blame as it omitted to flag up non-segregation of client assets for the seven years to 2008, not systemic audit failure. PwC committed an “honest error” as it “strove to test segregation and reconciliation of client assets”, argued Tim Dutton of law firm Herbert Smith. Dutton said the firm’s penalty should be in the region of £500,000 to £1m, saying it would be “appropriate to keep the fine at the lower end due to mitigating reasons”.

Is the Judiciary about to Give the SEC a Backbone?* [Accounting Onion]
Tom Selling’s old stomping grounds got the business from Judge Jed Rakoff.

Grover Norquist v. Ross Douthat on the Taxpayer Protection Pledge [TaxProf]
We’re still waiting for a real match up.

Legal cloud starting to lift for Fastow [HC]
[Andrew] Fastow is now working full-time for the law firm that represented him in civil matters over the last decade, Smyser Kaplan & Veselka, using his business background under the job title “document review clerk.” “We’ve found him to be very intelligent, creative and meticulous,” partner Lee Kaplan said. “We just gave him a raise, but he’s making far less than his talents are worth.”

Senator Questions Extension of Tax Cut [NYT]
[O]n “Fox News Sunday,” Mr. Kyl, of Arizona, said: “The payroll tax holiday has not stimulated job creation. We don’t think that is a good way to do it.” Moreover, Mr. Kyl said, increasing taxes on the most affluent Americans, including small-business owners who report business income on their personal tax returns, would undermine the fragile economic recovery. “The best way to hurt economic growth is to impose more taxes on the people who do the hiring,” Mr. Kyl said. “As a result, the Republicans have said, ‘Don’t raise the existing tax rates on those who do the hiring.’ ”

Grover Norquist: a misleading accounting of recent history [Fact Checker/WaPo]
Grover’s appearance on Meet the Press yesterday garnered a ranking of Three Pinocchios. That’s out of a possible four (which is classified as a “whopper”).

KPMG sets dates for UK claims on MF Global cash [Reuters]
MF Global UK’s administrator KPMG said the failed futures broker’s clients will be able to claim monies frozen at the firm beginning early next month in a move that offers frustrated investors some hope they will recover their cash. KPMG said on Monday MF Global UK clients can formally make applications from Dec. 8 this year and asked that all claims are submitted by March 30, 2012.

Are Fourth Quarter Write-offs Looming for Deloitte’s Clients? [GOA]
The Grumpies have been busy. They’ve found 24 Deloitte audit clients who they say are at “at significant risk for some type of intangible asset write-down in the very near future.”

MF’s Missing Money Makes You Wonder About Goldman [Bloomberg]
Six months ago the accounting firm PricewaterhouseCoopers LLP said MF Global Holdings Ltd. and its units “maintained, in all material respects, effective internal control over financial reporting as of March 31, 2011.” A lot of people who relied on that opinion lost a ton of money. MF Global filed for bankruptcy on Oct. 31. This week the trustee for the liquidation of its U.S. brokerage unit said as much as $1.2 billion of customer money is missing, maybe more. Those deposits should have been kept segregated from the company’s funds. By all indications, they weren’t. What’s the point of having auditors do reports like this? And are they worth the cost? It’s getting harder to answer those questions in a way the accounting profession would favor.

Ernst & Young on Auditor Rotation [The Summa]
FLASH: They’re not thrilled with the idea.

Appeal for EU to stick by accountancy reforms [FT]
The heads of several midsized audit networks have issued a last-ditch appeal to the European Commission not to dilute sweeping proposals aimed at reducing the dominance of the four biggest accountants and improving audit quality. In a joint interview with the Financial Times, the chief executives called on Michel Barnier, EU internal market commissioner, to hold his nerve as he finalises his recommendations for reforming the sector, which are expected next week.

KPMG’s Andrew Says ‘Significant Fraud’ Evident at Olympus [BBW]
KPMG International LLP’s global chairman, Michael Andrew, said fraud was evident at Olympus Corp. and his firm met all legal obligations to pass on information related to Olympus’s 2008 acquisition of Gyrus Group Ltd. before it was replaced as the camera maker’s auditor. “We were displaced as a result of doing our job,” Andrew told reporters at the Foreign Correspondents’ Club in Hong Kong today. “It’s pretty evident to me there was very, very significant fraud and that a number of parties had been complicit.”