The Lehman Brothers autopsy is unfolding in full spectacle fashion as Wall Street pores over the sordid details of bad mortgage holdings and some aggressive off-balance-sheet maneuvers—all described in a 2,200-page bankruptcy examiner’s report released late yesterday.

Examiner Anton Valukus, chairman of Jenner & Block, published nine volumes alleging Lehman management played a shell game with the blessing of its audit firm, Ernst & Young, to shuffle $50 billion in troubled assets on and off the books under the noses of investors, regulators, and even the firm’s board of directors.

Valukus concluded the business decisions that led Lehman to crisis may have represented permissible business judgments. “But the decision not to disclose the effects of those judgments does give rise to colorable claims against the senior officers who oversaw and certified misleading financial statements—Lehman’s CEO Richard S. Fuld, Jr., and its CFOs Christopher O’Meara, Erin M. Callan, and Ian T. Lowitt,” the examiner wrote. “There are colorable claims against Lehman’s external auditor Ernst & Young for, among other things, its failure to question and challenge improper or inadequate disclosures in those financial statements.”

The report describes accounting maneuvers dubbed inside Lehman as “Repo 105” and “Repo 108” transactions to move securities off the balance sheet for seven to 10 days at a time. The transactions were meant to look like standard repurchase and resale transactions that are common in investment banking to secure short-term financing, except Lehman accounted for them as “sales” to get the transactions off the balance sheet, the report says.

Through spokesman Charlie Perkins, Ernst & Young said in a statement that Lehman’s September 2008 bankruptcy resulted from “a series of unprecedented adverse events in the financial markets.” The firm notes its last Lehman audit was for the fiscal year ending Nov. 30, 2007.

“Our opinion indicated that Lehman’s financial statements for that year were fairly presented in accordance with Generally Accepted Accounting Principles (GAAP), and we remain of that view,” E&Y said. “After an exhaustive investigation the Examiner made no findings in his report that Lehman’s assets or liabilities were improperly valued or accounted for incorrectly in Lehman’s November 30, 2007 financial statements.”

Compliance Week will provide full coverage of the allegations of misleading accounting in a future edition.