Supercom[m]ittee Failure Poses Threat to U.S. Recovery [Bloomberg]
The implosion of the congressional supercommittee is likely to delay any major deficit-reduction agreement until after the next presidential election and may pose an immediate threat to the struggling U.S. economy.The committee’s failure to reach a deal means several tax programs, including a payroll tax holiday, risk expiring at the beginning of next year, weighing on the household spending that accounts for about 70 percent of the world’s largest economy. The panel’s inability to agree on $1.2 trillion in budget cuts, w��������������������wn yesterday and Treasuries higher, also stoked doubts about U.S. lawmakers’ ability to overcome partisan gridlock and safeguard the nation’s fiscal health. “They could not agree even on the smaller challenge of $1.2 trillion,” said former White House budget director Alice Rivlin, among a coalition of officials who pushed the panel to “go big” and find $4 trillion in savings, in an e-mail. “I do not see a way to get to the big deal before the election, if then. It is really discouraging!”

Auditing Watchdog’s Audit of PwC, KPMG Find Weaknesses [WSJ]
The government’s auditing regulator found deficiencies in 28 audits conducted by PricewaterhouseCoopers LLP and 12 audits by KPMG LLP in its annual inspections of the Big Four accounting firms. The Public Company Accounting Oversight Board said many of the deficiencies it found in its 2010 inspection reports of the two firms, released Monday, were significant enough that it appeared the firms didn’t obtain sufficient evidence to support their audit opinions.

At PWC, They Now Have Names [Economix/NYT]
The response from PWC this time breaks welcome new ground. It is signed by real people: Bob Moritz, the firm’s United States chairman, and Tim Ryan, the United States assurance leader. In the past, these letters — like audit reports signed by the firms — never mentioned a name. So it was impossible to even know if top management of the firm had approved the response. In this case, top management signed it.

Senator Gets Deloitte Information on Federal Audits [WSJ]
In a Nov. 7 letter to Deloitte LLP, Sen. Claire McCaskill (D., Mo.), who is chairwoman of a Senate subcommittee on oversight of government contracts, said she was requesting the information because the criticisms “raise serious questions regarding the integrity of all audits conducted by Deloitte.” She also said she wanted to better understand the impact on the federal government. The government spent more than $958 million on contracts with Deloitte LLP in 2010, she said in the letter. A Deloitte spokesman said the firm has “cooperated with the senator’s request.”

Taxman Preoccupies Wall Street to Upper East Side in IRS Levies [Bloomberg]
New York is where the 1 percent live — and they have the tax returns to prove it. Nine of the 10 most heavily taxed neighborhoods in the U.S. are in the city’s metropolitan area, Internal Revenue Service data show. The nine neighborhoods, which range from Manhattan to Fairfield County, Connecticut, accounted for 0.2 percent of all federal income-tax filers in 2008, the latest year for which data are available, according to IRS statistics compiled by Bloomberg. They paid 1.6 percent of all individual income taxes, eight times their proportionate share of the filing population.

MF Global HK can’t be sold as going concern-KPMG [Reuters]
KPMG, provisional liquidator of the Hong Kong unit of collapsed U.S. futures brokerage MF Global Holdings, said it was focused on returning client funds having failed to sell the business. Tuesday’s statement from KPMG came as the Australian arm of MF was shut down after failing to get an adequate offer and underscored the difficulty liquidators have had in selling MF’s Asian business, which generated around 14.4 percent of the company’s global revenue. MF Global, which filed for bankruptcy on Oct. 31 having placed disastrous bets on European sovereign debt, has laid off nearly half its staff globally, including more than 1,000 employees of the company’s broker-dealer unit.

Should j2 Global Communications Restate its 2010 Financial Reports? [WCF]
Sam Antar says, “maybe!”

Fired Olympus C.E.O. to Press Board on Fees [NYT]
“I am returning to the world headquarters of Olympus,” Mr. Woodford said by phone from London on Monday. “And I will use the opportunity to emphasize that all the facts come out.” He later told reporters at a London news conference that he was “not afraid of challenging my board members.”

Supporters Go Naked for Accused Tax Evader [Forbes]
Now that’s a support group.

Debt supercommittee members brace for failure [WaPo]
The congressional “supercommittee” stumbled its way toward failure Sunday, with final staff-level discussions focusing mostly on how the panel should publicly admit that lawmakers could not meet their mandate of shaving $1.2 trillion from the federal debt. Rather than making a final effort at compromise, members of the special deficit-reduction committee spent their final hours casting blame and pointing fingers, bracing for the reaction from financial markets that are already jittery over the European debt crisis.

Kyl, committee divide on taxes [The Hill]
“We are not a tax-cutting committee,” Kerry said. “We’re a deficit-reduction committee.”

U.S. Billionaires Avoid Reporting Gains to IRS [Bloomberg]
When billionaire Billy Joe “Red” McCombs, co-founder of Clear Channel Communications Inc., reported a $9.8 million loss on his tax return, he failed to include about $259 million from a lucrative stock transaction. After an audit, the Internal Revenue Service ordered him to pay $44.7 million in back taxes. McCombs, who is worth an estimated $1.4 billion and is a former owner of the Minnesota Vikings, Denver Nuggets and San Antonio Spurs sports franchises, sued the IRS, settling the case in March for about half the disputed amount.

Enron’s Tenth Anniversary: Arthur Andersen’s Audit Failures at Enron and Elsewhere [GOA]
From the Grumpies: “Arthur Andersen was not a hapless bystander when Enron’s managers committed their accounting frauds, nor was it a duped auditor, nor an innocent victim of the media. Perhaps it was a scapegoat as all the large firms have engaged in audits of less than stellar quality, but that does not excuse its poor performance at Enron.”

Olympus’s $687 Million Takeover Scam Lay Hidden in Cardiff Filing System [Bloomberg]
Olympus on Nov. 8 admitted inflated advisory fees paid in the $2.1 billion acquisition of Gyrus were used to conceal soured investments dating back decades. In a practice known as “tobashi” — loosely translated as “to make fly away” — the company used offshore entities to park assets in the hope that a market recovery would erase losses before they had to be accounted for. A week after Olympus paid $620 million in March 2010 to buy back preference shares given to its advisers as fees, former Chairman Tsuyoshi Kikukawa and two senior aides, who were all serving as Gyrus directors, filed financial statements saying it wasn’t “meaningful to estimate a fair value” for the securities. Gyrus instead booked them at $177 million, the documents show.

Loyal Olympus workers feel betrayal over accounting scandal [Reuters]
“I cried in front of my family when I watched that news conference,” one male employee wrote on Facebook, using the social-networking site to vent his feelings after television news coverage of the president’s revelation of the scandal. A co-worker posted a message to console him, appealing to a sense of loyalty for customers rather than the company, saying they simply had to work hard to regain their trust. But the co-worker was also enraged. “I know it’s deep in the night and everyone has fallen asleep. But I just want to scream out loud ‘idiots!!'” he wrote.

Financial Statement Fraud: Olympus Makes It Look Easy [Fraud Files]
Fraud never gets lost in translation.

US SEC sues ex-Ernst worker in insider trading case [Reuters]
The SEC accused defendant Mark Konyndyk, a Los Angeles resident, of making $9,725 of illegal profit through his purchases of Activision call options before and soon after his Nov. 2, 2007 resignation from Ernst & Young. The combination was announced on Dec. 2 of that year. Konyndyk, who was a manager in Ernst & Young’s transaction advisory services group, made the trades after briefly working on a team conducting due diligence on behalf of Vivendi for the merger, which was code-named Project Sego, the SEC said.

Repo Accounting: After Lehman, another Debacle was Just a Matter of Time [Accounting Onion]
Tom Selling told you so.