San Diego Consultants: 2003 Audit Could be out by January

According to the San Diego Union-Tribune, the auditor said completion of the audit would depend on whether Kroll Inc., a risk management firm hired to investigate accounting irregularities and possible securities fraud by city employees, honored its own timeline to complete the investigation by the end of December.   Bill Morris, Western area managing partner for KPMG, said the audit would be completed 30 days after Kroll finishes its investigation.

The issue is the denial from the city’s pension board and its attorneys to let the Kroll auditors review documents it considers confidential.   An attorney with the Kroll team said they would know in 30 days how important those documents may be in the investigation, the Union-Tribune reports.

The board recently complied with a court order to turn over some of its financial documents, and at the same time hired Navigant Consultants on its own to investigate the criminal charges (See  San Diego Pension Board Agrees To Turn Over Documents ).   According to the Union-Tribune, one audit committee member said it would delay the Kroll investigation if the two companies did not communicate freely.

Delivery of KPMG’s 2003 audit would speed the release of two audits for fiscal 2004 and 2005 and let the city resume borrowing from the bond market for many government-mandated capital projects that are on hold, the Union-Tribune notes.

The meeting further increased tension between the Council and city attorney Michael Aguirre, who questioned the auditor’s independence and their lack of detail in billing invoices.   Councilman Jim Madaffer noted at one point that Aguirre’s questions seemed more fit for the courtroom drama of “Perry Mason” than a City Council public hearing, according to the Union-Tribune.   Councilman Scott Peters said he was embarrassed by Aguirre’s actions and apologized to the auditors.

KPMG has billed the city $2.8 million so far for this audit and related investigations.   The city spent only $300,000 for its last audit.