Without the release of all pertinent documents by San Diego's pension board, attorney's office and firefighters union , auditor KPMG says that its review of the city's 2003 year could drag on even longer.
The Securities and Exchange Commission, the U.S. Attorney's Office and the Federal Bureau of Investigation have been investigating San Diego's finances since February 2004, after the city failed to properly account for pension fund debt. Estimates now put the system's shortfall at more than $1.4 billion.
KPMG is waiting for Kroll Inc., which is acting as the city's independent audit committee, to complete an investigation into municipal finances before issuing an audit report. A certified audit could be issued within 30 days of the completion of the internal investigation, and Kroll said that it is eyeing a year-end deadline for its work. Completion of the audit would allow San Diego to improve its credit rating and reenter the bond market to pay for infrastructure projects. Audits still need to be completed for both 2004 and 2005.
Vinson & Elkins LLP was originally hired to conduct the internal investigation into whether city workers were committing illegal acts, but KPMG rejected the firm's findings that incompetence had led to the city's financial mismanagement. The San Diego pension board has refused to waive its attorney-client privilege so investigators can review documents, and the audit committee has expressed concerns that both the city attorney's office and the president of the firefighters union have not turned over all the paperwork related to the investigation.
Published reports have said that through mid-September, KPMG had already billed the city nearly $2.8 million. The city's 2002 audit cost just $300,000.
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