Sleeping With the Auditor

- Two years ago, the auditors contracted to supervise the cleanup of an accounting disaster at the Health Services System, which runs the city's health plan, after the department's finance staff was summarily fired. Then KPMG audited its own work.

This is not to say that KPMG did not do a good job in these situations; it is to say that it does not make sense to pay the company for auditing its own work -- nor the work of KPMG Consulting, to which the auditors have financial ties.

Although the integrity of the city's accounting system is clearly imperiled by issues of nonindependence, there do not appear to be any plans afloat at City Hall to hire a new auditor, or a new software consulting firm.

So for now the questions of accounting independence will linger, and the city will continue to run up against situations like this: When SF Weekly asked the controller how much money KPMG LLP and KPMG Consulting were paid from 1996 to the present, the answer ($19 million) was three weeks in coming. The reason for the delay, according to the controller's spokesperson, was that the information had to be extracted manually from a variety of databases and correlated into a spreadsheet by hand. In other words, the city's FAMIS accounting system, designed, built, and audited by KPMG, is incapable of answering how much money the city has paid to its own accountants.