Letters to the Editor

Week of July 3,2002

Balancing the Account

The controller responds:As I told your reporter, I was not going to interrupt my work on the city's budget to respond to your four-page list of 36 questions related to the city and KPMG. Now that the Board [of Supervisors'] Budget Committee completed its work, I have some comments on your article ("Sleeping With the Auditor," June 26).

The FAMIS system:As you noted in your report, the FAMIS accounting system was chosen from a competitive bid process in 1994. It allowed us to change from a centralized, batch process to a distributed, online, real-time system, which saved the city millions of dollars and allowed our vendors, including many nonprofit service providers, to be paid more quickly.

Does it do all the things we would like? No, but I'm not sure any system would. Why don't we replace it? Well, among other reasons it would cost more than $10 million to do so in a time when we are threatened with cuts to our public health system. The technology budget for this year is being used to automate still manual processes and replace much older systems in human resources, public safety, and tax collection -- I can hardly put my relatively new system ahead of these other important areas.

And FAMIS does everything required of a governmental financial accounting system. It is the system currently in place in more than 50 major local governments in the U.S.

And you failed to note that the FAMIS system is no longer owned by KPMG.

KPMG auditors: The city selects its auditors typically every five years through a competitive process. We intentionally separated the audit work into 11 parts so small and medium-size firms could get part of the business. There are now eight audit firms issuing our financial statements.

To avoid any conflict, the audit of the controller is actually budgeted in the Board of Supervisors budget, and they select the auditors -- I don't. Under the charter, the board has an Audit Committee which has a direct line of communication with the auditors.

I am quite comfortable that our relationship with our auditors is fully independent and could withstand scrutiny by any professional or reputable agency.

Controller's staff:Your reporter says that I "insulated" myself by "requiring" my staff to sign off on invoices and other items. That is truly insulting to the long-term, trusted managers in my office to whom I have delegated authority to handle these and many other activities. As the controller, I expect some level of your type of reporting. Subjecting my staff to it is not OK.

Expenses:Your reporter noted he had found bills for what he considered to be extravagant expenses which exceed the per diem amount in our agreement with KPMG. I should note that no expenses are allowed on the audit contracts -- only on consulting. We typically collect all of the expense receipts to see actual spending -- but we limit our meals and lodging reimbursement to the federally approved per diem amount. If your reporter had looked at the cover sheet on these invoices he would have noted the per diem limits in effect. However, other city agencies use KPMG's services under our master contract. As with all other distributed processes, we do not pre-audit invoices approved by other agencies. Your sidebar mentioned a number of billings related to a project done for Muni. We are now reviewing those invoices -- should anything exceed contractual limits, future billings will be corrected to recover funds.

My involvement with KPMG: From 1980 to 1984 I worked for Peat Marwick -- a predecessor firm to KPMG LLP. I have not had a professional or financial involvement with KPMG LLP in over 18 years.

Again, I believe the city's relationship with its auditors has met and continues to meet all ethical and professional standards.

Edward M. Harrington
San Francisco

Peter Byrne responds:Although KPMG Consulting recently sold the FAMIS trademark, the firm's contract to maintain and upgrade San Francisco's FAMIS system runs through at least June 30, 2003.

Copies of KPMG Consulting's expense reports cited in the story show that the expenses were fully approved for reimbursement by Evangeline Bruce, director of the Accounting Operations and Systems Division at the Controller's Office.

Director's Cut

A bad Sayles job: Can it be that your movie critic doesn't know who John Sayles is? I can't imagine reviewing a new John Sayles movie (Sunshine State, Film Capsules, June 26) and not mentioning that it is a new John Sayles movie. I would go to see a John Sayles movie without knowing anything else about it. And describing it as "Altman-esque" for combining different story threads is a little insulting, as Sayles does that very well on his own.

John Swanda
Richmond District

Privates Lesson

Real drag: In order to be a drag queen, one positively must have the following two attributes: 1) an overstimulated sense of how to accessorize, and 2) a penis. Mink Stole, talented actress that she is, does not possess either of these things (Night & Day, June 12, which previewed the play Sleeping With Straight Men, starring Stole). Thus, she cannot be a drag queen. Divine was a drag queen. Ricki Lake was not a drag queen. RuPaul is a drag queen. John Paul II is not a drag queen. (He has been seen in public wearing white between Labor Day and Easter. Not done.) Patrick Swayze played a drag queen. Uncle Miltie did not (see requirement No. 1 above). Is that clear? Good. See that it doesn't happen again.

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