Fired UCSF dean says review backs his claim of irregularities

An outside accounting firm had trouble reconciling financial statements of the medical school dean’s office at UC San Francisco, saying in a report released Monday that the university needed to improve some of its financial reporting methods.

The finances of the School of Medicine have been in dispute since the December firing of Dean Dr. David A. Kessler, who complained repeatedly about alleged financial irregularities. Kessler, formerly commissioner of the U.S. Food and Drug Administration, said his dismissal was prompted by his complaints.

The findings by accounting firm KPMG appeared to support Kessler’s contention that there was a lack of transparency in the medical school’s finances.

“The KPMG review substantiates that there were financial irregularities for closed fiscal years and a lack of financial controls,” Kessler said.

Campus officials strongly disputed his interpretation. Eric Vermillion, the university’s associate vice chancellor for finance, said KPMG confirmed that the dean’s office had more-than-adequate funding and that there were no improprieties. The school of medicine is “in the strongest financial position it’s been in ever,” he said.

A KPMG spokesman said the firm could not comment because of client confidentiality. The firm’s 31-page report said the financial schedules prepared by UC San Francisco did not appear to include all of the financial activity of the dean’s office. It also found that the methodologies used by the university could not be reproduced and that its financial schedules could not be reconciled with the university’s general ledger. KPMG did not audit the underlying figures.

KPMG recommended that the university develop “an automated reporting capability” to reconcile its financial statements and its general ledger.

Vermillion said the university had been working to improve its financial systems since fall 2005.

He said the differences between the financial reports and the ledger were minor and did not affect the overall standing of the school.

The dispute between Kessler and UC San Francisco goes to the heart of the highly ranked medical school’s ability to remain competitive. The money set aside for the dean’s use allows the school to recruit prominent faculty members, augment educational offerings and launch research. Far more of the medical school’s budget is disbursed through individual departments, which KPMG did not audit.

charles.ornstein@latimes.com