12/8/2009 UC hires audit firm to review UCSF bu…

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UC hires audit firm to review UCSF

budget
Erin Allday, C hronicle Staff Writer
Tuesday, December 8, 2009

The UC system has agreed to hire

PricewaterhouseCoopers to conduct a financial
review at UCSF, after a U.S. senator raised concerns
about allegations of money mismanagement and
university officials making misleading statements to
state leaders.

The allegations came from Dr. David Kessler, who was fired from his job as dean of the UCSF School of
Medicine in 2007. Kessler had repeatedly questioned what he said were "financial irregularities" in the
dean's office budget.

In a letter to UC President Mark Y udof on Monday, Sen. Charles Grassley, R-Iowa, wrote that he's
pleased that UC has agreed to an outside audit at UCSF, but noted several "troubling matters" at the
university. He said UCSF administrators appear to have provided "misleading" statements to the
California Senate.

"The medical school at UCSF receives hundreds of millions of taxpayer dollars every year from various
federal agencies," wrote Grassley, who serves on the Senate Finance Committee. "If there is any
question about the integrity of the finances at UCSF, I am worried that similar problems regarding
taxpayer dollars may also exist at other campuses within the UC system."

The Pricewaterhouse review will focus on internal finance controls relating to certain federal regulations,
so the review may not address Kessler's specific allegation.

In a statement, UCSF confirmed that it has agreed to use Pricewaterhouse for a financial review. "This
review reflects our continuing and extensive cooperation with Sen. Grassley with respect to UCSF's
stewardship of federal research funds," the statement said.

Kessler, whose firing is under administrative review, declined to comment on Grassley's letter or the
Pricewaterhouse review.

His allegation relates to the dean's discretionary funding budget, which he has said was millions of
dollars less than what he'd been promised when he was hired in 2003. He conducted his own financial
analysis in December 2004 and said he found an $18 million annual discrepancy.

UCSF conducted two internal reviews, both of which found no financial irregularities. The university
then hired private accounting firm KPMG to confirm the internal findings. KPMG's report stated it was
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12/8/2009 UC hires audit firm to review UCSF bu…
not able to replicate the methodology used by the internal analysts for their reviews.

But Grassley said in his letter that former Chancellor J. Michael Bishop told state leaders that the KPMG
report "verified" certain findings in the internal reviews. "Chancellor Bishop made what appears to be
several inaccurate and/or misleading claims about KPMG's work," Grassley wrote.

E-mail Erin Allday at eallday@sfchronicle.com.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/12/08/BADN1B0KBC .DTL

This article appeared on page C - 3 of the San Francisco C hronicle

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