The audit that has held up San Diego’s attempts at financial recovery for three years has been completed, the Mayor’s Office just announced.

The release moves the city one step closer to regaining its credit rating and its access to public loans on Wall Street. City officials have said they expected the remaining backlogged audits to fall in line relatively quickly following the release of the fiscal year 2003 audit, clearing the way for the city to borrow funds for its pension system, upgrade its water and wastewater systems and other liabilities.

Auditing firm KPMG was hired in April 2004 to bless the city’s 2003 financial statements. Later that year, one of the three credit rating firms suspended the city’s credit rating because of concerns regarding the veracity of the city’s reports to investors.

The city has since waged a costly and oftentimes frustrating battle to release its financial statements, employing two separate firms at the cost of $26 million over the course of three years to conduct independent investigations into allegations of wrongdoing. The final investigation alleged that eight former city staffers had likely committed securities fraud and that elected officials had knowingly broken the law.

In November, the city settled with the Securities and Exchange Commission. The settlement stated that the city had committed securities fraud for failing to disclose looming liabilities in its pension system and retiree health care.


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