State agencies and local municipalities in New Jersey should review their relationships with outside auditing firms as more than 400 have been using the same financial assessor for 10 years or more, according to a report filed last week by state Comptroller Matthew Boxer.

Along with retaining the same auditing company for extended periods of time, many state and local governments do not select their auditing firms via competitive bid.

The report also said the state’s top 10 firms and their employees made more than $1 million in political contributions in 2006 and 2007. Among the 18 auditing companies with the least amount of government clients, only one firm made a political contribution.

“Too few New Jersey governments are selecting and rotating their auditors in a way that is in the best interest of New Jersey taxpayers,” Boxer said in a press release.

According to Boxer’s findings, two government entities have been using the same auditing firm for more than 60 years, while 19 state and municipal governments have kept the same examiner for more than 40 years. Overall, more than 400 entities have yet to select a different auditor after working with those firms for more than 10 consecutive years.

“Scheduled auditor changes provide a check against lax analysis and reporting that can occur after a protracted relationship,” according to the report.

Boxer recommended selecting auditors via competitive bid every five years, if not more frequently, and replacing firms at least every 10 years. Nearly half of the 813 government entities reviewed do not use a competitive bidding process.

The comptroller also recommended that government entities refrain from hiring auditing companies that made state or local-level political contributions in the previous year.

The government entities in the report include school districts, municipalities, state and local authorities, fire districts, and higher education institutions.

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