What happened in Milwaukee is becoming the norm. "With the reduced number of firms and with the reduced fees that governments are willing to pay," says Relmond Van Daniker, of the National Association of State Auditors, Comptrollers and Treasurers, "it's very difficult to encourage a large number of big audit firms to do government audits."
Milwaukee County did what it could to open up the bidding, eliminating its non-succession clause to allow its current auditor in the game and switching over to a five-year contract. Jerome Heer, the county auditor, says his biggest concern was how his move to a regional firm would look to investors in New York and elsewhere. "We did have that moment of pause about not having a Big Four opinion," Heer says.
But Heer found that auditors across the country no longer believe that hiring a brand-name firm is a must, particularly in the wake of the Arthur Andersen scandal. David A. Fucio, who tracks the bond market for JPMorgan Fleming Asset Management, says that investors are typically less nervous about financial accounting for governments than they would be for bonds issued by corporations.
