Degree Name

Doctor of Philosophy


School of Accounting and Finance, Faculty of Commerce


Economic pressures over the last three decades have encouraged governments in western style capitalist countries to change the ways in which governance is provided. The adoption of public choice theories has encouraged governments to divest themselves of many activities to concentrate resources on policy formation and implementation. The application of economics principles, that suggest efficient resource allocation is best attained by competitive markets, has meant that management tools derived from the private sector have been presumed to be equally appropriate for use in government. This presumed market superiority has created a conflict between the underlying public interest motivation of government and the profit motivation of private sector providers of goods and services. Using largely a historical perspective, the thesis examines economic, political, social and administrative factors in the commtmity and government that provided impetus for public sector reforms in Australia in the 1980's and 1990's. That the concern for the public interest is constantly challenged by political expediency, power struggles and the persuasive forces of profit seeking interest groups is analysed using an institutional theory perspective. This thesis is concerned with the implications of government reforms in Australia for government accountability mechanisms, in particular, public sector audit. The increasing use of private sector modes of accotmting and auditing in the public sector has resulted in public sector audit moving away from the role it has traditionally served. In Victoria, this movement has affected the ability of the auditor-general to provide a quality audit function to ensure the accountability of government to the people. The damage to public sector audit quality is shown to be a progressive process. Quality continues to be eroded as procedures and practices of auditing become more generic. The radical government reforms introduced into the Australian State of Victoria, between 1992-1999 imder the Keimett Government, are critically reviewed to demonstrate the extent to which a dominant executive govenmient can undermine government accountability mechanisms, in particular audit. Despite attempts to legitimise the corporatisation (and planned privatisation) of the public audit function, the moves to undermine the role of public sector audit in Victoria were met with condemnation by the public, academics, government and business. Although the reputation of private sector auditing continues to suffer from an 'expectations gap', primarily as a consequence of impaired audit independence, the continued hegemony of private sector business practices continues unabated. The Victorian experiment to radically alter the public audit function, now partially reinstated, provides insights into how the role of public audit may yet evolve should the governments in Australia continue down the current path of economic rationalism.

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Unless otherwise indicated, the views expressed in this thesis are those of the author and do not necessarily represent the views of the University of Wollongong.