This study attempts to demonstrate the evolution of performance auditing in Australia. The previous studies relating to the development of performance auditing (e.g., Porter, 1981; McCrae and Vada, 1997; Funnel and Cooper, 1998; Guthrie and Parker, 1999; and Wanna, et al., 2001) have used time frame to describe the development of performance auditing in Australia. However, the present study argues that the development of performance auditing in Australia has not been influenced by time, rather it has been influenced by the demand for performance auditing by the government, policy makers, managements, and the users of the information of the government entities. The development of performance auditing in the Australian National Audit Office (ANAO) was mainly forced by the changes in government functions, policies, and accountability to the people, such as New Public Management, evaluation of economy, efficient use of government resources, and effectiveness of government programs.

There has been a radical change in government activities, policies, accountability and responsibility over the past few decades. Nowadays, people have become more conscious about the government activities than before, and they have become more interested in knowing how the resources of the government are used. The governments of most countries are trying to be more transparent/accountable while using their resources and to ensure value for money to the taxpayers and make the parliament more accountable to the people. During the 1960s and 1970s, the audit and evaluation framework and related roles in the Australian Public Sector were significantly changed and clarified (Barrett, 2001). Performance auditing, in recent times, has become the subject of increasing experimentation, application and debate in the public sector of many countries, such as the UK, Australia and New Zealand (Guthrie and Parker, 1999).

This audit gets its importance because it is directed towards the performance, efficiency, thrift and productivity of public administration organs, and it covers not only specific aspects of administration, but also managerial activity, which includes organizational and managerial systems (International Organization of Supreme Audit Institutions (INTOSAI), 1977). It has generally been seen to have arisen as a response to increasing community and political concerns about value for the taxpayers' money and efficiency and effectiveness of service delivery (Guthrie and English, 1997). Similar concerns were heightened by the contemporary dominance of `economic rationalism' (Pusey, 1991) and the associated public sector philosophy in Australia labeled `managerialism' (Guthrie and Parker, 1990, 1998, 1999) and in Europe labeled `New Public Management' (Pollitt, 1995; Olson et al., 1998; and Guthrie and Parker, 1999).

Accounting Research and Audit Practices, Australian National Audit Office, ANAO, Managerial Activity, Public Administration Organs, Economic Rationalism, Government Accounting Office, GAO, Commonwealth Public Sector Entities, Sound Risk Management, Royal Commission on Australian Government Administration, RCAGA, Human Resource Management, Financial Management, Performance Management.