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The Development of Public Sector Audit Independence: the Colonial Experience in Western Australia

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The Development of Public Sector Audit Independence: the Colonial Experience in Western Australia School of Accounting Curtin Business School The Development of Public Sector Audit Independence: The Colonial Experience in Western Australia Michelle Leanne Bunn This thesis is presented for the Degree of Doctor of Philosophy of Curtin University January 2017 DECLARATION To the best of my knowledge and belief this thesis contains no material previously published by any other person except where due acknowledgment has been made. This thesis contains no material which has been accepted for the award of any other degree or diploma in any university. Signature:…………………………………………. Date:………………………... i ABSTRACT This thesis makes a connection between the histories of public sector audit and those of Parliament and public administration.1 In so doing, it reveals important findings that provide a precedent for retaining the independent Auditor General as a fundamental requirement of Australia's Westminster-based constitutional arrangements, and which are essential for enabling an informed defence against potential erosion of effectiveness. As a secondary purpose, this study also substantially contributes to filling significant gaps in the specific history of the Auditor General’s role in Western Australia between 1829 and 1891, using new data identified in archival official correspondence and other original source material. How and why the principles of independence in public sector audit came to be seen as essential for democratic accountability are questions that have received limited attention from scholars, even though the field of accounting and auditing history (in both the public and private sectors) has many ongoing discussions and a wealth of already-published research. Nineteenth-century public sector auditors in Britain and in the Australian colonies were understood to provide essential controls in managing public finances, but they operated as an arm of Executive government. It is the nineteenth-century transition of the Auditor General from an Executive functionary to an independent officer of Parliament that is of interest here. Appointing an independent Auditor General provided a crucial strengthening of Parliament's historically-claimed constitutional power over the Executive. In providing a new narrative description of the development of audit independence in a Westminster jurisdiction, this thesis delivers a foundational understanding to inform improvements in policy and legislative development and to substantially add to Australian and international discourse around the constitutional framework within which the Auditor General works as an independent officer of Parliament. 1 The formatting used throughout this thesis is in accordance with Curtin University requirements and APA style. The words "Parliament" and "Executive" and their derivatives are generally capitalised as they refer to political entities of significant relevance to the arguments here around democratic governance. The non-hyphenated form of "Auditor General" is used (except in a few instances where the hyphenated form is specific to a particular jurisdiction or quote) as it is the one used by the Office of the Auditor General in Western Australia and was the usual form in nineteenth-century documents. ii ACKNOWLEDGEMENTS Micah 6:8: "And what does the LORD require of you? To act justly and to love mercy and to walk humbly with your God". Completing this thesis would have been impossible without the advice, support and encouragement provided by many people. I have been especially blessed with my supervisors, Professor David Gilchrist and Associate Professor Robyn Pilcher. Their enthusiasm for the value of this work was a continual encouragement, especially in the times when I could not see that value myself. As an added bonus, they helped make the journey fun—a rare achievement with a topic such as this! David Gilchrist showed me this journey was possible and his insight assisted in maintaining a real focus. Robyn Pilcher's attention to academic rigor was essential for a work of quality and it was a constant pleasure to share our passion for the well-written word. My appreciation also goes to the Chairperson, Professor John Evans, for his support towards the completion of my thesis. My interest in public sector administration and political accountability stems from my work with Maxine Murray, an inspirational role-model. My friends (you know who you are): thank you for your understanding, for staying away when I needed to concentrate and for being there when I needed to escape. My parents: Dad, Laurie, taught me to never be afraid of "having a go" and of asking questions. Mum, Wendy Anne, always encouraged my love of learning, knowing that education is a tool for empowerment in a world that all too often does not value women's work. In the last months of her life, Mum helped me to recognise what is really important and gave me the courage to take the first step of this journey. My children, Rin and Tash: thank you for truly believing I am more amazing than a flying porpoise, and for all your motivating notes, cups of tea and hugs as we "did uni" together. Most of all, I thank Len: for your patient listening, your constant assurance and your unwavering support, expressed in so many ways—and always. iii TABLE OF CONTENTS Page DECLARATION ........................................................................................................ i ABSTRACT ................................................................................................................ ii ACKNOWLEDGEMENTS ...................................................................................... iii TABLE OF CONTENTS .......................................................................................... iv LIST OF APPENDICES ....................................................................................... viii LIST OF TABLES ................................................................................................. viii LIST OF FIGURES ............................................................................................... viii LIST OF ABBREVIATIONS ................................................................................. ix RELATED THESIS PUBLICATIONS ................................................................. ix CHAPTER 1 INTRODUCTION AND OVERVIEW OF THE STUDY ......... 1 1.1 Introduction and background .............................................................................. 1 1.2 Research scope ................................................................................................... 2 1.3 Research questions ............................................................................................. 4 1.4 Significance of research ...................................................................................... 4 1.5 Organisation of thesis ......................................................................................... 7 1.6 Limitations .......................................................................................................... 9 1.7 Concluding remarks .......................................................................................... 10 CHAPTER 2 LITERATURE REVIEW ........................................................... 11 2.1 Introduction ...................................................................................................... 11 2.2 Theme one: identifying the under-representation ............................................. 12 2.3 Theme two: teleological descriptions of Auditor General independence ......... 14 2.4 Theme three: modern contextual analysis ........................................................ 19 2.5 Concluding remarks .......................................................................................... 23 CHAPTER 3 METHODOLOGY AND THEORETICAL APPROACH ...... 25 3.1 Introduction ...................................................................................................... 25 3.2 Methodological considerations ......................................................................... 26 3.3 Theoretical framework ..................................................................................... 27 3.4 Research design and scope ............................................................................... 29 iv 3.4.1 Research phase one: data collection .............................................. 30 3.4.2 Research phase two: data analysis ................................................. 36 3.5 Ethical concerns ................................................................................................ 37 3.6 Risk assessment ................................................................................................ 37 3.7 Chapter summary .............................................................................................. 38 CHAPTER 4 POLITICAL POWER AND THE PUBLIC PURSE ............... 39 4.1 Introduction ...................................................................................................... 39 4.2 Historical overview: Britain ............................................................................. 40 4.2.1 Data analysis: effectiveness of parliamentary actions affecting public sector audit ........................................................... 41 4.3 Public finance and political struggle ................................................................ 43 4.3.1 Public finance and political struggle: pre-1600 ............................. 43 4.3.2 Public finance and political struggle: post-1600 ..........................
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