The Australian performance audit literature finds that individual Auditors-General have adopted completely diverse interpretations of what performance audits are and how they should be conducted. Early performance audits were concentrated more on economy and efficiency and not on effectiveness (English, 2007). The audit criteria are set up because these are the benchmarks against which PPP performance is measured. The benchmarks are the basis of performance audits and focus on effectiveness and good management (English, 2007).
However, according to Bovaird (2004), when PPPs are attempting to solve wicked problems their success cannot be restricted only to achieved efficiency or improvised performance. Their main objective is quality of service improvement in areas of major significance to citizens and other users. Thus performance indicators, which measure the success of PPPs, should be associated to this objective. Another key measure of the achievement of the PPP objectives is whether the partnership itself is working successfully. The partnership may be endangered if each party has to account publicly as to whether it is getting more out of a partnership than it is putting in. English (2007) does not agree with this, believing that everything should be made public and audits should be based on the principle of open book. Parties are held responsible and accountable for the decisions they make and outcomes they deliver.
Research conducted by English (2007) analyses the extent, focus and characteristics of ten Australian high profile PPP performance audits. According to this research, the performance audits are separated into two broad groups: systemsbased and substantive. The main characteristic of systems-based performance audits is checking for adherence to procedures mandated by audited bodies or to best practice frameworks set by Auditors-General. Substantive audits investigate the effectiveness of policy implementation in relation to core activities and the quality of service experienced by users against externally derived criteria. The substantive audits are costly both politically and in terms of time and labour necessary to conduct them.
The literature suggests that most performance audits are systems-based. Another observation that emerged from English's study is that the least audited projects are those that involve large government funding commitments (PFI-type PPPs). The achievement of VFM and risk transfer does not seem to have been investigated by Auditors-General. Also, English found that not one Auditor-General conducted an audit of a PPP on a regular basis and had not, consequently, established audit methodology (English, 2007). The focus is on the pre-contracting stage as opposed to the post-contracting stage as the development of PPPs is long and complex (English, 2005).
The following benchmarks are used extensively in the pre-contracting stage of the PPP to determine the achievement of VFM: Public Sector Comparator (PSC) and Public Interest Test (PIT). PSC is used to determine the costs and benefits of a project if it was completed by the government alone. In addition, PIT is used to evaluate the non-economic costs and benefits such as privacy, security, the impact on key stakeholders and consumer rights (English & Guthrie, 2003; Tarrant, 2007). In the literature there are arguments about the appropriateness of the use of PSC as a benchmark (English, 2005; Clifton & Duffield, 2006; Tarrant, 2007).
It appears that since 2000, Australia's Auditors-General have failed to provide adequate independent external performance audit of PPP projects. Many examples show that Australia's parliaments are providing more substantive external review of PPPs than the Auditor-General (English, 2007). Furthermore, post-contracting evaluation of PPPs has not been addressed at all, partly because these projects have not yet concluded. Consequently, future PPP projects will not be able to implement lessons learnt from past experience. In order to address this issue, a project is underway for development of a generic post-contracting evaluation model for PPPs in Australia (English, 2005).