PRIVATISATION AND THE SOCIAL ROLE OF AUDIT.

The purpose of this paper is to provide a framework within which the audit function can be fulfilled. The framework evolves from a study of the effects of privatization anticipated by the economics literature. Privatization refers to one or more of the following activities, namely, the transfer of assets, service provision or elements of decision taking from the public sector into private hands. For the politically inclined it is a subject which tends to invoke instinctive reactions of support or rejection. To British economists it has provided ample opportunities for academic analysis of the issues. This paper is founded in the economic issues. It identifies three privatization measures with which the economics literature associates, largely a priori, both positive and negative effects. Type 1 privatization is concerned with the transfer of state owned monopolies to the private sector, type 2 is concerned with the transfer of service provision to the private sector under conditions of competitive tendering and type 3 with the transfer of elements of decision taking from government to individuals.