The audit culture which has developed in public universities has led to counter-productive outcomes. Managerial oversight of academic work has reached a critical tipping point. Extensive auditing of research output by means of performance management assessment regimes motivated by a New Public Management mentality has damaged individual scholarship and threatened academic freedom. Such assessment regimes are perverse and conducive to the development of psychotic tendencies by universities. It is important to understand the effects of a perverse audit culture when re-thinking and reforming approaches to university performance management. We suggest ways for public universities to acknowledge the need for accountability while remaining true to core academic purposes.