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The System of Internal Control

What is a system of internal control, what is an ‘appropriate’ system of internal control, and how is the effectiveness of a system of internal control assessed?

As internal control experts, internal auditors may be called upon to provide advice on an organisation’s system of internal control to management, the audit committee, or both. In particular, audit committees in Australian Government agencies subject to the ‘Public Governance, Performance and Accountability (PGPA) Act’1 are required to review “the appropriateness of the…system of internal control”.

This White Paper is intended to provide guidance to internal auditors on:

  • what a system of internal control is.
  • what constitutes an ‘appropriate’ system of internal control.
  • how to assess a system of internal control.