Internal controls and governance help agencies achieve their outcomes by supporting effective operations, reliable financial reporting and legal compliance. This report provides insights from the financial audits of 26 major New South Wales (NSW) public sector agencies, focusing on the effectiveness of their internal controls and governance. It presents observations across key elements of these frameworks.

The report recommends that agencies strengthen controls and processes across three key areas: procurement frameworks, adoption of artificial intelligence and cyber security controls.

Key findings

• Internal control findings have decreased.
• IT controls need to improve. Five high-risk findings were reported, all related to ineffective IT controls.
• Deficiencies in procurement practices. Agency procurement practices show deficiencies in policy alignment, capability and oversight.
• Agencies can better integrate artificial intelligence (AI) into their existing governance and strategy arrangements.
• Cyber security control deficiencies expose supply chains to vulnerabilities and undermine investment effectiveness.
• 33% of reported audit issues were repeat findings.
• 29% of agencies that have implemented AI have a supporting strategy in place.