With the passage of S.L. 2007-424 (HB 1401), the NC General Assembly enacted the North Carolina Internal Audit Act. The findings and recommendations of the State Auditor’s September 2006 report, Internal Auditing in State Agencies and Institutions, formed the impetus for the legislation. Internal auditing was one of six areas of deficiency selected for scrutiny by the General Assembly’s second Government Performance Audit Committee (GPAC) initiative. The Committee engaged MGT of America, Inc., a management and research consulting firm, to conduct an assessment of North Carolina state government’s internal auditing practices and to develop an audit program. As a result, HB 1401 authorized an internal audit protocol for state agencies, the judicial branch, the University of North Carolina, and the Department of Public Instruction. The Act applies to state agencies that have budgets exceeding $10 million, more than 100 full-time equivalent employees, or process more than $10 million in cash in a fiscal year. A Council of Internal Auditing headed by the State Controller oversees requirements and standards for the auditing programs that are in compliance with guidelines issued either by the Institute for Internal Auditors or the Comptroller General of the United States. The Office of State Budget and Management supports the work of the Council.