What Is an Audit, Risk and Improvement Committee (ARIC)?
What Is an Audit, Risk and Improvement Committee (ARIC)?
Wednesday, 16 September 2026
Key takeaways
- An Audit, Risk and Improvement Committee (ARIC) is an independent advisory committee that provides assurance to a council on financial management, risk management, internal controls, governance, compliance and service improvement
- All NSW councils and joint organisations have been required to have an ARIC since 4 June 2022 under section 428A of the Local Government Act 1993
- From 1 July 2024, councils must also have a risk management framework and internal audit function that comply with OLG Guidelines and must attest to compliance in their annual reports
- ARIC membership must include independent external members with experience in audit, financial management, business management or law
- The ARIC is not a decision making body. It advises the governing body (the elected council) on whether governance, risk and financial management arrangements are adequate
An Audit, Risk and Improvement Committee (ARIC) is an independent advisory committee that provides assurance to a local council on the adequacy of its financial management, risk management, internal controls, governance, compliance and service improvement arrangements. The Office of Local Government (OLG) Guidelines prescribe the framework within which ARICs operate. Under section 428A of the Local Government Act 1993 (NSW), all councils and joint organisations have been required to have an ARIC since 4 June 2022. The committee does not make decisions on behalf of the council. It reviews, advises and provides independent perspective on whether the council’s governance arrangements are working as intended.
What does an ARIC do?
From 1 July 2024, ARIC responsibilities expanded under the Local Government (General) Regulation 2021. The NSW Audit Office Local Government 2025 report confirms that ARICs are now required to review and advise on whether financial management processes and controls are adequate, cash management policies and procedures are adequate and controls are monitored and reviewed to ensure they are operating as intended.
In practice, an ARIC typically meets quarterly and covers: internal audit reports and management responses, the external audit management letter, the risk management framework and risk register, financial statement preparation and quality, compliance with legislation and policy, fraud and corruption prevention and organisational improvement initiatives. The OLG circular on ARIC membership requirements sets out the eligibility and independence criteria for committee members.
Who sits on an ARIC?
ARIC membership must include independent external members with experience in audit, financial management, business management or law. The chair must be independent. Councillor representatives also sit on the committee but must not form the majority. The general manager attends meetings but is not a member. Internal and external auditors attend relevant items.
The independence requirement is critical. The ARIC’s value depends on its ability to provide objective assurance to the council. If the committee is dominated by councillors or officers, it cannot fulfil its independent oversight function. The NAG analysis of the OLG guidelines notes that councils have until 2027 to ensure ARIC membership complies with the updated requirements, with attestation commencing from 2027.
Why does the ARIC matter for council governance?
The ARIC is the mechanism through which councils demonstrate that they take governance, risk and financial management seriously. Without an effective ARIC, there is no independent check on whether the council’s internal controls are working, whether risks are being managed within appetite and whether the financial statements are reliable. The Statewide Mutual framework analysis described the ARIC requirement as supporting proper governance for all councils regardless of size or region.
For councillors, the ARIC provides expert advice on matters that elected members may not have the technical background to assess independently. A councillor who receives an ARIC report flagging weaknesses in the council’s cyber security controls or internal audit coverage has an independent, evidence based foundation for raising the issue with the general manager.
How can councillors and ARIC members build capability?
AcademyGlobal (AG), the Chartered Institute of Procurement & Supply (CIPS) Centre of Excellence for Australia, New Zealand and Southeast Asia, delivers programs that build governance and risk management capability. AG’s Strategic Risk Management for Councillors and Executives program is designed for elected members and senior leaders who need to understand and fulfil their governance obligations around risk. For ARIC members seeking to deepen their risk management expertise, AG’s Risk Management Fundamentals provides the structured foundation.
An effective ARIC is the difference between a council that identifies governance problems before they become crises and one that discovers them when the auditor or the media arrives.
Frequently asked questions
What is an ARIC?
An Audit, Risk and Improvement Committee is an independent advisory committee that provides assurance to a council on financial management, risk management, internal controls, governance, compliance and service improvement.
Are ARICs mandatory?
Yes. All NSW councils and joint organisations have been required to have an ARIC since 4 June 2022 under section 428A of the Local Government Act 1993. Councils can share ARICs through formal arrangements.
Who can be an ARIC member?
Independent external members with experience in audit, financial management, business management or law. The chair must be independent. Councillor representatives can sit on the committee but must not form the majority.
What changed from 1 July 2024?
ARIC responsibilities expanded to include reviewing financial management processes, cash management policies and internal controls. Councils must now attest to compliance with the OLG Guidelines in their annual reports.
Where can councillors build risk governance capability?
AcademyGlobal’s Strategic Risk Management for Councillors and Executives program builds governance capability for elected members and senior leaders.
References
1. OLG NSW, “Guidelines for Risk Management and Internal Audit for Local Government in NSW”
2. NSW Audit Office, “Local Government 2025,” July 2026
3. OLG NSW, “Integrated Planning and Reporting Framework”
4. NAG, “NSW Local Government Draft Guidelines for Risk Management and Internal Audit,” September 2021
5. Statewide Mutual, “New Risk Management Framework for NSW Councils,” November 2019