Early in the year 2000 Government initiated a program to restructure and upgrade the Internal Audit Function. The IAID was set up in June 2000 as a functionally independent government entity under the Office of the Prime Minister (OPM) with the responsibility to assist Permanent Secretaries (PS) in highlighting areas whereby the suitability of internal controls are vulnerable. The IAID's vision is derived from the Internal Audit and Investigations Board (IAIB) which is chaired by the Secretary to Cabinet of Ministers. The Board is presented with IAID's findings and if the need arises, these are discussed at Cabinet level 

Yet, Malta’s application for European Union (EU) membership and Government’s commitment to ensure transparency in its departments were the two driving forces soliciting the financial investigative function to be coordinated also by the IAID. In fact, in February 2001, the IAID was also given the responsibilities to perform the function as the sole national interlocutor of the European Anti-Fraud Office (DGOLAF) in Malta and to act also as the chairman of the Coordinating Committee to support investigations into irregularities with a possible criminal intent coming from the Police, Customs and the Attorney General, amongst others