Internal Control is an integral component of an organisation’s management processes which is established in order to provide reasonable assurance that the operations are carried out effectively and efficiently, that financial reports and operational data is reliable, and that the applicable laws and regulations are complied with so as to achieve organisational objectives. A review of internal controls of the Medical Education Department in Andhra Pradesh during the years 2002-07 has shown that there was lack of discipline in Budget preparation, weak expenditure controls, poor implementation of Central/State financed schemes and disregard for the codal provisions as well as the instructions issued by Government/Director of Medical Education (DME). Internal Audit was ineffective. Overall, these adversely affected the quality of medical care to public and medical education to students.