The following is a conceptual study that seeks to bring together the Innovation System concept and the internal audit profession to develop a universal and transferable audit framework that aims to test organizational compliance against established internal controls and audit criteria. For this study, the literature surrounding innovation systems was reviewed in order to uncover internal controls within the system that public sector organizations such as governments are responsible for implementing. Findings from the literature review were then validated through consultation with innovation leaders in the Canadian federal government; they also 'contextualized' the findings within the Canadian federal public sector. Additional internal controls and audit criteria were identified through a content analysis of a sample of 11 internal audits conducted by Government of Canada departments and agencies. The internal controls derived from these sources were the basis for developing audit criteria that could be tested for each of the internal controls respectively. The Innovation System internal controls identified within this study were governance, monitoring, strategic decision-making, and oversight; stakeholder/actor interactions and knowledge and information exchange/flows; supporting policy and funding; incentives for private investment and adoption of innovation; and intellectual property rights. A total of 60 audit criteria were created and included in the comprehensive audit framework at the end of this study.