The Department of Foreign Affairs is to hire external consultants to see if current financial procedures practised by Irish Aid "are fit for purpose".
Irish Aid manages a budget of over €500m annually, which is distributed to developing countries across the world.
The review follows the misappropriation of €4m of Irish Aid funding in Uganda last year.
The misappropriation to unauthorised accounts has since been re-reimbursed. However, the episode sparked calls for greater accountability.
Yesterday, chairman of the Oireachtas's Public Accounts Committee Deputy John McGuinness (FF) said that there are weaknesses in relation to Irish Aid's accountability.
Mr McGuinness pointed out that "the misappropriation of funds was identified by the auditor general in Uganda".