We investigate an extension of the formalism of interpreted systems by Halpern and colleagues to model the correct behaviour of agents. The semantical model allows for the representation and reasoning about states of correct and incorrect functioning behaviour of the agents, and of the system as a whole. We axiomatise this semantic class by mapping it into a suitable class of Kripke models. The resulting logic, KD45ni-j, is a stronger version of KD, the system often referred to as Standard Deontic (...) Logic. We extend this formal framework to include the standard epistemic notions defined on interpreted systems, and introduce a new doubly-indexed operator representing the knowledge that an agent would have if it operates under the assumption that a group of agents is functioning correctly. We discuss these issues both theoretically and in terms of applications, and present further directions of work. (shrink)