IIA and IFAC offer governance advice

The Institute of Internal Auditors and the International Federation of Accountants have released a new report on how auditors and accountants can help with corporate governance strategies.

The report, “United, Connected and Aligned – How the Distinct Roles of Internal Audit and the Finance Function Drive Good Governance,” provides advice from 11 governance experts and thought leaders on the role that both internal audit and the finance function can play in maintaining a sound system of corporate governance.

The report highlights a number of important requirements for effective governance, including:

• An ethical corporate culture that empowers effective leaders to implement good governance processes;
• Effective communication and collaboration among the various roles; and,
• The required competencies for internal audit and the finance and accounting functions to earn support and respect from their constituents.

The IIA and IFAC have a memorandum of understanding and collaborate on projects such as this report.

“Collaboration and cooperation between internal audit and the finance function is crucial to ensuring good governance,” said IIA President and CEO Richard Chambers in a statement. “Only by recognizing their distinct roles and the value in their successful interaction can organizations fully leverage the services they provide.”

The governance experts who offered their advice for the report include leaders of both the IIA and IFAC.

“There is a deep need to pursue actions and preserve cultures that drive good governance,” stated IFAC President Rachel Grimes. “Professional accountants play a key role in governance at every line of defense, and abide by a global Code of Ethics that exemplifies the profession’s public interest mandate.”

Courtesy of IFAC

The report pointed out that, because internal audit and finance have complementary roles, their overlapping duties can help avoid gaps in corporate governance. Both internal audit and the finance function need to have champions within and outside the organization who advocate for their importance and value.

“Internal audit needs to be its own champion and work to articulate the benefits of including internal audit in the governance process,” said Chambers. Stakeholders [executive management and the board] who understand the complex interactions and relationships that influence governance are best positioned to help their organizations succeed.”