Distinct Roles of Internal Audit & Finance Function Provide Crucial Support
September 18, 2018
Published: The Institute of Internal Auditors (IIA)
Effective governance is the outcome of a mosaic of organizational policies, processes, and cross-functional interactions, according to experts featured in a new report from The Institute of Internal Auditors (IIA) and IFAC (the International Federation of Accountants).
“United, Connected and Aligned – How the Distinct Roles of Internal Audit and the Finance Function Drive Good Governance,” takes the pulse of 11 governance experts and thought leaders to examine the crucial roles both internal audit and the finance function play in maintaining a sound system of corporate governance.
The report identifies several key requirements for effective governance, including:
– An ethical corporate culture that empowers effective leaders throughout the organization to carry out good governance processes;
– Effective communication and collaboration among the various roles; and
– Requisite competencies for internal audit and the finance and accounting functions to earn stakeholder support and respect.
The governance experts who shared their knowledge and experiences include the leaders of the international professional associations that produced the report.
“Collaboration and cooperation between internal audit and the finance function is crucial to ensuring good governance,” said IIA President and CEO Richard F. Chambers, CIA, QIAL, CGAP, CCSA, CRMA. “Only by recognizing their distinct roles and the value in their successful interaction can organizations fully leverage the services they provide.”
IFAC’s President also stressed the benefit of the relationship.
“There is a deep need to pursue actions and preserve cultures that drive good governance,” said Rachel Grimes, IFAC President. “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.”
The report notes that, because the two functions have complementary roles, their overlapping duties may help to avoid gaps in governance. Importantly, the experts demonstrate the need for both internal audit and the finance function to have champions within and outside the organization who advocate for their importance and value.
Chambers added, “Internal audit needs to be its own champion and work to articulate the benefits of including internal audit in the governance process. Stakeholders [executive management and the board] who understand the complex interactions and relationships that influence governance are best positioned to help their organizations succeed.”
“United, Connected and Aligned – How the Distinct Roles of Internal Audit and the Finance Function Drive Good Governance” represents an important collaboration between IFAC and The IIA, whose members represent a significant and vital segment of professionals who contribute to good governance. The organizations have a long, mutually supportive relationship, which includes a Memorandum of Understanding that promotes collaborative works and serve on each other’s boards and committees.