20 September 2018

IFAC and IIA: New report outlines keys to sound governance

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 IIA and IFAC.

“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.

Full press release

Full report

© IFAC