Guiding Principles for

Effective Affiliate
Governance

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 OVERVIEW
Governance sets the foundation for an organization’s success. As the chief advocate for
the internal audit profession, The IIA aims to promote growth and development that
positively impacts its members and elevates the profession.

Recognizing the extensiveness of its global network, The IIA must continue to deploy all
the necessary efforts to ensure consistency in the message delivered to its more than
200,000 members and stakeholders. A global presence means operating in a borderless
world, where actions taken by an affiliate may adversely impact The IIA as a whole.

Good governance is fundamental to ensuring that affiliates are independent and

mission-driven, can create value, provide high-quality products and services, and
effectively represent the broad interests of their membership. Effective leadership is
central to good governance — leadership that is impartial in its actions and conducts the
business affairs of the affiliate in good faith and with accountability, competence, due
diligence, fairness, honesty, integrity, transparency and reasonability.

While there is no single set of guiding principles for professional associations, there are
well-recognized legal, ethical, and accountability principles that should be observed by
well-run and accountable associations. With that in mind, The IIA and its affiliates must
each operate under the highest principles of corporate governance, consistent within
international and national context.

This document highlights guiding principles to help affiliates build stronger governance
foundations. Recognizing and adapting these principles not only benefits affiliates, but
also various stakeholders, and ultimately the thousands of members represented by The
IIA worldwide.

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 THE PRINCIPLES
The IIA’s Governance principles are divided into three separate categories:

1. Legal Compliance and Public Disclosure

2. Effective Governance
3. Financial Oversight

Within each category, governance principles are listed as mandatory or recommended.

▪ Mandatory principles must be adhered by all affiliates. The non-adoption of any

of these principles is characterized as non-compliance with The IIA’s affiliation
requirements.

▪ Highly-recommended principles should be adhered by all affiliates although it is

understood that doing so may be not feasible due to several factors. The non-
adoption of recommended principles is not characterized as non-compliance
with The IIA’s affiliation requirements.

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 1. LEGAL COMPLIANCE AND PUBLIC DISCLOSURE
MANDATORY

1.1. Boards (which shall refer to affiliates’ elected governing councils) must adopt and
implement written policies and procedures to ensure that all conflicts of interest
(real and potential), or the appearance thereof, are appropriately managed through
disclosure, recusal, or other means.

1.2. Boards must formally adopt a written Code of Conduct with which all of their
directors or trustees, staff, and volunteers are familiar and to which they adhere.

1.3. Boards must ensure that their affiliates remain in good standing and in compliance
with all regulatory statutes applicable to the affiliate in the territory of operation.

1.4. Boards must effectively govern their affiliates and ensure full adherence and
compliance, at all times, with the terms of their applicable (governance and
administrative) agreements with The IIA.

1.5. Affiliates must ensure that the following are freely accessible to every member:
▪ Board composition
▪ Bylaws
▪ Constitution/Memorandum of Incorporation/Articles of Incorporation or
equivalent
▪ Audited financial statements

HIGHLY-RECOMMENDED

1.6 Boards should establish and implement policies and procedures that enable
individuals to come forward with information on illegal practices or violations of
affiliate policies. These policies and procedures should specify that affiliates will not
retaliate against, and will seek to protect the confidentiality of individuals who
make good-faith reports.

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 2. EFFECTIVE GOVERNANCE
MANDATORY

2.1 Elected members of the Board must serve without compensation, other than, if
needed, reimbursement for expenses incurred to fulfill their board-related duties.

2.2 Boards must ensure that their affiliates have an open and transparent nomination,
eligibility, and election process in place. Such an election process should be documented
in the affiliate’s bylaws and in accordance with the principle that only eligible individuals
should have an opportunity to stand in such an election.

2.3 Board members must act at all times in the best interest of their affiliates and not
for personal or third-party gain or financial enrichment. When encountering potential
conflicts of interest, board members should identify the conflict and, as required,
remove themselves from all discussion and voting on the matter. Specifically, members
of the board should, but not limited to:

a. Avoid placing (and avoid the appearance of placing) one’s own self-interest or any
third-party interest above that of the affiliate.

b. Provide goods or services to their affiliates as a paid vendor only after full
disclosure to, and advance approval by, the Board and The IIA (when necessary),
and pursuant to any related procedures adopted by the board.

c. Not engage in any outside business, professional or other activities that conflicts
with, and/or would directly or indirectly materially adversely affect the affiliate.

d. Not abuse their board position by improperly using the affiliate’s staff,
membership information, services, equipment, resources, property, or events for
their personal or third-party interest or gain.

2.4 Boards must meet at least semi-annually to ensure appropriate oversight of the
operations of their affiliates and maintain written minutes of their meetings to
document key actions and decisions.

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 HIGHLY-RECOMMENDED

2.5 Boards should comprise at least 5 (five) members to allow for full deliberation and
diversity of thinking.

2.6 Board members should remain in good standing with their membership at all times.

2.7 The composition of the board should include members with a diverse background
such as, but not limited to, ethnicity, race, gender, experience, industry, organization,
and financial skills necessary to advance the affiliate’s mission.

2.8 Boards should establish clear policies and procedures setting the length of terms
and the number of consecutive terms a board member may serve. The affiliate’s Top
Elected Officer (TEO) should not serve for more than 6 (six) years or a maximum of two
terms (whichever is shorter).

2.9 Boards should implement a succession plan policy and its related procedures for an
eventual permanent change in leadership either planned or unplanned.

2.10 Boards should ensure there is appropriate segregation of duties to reduce

opportunities for unauthorized or unintentional modification or misuse of the affiliate’s
assets.

2.11 Boards should develop a strategic plan, generally aligned with The IIA’s, and
periodically conduct a risk self-assessment to be more effective in achieving their
objectives and managing their related risks.

2.12 Boards should establish an effective, systematic process for educating and
communicating with board members to ensure they are continuously aware of their
legal and ethical responsibilities, are knowledgeable about the programs and activities
of their affiliates, and can carry out their oversight functions effectively.

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 3. FINANCIAL OVERSIGHT
MANDATORY

3.1 Boards must receive and review timely reports of their affiliate’s financial activities
and should have a qualified, independent financial expert audit or review these
statements annually in a manner appropriate to their affiliate’s size and scale of
operations and in line with the legal requirements of the country where their affiliates
are domiciled.

3.2 Boards must be responsible to define clear authorities for approving financial
transactions taking sufficient segregation of duties into consideration.

HIGHLY-ECOMMENDED

3.3 Boards should ensure that their affiliates operate under an approved budget.

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