Articles Judy Warner Nov 01, 2022
The IIA has launched a nonpartisan political action committee to advocate for the profession and educate lawmakers and policymakers about internal auditing's role in business, government, and the economy.
As part of its commitment to advocate for the profession, The IIA is forming a nonpartisan political action committee. The creation of The IIA's PAC is being spearheaded by Anthony Pugliese, who when named president and CEO of The Institute in January 2021 pledged to raise the visibility and credibility of the internal audit function and the work of internal auditors.
Establishing a PAC — particularly at a time when all issues seem to be politicized and basic facts often cannot be agreed on — is challenging, but Pugliese is undaunted. He firmly believes the benefits to The IIA membership far outweigh the risks.
"I don't think we've ever been in a period of time where internal audit could be so negatively affected by unintended consequences or negatively affected by not having a strong voice in Washington," Pugliese says. "This is one of the most powerful tools in this country for advocacy by any profession."
Among the areas that The IIA is focused on in the public policy arena are policies and regulations related to protecting the internal audit profession's current self-regulatory model; cybersecurity; human capital management; privacy and data protection; environmental, social, and governance issues; and the prevention of fraud and malfeasance, he says.
IIA President and CEO
Oversight of PACs is familiar territory for Pugliese, who was previously president and CEO of the California Society of CPAs and, chief operating officer of the Association of International Certified Professional Accountants. Both the state and national CPA organizations operate PACs. During his time at AICPA, Pugliese was instrumental to the management of the AICPA Political Action Committee, which is now the eighth largest membership PAC by money raised ($1.8 million) in the U.S., according to the U.S. Federal Elections Commission.
When launched, The IIA will join the legion of nonprofits, companies, and labor unions to have funded PACs in the decades since they first emerged out of the U.S. labor movement in the 1940s. Campaign finance reform laws in the 1970s further spurred the popularity of PACs (see "PAC FAQs" below).
Pugliese says The IIA needs to be involved in politics to help shape the future of the profession and to educate policymakers and lawmakers on the important role that internal audit plays in business, government, and the economy. "If you look at the major learned professions such as doctors, lawyers, dentists, accountants, engineers, and architects, they all have PACs, but internal auditors don't," he explains. "This is one of the most powerful tools in this country for advocacy for any profession."
Today, there are more than 8,700 PACs operating in the U.S., which each year raise and distribute billions of dollars in support of or against political candidates, ballot initiatives, and legislation. Of these, 305 are membership PACs similar to that of The IIA. An important distinction about PACs is their transparency. The FEC regularly reports all money raised and disbursed by PACs, which must register with the FEC for their license to operate.
Of note, under FEC rules, only U.S. citizens and permanent residents who are members of a registered association can donate, and their annual contribution is capped at $5,000. Also capped at $5,000 is the total amount that can be given to a political candidate in a single election cycle.
Pugliese says The IIA is forming a PAC advisory committee to work under the bylaws of the PAC agreed to and authorized by The IIA's North American Board of Directors. The IIA PAC advisory committee is being constituted with a bipartisan mix of existing board members as well as volunteers, members, and IIA staff. "The bylaws and stated objectives of the PAC are key," Pugliese says. "We have to be careful that this PAC committee is comprised of people from both parties and independents who in spite of their political orientation will vote to support allies of our profession."
Working with Pugliese on the PAC's foundation is The IIA's newly established advocacy team, helmed by Mat Young, vice president for Global Advocacy, Policy, and Government Affairs. Young joined The IIA in February from a more than 20-year career in public policy-related roles. His team is already working with The IIA's U.S.-based chapters while also building recognition for the internal audit profession through group and one-on-one educational events and meetings with lawmakers and their staffs.
"Nearly all sophisticated corporations and membership associations involved in U.S. federal advocacy have PACs," Young says. "It really is a standard best practice and is seen as essential to engaging in the public policymaking process."
The IIA has retained New York law firm Venable LLC for legal counsel in standing up and operating its PAC. Venable associate David Owens and Lawrence Norton, former general counsel to the FEC, comprise part of the IIA's outside legal team. Owens explains that from a high level, the advantage of forming a PAC is that it gives association members an opportunity to pool resources to support candidates who share their values. "PAC contributions coupled with effective advocacy by The IIA help to ensure that policymakers get elected and maintain key positions and that they understand the importance of the internal audit profession more broadly," he says. "It's really just a funding mechanism for candidate support."
For Pugliese, educating The IIA's U.S. membership and its chapters about the PAC's objectives will be key to its ongoing success. "The way our political system works is you need to have some skin in the game, so to speak," he says. "We're running into new opportunities each day to explain what we do and why. The amount of pending legislation related to internal audit, corporate governance, artificial intelligence, cybersecurity, data privacy, ESG — the list really goes on and on — requires us to have a seat at the tables because we need to do what is in the best interest of our profession. That will be our guiding principle because that is our mission."
For more information on The IIA's PAC, visit www.theiia.org/pac.
In the U.S., a political action committee is a 527 organization that pools campaign contributions from eligible individuals and donates those funds to campaigns for or against candidates, ballot initiatives, or legislation. PACs are separate legal entities often affiliated with a union, an interest group, a corporation, or a professional membership association.
The Institute of Internal Auditors Political Action Committee (IIA PAC).
Under U.S. law, all PACs must register with the Federal Election Commission, demonstrate that they have applied to and received from the Internal Revenue Service an Employer Identification Number, and that there is a named treasurer. After its formation, the PAC has regular reporting requirements to the FEC to ensure it is in compliance with all relevant laws and regulations.
IIA PAC will be nonpartisan and contribute to elected officials and candidates for office who demonstrate that they are committed to advancing the interests and policy priorities of The IIA, its members, the internal audit profession, and the public interest. Each congressional cycle, the IIA's PAC Committee, under the oversight of The IIA's North American Board, will approve a giving strategy for that two-year period, and then the IIA's advocacy team will be charged with disbursing the funds over the course of the cycle.