REPORTS

2015 Financial Discussion and Analysis

As The IIA reviews its 2015 fiscal position, it is pleased to outline the financial performance that supported the aforementioned achievements.

For the 12 months ending December 31, 2015, total revenue was $55.9 million for The Institute of Internal Auditors, Inc., and related entities (IIA). That represented an increase of $6.8 million (13.8%) from 2014. The Change in Net Assets (net contribution) was $2.9 million in 2015, a decrease of $2.1 million (42.3%) from 2014.

In 2015, The IIA experienced revenue growth in all major operating areas highlighted by a 25.6% increase in Certification revenue, a 17.4% increase in Educational Program revenue and a 8.3% increase in Membership revenue.

The growth in Certification revenue in 2015 was mainly due to IIA–China converting from paper-and-pencil exams to computer-based testing. The conversion allowed The IIA to directly collect exam application and registration fees from China-based candidates. The growth in Educational Program revenue was the addition of the 2015 International Conference, hosted by the Canadian Institute of Internal Auditors and held in Vancouver, British Columbia, Canada. The Conference was recorded as a full program of revenue and expenses, whereas the 2014 International Conference was recorded at net contribution. The International Conference generated revenue of $3.2 million before operating expenses. The growth in Membership revenue is mainly a result of membership dues increases implemented in 2015 and 2014 to fund key initiatives, programs, and services.

As a result of the strong financial performance, The IIA ended 2015 with $13.9 million in cash and cash equivalents. That represented a year-over-year increase of $1.6 million (13.0%). During 2015, $5.0 million in excess daily operating cash was moved into long-term investments, bringing the two-year (2014–15) total to $7.0 million of excess daily operating cash moved to long-term investments. As result of a change to its banking relationship, The IIA in 2014 closed its $2 million line of credit with CNL Bank. The line of credit was intended to fund any short-term cash-flow shortages.

During 2015, The IIA continued its practice to re-invest prior year net contribution into improving the products and services offered to it members. In 2015, The IIA invested $1.2 million into capital-related projects, bringing the two-year (2014–15) total investment to $2.6 million.

The IIA’s investment portfolio in 2015 increased from $32.7 million to $37.9 million as a result of $5.0 million moved from excess daily operating cash, $1.7 million investment interest, dividend income and capital gains received, and the recording of a negative $1.4 million mark-to-market adjustment. Overall, the investment portfolio has performed consistent with expectations given the more conservative nature of an investment policy implemented in 2011.