S T AT U T E OF THE INSTITUTE OF INTERNAL AUDITORS OF MONTENEGRO. Article 1

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1 Pursuant to Article 11 of the Association Act (Official Gazette of ROMN, No 27/99, 09/02, 30/02 and Official Gazette of MN No 11/07), Inaugural Assembly of the Institute of Internal Auditors Montenegro, held in September 04 th 2009 adopted S T AT U T E OF THE I GENERAL PROVISIONS Article 1 This Statute regulates provisions regarding name, headquarters, representation, objectives, and activities which facilitate achieving objectives, public nature of work, its members and their membership fee, members' rights and obligations, internal organization, bodies, their organization, competence, manner of decision-making, conditions and manner of election and recall, term of office duration, responsibilities given to members, assets and disposal of prospective profit, asset acquisition; winding up and further activities relating to assets providing the winding up of the Institute of Internal Auditors Montenegro (hereinafter the Institute). Based on its operating principles, objectives and tasks, the members of the Institute are also the members of IIA (the Institute of Internal Auditors) and the Institute may become a member of ECIIA (European Confederation of Institute of Internal Auditors). Article 2 Name of the association: the Institute of Internal Auditors Montenegro Abbreviated name of the association: IIAMNE. The headquarters of the Institute: Podgorica, Vranjske Njive bb. Tel/fax: +382(0) ; mob

2 Article 3 The Institute is a non-profit legal entity. Article 4 The Institute has a seal. The seal of the Institute is round shaped, 3 cm in diameter containing the following text along its rim: Institut internih revizora Crne Gore (the Institute of Internal Auditors Montenegro), with the Institute s logo along its rim. Article 5 The Institute is presented and represented by its president. The Assembly can extend authorization to other representing persons. II OBJECTIVES, TASKS AND ACTIVITIES OF THE INSTITUTE Article 6 Principal objectives and tasks of the Institute are the following: Development of the internal auditing profession in Montenegro, Setting up and maintaining internal auditing profession standards and standards for the evaluation of the quality of the internal auditing organization, Professional development and certification of internal auditors, Organization of specialized member meetings with the purpose of getting acquainted with the internal auditing work practice and its existence in different countries worldwide, Promotion of internal auditors, that can assist in development of the profession, Promotion of professional internal auditing work practice to all interested parties, Researching, informing and promoting knowledge and information on internal audit, internal controls, internal control system and related topics, 2

3 Recognizing and informing its members on internal auditors professional code of ethics, internal audit standards, information, knowledge, experience and views of IIA and ECIIA, Liaising the Institute and maintaining relations with other professional associations in Montenegro with the purpose of exchanging knowledge, information and experience on internal audit, Including as many members as possible into the Institute's working practice, maintaining an appropriate professional level, work continuity and development of the Institute, Appropriate communication between the Institute and its members in order to provide answers to all its members' needs, Providing financial stability and technical conditions needed for the Institute's working practices. Article 7 Activities of the Institute are related to its objectives and tasks: Maintaining internationally approved program for internal auditors' education, Organization of internal auditors' education by providing quality and accessible, professional development programs for current and future needs of its members and the profession as well, The Institute can, for its own needs, organize a separate organization for providing educational services and organizing different forms of professional development, Cooperation with other professional organizations in providing professional development program, Strengthening the cooperation with related professional organizations in Montenegro and abroad, Creating and distributing educational material through different media for the purpose of continuous education of our members and the profession itself, Encouraging and supporting secondary schools and faculties in developing internal auditing courses, Developing international cooperation programs and involving professional associations in Europe and the world into its working activities, Publishing books and magazines on internal auditing topics as well as related professional disciplines, Informing the public on its work. 3

4 Article 8 The activities of the Institute are public. The public nature of its work is implemented through methods determined by this Statute, appropriate and timely reporting of its members on the Institute's working activities and significant events, written reports, on specially organized gatherings or in any other appropriate way, by means of public announcements etc. III MEMBERSHIP IN THE INSTITUTE Article 9 Any physical or legal entity can become a member of the Institute providing they accept this Statute and the Institute's rules of work. Article 10 One becomes a member of the Institute by registering into the register of members administered by the secretary. Members of the Institute may have different status and obligations: Full-Term Members, Lecturing Members, Student Members and Retired Members. Full-Term Members are individuals engaged in activities of the internal auditing, internal controls, risk assessment, IT audit and other related areas. Additionally, all entities interested in the area of internal audit, such as members of the audit committees, certified accountants, controllers, external auditors, executive managers, general managers etc. may also become full-time members of the Institute. Lecturing Members are individuals mainly engaged as lecturers and teachers in secondary schools and at the university. Student Members are individuals that dedicated majority of their activities to studying internal audit or related fields at universities and secondary schools and that cannot be qualified as Full-Time Members of Lecturing Members. Retired members are individuals that meet the membership requirements, but are retired. 4

5 Article 11 The decision on the Institute's member approval is enacted by the Institute s Managing Board upon receipt of the membership application. The decision on approval of the status of an Honorable Member is enacted by the Assembly on the proposal of the Managing Board of the Institute. The Institute maintains a register of the members. The Managing Board decides on the form, the content and the manner of maintaining the Register. Article 12 Managing Board of the Institute decides on the amount of the annual membership fee for all types of members. Members' rights and obligations are: Article 13 Settlement of due membership fees, Participation in the work and activities of the Institute with the purpose of developing the internal auditing profession, Participation in the management of the Institute operations, Promotion and improvement of the reputation of the Institute, Strengthening of the Institute's financial base and creating conditions for a continual growth. Article 14 Membership in the Institute ceases by: Voluntary withdrawal, Failure to settle the due membership fees, Exclusion, Transfer to an another association or institute. The member is automatically deleted from the Register of the Institute's members without any special decision if the member fails to settle the due membership fee throughout the end of a year for the current year. Any excluded member or a member that voluntarily 5

6 terminate the membership in the Institute is obliged to settle the membership obligations due as of the day of termination of the membership. The decision on the Institute's member exclusion is enacted by the Management Board. The excluded member has a right to file an appeal to the Management Board within 15 (fifteen) days from the day of the receipt of the Decision. The management Board is obliged to settle the appeal on its first session following the receipt of the appeal. The Management Board decision on the exclusion is final. Article 15 The Institute may enter an alliance with other national and foreign professional organizations, institutions and institutes, provided that they are organized and promote the principals of the internal auditing profession. The decision on establishment of an alliance is made by the Institute's Assembly. IV INSTITUTE BODIES Article 16 Bodies of the Institute are as follows: 1. Assembly, 2. Supervisory Board 3. Management Board 4. President 5. Treasurer and 6. Secretary Article 17 In case of their incapacity to perform their functions (resignation, undertaking other functions, inactivity and other reasons), all members of Institute's bodies (Supervisory Board, management Board, President, Treasurer and Secretary) may be replaced at the next Institute's annual reporting or electoral Assembly. In such case, a written request of the member himself or the president of the respective body must be presented. 6

7 1. THE ASSEMBLY Article 18 The Assembly is the Institute's highest managing body. The Assembly consists of all Institute full-term members. The Assembly of the Institute: Article 19 enacts and approves amendments to the Institute s Statute and other bylaws and decisions required for the work of the Institute, determines the Institute's development policy, enacts financial plans and approves financial documents, appoints and dismisses the Management Board, Supervisory Board, the President, Treasurer and the Secretary, considers and adopts the report on operations of the Institute, provides guidelines for concerning the work of the Institute, decides upon members appeals on the decisions of the Management Board on exclusion from the Institute, decides on the winding up of the Institute, and performs other activities prescribed by the law or this Statute. Article 20 The Assembly can be regular, electoral and extraordinary. The Assembly sits once a year. The electoral Assembly session is held every four years. Assembly sessions are convened by the President of the Institute on his own initiative. In the decision on convening the Assembly, the President establishes the session agenda, the date and location of the Assembly session. The President is obliged to convene the Assembly session when at least 1/3 of the Institute's members file the request. The request for convening the Assembly must include the proposed session agenda. 7

8 If the President fails to convene the Assembly session within 30 days as of request delivery, the session shall be convened by the proposer (the decision must include the session agenda, its date and location). Article 21 The Assembly elects the President, members of the Management Board and the Supervisory Board, Treasurer and Secretary for the term of four (4) years. The term is renewable for the maximum of two successive mandates. The President of the Institute presides over the Assembly. In his absence, the Assembly determines the person to preside over the session at its start by means of a public vote. Minutes of the session are kept and permanently preserved in the Institute's archives. Article 22 All Assembly members must be acquainted with the agenda and the date of the session in an appropriate way, in written form or electronic form, or by means of public announcement (newspaper) 15 days before holding the Assembly session. The agenda and the material being the subject of discussion and decision making must be delivered to the members prior to the Assembly. The Assembly makes valid decisions with the presence of at least 50% of the Assembly members. The Assembly adopts decisions by a majority vote of present members. In case the conditions for the Assembly session are not met, the President of the Institute shall declare a 30-minutes break and resolve upon continuation of the Assembly session, provided at least 30% of Assembly members are present. The voting at the Assembly is public by means of raising hands. 2. THE SUPERVISORY BOARD Article 23 The Supervisory Board is the body of the Institute's Assembly responsible to the Assembly for its work. The term of office of Supervisory Board members is four (4) years. The Supervisory Board has three (3) members: the President and two Members of the Institute. Article 24 The Supervisory Board reports to the Institute's Assembly on the supervision over the work of the Management Board and the Institute as a whole. The Supervision of this Board includes the lawfulness of Institute's operations, material-financial operations and 8

9 overall operations and activities of the Institute's bodies. Once a year, at the reporting or electoral Assembly, it submits the report to the Institute's Assembly on the conducted supervision. Article 25 The President administers the activities of the Supervisory Board. In his absence, the sessions are presided by the member elected by the members of the Supervisory Board on case-to-case basis. The Supervisory Board performs its activities in sessions, by reviewing documentations, establishing the status, considering the reports and preparing the reports for the Institute's Assembly. Minutes of the session are kept and permanently preserved in the Institute's archives. Article 26 The Supervisory Board meets on case-to-case basis but not less than twice a year. The Supervisory Board can make valid decisions provided that two out of three members are present. Decisions are made by a majority vote of present members. 3. THE MANAGEMENT BOARD Article 27 Management Board is the body of the Institute's Assembly responsible to the Assembly for its work. The term of office of the Management Board members is four (4) year. Upon expiry of the term, the Management Board members can be reelected. The Management Board members are elected by the Assembly by the votes of two thirds of the present Assembly members. The management Board has five (5) members, the President, the Vice-President and three Members. The President and the Vice-President of the Board are elected by the Board with a four years mandate. Upon expiry of the term, the President and the Vice-President can be reelected. 9

10 The President and the Vice-President are elected by the votes of two thirds of the present Management Board members. The Institute President shall be present on all Management Board meetings. Article 28 The Management Board administers the Institute's business activities in accordance with the Statute and decisions made by the Institute's Assembly, prepares a draft program and operating plan for the Institute for each business year and submits the report on its work to the Institute's Assembly. The Management Board considers the report of the President of the Institute that is submitted to by the President to the Assembly for its consideration and adoption. The Management Board the Treasurer reports on financial operations of the Institute that are submitted by the Treasurer to the Assembly for its consideration and adoption. Article 29 The Management Board decides on the amount of the membership fee payable by the each category of members. Article 30 The President presides the sessions of the Management Board. In his absence, the session is presided by the Vice-President. The Management Board performs its activities in sessions. The Management Board members make decisions in sessions. Decisions are made by the two thirds of votes of the present members provided three (3) members are present. Minutes of the session are kept and permanently preserved in the Institute's archives. Article 31 The Management Board sits at least four times a year. 10

11 Article 32 The President of the Management Board is obliged to convene a session when at least 1/3 of Management Board members submit such a request. In such a request the proposer is obliged to explain the request and propose the session agenda. If the President fails to convene the Management Board session within 15 days as of request delivery, the session shall be convened by the proposer (the decision is to include the session agenda, its location and the date). 4. THE PRESIDENT Article 33 The President of the Institute is elected by the Institute Assembly for the period of four years. The President can be elected for only two consecutive terms of office. The President represents the Institute and conducts all executive functions and other business activities defined by the Statute, tat are in accordance with the decisions adopted by the Assembly and the Management Board. Article 34 The President has the following tasks and obligations: Represents the Institute, Convenes the Assembly of the Institute, Administers the Assembly activities, Determines the draft operating program and the Statute which are submitted to the Assembly for its adoption, Drafts operating programs and plans, Attends to implementation of the adopted operating programs and executes the decisions enacted by the Assembly, Manages the assets of the Institute, Submits the report on his activities to the Assembly of the Institute, Appoints members of the committees and corresponding bodies as required and assigns defines their tasks, Attends to keeping the public informed on the activities undertaken by the Assembly of the Institute, Performs other activities defined by the Statute and other Institute acts. 11

12 Article 35 The President is accountable to the Institute Assembly. The President submits the annual report on his/her work and on the work of the Management Board Committee to the Institute's Assembly for its consideration and adoption. 5. THE TREASURER Article 36 The Treasurer of the Institute is elected by the Institute's Assembly for the period of four (4) years. The Treasurer administers and has responsibility for the material and financial operations of the Institute. The Treasurer prepares the annual report on Institute s financial operations, submits it to the Management Board for its consideration and to the Institute's Assembly for adoption. Prior to submission of the reports to the Institute's Assembly, all reports are approved by the Supervisory Board. 6. THE SECRETARY Article 37 The Secretary of the Institute is assigned all administrative operations of the Institute. The Secretary is appointed by the Institute's Assembly for the period of four (4) years. The Secretary keeps the register of all members. V THE NOMINATING COMMITTEE Article 38 The Nominating Committee is consisted of the Committee President and not less than two members. Members of the Committee are appointed by the Institute Assembly. 12

13 The Nominating Committee is in charge of recognition of candidates for positions in the Management Board, the Supervisory Board, and all other boards or committees of the Institute. In case of absence of members of the Nominating Committee, the Assembly shall appoint the substitution members of the Committee. Article 39 The Nominating Committee submits the list of members nominated for each of the positions to the Secretary. The Nominating Committee shall decide on the type of qualification requirements applicable to all nominated candidates that have submitted a written statement of consent to appointment to these positions, provided that that there is no conflict of interest. In case of the open competition, the decision on election shall be made by voting of all present Committee members. VI THE CONSULTATIVE BOARD Article 40 The Institute shall appoint the Consultative Board that will consist of: President of the Institute, Management Board president, Vice-President of the Management Board and; Presidents of committees established in accordance with the Article 41 of this Statute. During the periods between the Assembly sessions, the Consultative Committee operates in cooperation with the Management Board on implementation of tasks and goals defined in annual programs, directs the Institute, make comments and suggestions on the Institute operations. The Institute President by default presides over the Consultative Committee. The President of the Management Board is a vice-president of this Committee by default. In absence of the President of the Management Board, the Vice-President of the Management Board shall act as the Vice President of the Consultative Committee. 13

14 The President of the Institute is in charge of identifying and achievement of goals of the Consultative Committee, as well as presides over sessions of the Consultative Committee and manages the Institute activities. The President of the Management Board is in charge of coordination of meetings and supervision over the committee established in accordance with Article 41 of this Statute. The President of the Management Board is also in charge of all activities defined by this Statute. The Vice-President of the Management Board is in charge of supervision of the committees established in accordance with the Article 41 of the Statute and replaces the President of the Management Board in his absence, in accordance with the provisions of the Statute. The Consultative Committee enacts its decisions by the majority of votes. VII ESTABLISHMENT OF THE PROFESSIONAL COMMITTEES Article 41 The Assembly or the President have the powers to establish permanent or temporary professional committees for performing activities within specific areas of the Institute's operations. The referred professional committees provide expert opinions and make proposals to the Management Board and the President with the purpose of improvement of operations of the Institute and development of the Institute. The decision on establishing the Institute's professional committees defines their organization, tasks, period of existence and responsibilities for conducting activities. VIII ASSETS AND MEANS OF THEIR ACQUISITION Assets of the Institute consist of: Article 42 Cash, Movables, Real estates, Other property rights. 14

15 Article 43 The Institute acquires its assets from: Collecting membership fees, Charities and gifts, Budget subsidies, Other sources in accordance with the law, Organizing professional gatherings, Organizing education programs for certified internal auditors. Article 44 The Management Board is in charge of deciding on the sorces of financing of the Institute, utilization of assets and funds of the Institute, in accordance with the Statute and other bylaws of the Institute. Article 45 The Institute is obliged to maintain accurate and up-to-date records in accordance wit the generally accepted accounting principles and to prepare financial statements in accordance with all relevant laws and regulations. Article 46 The Management Board shall, not less than once a year, submit to the Assembly a report containing the data on the Institute assets, utilization of assets, revenue and expenditure of the Institute, as well as information on other issues that may or have impact on utilization of the Institute assets and its financial operations. The Supervisory Board is in charge of controlling the financial aspects of the Institute operations by means defined in the Statute. Article 47 The supervision over the Institute s asset disposals and approved expenditures shall be performed by the Assembly and the Supervisory Board. 15

16 The Assembly may enact a decision to engage an independent audit company to review the financial operations of the Institute. IX WINDING UP OF THE INSTITUTE Article 48 The Institute ceases to exist under circumstances prescribed in the Article 28 of the Law on Non Governmental Associations. In case of wound up of the Institute, the remaining Institute assets shall be allocated in accordance with the Article 29 of the Law on NGOs. In case of wound up of the Institute on the basis of an Assembly decision, the Assembly shall adopt the referred decision on winding up of the Institute by 2/3 majority of votes of all Assembly members. X TRANSITIONAL AND FINAL PROVISIONS Article 49 The Statute of the Institute is approved by the Assembly decision made by a majority of votes of all members of the Institute. Amendments to this Statute may be passed in accordance with Article 22 above. Article 50 Interpretation of the provisions in this Statute and other Institute acts is provided by the Assembly, unless otherwise decided. Podgorica, September 4 th 2009 THE PRESIDENT OF THE IIA MONTENEGRO Prof. Djordjije Rakocevic, PhD, Licensed Auditor 16

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