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1 – 10 of over 1000Mustafa Faza', Nemer Badwan and Montaser Hamdan
This study aims to conduct a review and analysis of the literature on Shariah audit compliance by examining the difference between internal and external auditors, the scope of…
Abstract
Purpose
This study aims to conduct a review and analysis of the literature on Shariah audit compliance by examining the difference between internal and external auditors, the scope of internal Shariah audits and the qualification of Shariah auditors.
Design/methodology/approach
The current study used content analysis and the descriptive approach to achieve the main objective of the study. To ensure that Islamic Financial Institutions’ (IFIs) practices preserve Shariah principles and values when providing Shariah-compliant products and services, this audit will be used to supervise and monitor the operations of IFIs. The main goal of Shariah compliance auditing is to protect the interests of IFIs stakeholders, including account holders, shareholders, creditors, management and employees, as well as the general public while ensuring that the mechanisms of checks and balances in place are appropriate and tailored to the goals and missions of its establishment following the Maqasid Al-Shariah.
Findings
The findings of this study attempt to contribute to the body of knowledge surrounding Shariah audit compliance by advising IFIs on the value of Shariah compliance auditing in addressing the needs of its stakeholders. As a result, the benefits of Shariah compliance audits will be maximized, and future legislative changes will be implemented to reduce or completely remove the risk of Shariah’s failure to comply.
Practical implications
This research advises IFIs on the usefulness of Shariah compliance auditing in addressing the demands of its stakeholders to add to the body of knowledge on Shariah audit compliance. Moreover, all parties involved to take action to reduce the gap that will significantly affect stakeholders’ confidence, particularly concerning the Shariah compliance of the IFIs’ products and services on their operations and activities.
Originality/value
The advantages of Shariah compliance audits will thus be maximized, and future regulatory improvements will be made to lessen or eliminate the danger of Shariah noncompliance.
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Md. Kausar Alam, Abu Umar Faruq Ahmad, Mezbah Uddin Ahmed and Md. Salah Uddin
The study explores the existing Shariah audit practice of Islamic banks (IBs) in Bangladesh aiming at providing suggestions for improvements on the detected shortfalls in the…
Abstract
Purpose
The study explores the existing Shariah audit practice of Islamic banks (IBs) in Bangladesh aiming at providing suggestions for improvements on the detected shortfalls in the relevant areas.
Design/methodology/approach
This research applied a qualitative method, and data were collected through conducting semi-structured interviews in Bangladesh. A total of 17 interviews were conducted for accomplishing the research objectives.
Findings
The study finds that there is no comprehensive Shariah audit manual in the current operation for IBs in Bangladesh, and as such, the requirements of their Shariah compliance remain a big question. Although the Shariah audit is conducted within IBs, and the Shariah audit officers or Shariah officers inspect necessary documents while conducting the Shariah audit, they only cover 10–20% of total investments and transactions. Based on the findings of this study, it is recommended that the Shariah auditing tasks should broadly cover at least 80% of the investment portfolios, documents and financial contracts and activities.
Research limitations/implications
The findings of this research are expected to significantly contribute to the regulatory authorities concerned in Bangladesh and beyond, which include the suggestions that IBs can adopt to strengthen their Shariah governance system. The study also pinpoints that in the current system, Shariah auditors' roles are somehow limited in examining and checking the investment sides with a minimal portion (10–20%), for which they are unable to perform their responsibilities in a befitting manner to provide assurance services and overall Shariah compliance of IBs activities.
Practical implications
This study explores the current Shariah audit systems and provides recommendations to improve the existing systems which will be beneficial for Islamic banks of Bangladesh.
Originality/value
To the researchers' knowledge, perhaps this is the first research of its kind which seeks to explore the current Shariah audit practice in Bangladesh qualitatively, and it provides some practical suggestions for making the necessary developments of the current audit process of IBs. In addition, there are no empirical studies in the entire Emerald insight publishers and Scopus database regarding Shariah audit practices. The study contributes to the agency, stakeholder and legitimacy theories by exploring the Shariah audit of IBs.
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Muhammad Iqmal Hisham Kamaruddin, Zurina Shafii, Mustafa Mohammed Hanefah, Supiah Salleh and Nurazalia Zakaria
This study aims to explore the current Shariah audit practices in zakat and waqf institutions in Malaysia.
Abstract
Purpose
This study aims to explore the current Shariah audit practices in zakat and waqf institutions in Malaysia.
Design/methodology/approach
A focus group discussion (FGD) with 38 zakat and waqf officers from 17 different zakat and waqf institutions in Malaysia was conducted. For reporting purposes, this study used a single-case study approach. The FGD was conducted and completed at the end of June 2021 via an online approach through Microsoft Teams.
Findings
The finding highlights the existing Shariah governance practices especially in terms of Shariah supervision roles, Shariah audit implementation in terms of Shariah audit scopes and common findings, Shariah audit competency, Shariah audit effectiveness especially the need for external Shariah audit function and Shariah audit issues and challenges faced in the implementation of Shariah audit practices.
Practical implications
The study findings and recommendations are useful for zakat and waqf institutions as well as the State Islamic Religious Councils to enhance Shariah audit practices in Malaysia.
Originality/value
This study is among the pioneer studies that explore Shariah audit practices in zakat and waqf institutions in Malaysia.
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Azam Abdelhakeem Khalid, Hasnah Haj Haron and Tajul Ariffin Masron
This paper aims to examine the characteristics influencing internal Shariah audit effectiveness in Islamic financial institutions (IFIs) in Bahrain.
Abstract
Purpose
This paper aims to examine the characteristics influencing internal Shariah audit effectiveness in Islamic financial institutions (IFIs) in Bahrain.
Design/methodology/approach
Data were collected from 76 internal Shariah auditors, 23 Shariah supervisory board and 16 audit and governance committee from 52 IFIs in Bahrain. The data were analyzed using structural equation method via SmartPLS 2.0 to examine the relationship between characteristics and effectiveness of internal Shariah audit.
Findings
It was found that competency and work performance were positively significant with internal Shariah audit effectiveness. The findings revealed that the main competency of internal Shariah audit to influence effectiveness were to have professional certification and skills, while work performance to influence effectiveness were engagement planning, performing the engagement and communicating results with management and having sufficient information to provide sound opinion formed by Shariah audit.
Originality/value
From the research perspective, this is the first study that examines the relationship between internal Shariah audit characteristics and its effectiveness in Bahraini IFIs.
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Saleh F.A. Khatib, Dewi Fariha Abdullah, Hamzeh Al Amosh, Ayman Hassan Bazhair and Ali Shariff Kabara
This study aims to present a detailed investigation of Shariah audit research based on a systematic literature review.
Abstract
Purpose
This study aims to present a detailed investigation of Shariah audit research based on a systematic literature review.
Design/methodology/approach
A total of 53 studies were collected from the Scopus and Web of Science databases following a systematic methodology. These studies were analyzed and evaluated based on the theoretical perspective, geographical distribution, research settings and themes background.
Findings
The findings indicate an increase in the literature on Shariah auditing over time, especially in the Malaysian context, with a dearth of research in other contexts and institutions (Takaful). It has been also revealed that the existing literature is still unclear about the effectiveness and consequences of effective Shariah auditing, pointing the need for more work on these areas. The authors outline opportunities for future Shariah auditing research.
Originality/value
The synthesized findings are helpful for policymakers and managers to understand better how research in Shariah auditing is developing and how to translate research findings into practice. To the best of the authors’ knowledge, this is the first research to comprehensively synthesize the literature on this topic and identify the potential opportunities for future research directions.
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Azam Abdelhakeem Khalid, Hasnah Haron and Tajul Ariffin Masron
The purpose of this paper is to propose the conceptual relationship between competency and effectiveness of internal Shariah auditors in Islamic financial institutions (IFIs).
Abstract
Purpose
The purpose of this paper is to propose the conceptual relationship between competency and effectiveness of internal Shariah auditors in Islamic financial institutions (IFIs).
Design/methodology/approach
Normative and theorizing based on the main sources of Islam, mainly Maqasid al-Shariah theory, has been utilized in this research.
Findings
This study demonstrated how Maqasid al-Shariah or higher objectives of Islamic law have gradually captured the attention of increasing numbers of modern Muslim scholars for solving contemporary issues.
Originality/value
This study uniquely captured Maqasid al-Shariah for the competency of internal Shariah auditor.
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Muhammad Iqmal Hisham Kamaruddin and Mustafa Mohd Hanefah
This study aims to explore and identify potential challenges and prospects for conducting the professional shariah audit training programme via an e-learning approach during…
Abstract
Purpose
This study aims to explore and identify potential challenges and prospects for conducting the professional shariah audit training programme via an e-learning approach during coronavirus disease 2019 (COVID-19).
Design/methodology/approach
Questionnaires were administered to 296 participants who were enrolled in the professional shariah audit training programme via e-learning during the COVID-19 pandemic outbreak in 2020. These participants were final-year students from selected Malaysian public universities.
Findings
Findings show that several main challenges are faced in adopting an e-learning approach for conducting the professional shariah audit training programme such as the inability to do more hands-on, group and physical activities, different understandings based on academic backgrounds, difficulty in learning practical and technical topics, technical issues and problems during e-learning sessions. These lead to the unsuitability of conducting professional training via the e-learning approach. In terms of prospects of knowledge learnt via the e-learning approach, participants showed that they are able to master all six modules covered in the professional shariah audit training programme via the e-learning approach. These include (1) shariah principles; (2) shariah governance; (3) Islamic financial transactions; (4) shariah risk management; (5) shariah audit planning and programme; and (6) shariah audit fieldwork and communication.
Practical implications
Based on the findings, it is suggested to have more time spent and earlier preparation on the learning contents and sessions, more discussion on actual contents and practical exercises and competency of the trainers in delivering e-learning sessions.
Originality/value
This study is believed to be one among the pioneering studies on the potential challenges and prospects in adopting e-learning for conducting the professional shariah audit training programme due to COVID-19.
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Nurfarahin Mohd Haridan, Ahmad Fahmi Sheikh Hassan and Sabarina Mohammed Shah
This study aims to investigate the pragmatic issues on the radical call for the establishment of an external Shariah auditor (ESA) in the governance framework of Islamic banks…
Abstract
Purpose
This study aims to investigate the pragmatic issues on the radical call for the establishment of an external Shariah auditor (ESA) in the governance framework of Islamic banks (IBs).
Design/methodology/approach
From 11 well-established Malaysian IBs, 16 internal auditors were interviewed to provide an in-depth understanding on how ESA can provide greater assurance to stakeholders in Malaysian IBs.
Findings
This study reported mixed acceptance from internal auditors on the proposed additional governance layer to be undertaken by the ESA. Generally, internal auditors reluctantly agreed that Shariah auditing by the ESA would enhance the quality of Shariah assurance but maintain several practical concerns regarding lack of guidelines on Shariah auditing, the additional cost to be borne by IBs and the possible tensions between the ESA and Shariah board (SB) amid the diverse Shariah interpretations available for experts in the field.
Practical implications
The critical point on the manifestation of an ESA in the contemporary IB practice brought by this study highlights the need for regulation and policy promulgation that embrace a comprehensive approach to Shariah audit process within the religio-ethical dogma of Islamic banking and the pragmatic approach to banking.
Originality/value
This study provides evidence on the expected role and competency of an ESA and explores the implications produced by its implementation in Malaysian IBs. This study also clarifies how IBs should delineate the role of Shariah assurance from SB to ESA.
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Azam Abdelhakeem Khalid and Adel M. Sarea
This paper aims to examine bases of effectiveness in internal Shariah auditing undertaken in Islamic financial institutions (IFIs).
Abstract
Purpose
This paper aims to examine bases of effectiveness in internal Shariah auditing undertaken in Islamic financial institutions (IFIs).
Design/methodology/approach
This paper is theoretical in approach taking, as its starting-point, an extensive literature review. From a general agency theory, an Islamic agency theory is articulated and then applied to ascertain attributes of internal Shariah audit effectiveness revolving around the concept of independence.
Findings
Effective internal Shariah auditing, as a mechanism of assuring Shariah compliance by IFIs, varies directly with the degree of independence enjoyed by internal Shariah auditors themselves. The research propounds that an articulated Islamic agency theory holds potential to serve as a theoretical foundation to build a multi-dimensional conceptual framework based on independence utile for evaluating internal Shariah audit effectiveness.
Research limitations/implications
Evidence is drawn strictly from secondary sources.
Practical implications
To assure effectiveness of internal Shariah auditing, IFIs ought to increase the level of independence of internal Shariah auditors.
Originality/value
Internal Shariah audit effectiveness in IFIs has not been extensively studied in comparison with both studies of external Shariah audit effectiveness in IFIs and internal audit effectiveness undertaken by conventional financial institutions. This research fills that gap.
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The purpose of this study is to propose a centralized Shariah governance framework (CSGF) for the Islamic banks and Shariah governance in Bangladesh as such, the existence and…
Abstract
Purpose
The purpose of this study is to propose a centralized Shariah governance framework (CSGF) for the Islamic banks and Shariah governance in Bangladesh as such, the existence and practices of the Shariah governance framework (SGF) are decentralized and diversified.
Design/methodology/approach
The paper implements a qualitative case study approach to develop a CSGF for the Islamic banks in Bangladesh. The data has been collected from 17 respondents through semi-structured interviews with a combination of regulators, Shariah supervisory board members, Shariah department executives and Shariah experts from the central bank and Islamic banks in Bangladesh.
Findings
This study proposes a CSGF which is comprising two-tier Shariah supervisory boards (SSBs), i.e. institutional SSB and centralized Shariah supervisory board (CSSB) under the central bank to monitor the overall functions of SG. The study recommends the setting up of four departments under the central bank to enhance the functions of CSSB. Besides, the central bank can introduce Shariah rating, external Shariah audit and external Shariah review through Islamic rating agencies and Islamic Chartered Accountant Firms for transparency and quality compliance which are more desired from the public and other stakeholders.
Research limitations/implications
The study significantly contributed to the national and global regulatory bodies by providing a structural CSGF for the Islamic banks to perform their functions and activities smoothly.
Practical implications
The study outlines a CSGF for the Islamic banks in Bangladesh as the existing practices are diversified and decentralized. Therefore, this framework would be helpful for the central bank and Islamic banks in Bangladesh to promote unique practices of the SGF.
Originality/value
This is the first research that provides a structure of CSGF for Islamic banks in Bangladesh, while the central bank of Malaysia developed the first SGF. There is no study concerning the demographic figure of CSGF of Islamic banks in the entire literature.
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