Shari'ah audit for Islamic financial institutions (IFIs) is an emerging practice. Shari'ah audit is important to provide Shari'ah assurance rather than just Shari'ah compliance. It is crucial to ensure credibility and enhance integrity of IFIs. Shari'ah Governance Framework (SGF 2011) has charted the path for Shariah audit in Malaysia. Many IFIs have started embarking on Shari'ah audit. Some are still struggling to practice as Shari'ah audit needs the understanding and the expertise of both the financial services and the Shari'ah.
The shift of focus from internal compliance to independence assurance is a requirement and no longer an option. It is not enough to claim that they are Shari'ah compliance without a robust practice of Shari'ah assurance through internal or/and external audit. More importantly now is the importance to link Shariah assurance and Shari'ah risk management. The SGF 2011 does not address this critical link sufficiently. I believed the next step of development is to develop a robust methodology for risk identification, risk measurement, risk mitigation etc. for Shari'ah non-compliance risk.
At the end of next month, there will be a conference to be organised by Institute of Internal Auditors Malaysia on Shari'ah Audit. They have requested me to write an article to promote the conference in the Edge. Hopefully, I will be able to write a piece of my thought soon. I intend to write on the importance of linking Shari'ah audit and Shari'ah risk management. The link is to ensure proper management and reporting of Shari'ah risk management (pre event) and Shari'ah audit (post event).
The shift of focus from internal compliance to independence assurance is a requirement and no longer an option. It is not enough to claim that they are Shari'ah compliance without a robust practice of Shari'ah assurance through internal or/and external audit. More importantly now is the importance to link Shariah assurance and Shari'ah risk management. The SGF 2011 does not address this critical link sufficiently. I believed the next step of development is to develop a robust methodology for risk identification, risk measurement, risk mitigation etc. for Shari'ah non-compliance risk.
At the end of next month, there will be a conference to be organised by Institute of Internal Auditors Malaysia on Shari'ah Audit. They have requested me to write an article to promote the conference in the Edge. Hopefully, I will be able to write a piece of my thought soon. I intend to write on the importance of linking Shari'ah audit and Shari'ah risk management. The link is to ensure proper management and reporting of Shari'ah risk management (pre event) and Shari'ah audit (post event).
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