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Internal shariah audit effectiveness and its determinants: case of Islamic financial institutions in Malaysia

Zakaria, Nur Azalia and Mohd Ariffin, Noraini and Zainal Abidin, Nor Hafizah (2019) Internal shariah audit effectiveness and its determinants: case of Islamic financial institutions in Malaysia. Kyoto Bulletin of Islamic Area Studies, 12. pp. 8-28. ISSN 1881-8323

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Abstract

Shariah compliance is utmost importance for the sustainability of Islamic Financial Institutions (IFIs) in the industry as stakeholders will only invest and deal with IFIs that operate within Shariah precepts. As such, Shariah audit is required by Bank Negara Malaysia to provide assurance that IFIs indeed do operate on the basis of Shariah principles. Therefore, this conceptual paper proposes the constructs of Shariah audit effectiveness (SAE) in IFIs. This paper reviews and synthesizes prior literature on internal audit effectiveness and Shariah audit in developing the construct of SAE. The construct consists of criteria of SAE as well as its possible determinants. The determinants comprise of top management support, organizational independence and objectivity, and internal Shariah audit process and activities. The development of appropriate measures for SAE is crucial to assist IFIs in monitoring and assessing how well resources are being utilized in the performance of Shariah audit. Effective Shariah audit practice is expected to provide value-added service to ensure IFIs are operating within the limits of Shariah as well as generating halal profits from its financing and investment activities.

Item Type: Article (Journal)
Additional Information: 1616/72066
Uncontrolled Keywords: shariah audit, IFI
Subjects: H Social Sciences > HG Finance > HG1501 Banking
H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
Kulliyyahs/Centres/Divisions/Institutes: Kulliyyah of Economics and Management Sciences
Kulliyyah of Economics and Management Sciences > Department of Accounting
Depositing User: Dr Nor Hafizah Zainal Abidin
Date Deposited: 13 May 2019 08:52
Last Modified: 12 Jul 2019 09:50
URI: http://irep.iium.edu.my/id/eprint/72066

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