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The measurement of effective internal shariah audit function in Islamic financial institutions

Ab Ghani, Nur Laili and Mohd Ariffin, Noraini and Abdul Rahman, Abdul Rahim (2019) The measurement of effective internal shariah audit function in Islamic financial institutions. International Journal of Economics, Management and Accounting, 27 (1). pp. 141-165. E-ISSN 2462-1420

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Assurance of Sharīʿah compliance through the Sharīʿah audit function is crucial for enhancing the integrity of Islamic Financial Institutions (IFIs). Effective Sharīʿah audit function during periodical assessment will ensure effective internal control system for Sharīʿah compliance in IFIs. This paper examines the measurement of effective internal Sharīʿah audit function in IFIs. It critically reviews the emerging literature on the importance of eight components for measuring effective internal Sharīʿah audit function. The components are Sharīʿah audit objective, Sharīʿah audit scope, Sharīʿah audit and governance, Sharīʿah audit charter, competency of internal Sharīʿah auditors, Sharīʿah audit process, reporting requirements and independence. These components are important for achieving effective internal control over Sharīʿah compliance. The study also performs a structured interview with Islamic financial experts to validate the measurement before it is further examined in future empirical studies. The main argument of this paper is that highly effective internal Sharīʿah audit function leads to inclusive opinion on reasonable assurance of Sharīʿah compliance. Assurance of Sharīʿah compliance should enhance stakeholder confidence and satisfy the growing demand for IFIs accountability and sustainability.

Item Type: Article (Journal)
Additional Information: 1616/73044
Uncontrolled Keywords: Sharīʿah audit, Sharīʿah compliance, Sharīʿah governance, Islamic financial institutions
Subjects: H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button): Kulliyyah of Economics and Management Sciences
Kulliyyah of Economics and Management Sciences > Department of Accounting
Depositing User: Dr. Noraini Mohd. Ariffin
Date Deposited: 09 Jul 2019 16:37
Last Modified: 18 Mar 2020 15:13
URI: http://irep.iium.edu.my/id/eprint/73044

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