Abstract
The Development of Shariah Audit Scope in Malaysian Takaful Industry: A Preliminary Analysis
Highlights
Shariah auditing is a systematic process of gathering sufficient and relevant evidence to form an opinion on whether the subject matter, such as personnel, processes, financial and nonfinancial performance, is consistent with Shariah rules and principles that are widely accepted by the Islamic community, and to report to stakeholders
To what extent does the development of shariah audit scope by Malaysian Takaful operators cover all the requirements in Shariah Governance Framework (SGF) and Takaful Operational Framework (TOF)? RQ2
The main reason why some Takaful Operators include financial statements as the Shariah audit scope is because they rely on external auditors to audit their financial statements
Summary
Shariah auditing is a systematic process of gathering sufficient and relevant evidence to form an opinion on whether the subject matter, such as personnel, processes, financial and nonfinancial performance, is consistent with Shariah rules and principles that are widely accepted by the Islamic community, and to report to stakeholders. Shariah Governance Framework (SGF) introduced by BNM in 2010 has defined Shariah audit in para 7.7 as :“periodic assessment conducted from time to time, to provide an independent assessment and objective assurance designed to add value and improve the degree of compliance in relation to the IFI’s business operations, with the main objective of ensuring a sound and effective internal control system for Shariah compliance” (BNM, 2011). In 2019, Bank Negara Malaysia proposed a new definition of Shariah audit in a new policy document on shariah governance as following: “function that provides an independent assessment on the quality and effectiveness of the IFI’s internal control, risk management systems, governance processes as well as the overall compliance of the IFI’s operations, business, affairs and activities with Shariah” (BNM, 2019). AAOIFI’s Governance Standard for IFIs no. 3 elaborates the objective of Shariah audit as :“The primary objective of the internal Shariah review (carried out by an independent division or part of the internal audit department) is to ensure that the management of an IFI discharges their responsibilities in relation to the implementation of the Shariah rules and principles as determined by the IFI’s Shariah Supervisory Board (SSB)”
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