This publication is part of the journal ISRA International Journal of Islamic Finance (English Journal) (2011-1)
Enhancing integrity is of prime importance for any business and it is especially more pressing in the case of Islamic Financial Institutions (IFIs) who claim that their business activities and operations are in compliance with the Shari’ah. In broad terms, Shari’ah audit is a process of accumulating and evaluating evidence to determine and report on the degree of correspondence between information and established criteria for Shari’ah compliance purposes. The objective of this paper is to provide an overview of a research and development initiative initiated by the International Shari’ah Research Academy in Islamic Finance (ISRA) and Bank Negara Malaysia (BNM) to produce the Shari’ah Audit Framework. The Framework aims to provide a guide for IFIs in Malaysia to conduct Shari’ah audit. The paper firstly explains the Shari’ah Governance Framework recently issued by BNM, which the Shari’ah Audit Framework will aim to complement. Secondly, the paper provides a discussion on the need for the Shari’ah Audit Framework. Thirdly, the paper presents some of the institutional arrangements and requirements that need to be considered to ensure that the IFIs will be able to effectively undertake a Shari’ah audit function.
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