Shari’ah audit practices continue to remain an opaque area with varied practices. Recent very public challenges on the Shari’ah authenticity of certain Sukuk structures, exemplify the need to readdress the Shari’ah assurance, governance and certification process. The report highlights a set of considerations directed to Shari’ah scholars, financial institutions, Shari’ah consultancy firms, standard setting bodies and regulators.
Lord Sheikh, patron of the IFC, said, "Ensuring customers have continued assurance in the products and associated compliance process is fundamental to maintaining the integrity of the sector."
Titled Enhancing Shariah Assurance the report adopts a comparative approach with mainstream assurance practices and looks at the following six key areas and provides specific proposals to strengthen Shari’ah assurance frameworks and empower Shari’ah scholars:
- Avoiding audit impairment by understanding the risk of self auditing.
- Effective utilisation of Shari’ah Supervisory Board audit opinions within annual reports.
- The opportunity for established audit firms to undertake limited scope audits to provide external Shari’ah audits.
- Improving transparency by enhancing disclosures by Shari’ah scholars.
- Maintaining and developing competence amongst the current and future body of Shari’ah scholars through Continuous Professional Development (CPD).
- Addressing gaps in the audit, disbursement and reporting of mandatory purification amounts.
The report notes the lack of a professional membership body for Shari’ah scholars typically found in other professions such as law and accountancy. Establishing such a body for Shari’ah scholars could play a meaningful role in regulating scholars and prescribing minimum levels for audit quality.
Tariq Masood, Chairman of the IFC, said, "Scholars and product providers should look to self adopt improved practices detailed in this report. Only then will we see positive progression in the market."
source: CPI Financial