Conceptualizing the duties and roles of auditors in Islamic financial institutions

Othman, Radiah; Ameer, Rashid

doi:10.1108/h-04-2013-0027

Cited by 28 publications

(29 citation statements)

References 13 publications

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“…On a realistic note, stewardship theory is contested by agency theory, which takes into account the nature of human behavior, especially when managers, as agents of the owners, act to maximize their own gains even at the expense of the owner and other stakeholders. In the comprehensive context of an Islamic company, in addition to the BOD, the SSB also manages the affairs of the company and shares authority over implementing all business strategies, plans, compliance and decisions [33]. To be Shariah compliant, the SSB provides Shariah advisory and consultancy to the BOD in all aspects relating to products, services and business transactions.…”

Section: Stewardship Theorymentioning

confidence: 99%

M&A Open Innovation, and Its Obstacle: A Case Study on GCC Region

Bindabel

2020

Journal of Open Innovation: Technology, Market, and Complexity

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Considering the effective growth in challenges and an urge in establishment for sustainable business, companies trading globally are inclined towards the implementation of highly efficient cross-border reallocations of revolving capital. The prominent objective of this research paper is therefore the clear identification of the active key attributes and specifications of all strategic measures for efficient sustainable cross-border mergers and acquisitions (M&As) of the Islamic companies in the Gulf region that are keen to engage with the non-Islamic companies across the globe. This paper also explores the paradigm of culture, in its different manifestations, it was and still is a primary factor of creativity. This study also focuses on building some better understanding of the role of "Culture for Open Innovation Dynamics." Initially, since the need to interpret community, that can also influence the dynamics of open innovation, has sharply increased, the research addresses open innovation dynamics and its significant concerns related to cross border mergers and cross culture ventures of firms and organizations. The researcher purposively selected 15 financial institutions from the selected Gulf Cooperation Council (GCC) countries. Semi-structured interviews were conducted with 40 key individuals including Board of Directors (BOD) members, lawyers and the Shariah scholars involved with three Islamic banks and two Islamic insurance companies in GCC. The findings indicate a consensus among the respondents regarding how the Shariah corporate governance principles can present barriers for cross-border M&As. Key obstacles to the success of cross-border M&As between the Islamic and the non-Islamic companies include the Shariah compliance, weak systems of disclosure, dependency, corruption in compliance, having family members on the Board, weakened communication with external auditors, different interpretations of Shariah by different scholars and a lack of alternative Islamic financial instruments. The comprehensive research in this paper fills the research gap by specifying the key attributes of considering the future implementation and management of M&As in broader scopes.

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Section: Stewardship Theorymentioning

confidence: 99%

M&A Open Innovation, and Its Obstacle: A Case Study on GCC Region

Bindabel

2020

Journal of Open Innovation: Technology, Market, and Complexity

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“…Auditors' role in the traditional or conventional framework is limited to certification of accounts and expression of a view on the financial position of a corporation (Khan, 1985). However, undoubtedly, a regular audit has a substantial influence on the auditing role in Islamic banks (Othman & Ameer, 2015). At the initial age of the establishment of the Islamic banking system, the Shariah auditors' roles and functions are threefold, as stipulated in the organization's articles of association (Lewis, 2006).…”

Section: Literature Reviewmentioning

confidence: 99%

“…The Shariah auditor does not only have to conduct an audit on financial statements but also compliance audits of the organizational structure, people and processes as well as audit review of the sufficiency of the Shariah governance process. Finally, they should also provide recommendations to the Board Audit Committee (BAC) and the Shariah Committee (ShC) (Othman & Ameer, 2015).…”

Section: Literature Reviewmentioning

confidence: 99%

“…This condition entails Islamic banks leveraging internal auditing and enhancing the effectiveness of the Shariah audit, which will eventually support the organization's objective (Abdul Wahab & Abdul Rahman, 2011). In other words, the auditor is responsible not only for the method in which the Islamic banks conduct their operations but also the effectiveness of Shariah audit operations that contribute to Shariah's principle itself (Othman & Ameer, 2015).…”

Section: Introductionmentioning

confidence: 99%

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The Role of Shariah Auditor in Islamic Banks: The Effect of Shariah Governance Framework (SGF) 2011

Yasoa

Abdullah

Endut

2020

IJFR

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This paper ascertains the current roles and responsibilities of Shariah auditor in the Islamic banking industry in Malaysia. To explore further, we identify the changes in these roles, especially after the introduction of the Shariah Governance Framework (SGF) 2011. The study employs a qualitative method by utilizing in-depth interviews with nine (9) key individuals in Malaysian Islamic banks. Our findings support the notion that Shariah auditors' roles and responsibilities are still under the jurisdiction of the banks' internal audit unit. More importantly, Shariah auditors play their roles as the third line of defense by giving assurance to the shareholders and stakeholders that all businesses and operations comply with Shariah precepts. Also, Shariah auditors need to look at the internal control elements of whether effective and efficient enough to alleviate any possible Shariah breaches. In terms of changes in its roles after the SGF implementation, most of the interviewees assert that the approach has been changed from compliance audit to risk-based audit. Our findings guide us to propose more structured and specific guidelines about Shariah auditors' roles and responsibilities in the Islamic banks. This guideline eventually could provide stimulus to improve governance and strengthen market as well as stakeholder's confidence. Finally, this study stipulates some precious recommendations to further enhance the Shariah auditor roles not only in the Malaysian Islamic banking industry but also in similar contexts.

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“…The review on literature of an effective internal Shariah audit is from past research such as Badara & Saidin (2014); Arena & Azzone (2009;Ahmad (2009); ; Endaya & Hanefah (2013). Shariah auditors" professionalism (Najeed and Ibrahim, 2014), conceptualization of the responsibilities and guidelines of Shariah auditors (Othman, et al, 2015) and Shariah-compliant audit framework (Shafii et al, 2015).…”

Section: Internal Shariah Audit Effectivenessmentioning

confidence: 99%

Factors Influencing Internal Shariah Audit Effectiveness: Evidence From Bahrain

Ahmed

Sarea

2019

IJFR

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It is this research’s objective to analyze factors that cause an effective internal Shariah audit among the Islamic Financial Institutions (IFIs) in Bahrain. The questionnaire method has been employed to examine the said topic. The questionnaire’s primary source of information was the Accounting and Auditing Organizations for Islamic Financial Institutions (AAOIFI) Governance Standards. Meanwhile, the respondents are consisted of 52 IFIs’ head of internal Shariah audit department. These IFIs are registered with the Central Bank of Bahrain. To analyze those relationships the structural equation method (SEM) via SmarPLS3.0 has been adopted. The study has found that the effective execution of internal Shariah audit is positively linked with the competency and performance of internal Shariah audit. Meanwhile, the other two variables, i.e. being independent and Shariah supervisory board have been discovered to be positively related with internal Shariah audit effectiveness. Nonetheless, there is no significant contribution. Overall, all the variables contribute 63.2% to IFIs’ internal Shariah audit effectiveness. The regulatory and professional bodies may benefit from this study in their assessment of factors that result in a successful and meaningful internal auditing of Shariah matters.

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Conceptualizing the duties and roles of auditors in Islamic financial institutions

Cited by 28 publications

References 13 publications

M&A Open Innovation, and Its Obstacle: A Case Study on GCC Region

M&A Open Innovation, and Its Obstacle: A Case Study on GCC Region

The Role of Shariah Auditor in Islamic Banks: The Effect of Shariah Governance Framework (SGF) 2011

Factors Influencing Internal Shariah Audit Effectiveness: Evidence From Bahrain

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