External Sharī‘ah audit and review committee <scp>Vis‐a‐Vis</scp> Sharī‘ah compliance quality and accountability: A case of Islamic banks in Bangladesh

Alam, Md. Kausar; Ahmad, Abu Umar Faruq; Muneeza, Aishath

doi:10.1002/pa.2364

Cited by 23 publications

(39 citation statements)

References 57 publications

(62 reference statements)

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“…Thus, the results confirm the optimistic view of (Previtali and Cerchiello, 2019; Amoiralis and Andriosopoulos, 2017; Akamangwa, 2017) who ensure that a company complies with its outside regulatory and legal requirements as well as (Lee, 2019; Vadasi et al , 2019; Faruk, 2018) internal policies and bylaws. An efficient compliance audit encourages companies to ensures adherence to regulatory guidelines of any country (Alam et al , 2020; Masruki et al , 2020; Orpana, 2019). Table 1, Table 2 and Table 3 shows that there are numerous noncompliance or violations in the part of companies in Oman.…”

Section: Discussionmentioning

confidence: 99%

The relevance of compliance audit on companies’ compliance with disclosure guidelines of financial statements

Thottoli

2021

JOIC

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Purpose This paper examines the relevance of compliance audit on companies’ compliance with disclosure guidelines of financial statements with special reference to the case of companies registered in the Muscat Securities Market (MSM), Oman. Design/methodology/approach This paper adopts a direct measure of compliance prescribed and published in the annual report of Capital Market Authority (CMA) and its executive regulation from period 2011 to 2019. Findings The finding shows that there is a positive association with audit on companies’ compliance with disclosure guidelines of financial statements that enrich companies to ensures adherence to regulatory guidelines of Oman. Practical implications The key limitation of the study is that it depends on a transparency indicator from a secondary source. Further, this might encourage companies to appoint qualified compliance officer which will be a value addition for best practice of corporate governance (CG) of the organizations. Originality/value The evidence recommends that audit on companies’ compliance with disclosure guidelines of financial statements is a significant factor that helps the company to enhance its financial performance and provides assurance to the government that the company follows applicable rules and regulations. It also recommends that the appointment of designated compliance officer assures adherence to companies’ regulatory guidelines of Oman. Besides, conducting research in audit on companies’ compliance with disclosure guidelines of financial statements brings novelty in the literature in emerging countries. As per best knowledge of the researchers, there has been no empirical study (within the literature) observed, which inspires much encouragement to do this study.

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Section: Discussionmentioning

confidence: 99%

The relevance of compliance audit on companies’ compliance with disclosure guidelines of financial statements

Thottoli

2021

JOIC

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“…Generally, the internal Shariah auditors directly report to the audit committee and in some countries, they report to both the audit committee and SSB. In contrast, Alam et al (2020b) suggest that external Shariah auditors should not be an employee of the bank or SSB member. Structurally, an external Shariah audit team should be formed based on an equal number of experts in accounting, Shariah, auditing, legal and Islamic banking.…”

Section: Shariah Governance System Internal Legitimacy and Stakeholders' Acceptancementioning

confidence: 97%

“…It is also implemented by a few regulatory authorities and countries to ensure more Shariah compliance and transparency. It also enhances the confidence of the stakeholders (Alam et al, 2020b). AAOIFI (2018) has drawn up an external Shariah audit process to certify Shariah compliance functions in the operations of Islamic banks that serve as professional guidelines thereon.…”

Section: Shariah Governance System Internal Legitimacy and Stakeholders' Acceptancementioning

confidence: 99%

Rationality of fourth party in legitimacy theory: Shariah governance of Islamic financial institutions

Alam

2021

JIABR

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Purpose The purpose of this paper is to focus on conceptualizing the origin of legitimacy, the legitimation process and its trustworthiness toward the people, regulators, society and stakeholders. In achieving the purpose of the study, an inclusive research gap concerning the roles of the Shariah Supervisory Board (SSB) as a Shariah regulatory authority or an internal mechanism of Shariah Governance Framework (SGF) in the development and formation of Islamic financial institutions (IFIs) would also be addressed. Design/methodology/approach The paper implements an analytical approach to investigate the legitimation process of SSB, and its presence, significance, as well as credibility to the stakeholders. Findings This study proposes an additional authority of legitimacy, namely, SSB/Shariah regulatory authority, along with regulators, professionals and people. These could be derived from the internal mechanism of Shariah Governance (SG) practices of IFIs. The study also proposes another type of legitimacy (ethical/Shariah legitimacy) that derives from the organizational SG practices through its internal mechanisms. The formation of SSB is mandatory and more significant for the isomorphic identification of IFIs, SG system, legitimacy and broader acceptance to stakeholders. Research limitations/implications The rational argument shows that SSB legitimates the overall functions of IFIs, SG practices, processes and structures. It is more apposite because it has substantial validity, dominance, recognition and acceptability along with three external bodies. Besides, IFIs and their SG do not have the proper value to the general people, society, regulators and other stakeholders without the legitimization of SSB. Thus, theorists and academicians may consider SSB as the fourth party of legitimacy along with three legitimacy providing authorities (regulators, professionals and people). Originality/value The paper focuses on illustrating and extending the border knowledge concerning the legitimacy from SG and how do SSBs legitimize IFIs and enhance their credibility to the general people, government, society and other stakeholders. The paper first clarified the internal legitimacy concerning SGF and contributed to the area of Islamic finance, legitimacy, institutional theory, legitimacy theory and internal legitimacy.

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“…Tabash et al (2020) stated a negative legitimacy of the Islamic banks and their SG from the ethical concept of legitimacy theory over two main SG mechanisms (such as SSB and Shariah department officers) in the context of Bangladesh. Therefore, studies recommending external Shariah audit and review committee, as well as Shariah rating for the improvement of Sharīʿah-compliance of the Islamic banks in Bangladesh (Alam et al , 2020e).…”

Section: Literature Reviewmentioning

confidence: 99%

The practices of Shariah governance systems of Islamic banks in Bangladesh

Alam

Rahman²,

Islam

et al. 2021

PAR

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Purpose The purpose of this study is to explore the practices of Shariah governance (SG) systems in terms of their guidelines, current operational procedures, internbal policies and structures and regulatory framework of Islamic banks in Bangladesh from the viewpoints of Shariah, Tawhidic approach/ontological approach and Shuratic process of Islamic corporate governance and institutional theory. Design/methodology/approach A semi-structured interview tactic has been applied to attain the objective. Overall, data has been collected from the regulators, Shariah supervisory board members, Shariah department executives and experts from the central bank and Islamic banks of Bangladesh. Findings The study finds that Islamic banks do not follow complete Shariah principles in all aspects of SG nor violate them fully in their overall functions due to less accountability, which contradicts the concept of the Tawhidi epistemological process of Islamic corporate governance. Islamic banks announce that they are following Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) guidelines, but in practice, they do not follow the instructions accurately because all of the standards and policies of AAOIFI and the Islamic Financial Services Board are not applicable in Bangladesh due to its cultural, legal and regulatory structures. It is found that Islamic banks in Bangladesh have a lower practice of maqasid as-Shariah and Tawhidic approach and Shuratic process. Research limitations/implications The study significantly contributed to the central bank of Bangladesh and Islamic banks by exploring the SG systems for their further enhancement. The research provides some suggestions for improving existing SG systems and enhancing more application of SG guidelines and Shariah principles in the overall operations of the Islamic banks in Bangladesh. Originality/value This research extends the literature regarding the Islamic banks’ SG practices in Bangladesh. The study also contributes to Shariah, Tawhidic approach/ontological approach and Shuratic process of Islamic corporate governance and institutional theory by exploring the Islamic banks’ existing SG practices in Bangladesh.

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External Sharī‘ah audit and review committee Vis‐a‐Vis Sharī‘ah compliance quality and accountability: A case of Islamic banks in Bangladesh

Cited by 23 publications

References 57 publications

The relevance of compliance audit on companies’ compliance with disclosure guidelines of financial statements

The relevance of compliance audit on companies’ compliance with disclosure guidelines of financial statements

Rationality of fourth party in legitimacy theory: Shariah governance of Islamic financial institutions

The practices of Shariah governance systems of Islamic banks in Bangladesh

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