An Analysis of Shari鈥檃h Audit Practices in Islamic Banks in Malaysia
Analisis Amalan Audit Shari鈥檃h di Bank-bank Islam di Malaysia

集美麻豆-Graduate School of Business
Universiti Kebangsaan Malaysia
43600 集美麻豆 Bangi, Selangor, MALAYSIA.

nurlaili@ukm.edu.my

Faculty of Economics and Muamalat
Universiti Sains Islam Malaysia
71800 Nilai, Negeri Sembilan, MALAYSIA.

abdulrahim.iium@gmail.com

Abstract

According to the Shari鈥檃h Governance Framework (Bank Negara Malaysia 2011), each Islamic bank and Islamic financial institution in Malaysia is required to establish the Shari鈥檃h audit function. The Shari鈥檃h audit function, according to the Framework, is instituted in order to provide reasonable assurance and to ensure an effective internal control system for Shari鈥檃h compliance. A review of the literature on this topic shows a lack of empirical studies that explain the Shari鈥檃h audit practices in Islamic banks. This study examines the extent of Shari鈥檃h audit practices in Islamic banks in Malaysia. The study employs survey questionnaires which were distributed to the Heads of Shari鈥檃h audit, internal Shari鈥檃h auditors, Shari鈥檃h executives and members of the Shari鈥檃h Committee of 16 Islamic banks in Malaysia. The study used the Exposure Draft of Internal Shari鈥檃h Audit Framework (ISAF) issued by the International Shari鈥檃h Research Academy (ISRA) as a benchmark to measure the extent of Shari鈥檃h audit practices. The results of the study indicate that the majority of the Islamic banks have properly established the audit objectives, the governance structure, the competency requirements, the audit process, and the reporting requirements as part of their Shari鈥檃h audit practices. However, some Islamic banks have not clearly spelled out the audit scope and the audit charter. The study also found that internal auditors, Shari鈥檃h executives and members of the Shari鈥檃h Committee mostly agreed on the importance of developing a proper structure for the Shari鈥檃h audit function. In conclusion, the reasonably good Shari鈥檃h audit practices present in Islamic banks are commendable and indicate a positive development in enhancing the integrity and the accountability of Islamic banks, especially in Malaysia.

Keywords

Auditing; internal audit; Islamic banks; Shari鈥檃h audit

Citation

Ab Ghani, N. L., & Abdul Rahman, A. R. (2015). An Analysis of Shari鈥檃h Audit Practices in Islamic Banks in Malaysia. Jurnal Pengurusan, 43, 107–118.

@article{abghani2015analysis,
  title={An Analysis of Shari鈥檃h Audit Practices in Islamic Banks in Malaysia},
  author={Ab Ghani, Nur Laili and Abdul Rahman, Abdul Rahim},
  journal={Jurnal Pengurusan},
 

volume={43},
  number={},
  pages={107—118},
  year={2015},
  doi={},
  publisher={Penerbit 集美麻豆},
}

Export Bibliography:

No. of views: 1,294

   

Article received:  
Accepted for publication:  
Available online: 

Issue logo

43 (2015) 107 – 118

Download PDF

Share via:

Similar Articles

  1. The Mudharabah Deposit Rate Behaviour in Relation to the Conventional Deposit Rate
  2. Assessing the Revenue Efficiency of Domestic and Foreign Islamic Banks: Empirical Evidence from Malaysia
  3. Islamic Banks vs Conventional Banks in Indonesia: An Analysis on Financial Performances

Receive updates when new articles are published