Introduction:

Islamic finance is particular kind of finance generating distinct corporate governance challenges.
Shariah governs all IFIs’s aspects which adds additional values to the existing corporate
governance structure.
Today with the quick steps of growth of Islamic financial system worldwide, corporate
governance of IFIs is assuming developing considerably.
While many practitioners and researchers insist on the need for a sound and efficient Shariah
supervisory system to insure the wellbeing of IFIs, it has nevertheless remarked that only few
studies have discussed this issue.

The importance of sharia governance:

is to ensure the concept and structure of the product the SG will evaluate the concept and structure of
the new product and will review the exiting products.

A good sharia governance structure should have proper arrangements in place for ensuring sharia-
compliance, set out the guidance and duties for the different levels of management related to sharia
matters and outline the functions of the different levels of sharia supervision and sharia risk
management. The importance of a strong sharia governance structure may be summarised by the
following points:

A. Include someone with expertise in accounting.

This criterion is important so that the board has robust understanding in what is happening in the
day-to-day operations of the entities. Knowledge in Shariah principle, coupled with knowledge in
business, accounting or finance will help the board to be of high independence while making
decision

B- SSB meets with audit committee and/or external auditor to review the financial statements.

The SSB should actually check and balance with the external auditor. They have to meet with audit
committee and/or external auditor not only to review the financial statement, but also to review the
whole operation of the business.