By

Nawal binti Kasim

Assoc. Prof. Dr. Shahrul Mohamad Ibrahim
Prof. Dr Maliah Sulaiman

By STUDENT KENMS IIUM

I. Shariah Governance Framework (SGF)
II. The Issues as Shariah Auditors
III. Conclusion
The Central Bank of Malaysia (BNM) has developed the
Shariah Governance Framework (SGF) for IFIs with the
objective of:
(i) sets out the expectations of the Bank on an IFIs Shariah
governance structures, processes and arrangements to
ensure that all its operations and business activities are in
accordance with Shariah
(ii) provides a comprehensive guidance to the board,
Shariah Committee and management of the IFI in
discharging its duties in matters relating to Shariah
(iii) outlines the functions relating to Shariah review,
Shariah audit, Shariah risk management and Shariah
research.
{with effect from 1st January 2011}
Shariah audit refers to the periodical assessment
conducted from time to time, to provide an
independent assessment and objective
assurance designed to add value and improve
the degree of compliance in relation to the IFIs
business operations, with the main objective of
ensuring a sound and effective internal control
system for Shariah compliance.
 Limited in people obtained with both knowledge shari'ah
& Auditing.
Competency as Shariah Auditor
Competency : technical skills, skills and knowledge to
perform job particularly with professional element.
Suggestion to expand the talent of auditors with
shariah audit knowledge and competencies(PwC,2011)
Proper training on shariah concept may enhance in
understanding of their among the staff in Islamic Bank
 Competency required for shari'ah Audit (SA)
Knowledge : A person have to obtain general and
specific knowledge.
General Graduates from Universities
(Bacc,ACCA,CIPA,etc)
Specific Training at local training agencies
(IBFIM, INCEIF,CERT & RED-money)
Skills : Ability of an Individual to apply knowledge and
complete task. SA to obtained skill to determined or
detects any non shari'ah compliance transaction in
their findings.
CBOK 2010 , internal auditors are required skill in
both technical and behavioral skills.
 Other Characteristic : Behavioral factor of a person
which could be treat an certainly differs between
individuals.
shari'ah Auditor : Identification and solving skills,
comunications skills & etc.
- Eg : Intitally at hiring a fresh graduate, screening the
skills otanied by candidates and selected, providing
training on analytical, interpersonal skills.

INPUT PROCESS OUTPUT

(Human talent (shari'ah (Assurance
; shari'ah Audit Service
auditor) Process) Achieved)
 Inititated by AAOIFI in 2013
CSAA is a program designed to equip candidates with the
requisite technical understanding and professional skills on
Shariah Compliance and review process for International
Islamic Banking and Finance Industry.
 CSAA provide knowledge in :
Roles and function of various Shariah compliance and review
process in financial institution
Correlation between a financial Instiutions Shariah
Supervisory Board (SSB) and its Internal Shariah comliance and
review process
Mechanism to ensure shariah compliance in accordance to
resolutions issued by SSB
Technical review of banking and financial operations to
determine the Shariah Compliance
Establishing the foundations to gain stakeholders trust and
confidence in a financial institutions adherence to Shariah
 CSAA program covers
AAOIFIs Shariah standards on Islamic finance products
and practices, and Shariah basis for those standards.
AAOIFIs Governance standards on Shariah compliance
and review processes.
Islamic banking and finance supervision (including
regulatory and external supervision, internal review, and
application of AAOIFIs standards).
Operational structures for Shariah compliance and
review.
Shariah compliance and review procedures (including
on planning, operations, documentation, and reporting).
Application of Shariah and Fiqh (Islamic jurisprudence)
to Islamic banking and finance practices.
 Launched in 2006, re-launched in 2017
CIPA is a internationally recognized qualification in
accounting for Islamic financial institutions, catering to
all banking, investments, and Takaful segments.
CIPA exclusively for ;
Accountants and Auditors
Shariah Auditors
Islamic finance practitioners, bankers, and
professionals
Undergraduate or graduate students aspiring for an
accounting career in Islamic banks
 CIPA objective are;
To develop understanding and application abilities of
the requirements of the AAOFI Financial Accounting
Standards (FAS) in respect of presentation of financial
statements and financial reporting of IFIs
To understand the process and techniques of carrying
out the audit in accordance with the principles of
accountancy as well as with the International
Standards on Auditing;
To deliver understanding of the fundamentals of
business and business management and the role of an
accountant in relation to governance, tax, compliance
and risk management in an organization
 To provide the understanding of the basic foundations
for Shariah compliance underpinning in Islamic
banking and finance, and to develop strong application
abilities of the requirements of the AAOFI Shariah
standards
To equip candidates with comprehensive
understanding of the requirements of Governance in
an organization from Shariah perspective.
 Need of competency knowledge and skill to apply
Clear on its responsibilities - to inform the bank of any
Shariah non compliance issues that need to be
addressed
The appointment of its Shariah board is made by the
General Assembly or at the Annual General Meeting of
shareholders and not by the Board of Directors
 Must be wider as in SGF (7.12)
1. Audit of financial statements
2. Compliance audit on organisational structure,
people, process and information technology
application systems
3. Review of adequacy of the Shariah governance
process.
 To ensure the products, services and all activities by
IFIs do not violate the Shariah
To ensure effectiveness of internal control system for
Shariah compliance

THE END