Role of Internal Shariah Audit to Detect Non-Shariah Compliance

Yusri Hazrol Yusoff, Mohammad Aqil Fikri Nor Hisham, Nur Azlin Sofia Mohamed Noordin, Siti Nur Mahirah Athirah Amrel, Siti Nur Nabilah Isnin and Mohamad Shahril Isahak
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Yusri Hazrol Yusoff: Faculty of Accountancy, UiTM Cawangan Selangor Kampus Puncak Alam Bandar Puncak Alam, Selangor
Mohammad Aqil Fikri Nor Hisham: Faculty of Accountancy, UiTM Cawangan Selangor Kampus Puncak Alam Bandar Puncak Alam, Selangor
Nur Azlin Sofia Mohamed Noordin: Faculty of Accountancy, UiTM Cawangan Selangor Kampus Puncak Alam Bandar Puncak Alam, Selangor
Siti Nur Mahirah Athirah Amrel: Faculty of Accountancy, UiTM Cawangan Selangor Kampus Puncak Alam Bandar Puncak Alam, Selangor
Siti Nur Nabilah Isnin: Faculty of Accountancy, UiTM Cawangan Selangor Kampus Puncak Alam Bandar Puncak Alam, Selangor
Mohamad Shahril Isahak: Faculty of Accountancy, UiTM Cawangan Selangor Kampus Puncak Alam Bandar Puncak Alam, Selangor

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 10, 2947-2953

Abstract: The internal Shariah audit has emerged as an important means of ensuring that Islamic Financial Institutions (IFIs) act in accordance with the principles of Shariah. Thus, this paper explores the pivotal role of internal Shariah audits in identifying non-Shariah compliance within the IFIs. While the Islamic finance industry continues to expand and diversify, weaknesses in compliance with Shariah standards remain significant concerns as they may erode the confidence of stakeholders and challenge the legitimacy of the industry. This research is therefore informed by the need to improve the efficiency of internal Shariah audits in averting compliance related risks and encouraging sound governance within IFIs. Consequently, this paper focuses on the methodologies and practices of internal Shariah auditors to determine the existing flaws and develop recommendations for enhancing the current audit approaches. The analysis is based on the assessment of the current state of internal Shariah audit practices, key problems observed by the auditors, and suggestions for improving the compliance assurance level. These findings are expected to facilitate the improvement of internal Shariah audit in IFIs and thus help enhance the confidence in the Shariah compliance of these institutions.

Date: 2024
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