An Islamic finance expert from Islamic Finance Council (UK), has highlighted the critical need to reinforce, upgrade and enhance Shariah-assurance practices to meet shareholder expectations and safeguard the integrity of the industry.
Joined by four panelists, Omar Shaikh who is an executive board member at Islamic Finance Council UK (IFC), moderated the session at the fourth World Islamic Retail Banking Conference and shared key findings from the report, Enhancing Shariah Assurance.
The report jointly released by the IFC, a not-for-profit promotional body and the Malaysia based International Shariah Research Academy for Islamic Finance (Isra), identified select limitations in current shar’iah audit practices and provided suggestions for improvements. “Although Shariah assurance is an issue unique to the Islamic finance industry, the mainstream audit and assurance industry has over time developed and embedded practices and mechanisms that address what are in essence similar underlying challenges,” Shaikh said.
He said maintaining Shariah integrity is key to building and maintaining stakeholder confidence in the market. “Shariah audit is central to this.” The report highlighted a set of considerations directed to Shariah scholars, financial institutions, Shariah consultancy firms, standard setting bodies and regulators. Amongst the critical topics discussed included the dangers of auditing your own work, the effective use of Shariah audit opinions, transparency, external Shariah audits, transparency and disclosure, competency and standards and income purification. Shaikh also shared key findings from the report, which concluded that an evident gap in Islamic finance is the presence of a professional services body for Shariah scholars. ?