Internal Shariah Audit Overview

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Questions and Answers

What is the main concern highlighted in the ISRA-UKIFC qualitative study regarding Shariah governance?

  • Overreliance on the Shariah Supervisory Board's own work for auditing. (correct)
  • Inadequate regulatory framework for Shariah compliance.
  • Lack of qualified practitioners involved in Shariah governance.
  • Absence of standard-setting bodies in the Shariah compliance process.

What is a common practice mentioned in the ISRA-UKIFC publication regarding external Shariah audits?

  • Exclusively relying on multilateral standard-setting bodies for audits.
  • Issuing an annual opinion on the compliance of contracts with Shariah by the SSB. (correct)
  • Having the internal Shariah compliance unit undertake the entire external audit.
  • Relying solely on the external conventional auditor for Shariah compliance.

What is a key challenge mentioned in the text regarding the Shariah Supervisory Board's audit process?

  • Inadequate regulations for Shariah audits in select jurisdictions.
  • Shortage of audit resources within the SSB.
  • The SSB mainly relying on the external Shariah compliance units for audits.
  • Risk of bias due to the SSB reviewing its own work. (correct)

In the ISRA-UKIFC study, what is one of the roles of the internal Shariah compliance unit/review department mentioned?

<p>Issuing an annual opinion certifying Shariah compliance. (D)</p> Signup and view all the answers

What is the main issue associated with the Shariah Supervisory Board's reliance on its own work for auditing, according to the ISRA-UKIFC publication?

<p>Risk of confirming non-compliance issues as compliant. (A)</p> Signup and view all the answers

What does the ISRA-UKIFC report suggest as a way to address the concerns regarding the Shariah audit process?

<p>Regularizing the publication of the SSB's annual opinion. (B)</p> Signup and view all the answers

What is a significant difference between Shariah auditors and conventional auditors highlighted in the ISRA-UKIFC qualitative study?

<p>Shariah auditors require specific Islamic education. (B)</p> Signup and view all the answers

What is a key aspect regarding the Shariah audit process that the ISRA-UKIFC report emphasizes as critical for Islamic Financial Institutions?

<p>Maintaining the independence of Shariah auditors. (A)</p> Signup and view all the answers

According to the ISRA-UKIFC publication, why is it a concern that the Shariah Supervisory Board reviews its own work in the audit process?

<p>It may result in overlooking non-compliance issues. (C)</p> Signup and view all the answers

In the ISRA-UKIFC report, what is the suggested approach to improve Shariah governance within Islamic Financial Institutions?

<p>Enhancing the collaboration between SSB and internal auditors. (B)</p> Signup and view all the answers

Flashcards

Main Shariah governance concern?

Overreliance on the Shariah Supervisory Board's own work for auditing.

Common external Shariah audit practice?

Issuing an annual opinion on the compliance of contracts with Shariah by the SSB.

Key SSB audit challenge?

Risk of bias due to the SSB reviewing its own work.

Role of internal Shariah compliance unit?

Issuing an annual opinion certifying Shariah compliance.

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Main issue with SSB's self-auditing?

Risk of confirming non-compliance issues as compliant.

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Suggested way to address audit concerns?

Regularizing the publication of the SSB's annual opinion.

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Difference between Shariah and conventional auditors?

Shariah auditors require specific Islamic education.

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Critical for Islamic Financial Institutions?

Maintaining the independence of Shariah auditors.

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Concern with SSB reviewing own work?

It may result in overlooking non-compliance issues.

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Approach to improve Shariah governance?

Enhancing the collaboration between SSB and internal auditors.

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