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- Title
External Shariah Audit Services from Practitioners’ Views: The Caseof Malaysian Islamic Banks
- Authors
Yasoa, M R Ph.D; Muhamad, S F Ph.D; Abdullah, T Ph.D; Yusoff, M N H Ph.D; Said, N M Ph.D; Zainuddin, S A Ph.D; Nasir, N A M Ph.D
- Abstract
Objective – This paper investigates the possibility and feasibility of Malaysia's Islamic banking industry hiring externalShariah audit (ESA) services in the audit fraternity as one of the Shariah governance mechanisms. Some of the scholarsargued that ESA is more independent and is able to strengthen the existing Shariah compliance in the industry.Methodology – This study employs a qualitative method by utilising semi-structured interviews with nine key industryplayers: Shariah auditors, Heads of Shariah audit, Shariah Committee (SC) Member, and Chief Shariah Officer. Datagathered from the interviews was transcribed and analysed using Atlas.ti software.Findings– A series of interviews reveal that given the current practices by the Islamic banking industry, it could beinferred that the Malaysian Islamic banking industry is not ready to exercise the ESA practices. This unreadiness is dueto several factors, such as ESA costs outweighing its benefits, the fear of reputational risk, and anxiety of leakingconfidential information to rivals.Novelty – The Shariah audit research especially relates to external Shariah audit is considered limited.Type of Paper: EmpiricalJEL Classification: E44, G10, G20.Keywords: External Shariah audit; Islamic Banks; qualitative method; Shariah governance; Malaysia
- Publication
GATR Journal of Finance and Banking Review VOL. 6 (3) SEPTEMBER- DECEMBER 2021, 2021, Vol 6, Issue 3, p144
- ISSN
2636-9176
- DOI
10.35609/jfbr.2021.6.3(4)