Standardizing the Shariah Regulation of the Forensic Audit Profession of Islamic Financial Institutions

Abstract

A juristic frame of reference is considered a crucial building block for Islamic banks, Sharīʻah boards and both internal and external Sharīʻah audit. It is aalso important at the level of regulatory and supervisory authorities. In this regard, many of those interested in the Islamic banking industry and those practicing the profession of Sharīʻah audit are looking forward to crystallizing the idea of unifying the frame of reference for the Sharīʻah pronouncements (fatwā) that are issued by the Sharīʻah supervisory boards of regional and international Islamic financial institutions. This study discusses the topic of establishing a juristic frame of reference, which refers to unifying the juristic frame of reference by relying on all the credible fatwā of Islamic banks that have been issued by various Sharīʻah supervisory boards in a country or a jurisdiction and all the Sharīʻah standards that have been issued by the Accounting and Auditing Organization for Islamic Financial institutions (AAOIFI). The topic of unifying the juristic frame of reference does not refer in any way whatsoever to the issue of unifying the juristic opinions, since it is completely different from the concept of unifying juristic opinions. Based on the problem statement, the objectives of the study has been determined, which aim to identify the concept of juristic frame of reference, its nature and relationship with Islamic financial institutions. Moreover, the study will analyze the obstacles of unifying the juristic frame of reference within the Islamic banking system and its effectiveness in any Islamic financial institution. In this context, the study reached a number of conclusions and recommendations, namely the need for the regulatory and supervisory authorities to impose the implementation of Sharīʻah and accounting standards issued by AAOIFI and in the event a Sharīʻah board of an Islamic financial institution did not follow a certain standard, disclosure should be made about such an incident. There is also the need to establish a supreme Sharīʻah board in the central bank that is tasked with providing guidance and identifying the preponderant view when different Sharīʻah boards of Islamic financial institutions differ on an issue not to unify the fatwā, but to support it with juristic evidence with the aim of disseminating knowledge among the new students.