INCEIF

The Global University in Islamic finance

Kuala Lumpur, Malaysia

MIFP

ASSIGNMENT
SUMMERY OF PROJECT PAPER

THE RELATION BETWEEN SHARIAH REVIEW AND SHARIAH

AUDIT

JUNE 2017

NAME : HASANUL BANNA ORAVAMPURATH

MATRIC NUMBER : 1700140

 INTRODUCTION

Now days, the Islamic financial institutions are being as a role model for the worlds economic structure. Because,

this institutions upholding strong mechanism of Shariah rules and regulations. Islam gave permission the trade but

prohibited the Ribah. So, the institution shall be operated with the obligation to Islamic rules. So, we discuss the

regulative methods of institutions. For a financial institution the important assessment technique is the auditing

process. But as an Islamic financial institution the contracts and services should be according to Shariah rules. So,

IFIs are shall created specified criteria to ascertain its internal examinations. That is Shariah review and Shariah

audit.

HISBAH

Hisbah is the religious institution under the state. Appoint the official to enjoining what is right, when people neglect

it and forbidding when people engaged in it. In the context of Islamic financial industry Hisbah is the regulatory

authorities under the state government. Central banks, monitory authorities, securities commission are the main

organs in clued in the frame. So the Shariah review and Shariah audit officers are the same like Muhthasib.

Muhthasib should be known qualified person and Shariah rulings. For more clarification the institutions are coming

under the heading of Hisbah.

SHARIAH GOVERNANCE

Shariah governance is the comprehensive term used for the whole management responsibility of an Islamic

institution. It provides the rules and regulations, give criteria to appoint officers, give instruction to institutional

behavior etc.

COPORATE GOVERNANCE

The corporate governance is the practice taken to develop the institutional affaires by intensifying the business

success and corporate accountability with respect of shareholders value and interest. The coordinative approach of

Shariah committee, Shariah governance, Shariah audit and risk management are settle the complete Shariah

compliance and conventional risk mitigation. Shariah review and Shariah audit are coming under this heading.

SHARIAH AUDITING

As a financial institution IFIs are shall conduct the operation of Shariah auditing. It has also clearly declared by

AAOIFI published in 2010 about the objective of the Shariah auditing. The financial report will be ensured the

advice of Shariah supervisory board of this IFI, the accounting standard of AAOIFI, the state accounting standard
and practice and the rule and regulations of the country where the institution is situated for working. Auditor has

some important characters honesty, integrity, trustworthiness, fairness, honesty, independence, care, skilled technical

standard. After the auditing the report will be published to Shariah committee.

SHARIAH REVIEW

AOIFI defined Shariah review as an examination of the extent of a IFIs compliance, in all its activities with Shariah

The IFIs level of Shariah compliance of business operations are evaluated in continuous and regular

assessment process.
To enhance the risk management and governance process best remedial measures are provided.
The relevant information and explanations are providing Shariah committee to assist in the formation of

judgment on the Shariah compliance level of an Islamic financial institution.

The function of Shariah review will be compliance with Shariah rulings and principle.

RELATION BETWEEN SHARIAH REVIEW AND SHARIAH AUDIT

The assessment process are usually coming under the authority of the state, it means we can say that the Hisbah

takes the role of comprehensive assessment authority. So, The Shariah review and Shariah audit are the assessment

methods of the Islamic financial institution. Both of them are individually operating organs. Without the two

techniques the institution cannot complete the obligation to the interest of stakeholders. the both techniques are

performing as the important techniques for the Islamic financial institutions. As an Islamic financial institution the

both assessment methods are operates according to Shariah compliance and Shariah rules. Shariah review taking

place regular assessment where as the Shariah audit is conducting periodical assessment from time to time

assessment. The Shariah review and auditing processes criteria provided the Islamic financial institution. Both

methods are operated by qualified officers with knowledge about Shariah compliance.

The Shariah review and Shariah audit are mutually dependent. Because, Shariah review is taking place before the

Shariah auditing process. The Shariah compliance also takes in a part of the assessment. the scope of Shariah review

and Shariah audit may overlap one another, Shariah review complements Shariah audit in a way that the continuous

and regular nature of Shariah review fills in the gap period during which audit is not performed. Shariah review

provides timely evidence and assistance for the Shariah committee to form their opinion as the Shariah compliance

level of the IFIs in a financial year for the purpose of issuing annual financial statements.

CONCLUSION
To conclude, after the study we found that the Shariah review and Shariah audit both are mutually related

concerning in an Islamic financial institution. not only the objective of the firm but also in the assessing criteria and

rules and regulations. To clear that, the Shariah audit and Shariah review are operating in the terms of Shariah

compliance and Shariah rules.