Shariah Audit Program

Audit Program
Audit Program Name Audit Program Code Audit Program Type
Shariah Audit - 1 SH-900 Item Base






EP Activity
EP Activity Name
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Diminishing Musharakaha
Dimishing Musharakaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
EP Activity Long Name
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
EP Activity Code Data Set
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
01
02
02
02
02
02
02
02
02
02
02
02
02
02
05
05
05
05
05
05
05
05
05
05
05
05
05
05
05
05
06
06
06
06
06
06
06
06
06
06
06
06
06
EP Strata
EP Strata Name
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
EP Strata Long Name
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Ijarah
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Murabaha
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Istisna
Test
Check List Descrip
Ensure that Product being offered is shariah compliant including but not limit
All or part of processess, procedures and documentation
Product developed must not contradict to any of SBP applica
Staff do not have sufficient training to eliminate the risk of no
Staff do not have sufficient knowledge to eliminate the risks of sh
Make sure that IBD has proper mechanism to identify training needs of staff involved in Ijarah Transac
Process of identifying shariah non-
Check Asset Purchase Price date ensures that date menti
Check that under Ijara Agreement, ownership related
Check that under DM Agreements, ownership related expenses are shared between lessor and the lesseee
Check that As per BPRD Circular No. 12 of 2007 clause 3 point # (v) wherein All charges, other than mark-up, including fees/p
customers
Check that security deposit at the
obtained timeijarah
against of entering into agreement.
is not placed in Islamic All
PLSsuch charges
account shall be by
as required locked and2/3
clause their upfront2f
of section
deposit provided by the customer on trust which cannot be invested or bank must obtain the permission o
Check that in rental calculations, margin over KIBOR rem
Check that rentals are not charged to customers where assets remain und
Check that Rentals are not deducted for the period car was in bank's
Check that asset being sold to customer has a separate relationship through an undertaking as
Make sure that IBD has proper mechanism to identify training needs of staff involved in Diminshing Musharaka
Check that under DM Agreement, ownership related expens

Check that As per BPRD Circular No. 12 of 2007 clause 3 point # (v) wherein All charges, other than mark-up, including fees/p
customers at the time of entering into agreement. All such charges shall be locked and their upfront f
Check that in rental calculations, margin over KIBOR rem
Check that rentals are not charged to customers where assets remain und
Check that Rentals are not deducted for the period car was in bank's custody
Check that asset being sold to customer has a separate relationship through an undertaking a
Check that all transaction processed are in accordence with shar
Ensure that a proper check and balance exists on documentations. And trasn
Check that all deviations are approval from the shariah advisor, and verify that D
Ensure that Assets were in the possession of Bank at the tim
in Physical Posession ve
a)Telephonic
Process of identifying Confirm
shariah non-
b) Physcial Confirma
in Constructive Pose
a)Telephonic Confirm
b) Physcial Confirma
Incase Gaps were identified in Ownership/Resale it m
a)Time gap between taking possession o
b)Time gap must be with
To ensure theinevidence
the limitofpresc
Ow
a)3rd Party Evidence (invoices /
b)Internal Evidence (PO, Processing d
Ensure that Assets were Qualified , Quantified a
Check Transaction Documents are properly signed off and

Was the subject matter Sharia
Had initially any Master Istisna Agreement signed be
Is there any agency agreement between the bank and the man
Did the bank had received the goods in its possession before the goods
Was (Takaful) obtained to cover the risk of D
Identification of Istisna goods at the ti

Check List Tool Tip
Ensure that Product being offered is shariah compliant including but not limited to product specification, cont
All or part of processess, procedures and documentation are approved/vetted by shariah
Product developed must not contradict to any of SBP applicable guideline, shariah advisor's i
Staff do not have sufficient training to eliminate the risk of non shariah compliance(Document
Staff do not have sufficient knowledge to eliminate the risks of shariah compliance(Knowledge ap
Make sure that IBD has proper mechanism to identify training needs of staff involved in Ijarah Transactions and its sufficiency
approved by SA.
Make sure that Identified Non shariah compliant transactions are properly reported and final verdict o
approved by SA.
Check Asset Purchase Price date ensures that date mentioned on Offer letter is of prior th
Check that under Ijara Agreement, ownership related expenses are borned by lessor (I
Check that under DM Agreements, ownership related expenses are shared between lessor and the lesseee in proportion to
Check that As per BPRD Circular No. 12 of 2007 clause 3 point # (v) wherein Allof
No. 02 charges, other3/1/12
2013 clause than mark-up, including fees/pr
banks/DFIs should be determined and clearly disclosed to the customers at the time of entering
Check that security deposit obtained against ijarah is not placed in Islamic PLS account as required into
byagreement. Allsection
clause 2/3 of such ch2
disclosure shall be made and agreed with the customers in the Finance Agreemen
standard # 9 of AAOIFI which require the bank to keep the security deposit provided by the customer on trust which cann
permission of the customer to invest it on the basis of Murabaha between the customer an
Check that in rental calculations, margin over KIBOR remains fixed over the tenor of fina
Check that rentals are not charged to customers where assets remain undleivered or is not usable due to
Check that Rentals are not deducted for the period car was in bank's custody till final settlement when
Check that asset being sold to customer has a separate relationship through an undertaking as any clause with regarads
agreement.
Make sure that IBD has proper mechanism to identify training needs of staff involved in Diminshing Musharakah Transactions
training material is approved by SA.
Check that under DM Agreement, ownership related expenses are borned as per their invest
Check that As per BPRD Circular No. 12 of 2007 clause 3 point # (v) wherein All charges, other than mark-up, including fees/pr
banks/DFIs should be determined and clearly disclosed to the customers at the time of entering into agreement. All such ch
disclosure shall be made and agreed with the customers in the Finance Agreemen
Check that rentals are not charged to customers where assets remain undleivered or is not usable due to
Check that Rentals are not deducted for the period car was in bank's custody till final settlement when a car i
Check that asset being sold to customer has a separate relationship through an undertaking as any clause with regarads to sa
approved by SA.
Check that all transaction processed are in accordence with shariah guidelines and process flow a
Ensure that a proper check and balance exists on documentations. And trasnactions are executed in accorda
Check that all deviations are approval from the shariah advisor, and verify that Deviations approval is taken befo
Ensure that Assets were in the possession of Bank at the time of Sale(Ref Sec 3/1/1 Shariah
in Physical Posession verify via
Make sure that Identified Non shariah complianta)Telephonic
transactions Confirmation
are properly reported and final verdict o
b) Physcial Confirmation
in Constructive Posession
a)Telephonic Confirmation
b) Physcial Confirmation
Incase Gaps were identified in Ownership/Resale it must be Justifiable. To ensure ch
a)Time gap between taking possession of the goods and Resale
b)Time gapmust be with
To ensure theinevidence
the limit of
presecribed
Ownershipbycheck:
the process flow.
a)3rd Party Evidence (invoices / Receipts/ GRNs)
b)Internal Evidence (PO, Processing dates on internal Docs)
Ensure that Assets were Qualified , Quantified and Specified at the time of sale.
Check Transaction Documents are properly signed off and in sequence as prescribed in pro
approved by SA.
Was the subject matter Shariah compliant?
Had initially any Master Istisna Agreement signed between the Bank and the Custom
Is there any agency agreement between the bank and the manufacturer to sell the goods on b
Did the bank had received the goods in its possession before the goods were sold to third party?(Check
Was (Takaful) obtained to cover the risk of Destruction or loss of Goods?
Identification of Istisna goods at the time of signing of GRN

Check List Code Category Risk Control of Risk Status Mandatory On-Site/Off-Site
1 Active Yes Offsite






ICFR Mapped ICFR Chapter Diarizable
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No
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No
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No
No
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No
No
No
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No
No
No
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No
No
No
No
No
No
No
No
No
No
No
No
No
No
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No
No
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No
No
Standard Observation Level 1
Observation Name
Shariah Compliant Product in line

Approved processess and procedures.
Compliance of product feature with the SBP guideline and Shariah Advisor instruction.
No sufficient training
No sufficient knowledge
Shariah board approved training mechanism
Adherence of shariah advisor verdict
Training material approved by SB
Prior offer and acceptance of asset purchase
Adherence of Ijarah aggrement
Adherence of SBP guideline
Adherence of AOOFI shariah standard guideline
Adherence of Ijarah agreement
Adherence of Ijarah undertaking
Shariah Compliant Product
Adherence of DM aggrement
Adherence of DM agreement
Adherence of DM related undertaking
Training need ananlysis
Approved shariah guidelines
Transaction exception approval of Shariah Advisor.

Reporting of shariah non-compliant transactions

Transaction as per approveed process flow.
Transaction as per policy guideline.

Adherence of Istisna agreement

Observation Custome Code
Obs-1
Obs-2
Obs-3
Obs-4
Obs-5
Obs-6
Obs-7
Obs-8
Obs-9
Obs-10
Obs-11
Obs-12
Obs-13
Obs-14
Obs-15
Obs-16
Obs-17
Obs-18
Obs-19
Obs-20
Obs-21
Obs-22
Obs-23
Obs-24
Obs-26
Obs-27
Obs-28
Obs-29
Obs-30
Obs-31
Obs-32
Obs-33
Obs-34
Obs-35
Obs-36
Obs-37
Obs-38
Obs-39
Obs-40
Obs-41
Obs-42
Obs-43
Obs-44
Obs-45
Obs-46
Obs-47
Obs-48
Obs-49
Obs-50
Obs-51
Obs-52
Obs-53
Obs-54
Obs-55
Obs-56
Obs-57
Obs-58
Obs-59
Obs-60
Observation Name Observation Custome Code
Level 2 1
Level 3 2
Level 4 3
Level 5 4
Level 6 5
Level 7 6
Level 8 7
Level 9 8
Level 10 9
Level 11 10
Level 12 11
Level 13 12
Level 14 13
Level 15 14
Level 16 15
Level 17 16
Level 18 17
Level 19 18
Level 20 19
Level 21 20
Level 22 21
Level 23 22
Level 24 23
Level 25 24
Level 27 26
Level 28 27
Level 29 28
Level 30 29
Level 31 30
Level 32 31
Level 33 32
Level 34 33
Level 35 34
Level 36 35
Level 37 36
Level 38 37
Level 39 38
Level 40 39
Level 41 40
Level 42 41
Level 43 42
Level 44 43
Level 45 44
Level 46 45
Level 47 46
Level 48 47
Level 49 48
Level 50 49
Level 51 50
Level 52 51
Level 53 52
Level 54 53
Level 55 54
Level 56 55
Level 57 56
Level 58 57
Level 59 58
Level 60 59
Level 61 60
Observation Name
Shariah Compliant Product in line

Compliance of product feature with the SBP guideline and Shariah Advisor instruction.
Shariah board approved training mechanism
Prior offer and acceptance of asset purchase
Adherence of Ijarah aggrement
Adherence of Ijarah undertaking
Adherence of DM aggrement
Adherence of DM related undertaking
Approved shariah guidelines
Transaction exception approval of Shariah Advisor.

Reporting of shariah non-compliant transactions

Transaction as per policy guideline.


Observation Custome Code Observation Name
Obs-1 Please enter Exception







Observation Custome Code
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
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48
49
50
51
52
53
54
55
56
57
58
59
60

Shariah Audit Program

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Audit Program

Audit Program Name Audit Program Code Audit Program Type

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Shariah Audit - 1 SH-900 Item Base

Check List Descrip

All or part of processess, procedures and documentation

Product developed must not contradict to any of SBP applica

Process of identifying shariah non-

Staff do not have sufficient training to eliminate the risk of no

Staff do not have sufficient knowledge to eliminate the risks of sh

Check that under DM Agreement, ownership related expens

Check that in rental calculations, margin over KIBOR rem

All or part of processess, procedures and documentation

Product developed must not contradict to any of SBP applica

Process of identifying shariah non-

Staff do not have sufficient training to eliminate the risk of no

Staff do not have sufficient knowledge to eliminate the risks of sh

Check that all transaction processed are in accordence with shar

Check Transaction Documents are properly signed off and

All or part of processess, procedures and documentation

Product developed must not contradict to any of SBP applica

Process of identifying shariah non-

Was (Takaful) obtained to cover the risk of D

Identification of Istisna goods at the ti

All or part of processess, procedures and documentation are approved/vetted by shariah

All or part of processess, procedures and documentation are approved/vetted by shariah