Human capital development in shariah audit

Abstract

The Shariah Governance Framework (SGF) is a set of organizational arrangements through which Islamic Financial Institutions (IFIs) ensure effective oversight, responsibility and accountability of the board of directors, management and Shariah Committee. In measuring the IFIs compliance to the Shariah, SGF requires regular internal Shariah reviews and Shariah audit. This paper aims to identify the independence and competency quality that requires for human capital development in Shariah audit. This research adapts focus group study conducted with the stakeholders of IFIs which consist of regulators, IFIs management, employees and shareholders. The results from this study indicate that Shariah auditors must possess Shariah and accounting knowledge. However, if the Shariah auditors do not have the necessary qualifications, their experiences in the Islamic banking could be considered. In terms of independence, the Shariah audit function shall currently attach to the internal audit department. The findings of the study could be used in developing syllabus and training modules for Shariah audit that reflects the Shariah requirements and also the industry’s needs. Future research could be done by expanding the sample of the study that covers wider group of informants to achieve variety of feedbacks from the Shariah audit experts.

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