Adoption of the COSO methodology for internal Shariʿah audit

Joint Authors

Jafri, Faris
Bu Harawah, Said

Source

ISRA International Journal of Islamic Finance

Issue

Vol. 14, Issue 2 (31 Aug. 2022), pp.221-235, 15 p.

Publisher

International Shari'ah Research Academy for Islamic Finance

Publication Date

2022-08-31

Country of Publication

Malaysia

No. of Pages

15

Main Subjects

Business Administration
Financial and Accounting Sciences
Islamic Studies

Abstract EN

Purpose : Islamic financial institutions (IFIs) are required to establish a Shariīʿah Governance Framework (SGF) to strengthen their Sharīʿah-compliance mechanism and ensure that all relevant IFI regulations are in line with Sharīʿah rules and principles.

Effective implementation of the Shariīʿah-compliance function will further promote stakeholder confidence, as well as the integrity of IFIs, by reducing Shariīʿah non-compliance risks.

This study aims to examine the internal control framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and explore the extent to which it can be incorporated in the Sharīʿah-compliance function of IFIs.

Design/methodology/approach :This study adopts a qualitative method of inquiry, utilizing the inductive method and content analysis to build comprehensive knowledge that will assist in exploring the framework of COSO methodology and the extent to which it can be adopted by IFIs.

Findings :The findings indicate that the existing frameworks of Sharīʿah governance, whether that of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) or Bank Negara Malaysia (BNM), need to be further developed.

Therefore, the adoption of COSO methodology in the internal Sharīʿah audit of IFIs, as suggested by AAOIFI, is not only possible but desirable.

The study also finds that the COSO framework places the highest priority on risk management in that it makes it an integral part of the decision-making process in all the institution's activities.

As a result, incorporating the comprehensive COSO risk management structure within the Sharīʿah-compliance function will enhance risk management in IFIs.

Originality/value :This study highlights the importance of the COSO internal control framework and examines its components, principles and the possibility of its adoption by IFIs.

The findings of this study are expected to contribute to enhancing the Sharīʿah-compliance function of IFIs.

American Psychological Association (APA)

Bu Harawah, Said& Jafri, Faris. 2022. Adoption of the COSO methodology for internal Shariʿah audit. ISRA International Journal of Islamic Finance،Vol. 14, no. 2, pp.221-235.
https://search.emarefa.net/detail/BIM-1429458

Modern Language Association (MLA)

Bu Harawah, Said& Jafri, Faris. Adoption of the COSO methodology for internal Shariʿah audit. ISRA International Journal of Islamic Finance Vol. 14, no. 2 (2022), pp.221-235.
https://search.emarefa.net/detail/BIM-1429458

American Medical Association (AMA)

Bu Harawah, Said& Jafri, Faris. Adoption of the COSO methodology for internal Shariʿah audit. ISRA International Journal of Islamic Finance. 2022. Vol. 14, no. 2, pp.221-235.
https://search.emarefa.net/detail/BIM-1429458

Data Type

Journal Articles

Language

English

Notes

Includes bibliographical references : p. 233-235

Record ID

BIM-1429458