INTERNAL CONTROL SYSTEM AND EFFECTIVE INTERNAL SHARIAH AUDIT FUNCTION: A CONCEPTUAL FRAMEWORK

Authors

  • NUR LAILI AB GHANI UNIVERSITI KEBANGSAAN MALAYSIA
  • Siti Saffa’ Shaharuddin IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia

DOI:

https://doi.org/10.53840/ijiefer106

Keywords:

Shariah audit, Shariah governance, Shariah non-compliance risks, internal control system, contingency theory

Abstract

This study proposes a conceptual framework for the internal control system, as a necessary pre-requisite for an effective internal Shariah audit function in Islamic Financial Institutions (IFIs). To improve a strong management of risks that do not comply with the Shariah, it is imperative that the internal Shariah audit function is effectively operated. This study reviews existing literature on the internal Shariah audit function. By adopting contingency theory, this study then develops a conceptual framework for an effective internal Shariah audit function. The main argument presented in this article is that a strong internal control system leads to a more effective the internal Shariah audit function at managing risks associated with non-compliant events in IFIs. This study contributes to provide a clear direction to the IFIs in reshaping the prevailing Shariah audit function and Shariah governance arrangements.

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Published

2023-12-18

How to Cite

AB GHANI, N. L., & Shaharuddin, S. S. . (2023). INTERNAL CONTROL SYSTEM AND EFFECTIVE INTERNAL SHARIAH AUDIT FUNCTION: A CONCEPTUAL FRAMEWORK. International Journal of Islamic Economics and Finance Research, 6(2 December), 121-137. https://doi.org/10.53840/ijiefer106