Professional Documents
Culture Documents
Lecture 13:
Auditing in Islamic Accounting
LECTURE BY:
DR. SITI NURZAHIRA CHE TAHRIM
CHAPTER OUTLINE
To understand the concepts, the needs,
objectives and principles of (Shariah)
Audit
To identify the nature of Shariah Advisory
Board
To comprehend the Shariah Governance
Framework
Illustrations of Shariah Audit
Introduction
Audits are performed to ascertain the validity and
reliability of information and to provide an assessment of
a system’s internal control.
The goal of an audit is to express an opinion on the
organisation.
Due to practical constraints, an audit often is conducted
on sampling basis, hence audit engagements usually seeks
to provide only reasonable assurance, not absolute
assurance, that the statements are free from material
error.
Audit provides an independent and impartial assurance
to the shareholders and other stakeholders of a
company on the financial statements.
For IFIs, the scope of audit extends to Shari’ah
compliance in execution of Islamic financial transactions.
Audit of Financial Statements
Auditing is the accumulation and evaluation of evidence
about information to determine and report on the degree
of correspondence between information and established
criteria.
Audit of financial statements is an independent assessment
of the fairness by which company′s financial statements are
presented by its management.
It is performed by competent, independent and objective
person(s) known as external auditors, who issue an
auditors’ report based on the results of the audit.
An audit seeks to provide only reasonable assurance that
the financial statement are free from material error based
on statistical sampling – True and Fair View
Objective of An Audit for IFIs
To enable the Auditor to express opinion as to whether the financial
statements are prepared, in all material aspects, in accordance with
Shari’ah rules and principles and relevant accounting standards and
practices in the country in which the financial institution operates.
Auditior’s Opinion
True and Fair View
Auditor’s opinion should enhance the credibility of financial statements
The user, however, cannot assume that the opinion is an assurance as to the
future viability of the financial institution nor can the user assume as to the
efficiency and effectiveness with which the management has conducted the affairs
of IFIs
An audit is designed to provide reasonable assurance that the financial
statements taken as a whole are free from misstatement.
Reasonable assurance is a concept relating to the accumulation of the
audit evidence necessary for the auditor to make a conclusion
In the case of IFIs, the auditor in theory, should have additional task to
provide reasonable assurance that the transactions examined comply
with Shari’ah rules and principles as determined by Shari’ah Board of
the IFI (AAOIFI)
Principles of An Audit
Righteousness • An Auditor must be in the right position and mindset
Embezzlement
elements such as tax
Any non-fulfillment of
Hoarding practices evasions,
the terms of contract
misstatement of
accounts
DETRIMENTAL TO
ZAKAT SHARE EXTRAVAGANCE
OTHER PARTY
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TAZKIRAH
Continue doing what you do best for the
benefits of Ummah, for the sake of Allah.
Never stop learning – Fardhu Ain and
others
Doa:
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