Knowledge for Shari’ah Auditors’ Competency in Islamic Financial Institutions

Abstract

Specialized auditors providing assurance that Islamic Financial Institutions (IFIs) comply with shari’ah principles are needed to serve better the IFIs’ stakeholders. These auditors who are termed as shari’ah auditors require a different set of knowledge to become competent in performing their function effectively. However, shortage of qualified and competent shari’ah auditors to perform the shari’ah audit is one of the challenges experienced by the IFIs in Malaysia. This paper aims to identify the knowledge requirement of shari’ah auditors. A multiple-case study involving four groups of IFIs has been conducted to gather rich data empirically on what constitute as required knowledge for shari’ah auditor. In total, 31 interviews have been performed involving the shari’ah auditors as well as Head of Shari’ah audit department of the participating IFIs. It is found that there are minimal guidelines on recruitment of shari’ah auditors in IFIs. The majority of the respondents within the group have also chosen Shari’ah knowledge as the main knowledge to be acquired besides knowledge in Islamic banking operation, Fiqh Muamalat, auditing and conventional banking. Comparative analysis between the Head of Shari’ah Audit and the shari’ah auditors does not show much difference regarding their choice of knowledge except for the knowledge in Fiqh Muamalat and Islamic banking. Also, auditing seems to be less favored by the respondents as a component of knowledge required for shari’ah auditors as it is regarded more as a skill to be applied rather than knowledge to be acquired.