Shariah audit
An independent assessment of internal controls, risk management and overall Shariah compliance, usually by internal audit.
Shariah audit is a function that provides an independent assessment of the quality and effectiveness of an institution's internal control, risk management and governance processes, and of its overall compliance with Shariah, as Bank Negara Malaysia's policy describes it. It works from an audit plan and methodology and reports findings to the board and the Shariah committee. AAOIFI also has a governance standard on internal Shariah audit.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
Shariah reviewA regular compliance function that assesses whether an institution's operations follow Shariah requirements.Shariah supervisory boardAn independent panel of Shariah scholars that approves an institution's products and oversees its Shariah compliance.Shariah governance systemThe institutional arrangements through which an institution ensures independent oversight of its Shariah compliance.