COFFIS Créteil 5 et 6 Juin 2009 - iefpedia.comAudit+for+Islamic...MUDHARABAH (MODUS OPERANDI) 7...
Transcript of COFFIS Créteil 5 et 6 Juin 2009 - iefpedia.comAudit+for+Islamic...MUDHARABAH (MODUS OPERANDI) 7...
Assoc.Prof.Dr.Younes SoualhiChairman, Shari’ah Board
HSBC Amanah (Malaysia) & Shari’ah Boardmember , Munich Re Re Takaful
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Contents1.Definition.2.Scope.3.Shari’ah framework.4.Techniques and modes ofimplementation.5.Case studies.6.Conclusions.
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Shari’ah audit is theexamination of an IFI’scompliance with the Shari’ah inall it activities.
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Scope
Shari’ahaudit
FinancialStatements
Operation-al
aspects
Structure
Statutoryrequirem
-ents
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Shari’ah Framework
Permissibilityof trade.
Trading inreal
commodities
Profit andloss sharing
Prohibition ofriba
prohibition ofgharar
&maysir.
prohibition ofharam
commodities.
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MUSHARAKAH PARTNERSHIP
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CustomerBank
Home
10% 90%
10%
90%
%
Initial Capital
Profit shared based oncapital contribution
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MUDHARABAH (MODUS OPERANDI)
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MUDARIBMUDARIB(Manager(Manager--Bank)Bank)
ProfitProfit
RABB AL MALRABB AL MAL(Capital provider(Capital provider--
Depositors)Depositors)
CAPITALCAPITAL
LossesLosses
• Shared between mudarib + rabb almal
• Profit sharing according to acontractually agreed ratio
• Profit sharing cannot be a fixedamount/a fixed percentage ofcapital contribution
• Born solely by rabb almal
• Mudarib will only bepersonally liable if theloss is caused by hisnegligence
Work with capitalWork with capital Provide capitalProvide capital
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Takaful (WAKALAH MODEL)
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-retakaful-reserves-claims-investment income-stabilization reserves
TakafulParticipants
Contribute
Risk Fund
Manage
Takaful Operator
Wakalahfee
Surplus
1st
contractTabarru`
2nd Contract
Wakalah
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PHASES OF THE SHARI’AH AUDIT
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A) PLANNING PHASE
I) Understand the business of the IFI.II) Identifying the Appropriate
Techniques, Resources and Scope.III) Developing the Audit Plan and
Program.
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B) EXAMINATION PHASE
Actual Fieldwork
Deploy the right auditing techniqueTo gather the required evidence
To enable reasonable conclusions to be reached
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AUDITING TECHNIQUES
Examination of papers
Interviewing
Direct Observation
Benchmarking
Surveys
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AUDITING TECHNIQUES
Case Studies
Flow Charting
Statistical analysis
Walkthrough
Questionnaires
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C) REPORTING PHASE
The most important part of the auditcycle.
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AUDIT REPORT FORMAT1. Title2. Executive Summary3. Introduction to Report4. Objectives and scope of audit5. Timing6. Methodology and Approach7. Summary of Key Findings8. Recommendations9. Management Response10. Conclusions11. Appendices12. Glossary
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SAMPLE AUDIT PROGRAM INEXCEL FILE
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REVIEW OF OPERATIONALFRAMEWORK
1.1 Objectives:-To examine the extent of an IFIs compliance,
in all it’s activities, with the Shari’ah.E.g. : Contracts, Agreements, Policies, Products
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SAMPLE OF SHARI’AH AUDITFINDINGS
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SAMPLE OF SHARI’AH AUDITFINDINGS
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INTERNAL ORGANS WITHIN THEORGANIZATION
The Shari’ah Supervisory Board (SAB)Independent body of specialized jurists in Shari’ah.
The Internal Shari’ah Review TeamEnsures that the decisions of the (SAB) are adhered to.
The Audit and Governance CommitteeOversee the financial reporting and the internal controlprocesses.
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Bodies if Shari’ah Audit
Shari’ahaudit
Shari’ahCommittee
Shari’ahDepartment
Internalauditor
Externalauditor
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SHARI’AH AUDIT IN MALAYSIA AS ACASE POINT
Started in 1983 with the establishmentof Bank Islam Malaysia Berhad (BIMB)Dual-banking system was introducedin 1993BNM (Central Bank) offer 3 newIslamic Banking licenses to foreignIslamic banks in 2004-2005
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NATIONAL LEVEL SHARIAH ADVISORYCOUNCIL (SAC)
Highest Shari’ah authority on Islamic banking in MalaysiaStreamline and harmonize the Shari’ah interpretationsAdvice BNM on Islamic banking and takaful operationSource of reference by the court of arbitratorCo-ordinate Shari’ah issues with respect to Islamicbanking and financeAnalyze and evaluate Shari’ah aspects of newproducts/schemes
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SHARI’AH COMMITTEEAdvise Board of DirectorsEndorse Shari’ah compliance manualEndorse and validate pertinent documentsAssist parties that seek advice on Shari’ah mattersAdvice IFI to seek clarificationProvide written Shari’ah opinionAssist SAC on referenceReport to the Board of Directors
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SHARI’AH AUDIT IN PAKISTAN AS A CASE STUDYState Bank of Pakistan (SBP) has adopted a Shari’ahcompliance based on international best practices whichconsist of:a. A central Shari’ah board that advises SBP on issues referred
to it by Islamic Banksb. Appointment of a Shari’ah Adviser in Islamic banksc. Periodic internal Shari’ah review by Islamic Banking
Institutions (IBI)d. Shari’ah compliance audit of IBIs by SBP as a part of
inspection
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CONCLUSIONSShari’ah audit must be done vigorously and with accuratedisclosure to ensure full compliance to Sha’riah principles.Internal auditors, together with shari’ah boards andShari’ah department s of their respective IFS mustcomplement each other for a better performance in thefuture.External auditors must equip themselves with thenecessary knowledge of shari’ah before auditing anyparticular IFI.Some auditing standards such as AAOIFI’s can be used as aguidelines in the auditing process.COFFIS
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