A conceptual paper on factors that affect the shariah compliance auditing among the Islamic financial institutions in Malaysia

In Malaysia, shariah compliance audit is one of the crucial elements stated in the shariah governance framework to control and monitor the operations of Islamic Financial Institutions (IFIs). It is not an easy task to ensure that the shariah audit upholds Shariah principles and values. This is to make sure that compliance of IFIs’ operations is practised when offering Shariah-compliant services. The main objective of shariah compliance auditing is to safeguard the interests of the stakeholders of IFIs such as account holders, shareholders, creditors, management, and employees, as well as the community at large, while ensuring proper and adequate mechanism of check and balance in place is tailored to the objectives and missions of its establishment as per the Maqasid al-Shariah. This study aimed to provide a review and analysis of Shariah audit compliance literatures by exploring the factors that affect Shariah audit compliance among the IFIs in Malaysia, such as the cooperation between internal and external auditors, the scope of the internal Shariah audit and qualification syariah auditors. This study contributes to the body of knowledge of Shariah audit compliance that would provide a more precise illustration to the IFIs on the importance of shariah compliance auditing in fulfilling the needs of stakeholders. Subsequently, it helps to maximise the benefits of shariah compliance auditing to their stakeholders as well as regulatory improvement in the future in minimising or reducing the occurrence of shariah non-compliance risk.