Shari’ah audit is a common function in Islamic financial institutions. However, other business institutions seems to have ignored this very important function simply because the origin of their businesses seems to be very clear to comply with Shari’ah and thus have public confidence to be so. So a restaurant or logistic or butcher or agri-business it appears to be compliant from the onset, therefore why undertake Shari’ah audit? We shall get back to this question, now
What is Shari’ah audit for a business?
Shariah audit for a business refers to periodic examination of overall business activities to determine if the business is operated and managed in compliance with Islamic business rules and ethics.
Why it matters to conduct Shari’ah audit for your business?
- Purity of income. In the past, business persons where well conversant with Islamic business rules and ethics for conducting legitimate business which has dramatically changed in modern times. With few exceptions, many Muslims business owners and managers runs their business based on the social setting they find themselves in. “When in Rome do as Romans do”, “Do and seek forgiveness later”, “Ends justify the means” mentalities seems to have settled to many of us and forget what is right and what is wrong, what is legitimate income and what is illegitimate. To uncover illegitimate income and the negative consequences thereof, Shari’ah audit is worthwhile undertaking. The Prophet peace be upon him said, “Flesh which has grown out of what is unlawful income will not enter paradise, but hell is more fitting for all flesh which has grown out of what is unlawful.” [Hadith Sahih].
- Shareholders assurance. Modern corporations are either listed or owned with many people who are not part of day to day running of the business. This reality prevents them from full understanding of business dynamics and the means that brings financial results thereof. With a share certificate, when dividend are declared I get my portion without actual understanding of how it come about. The case in point is investment in mutual funds, which might be investing in diverse set of assets. Shari’ah audit becomes a useful tool to solve and clear this ambiguity as well as provide bring assurance to shareholders who are sensitive to where they invest and how returns are generated.
- Public confidence. Businesses are operating in open system, whereby several stakeholders are impacted by the business undertaking. Suppliers needs comfort that raw materials are used to make lawful products. Islamic Financiers needs assurance that the business financed conform to acceptable business rules and ethics. Consumers wants to be associated with business brand that is well managed and is ethical.
When to conduct Shari’ah Audit for business?
Just like financial audit which is carried on once in a year, Shari’ah audit can be once a year or twice a year depending on the size of the organization business operations.
What is the scope of Shari’ah Audit for business?
It varies from business to business. However, these are common areas that are evaluated among others: Business model, Business finance, Business products and services, Business personnel, Business processes and so on.
What are the principles of Shari’ah Auditing?
Some of the worth noting principles of Shari’ah auditing are given are: (1) Integrity (2) Objectivity.(3) Confidentiality.(4) Neutrality (5) Competency (6) Continuity (7) Disclosure (8) Committed to Ethics (9)Committed to Religious rules.
Who can conduct Shari’ah Auditing for your business?
ABRAR Consult has a professional team of experts that can objectively audit your businesses and issue a Shari’ah audit report as well as certificate of compliance or otherwise within agreed timelines.
For booking your appointment, write to: info@abrarconsult.co.ke.