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Shariah Audit Practices in Malaysian Islamic Banks: An Audit Expectation Performance Gap Analysis

Supiah Salleh
By Supiah Salleh
3 weeks ago
Shariah Audit Practices in Malaysian Islamic Banks: An Audit Expectation Performance Gap Analysis

Gharar, Islamic banking, Shariah, Takaful, Israf

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  1. Chapter 5 SHARIAH AUDIT PRACTICES IN MALAYSIAN ISLAMIC BANKS : AN AUDIT EXPECTATIONPERFORMANCE GAP ANALYSIS Supiah Salleh, Mustafa Mohd Hanefah, Zurina Shafii & Muhammad Iqmal Hisham Kamaruddin Universiti Sains Islam Malaysia (USIM) INTRODUCTION Shariah audit practices strengthen Shariah-compliance and enhance the integrity of the IFIs. They emerged to cater to the different natures and characteristics of Islamic banking practices. Many Islamic banking scholars require that the nature of Islamic banking should be distinct from conventional banks. Islamic banking and finance should differ from conventional banking practices in terms of: (i) striving for a just, fair and balanced society as envisioned by Islamic economics; (ii) being constructed upon the principle of brotherhood and cooperation, which calls for a system of equity-sharing, risk-sharing and stake-taking; (iii) being characterised by ethical norms and social commitments as a system grounded in the ethical and moral framework of the Shariah community; (iv) being oriented and entrepreneur-friendly, emphasising productivity and the physical expansion of economic production and services; and (v) and operating within limits that ensure stability in the value of money and that curtail destabilising speculation (Dusuki, 2011; Iqbal & Mirakhor, 2007; Chapra & Ahmed, 2002). The motivation of this study is to ensure Shariah-compliance issues are properly addressed since Shariah non-compliance is a risk to all IFIs. This can be done through developing proper guidance on Shariah audit practices regarding framework, scope, independence, competence processes, reporting, responsibilities and performance. With the expanding global Islamic banking and finance industry, there is a need for developing professional Shariah auditing practices. In Layout Syariah Governance.indd 113 05/08/2019 4:02 PM
  2. Shariah Governance And Assurance In Islamic Financial Sectors addition , the failure of external auditors and Shariah Supervisory Board members to conduct a holistic Shariah audit (Najeeb & Ibrahim, 2014) also motivates this research to identify gaps in the current practices in Shariah audit. According to Sultan (2007), Shariah non-compliance risks may occur in products, the technology supporting the operations, operational processes, the people involved, documentations and contracts, policies and procedures, and other activities that require adherence to Shariah principles. Chik (2011), also address that Shariah auditing should not only address worldly corporate governance practic, but also on the religious obligations of IFIs and Shariah auditors (muhtasib/mudaqqiq syar’ie). Additionally, Abdul Rahman (2011) states that the Shariah Committees of IFIs normally express their opinions on the Shariahcompliance of offered products and services (ex-ante compliance). He also argued that a comprehensive and well-guided audit of Shariah legal contracts, documentations and operations have not been adequately conducted. Besides that, the ex-post compliance stage is absent in practice. Without a Shariah audit function, this scenario creates a functional gap of Shariah compliance in the Islamic financial system. From the stakeholder’s point of view, it will create an expectation gap in Shariah audit practices in the IFIs. It is noteworthy to highlight that, Shariah audit in theory, should enhance the shareholders’ valuations and confidence of the stakeholders of the IFIs. Hence, if the stakeholders (i.e. customers, depositors, etc.) are suspicious of Shariah compliance, this would adversely affect the integrity of Islamic finance (Abdul Rahman, 2011; Atiqah, 2009). To this end, two objectives are set in this study, which are: Firstly to examine the perceptions of the internal auditors (Shariah auditors), regulators (BNM), Shariah committee members, Shariah officers, external auditors and depositors concerning the Shariah audit practices in Islamic banks in Malaysia. Secondly, to determine the existence of an expectations-performance gap between the internal auditors (Shariah auditors), regulators (BNM), Shariah committee members, Shariah officers external auditors and depositors concerning the Shariah audit practices in Islamic banks in Malaysia. Moreover, in order to fulfil the research objectives, the expectation gap in Shariah audit practices was analysed using Porter’s (1993) framework on audit 114 Layout Syariah Governance.indd 114 05/08/2019 4:02 PM
  3. Shariah Audit Practices in Malaysian Islamic Banks : An Audit Expectation-Performance Gap Analysis expectation-performance gaps, which refers to the classification of gap into reasonableness gaps and performance gaps. LITERATURE REVIEW To date, a limited number of studies have been conducted on Shariah audit practices in Malaysia. Instead, one of the early empirical study was initiated by Hood and Bucheery (1999) on audit expectation gaps between financial and religious (Islamic) auditors in Bahrain. Hood and Bucheery (1999) further argued that religious audits in Bahrain seem to complement the financial audits by external auditors. Nevertheless, they questioned whether or not religious auditors have a set of religious statements to audit as compared to financial statements audited by financial auditors. They found that a financial audit expectation gap does exist in Bahrain but not for religious auditors. They also found that financial auditors and religious auditors in Bahrain seem unaware of the tasks performed by the other. Hood and Bucheery (1999) presumed that this finding might be due to the respondents’ lack of understanding on the subject of the religious audits in comparison, Kassim et al. (2009) examined the expectations and the actual practices of Shariah audit functions in IFIs in Malaysia. The study surveys different groups of respondents involved directly or indirectly with the process of Shariah compliance/auditing in IFIs. Based on their study, they found that there exists a gap between the “desirable” and the “current” practice of Shariah auditing in the IFIs in Malaysia. Kassim et al. (2009) also classified the gaps into framework, scope, qualifications and independence. The inclusion of these four components are what makes this study different from previous studies on audit expectation gaps. Grais and Pellegrini (2006) also highlighted that the Islamic banking industry lacks supervision and monitoring, oversight, auditing and management of risks. These are closely related to the competence level of Shariah auditors. This is because any risks resulting from the auditor’s incompetence will expose Islamic banks to potential losses (Othman & Ameer, 2015). Losses in the Islamic banks like in the case of Dubai Islamic banks in 1998, signals the importance of identifying and monitoring the gaps that exist in Shariah audit practices. Mulyani (2007) for instance, found that the academics, audit practitioners and 115 Layout Syariah Governance.indd 115 05/08/2019 4:02 PM
  4. Shariah Governance And Assurance In Islamic Financial Sectors Shariah scholars in Malaysia , agreed strongly on the creation of a new Shariah audit discipline with a separate regulatory framework. However, this Shariah audit should be conducted by a new group of professionals termed Shariah auditors. In addition, Yahya and Mahzan (2012) found that the practice of Shariah audit is still at the development stage and requires further improvement. Thus, there is a need to increase the understanding of Shariah auditing among internal auditors, to enhance the Shariah knowledge of internal auditors to standardise the Shariah audit framework and to provide general guidelines in designing audit programmes for Shariah auditing. Abdul Rahman (2011) also suggested the need for establishing Shariah audit evidence, Shariah audit education, Shariah audit programmes and procedures, and reporting results from the Shariah audit findings. Training on Shariah audit practices must be undertaken among regulatory authorities, IFI staff and external auditors so that they reach a uniform level of understanding of what constitutes Shariah audit (Sultan, 2007; Abdul Rahman, 2008). Among the views from the scholars and practitioners regarding the practice of Shariah audit in Islamic banks include a lack of comprehensive and well-guided audit of Shariah legal contracts, documentations and operations (Abdul Rahman, 2011). The Islamic banking industry is also found to be lacking in supervision and monitoring, oversight, auditing and management of risks (Grais & Pellegrini, 2006). In addition, it is also lacks auditor competence in performing Shariah audit functions according to scholars and practitioners (Uddin et. al., 2015; Yusoff, 2013; Yaacob, 2012; Kasim, 2009). These gaps in both Shariah and accounting knowledge have inadvertently dampened the availiability of competence amongst Shariah auditors. Those with accounting knowledge tend not to have Shariah knowledge and vice versa. Hence, any risks resulting from auditor’s incompetence during Shariah audit processes would expose the Islamic banks to potential losses (Othman & Ameer, 2015). Subsequently, the rapid and tremendous growth in Islamic finance requires the IFIs to have competent Shariah auditors. Providing checks and balances also requires equally competent auditors, with adequate knowledge of accounting, auditing and finance, as well as being equally good with knowledge on Shariah and fiqh (Uddin et. 116 Layout Syariah Governance.indd 116 05/08/2019 4:02 PM
  5. Shariah Audit Practices in Malaysian Islamic Banks : An Audit Expectation-Performance Gap Analysis al., 2015). In essence, investments in Shariah education, accounting and auditing is crucial to enhance the knowledge and expertise of the actors involved with Shariah audit, especially those involved in the IFIs (Rahman, 2011; Sulaiman, 2011). Subsequently, many of the academics, audit practitioners and Shariah scholars in Malaysia, agreed strongly on the creation of a new Shariah audit discipline with a separate regulatory framework (Yusoff, 2013; Mulyani, 2007). They argued that there is a need to increase the understanding of Shariah auditing among internal auditors, to enhance the Shariah knowledge of internal auditors, to standardise the Shariah audit framework and to provide general guidelines to design audit programmes for Shariah auditing (Yahya & Mahzan, 2012). Some of the scholars also argued that Shariah audit is only to be conducted by Shariah professionals instead of accountants (Kasim et.al., 2009), while some others preferred trained internal auditors to undertake the responsibilities (Yusoff, 2013; Yaacob, 2012). The audit committees of IFIs should discharge their best efforts to ensure that external auditors are capable of undertaking the ex-post Shariah compliance reviews within their terms of references (IFSB, 2006). They should also work with the internal auditor and the Shariah auditor, if the internal auditors are not Shariah capable, and more importantly with the SC (Abdul Rahman, 2011). Hence, IFIs auditing should evolve into professional internal and external Shariah auditors capable of carrying out financial, management and also Shariah auditing. Hence, it is also the crucial for chartered audit firms, in this instance, to acquire the necessary knowledge and personnel to undertake Shariah audit. The above discussions presented above result in different expectations for Shariah audit practices especially in the area of framework, independence, competency, reporting, scope and processes. Identifying components of the audit expectation gap is critical because problems arising from different components require different solutions. This is because possible tools to reduce the gap can be assigned only after the audit expectation gap and its components have been identified in a specific society (Judit, 2015). Based on the previous studies and given current scenario, it is undeniable that there is a need to identify the existence of an expectation 117 Layout Syariah Governance.indd 117 05/08/2019 4:02 PM
  6. Shariah Governance And Assurance In Islamic Financial Sectors gap in the Shariah audit practices due to the different views and opinions of the scholars , practitioners and stakeholders regarding the practice of Shariah audit. It is crucial to get feedback from regulators, practitioners and the stakeholders on what the best practices in Shariah audit would be, and then to analyse their expectations as to identify the gaps in the implementation of the Shariah audit function based on the given SGF (BNM, 2010) and Islamic Financial Services Act (IFSA, 2013). In this instance, it is important to identify the gaps that exist in the practice of Shariah auditing since its implementation requires improvement (Othman & Ameer, 2015). Hence, through the identification of the factors that contribute to the expectation gap in Shariah audit practices, steps will be taken as an initiative to narrow the gaps. This can also assist in enhancing and harmonising, the practice of Shariah audit in IFIs. METHODOLOGY After the validation process with the experts is conducted, the research proceeds with collecting data using the survey method. There are different methods for data collection identified in the literature, including by mail, face-to-face, telephone, electronic mail, and a combination of these methods (Sekaran & Bougie, 2009). The decision to choose a survey method may be based on a number of factors that include sampling, type of population, the form and content of questions, predicted response rates, costs, and the duration of data collection (Cooper & Schindler, 2006). The instrument used in this research is a mail survey questionnaire. The target respondents were required to read the questions themselves and mark the answers they deemed appropriate on the questionnaire. Specifically, the questionnaires for this study were distributed to the regulators, Shariah Committee members, practitioners of the IFIs (internal auditors, external auditors and Shariah officers). The target population in this study was a group of individuals employed in Islamic banks who are related to Shariah audit practices, in various Islamic banks that are linked to Shariah audit practices. These include those involved in the Shariah Committee; the practitioners (internal auditors, external auditors and Shariah officers), the regulators and the stakeholders. The regulators are representatives from Jabatan 118 Layout Syariah Governance.indd 118 05/08/2019 4:02 PM
  7. Shariah Audit Practices in Malaysian Islamic Banks : An Audit Expectation-Performance Gap Analysis Perbankan, Insurans dan Takaful (JPIT) department and other related departments of BNM. They were also included in the population due to their responsibilities in overseeing the overall operations of Islamic banks in Malaysia. The Shariah committee members, the practitioners of the IFIs (internal auditors, external auditors and Shariah officers) and other stakeholders were selected as the sample population of this study. This is because they are the three lines of defence as referred by IFSB in its Guiding Principles of Risk Management for Institutions (other than Insurance institutions) offering only Islamic Financial Services. Principle 14 states that: “IFI should have in place adequate systems and controls, including Shariah Board or Advisor, to ensure compliance with Shariah rules and principles”. Performance Gap in Shariah Audit Practices According to Porter (1993), the ‘performance gap’ arises when society’s reasonable expectations of auditors’ accomplishments are not equivalent to their expectations of the auditors’ achievement. This result could be due to either ‘deficient standards’ (the gap between duties reasonably expected of auditors and auditors’ existing duties, as defined by the law and professional promulgations) or ‘deficient performance’ (the gap between the expected standards of performance of auditors’ existing duties and auditors’ perceived performance). Performance gaps due to ‘deficient standards’ involve comparing the roles and responsibilities based on legal and professional standards (Bui & Porter, 2010; Haniffa & Hudaib, 2007; Teck Heang et al., 2007; Fadzly & Ahmad, 2004) and would commonly use responses from surveys and observations. Deficient standards may also arise due to factors in the environment that do not support effective functioning in auditing. One of the causes of the performance gap in relation to the auditors’ role and responsibilities is due to the deficiency in standards, or a situation that arises when auditors are not able to fulfil the roles and responsibilities that are expected by the public because they are not clearly defined or are not included in the legal pronouncements (Muneeza & Hassan, 2011; Teck Heang, 2008; Haniffa & Hudaib, 2007; Zaidi, 2007; Porter, 1993) litigious environment which 119 Layout Syariah Governance.indd 119 05/08/2019 4:02 PM
  8. Shariah Governance And Assurance In Islamic Financial Sectors characterises auditing today can be traced to the audit expectationperformance gap . Defined as the gap between society’s expectations of auditors and auditors’ perceived performance, it is seen to comprise ‘reasonableness’ and ‘performance’ components, the latter being subdivided into ‘deficient standards’ and ‘deficient performance’. Empirical research was conducted in New Zealand in 1989 to investigate the audit expectation-performance gap. The study enables the duties which constitute the reasonableness, deficient standards and deficient performance components of the gap to be identified. It also provides the means to estimate the relative contribution of the duties to their respective components, and of the components to the overall gap between society’s expectations of auditors and auditors’ perceived performance. The research provides new insights into the structure, composition and extent of the audit expectation-performance gap but, more importantly, it signals a rational, comprehensive approach towards narrowing the gap. If adopted, this should bring society’s expectations of auditors and auditors’ performance into closer accord and, as a consequence, reduce the criticism and litigation which auditors face today. (Wolters Kluwer UK. In Shariah audit practices, the duties and responsibilities of a Shariah auditor are not clearly defined in the SGF (BNM, 2010) or IFSA (2013). However, the implementation of the Shariah audit function in IFIs is highlighted in the SGF (BNM, 2010) and IFSA (2013). As a result, this research chooses the guideline outlined in the SGF (BNM, 2010) and IFSA (2013) on the Shariah audit function and on additional responsibilities of Shariah auditors as perceived by the public, in order to determine the expectation gap due to deficient standards. ‘Deficient performance’ is defined as the gap between the expected standard of performance of auditors’ existing duties and auditors’ perceived performance. For the purpose of this research, deficient performance of the Shariah audit is measured based on the fullfilment of the existing duties of the Shariah auditors and perceived performance in the Islamic banks. The research involved a series of questionnaires and hypotheses to measure the gap among the respondents. The hypothesis for deficient standards was developed based on regulator’s policies on 120 Layout Syariah Governance.indd 120 05/08/2019 4:02 PM
  9. Shariah Audit Practices in Malaysian Islamic Banks : An Audit Expectation-Performance Gap Analysis the Shariah audit functions. Performance gaps may exist when Shariah auditors are not able to fulfil the role and responsibilities expected by the public due to those not being clearly defined by regulator’s policy. SGF (BNM, 2010) and IFSA (2013) describe the function of Shariah audit in IFIs but the specific roles and responsibilities of Shariah auditors are not properly addressed. Thus, this study expects an expectations gap among the respondents concerning the current performance of responsibilities as prescribed by the regulator policy. In addition to the responsibilities concerning Shariah audit as prescribed by regulators, the measurement of the performance of responsibilities in Shariah audit are also derived from the input from the interview sessions with respondents in Part A. Among the identified responsibilities for Shariah audit are: i. Shariah auditors are responsible for compliance to the Shariah rulings in the IFIs (bakhs, tatfif, ‘uqud, khiyanah, israf, tanajush, speculation and gharar). ii. Shariah auditors are responsible for imaintaining internal control system for Shariah compliance in IFIs. iii. Shariah auditors are responsible to attest and provide Shariah assurance on the overall operations in IFIs. These are the three main areas pertaining to Shariah audit responsibilities highlighted by the respondents during the interview sessions. Hypotheses are developed to test the reasonable responsibilities of Shariah auditors as outlined above for empirical evidence. Hence the list of hypotheses is as follows: H1: There is an expectation gap among the respondents (regulators, Shariah committee, internal auditors, external auditors, Shariah auditors, Shariah officers and the depositors) in relation to Shariah audit responsibility. H1a: There is an expectation gap among the respondents concerning Shariah audit responsibility as prescribed by BNM. 121 Layout Syariah Governance.indd 121 05/08/2019 4:02 PM
  10. Shariah Governance And Assurance In Islamic Financial Sectors H1b : There is an expectation gap among the respondents concerning Shariah audit responsibility on Shariah rulings (bakhs, tatfif, ‘uqud, khiyanah, israf, tanajush, speculation and gharar). H1c: There is an expectation gap among the respondents concerning Shariah audit responsibility to attest and provide for Shariah assurance in Islamic banks. Additionally, as discussed previously, ‘deficient performance’ is defined as the gap between the expected standard of performance of auditors’ existing duties and auditors’ perceived performance. The development of the hypotheses are based on the performance of the existing duties of the Shariah auditors and the perceived performance in Islamic banks. The hypothesis is: H2:There is an expectation gap among the respondents (regulators, Shariah committee, internal auditors, external auditors, Shariah auditors, Shariah officers and the depositors) on Shariah auditor’s performance in Islamic banks. The items involved in measuring the Shariah auditor’s performance are gathered from the input during the interview sessions and from the existing duties of internal auditors in Islamic banks. Among the performance assessments are: (i) providing useful service to the stakeholders; (ii) reporting truthfully; (iii) detecting errors and irregularities pertaining to Shariah; (iv) acting independently; (v) communicating effectively; (vi) prescribing remedies in the event of Shariah noncompliance; (vii) preventing errors and irregularities pertaining to Shariah; (viii) coping with Shariah risk and uncertainty in transactions; (ix) predicting the future in the event of Shariah litigation; (x) enforcing Shariah legal requirements; (xi) forming correct judgements in Shariah audit findings; and (xii) coping with professional rules and Shariah rules. In addition, among the assessments for Shariah audit responsibilities conducted in the study are: (a) Shariah auditors are responsible towards outside financiers (i.e. capital contributors, mudharib); (b) Shariah auditors should have a clear understanding on the business activities of the IFIs to allow for 122 Layout Syariah Governance.indd 122 05/08/2019 4:02 PM
  11. Shariah Audit Practices in Malaysian Islamic Banks : An Audit Expectation-Performance Gap Analysis better scoping audit exercises; (c) Shariah auditors should develop a comprehensive internal Shariah audit programme; (d) Shariah auditors should make references to relevant sources including the SAC’s published rulings, the SC’s decisions and fatwa guidelines; and (e) Shariah audit should be conducted on a periodic basis ANALYSIS AND FINDINGS The researcher received a total of 172 questionnaires out of the 340 questionnaires mailed to the respondents, which is equivalent to the response rate 49 per cent. After screening, the dataset remained at 166 usable questionnaires with demographic profiles as shown in Table 5.1: Table 5.1: Respondents Demographic Frequency Percentage Gender Male Female 81 85 48.8% 51.2% 40 88 32 6 53% 24.1% 19.3% 3.6% Age Below 30 31-40 41-50 Above 50 Designation 14 Shariah committee Internal auditors 33 External auditors 16 Stakeholders (depositors) 43 32 Shariah officers Regulators (BNM) 28 Years of Experience in Islamic Banks 1-2 years 73 3-5 years 49 6-10 years 32 More than 10 years 12 8.4% 19.9% 9.6% 25.9% 19.3% 16.9% 44% 30% 19% 7% 123 Layout Syariah Governance.indd 123 05/08/2019 4:02 PM
  12. Shariah Governance And Assurance In Islamic Financial Sectors Based on Table 5 .1, 85.7 percent of the Shariah committee members who responded to the questionnaire hold legal qualifications apart from the existing Shariah qualification that they already possess. This shows that out of the 14 Shariah committee members, 12 have legal and Shariah qualifications. However, most of the internal auditors are also found to hold accounting qaulification, which is 48.5 percent from the total internal auditors. In comparison, about 18.2 percent of the internal auditors have Shariah qualification, while nine per cent of them have a background in law. It is noteworthy to highlight that, these internal auditors whom are working in various Islamic banks, possess other academic qualifications than accounting as they are also responsible for performing the Shariah audit function at their respective Islamic banks. Apart from that, 32 Shariah officers, of which five are Shariah managers of the Islamic banks that participated in the survey. 75 percent of them hold Shariah qualifications while 34.3 percent are qualified in law. 17.8 percent of the Shariah officers are qualified in both areas of Shariah and law. However, none are qualified in accounting and auditing. Also, 28 respondents from BNM participated in the study from various departments such as Jabatan Perbankan Insurans dan Takaful (JPIT) and departments related to Islamic banking operations. 42.9 percent of the regulators who participated in the survey are qualified in accounting, 10.7 percent are qualified in law and 28.6 percent are qualified in Shariah. The qualifications of the respondents is illustrated in Table 5.2: 124 Layout Syariah Governance.indd 124 05/08/2019 4:02 PM
  13. Layout Syariah Governance .indd 125 19.9% 33 16 43 32 28 166 Internal Auditors External Auditors Stakeholders (Depositors) Shariah Officers Regulators (BNM) Total 100% 16.9% 19.3% 25.9% 9.6% 8.4% 14 Shariah Committee Designation No. of Respondents /% Representative 49 29.5% 12 (42.9%) 0 5 (11.6%) 16 (100%) 16 (48.5%) 0 Accounting Qualification Table 5.2: Qualifications of Respondents 35 21% 3 (10.7%) 11 (34.3%) 6 (13.9%) 0 3 (9%) 12 (85.7%) 58 34.9% 8 (28.6%) 24 (75%) 5 (11.6%) 2 (12.5%) 6 (18.2%) 13 (92.9%) Legal Shariah Qualification Qualification 46 (27.7%) 4 (14.3%) 9 (28.1%) 0 4 (25%) 28 (84.8%) 1 (7%) Shariah Audit Involvement 142 85.5% 28 (100%) 32 (100%) 19 (44.1%) 16 (100%) 33 (100%) 14 (100%) Awareness in Shariah Audit 3 5 0 5 3 10 Mean Years of Experience in Islamic Banking Shariah Audit Practices in Malaysian Islamic Banks: An Audit Expectation-Performance Gap Analysis 125 05/08/2019 4:02 PM
  14. Shariah Governance And Assurance In Islamic Financial Sectors To determine the existence of an expectation-performance gap in Shariah audit the Kruskal-Wallis test was used to find a statistically significant difference between two or more groups of an independent variable on a continuous or ordinal dependent variable . It is considered the nonparametric alternative to the one-way ANOVA, and an extension of the Mann-Whitney U-test to allow the comparison of more than two independent groups. Since this study involves a small number of respondents, the Kruskal-Wallis test was appropriate to identify the objective of the research, which is to determine the existence of an expectation-performance gap in Shariah audit practices among the respondents. The present study utilised the Kruskal-Wallis to assess whether there was a significant difference among six groups of respondents. Most of the questions in the questionnaires use the 5-point Likert scale measurement (1=Strongly disagree to 5=Strongly agree). Hence, the data were ranked and the Kruskal-Wallis was used to analyse the differences based on the mean rank of each group. For the purpose of comparing those surveyed, the mean values were used to reflect the accuracy of the score for each group of respondents. Expectation Gap in Shariah Audit Practices on Shariah Audit Responsibility Performance gap – deficient standards is a gap between the duties which can reasonably be expected of Shariah auditors and Shariah auditors’ report as defined by the Shariah Governance Framework (BNM, 2010), Islamic Financial Services Act (IFSA) 2013, and IPPF. In this segment, the Shariah audit responsibilities are segregated into three areas, which are regulator, Shariah rulings and Shariah assurance. The hypothesis for this segment is H1a: There is an expectation gap among the respondents concerning Shariah audit responsibility as prescribed by BNM. The four statements in this section are derived from the SGF (BNM, 2010). Two out of four statements have a p-value of <0.05 which rejects the null hypothesis. The audit responsibilities that have a significant effect among the respondents are: (i) the Shariah audit function shall be performed by internal auditors who have acquired adequate Shariah-related knowledge and training; and (ii) the audit committee upon consultation with the Shariah committee shall 126 Layout Syariah Governance.indd 126 05/08/2019 4:02 PM
  15. Shariah Audit Practices in Malaysian Islamic Banks : An Audit Expectation-Performance Gap Analysis determine the deliverables of the Shariah audit functions. Not all of the respondents agree on the view that the internal auditors should acquire adequate Shariah knowledge and training to perform the Shariah audit function. 127 Layout Syariah Governance.indd 127 05/08/2019 4:02 PM
  16. Layout Syariah Governance .indd 128 3.64 3.85 4.14 4.07 b) Shariah audit may be conducted as part of the IFIs thematic audit on specialised areas such as management audit and Anti-Money Laundering Audit (AMLA). c) Shariah audit on critical areas shall be conducted at least once a year depending on the risk profile of the IFI. d) The Audit committee upon consultation with the Shariah Committee shall determine the deliverables of the Shariah audit functions. SC a)The Shariah audit function shall be performed by internal auditors who have acquired adequate Shariah-related knowledge and training Statements 4.03 4.33 4.03 3.93 IA 3.93 4.06 3.81 3.87 EA 4.39 4.25 4.46 4.51 DEP Mean 4.06 4.53 4.15 4.37 SO 3.75 4.00 3.82 3.82 REG) 4.0783/ 0.004* 4.2530/ 0.062 4.0964/ 0.105 4.1205/ 0.002* Avg. Mean/ Regulator H1a: There is an expectation gap among the respondents concerning Shariah audit responsibility as prescribed by BNM regulator. Table 5.3: Existence of Expectation Gap in Shariah Audit Practices on Shariah Audit Responsibility Shariah Governance And Assurance In Islamic Financial Sectors 128 05/08/2019 4:02 PM
  17. Layout Syariah Governance .indd 129 4.30 4.00 c) Shariah auditor should attest and provide assurance that the Shariah audit conducted have met Shariah objectives and comply with Shariah requirements 4.42 a) Shariah audit should cover Shariah rulings such as bakhs (any voluntary effort to diminish or decrease the value of the product or services being sold) tatfif (taking in an excess in measure and giving out a short measures) uqud (contract), khiyanah (embezzlement of funds), Israf (the propriety of expenditure), tanajush (bidding), speculation and gharar (uncertainty). b) Shariah auditor should obtain and make references to relevant sources, including the SACs published rulings, the Shariah committee decisions, fatwas, guidelines, the Shariah audit results and the internal Shariah checklist. SC Statements 4.39 3.85 4.00 IA 4.00 3.98 4.00 EA 4.58 4.05 4.37 DEP 4.50 4.02 4.04 SO 3.89 3.95 3.85 REG) 4.221/ .004* 4.027/ 0.000* 4.115/ 0.018* Avg. Mean/ Shariah Rulings H1b: There is an expectation gap among the respondents concerning Shariah audit responsibility on Shariah rulings (bakhs, tatfif, ‘uqud, khiyanah, israf, tanajush, speculation and gharar). Shariah Audit Practices in Malaysian Islamic Banks: An Audit Expectation-Performance Gap Analysis 129 05/08/2019 4:02 PM
  18. Shariah Assurance H1c : There is an expectation gap among the respondents concerning Shariah audit responsibility to attest and provide Shariah assurance in the Islamic Banks. Avg. Statements SC IA EA DEP SO REG) Mean/ 3.78 3.21 3.43 4.18 3.84 3.07 3.632/ a) Shariah auditors are reponsible towards the 0.000* outside financiers (i.e. capital contributor; mudharib). 4.50 4.36 4.31 4.69 4.50 4.17 4.451/ b) Shariah auditor should have a clear understanding 0.022* of the business activities of the IFI to allow for better scoping of an audit exercise, i.e. auditability and relevance of activities. 4.07 4.42 4.00 4.60 4.50 4.10 4.361/ c) Shariah auditor should develop a comprehensive 0.000* internal audit program or plan. 4.42 4.69 4.18 4.51 4.06 4.03 4.506/ d) Shariah auditor should provide recommendations 0.035* on rectification measures taken as well as following-up on the implementation by the IFI. 4.57 4.69 4.00 4.58 4.50 4.35 4.494/ e) Shariah auditor should attest and provide 0.004* assurance that the Internal Shariah Control System (ISCS) established by the IFIs have met Shariah objectives and comply with Shariah requirements. Shariah Governance And Assurance In Islamic Financial Sectors 130 Layout Syariah Governance.indd 130 05/08/2019 4:02 PM
  19. Layout Syariah Governance .indd 131 3.45 3.66 4.12 4.45 2.00 4.28 4.00 4.07 4.25 4.25 3.18 3.56 4.48 4.32 4.34 2.86 4.28 4.06 4.31 3.34 4.25 4.03 3.42 3.42 4.035/ 0.353 3.578/ 0.014* 4.133/ 0.082 3.162/ 0.003* * Significantly different among overall respondents p<0.05 based on Kruskal-Wallis test. IA: Internal auditors; SA: Shariah auditors; SC: Shariah Committee; EA: External auditors; DEP: Depositors; SO: Shariah officers; REG: Regulator f) Shariah auditor should assess the adequacy of Shariah review as a basis to determine the authenticity of Shariah rulings, adoption of Shariah requirements and validity of Shariahcomplaint transactions. g) Shariah auditor should detect fraud related to Shariah. h) Shariah auditor should communicate results of any assessment or findings arising from the Shariah audit to the Board Audit Committee and the Shariah Committee. i) Shariah auditor should include objectives, scope, personnel assignment, sampling, control and duration in the Shariah audit planning. Shariah Audit Practices in Malaysian Islamic Banks: An Audit Expectation-Performance Gap Analysis 131 05/08/2019 4:02 PM
  20. Shariah Governance And Assurance In Islamic Financial Sectors The next hypothesis is H1b : There is an expectation gap among the respondents concerning Shariah audit responsibility on Shariah rulings (bakhs, tatfif, ‘uqud, khiyanah, israf, tanajush, speculation and gharar). There is an expectation gap among the respondents since all three statements in this section has a p-value<0.05. The statement “Shariah audit should cover Shariah rulings such as bakhs (any voluntary effort to diminish or decrease the value of the product or services being sold) tatfif (taking in an excess in measure and giving out a short measures) uqud (contract), khiyanah (embezzlement of funds), Israf (the propriety of expenditure), tanajush (bidding), speculation and gharar (uncertainty)” received an average mean value of 4.11, which shows agreement with the statement. The Shariah committee group scored an average mean of 4.42, which indicate the importance of Shariah rulings in operations. Even though there is an expectation gap among the respondents, the gap is due to the level of agreement to strongly agree with this statement. For the statement “Shariah auditor should obtain and make references to relevant sources, including the SACs published rulings, the Shariah committee decisions, fatwas, guidelines, the Shariah audit results and the internal Shariah checklist”, Shariah committee, depositors and the regulators agree with the statement with an average mean value of 4.02 to 4.30. The internal and external auditors and the regulators have a variety of responses with average mean values between 3.85 and 3.95. The average mean showed that there are individuals who do not agree and are not sure with the statements. For the statement “Shariah auditor should attest and provide assurance that the Shariah audit conducted have met Shariah objectives and comply with Shariah requirements”, the average mean is between 3.89 to 4.58, indicating that an expectation gap exists among respondents. The other significant difference is that Shariah auditors and internal reviewers have an added layer of religious accountability, and while assessing the Shariah adherence of an entity’s financial statements, they are additionally expected to carry out their main religious responsibility of amr bil ma’ruf wa nahi ‘an al-munkar (enjoining the proper and forbidding the improper). This means that all audit dimensions or parameters designed to evaluate Shariah compliance must have the spiritual ingredient of God consciousness, 132 Layout Syariah Governance.indd 132 05/08/2019 4:02 PM
  21. Shariah Audit Practices in Malaysian Islamic Banks : An Audit Expectation-Performance Gap Analysis that is, a fear of sanctions in the hereafter for not complying with Shariah. Due to the religious requirements prescribed for Muslims under Shariah law implicit in the objectives of Shariah, it can be inferred that the auditors and reviewers are required to be Muslims, to give certification on permissible (halal) financing. This is comparable to the issuing of halal certification by relevant religious authorities for food and pharmaceuticals and for religious edicts/decrees (fatwas) of Shariah advisors, who likewise must be Muslims. i. The next hypothesis is H1c: There is an expectation gap among the respondents concerning Shariah audit responsibility to attest and provide Shariah assurance in Islamic banks. There are nine statements related to this section. Among the questions that obtained p-value <0.05 show significant support for the hypothesis are as follow: ii. Shariah auditors are responsible towards outside financiers (i.e. capital contributors; mudharib); iii. Shariah auditors should have a clear understanding of the business activities of the IFI to allow for better scoping of audit exercises, i.e. auditability and relevance of activities; iv. Shariah auditors should develop a comprehensive internal audit programme or plan; v. Shariah auditor should provide recommendations on rectification measures taken as well as following-up on the implementation by the IFI; vi. Shariah auditor should attest and provide assurance that the Internal Shariah Control System (ISCS) established by the IFIs have met Shariah objectives and comply with Shariah requirements; vii. Shariah auditors should assess the adequacy of Shariah reviews as a basis to determine the authenticity of Shariah rulings, on whether to adopt Shariah requirements, on the validity of Shariahcomplaint transactions and Shariah auditors should detect fraud related to Shariah. These statements highlight Shariah auditor’s responsibilities in Islamic banks. Seven statements received different views from the respondents. For Shariah auditors are responsible towards the outside financiers (i.e. capital contributor; mudharib) statement, the average 133 Layout Syariah Governance.indd 133 05/08/2019 4:02 PM
  22. Shariah Governance And Assurance In Islamic Financial Sectors mean score for the overall respondents is 3 .63. This shows that the respondents’ feedback range from ‘disagree to not sure’. However, this statement is agreed with by depositors with a mean score of 4.18 since it favours the depositors as capital contributors. One statement that does not have overall agreement is “Shariah auditors should assess the adequacy of Shariah reviews as a basis to determine the authenticity of Shariah rulings, adoption of Shariah requirements and validity of Shariah-complaint transactions.” The overall mean score for this statement is 3.16. The Shariah committees do not agree with the statement since their mean score is 2.00. The research assumes that the respondents do not agree with the statement since Shariah auditors assessment on the Shariah review seems redundant and not cost efficient. For some Islamic banks, the Shariah auditor is assisted by Shariah officers in performing the Shariah audit function since the former do not have adequate expertise in Shariah. The statement “Shariah auditors should detect fraud related to Shariah” received a variety of responses. The average mean value for all respondents is 3.57. The internal and external auditors and the regulators did not agree with the statement since the mean value is between 3.18 to 3.66. However, the depositors and Shariah officers agree with the statement with an average score of 4.00 and above. 134 Layout Syariah Governance.indd 134 05/08/2019 4:02 PM
  23. Layout Syariah Governance .indd 135 4.03 b) The audit committee upon consultation with the Shariah Committee shall determine the deliverables of the Shariah audit functions. 4.00 3.85 4.39 a) Shariah audit should cover on Shariah rulings such as bakhs (any voluntary effort to diminish or decrease the value of the product or services being sold) tatfif (taking in an excess in measure and giving out a short measures) uqud (contract), khiyanah (embezzlement of funds), Israf (the propriety of expenditure), tanajush (bidding), speculation and gharar (uncertainty). b) Shariah auditor should obtain and make references to relevant sources, including the SACs published rulings, the Shariah committee decisions, fatwas, guidelines, the Shariah audit results and the internal Shariah checklist. c) Shariah auditor should attest and provide assurance that the Shariah audit conducted have met Shariah objectives and comply with Shariah requirements. Shariah Rulings 3.93 IA/SA a)The Shariah audit function shall be performed by internal auditors who have acquired adequate Shariah-related knowledge and training. Regulatory STATEMENTS 0.39* -0.45** -0.42* -0.04 0.29* SC 0.39* -0.13 0 0.1 0.06 EA -0.58** -0.07 -0.37* -0.46** -0.64** DEP 0.08 0.03 0.33* 0.33* 0.14 SO 0.61 0.07 0.19 0.31* 0.55** REG USERS GROUP (OVERALL GAP) Table 5.4: Overall Gap among the Respondents in Shariah Audit Practices on Shariah Audit Responsibility Shariah Audit Practices in Malaysian Islamic Banks: An Audit Expectation-Performance Gap Analysis 135 05/08/2019 4:02 PM
  24. Layout Syariah Governance .indd 136 4.36 4.42 4.69 4.69 3.45 3.66 b) Shariah auditor should have a clear understanding of the business activities of the IFI to allow for better scoping of an audit exercise, i.e. auditability and relevance of activities; c) Shariah auditor should develop a comprehensive internal audit programme or plan. d) Shariah auditor should provide recommendations on rectification measures taken as well as following-up on the implementation by the IFI. e) Shariah auditor should attest and provide assurance that the Internal Shariah Control System (ISCS) established by the IFIs have met Shariah objectives and comply with Shariah requirements. f) Shariah auditor should assess the adequacy of Shariah review as a basis to determine the authenticity of Shariah rulings, adoption of Shariah requirements and validity of Shariah-complaint transactions. g) Shariah auditor should detect fraud related to Shariah. -0.62** 1.45** 0.12 0.27 0.35* -0.14 -0.57** 0.48* -0.11 0.69** 0.51** 0.42* 0.05 -0.22 -1.16** 0.7** -0.58** -0.33* -0.6** -0.38* -0.75** 0.03 -0.48** 0.08 0.45* 0.1 0.19 0.34* 0.89** -0.08 0.15 0.03 0.4 0.33* 0.77** ** Significantly different from internal auditors overall gap at p<0.01 based on Man-Whitney U-test. IA: Internal auditors; SA: Shariah auditors; SC: Shariah Committee; EA: External auditors; DEP: Depositors; SO: Shariah officers; REG: Regulators * Significantly different from internal auditors overall gap at p<0.05 3.21 a) Shariah auditor is responsible towards the outside financiers (i.e. capital contributor; i). Shariah Assurance Shariah Governance And Assurance In Islamic Financial Sectors 136 05/08/2019 4:02 PM
  25. Shariah Audit Practices in Malaysian Islamic Banks : An Audit Expectation-Performance Gap Analysis Expectation Gap in Shariah Audit Practices on Shariah Auditor Performance Performance gap - deficient performance is a gap between the expected standard of performance of Shariah auditors’ existing duties and Shariah auditors’ perceived performance, as expected and perceived by society. Based on Table 5.5 the findings support the hypothesis H2: There is an expectation gap among the respondents on Shariah auditor’s performance in Islamic banks. The respondents were asked to evaluate the Shariah auditors’ performance in the Islamic banks. There are 15 statements related to Shariah auditor’s performance in Islamic banks. The rating for this section is based on a five-point Likert scale where ‘1’ represents ‘poorly’, ‘2’=adequately, ‘3’=average, ‘4’=well and ‘5’=excellent. The overall average mean score among the respondents for each of the statements on Shariah auditors’ performance ranges from 3.31 to 3.95, which ranges from ‘unable to judge’ to ‘well’. The findings show that all existing duties were rated significantly differently between the respondents. This signifies the existence of expectation gaps among the respondents on the Shariah auditor’s performance. 137 Layout Syariah Governance.indd 137 05/08/2019 4:02 PM
  26. Layout Syariah Governance .indd 138 2.85 3.57 3.50 4.14 3.85 g) Prescribing remedies in the event of Shariah noncompliance issues. h) Preventing errors and irregularities pertaining to Shariah. i) Coping with risk and uncertainty in the transactions related to Shariah. j) Diagnosing problem. 4.42 d) Detecting errors and irregularities pertaining to Shariah. f) Communicating effectively 4.21 c) Providing a useful service to the IFIs. 4.21 4.14 b) Reporting truthfully. e) Acting independently without regard to selfinterest 4.14 a) Providing a useful service to the stakeholders. STATEMENTS SC 3.06 3.81 3.21 3.03 2.90 3.21 3.12 2.87 2.81 3.18 IA 2.68 2.62 2.87 2.81 2.87 2.87 3.12 3.91 3.12 3.00 EA 3.76 4.06 3.90 3.91 4.04 3.81 3.97 3.88 3.91 4.00 Mean DEP 3.37 3.56 3.31 3.53 3.56 3.62 3.56 3.72 3.72 3.71 SO 3.00 4.07 3.14 2.96 3.31 3.47 3.51 2.92 3.10 3.10 REG) H2: There is an expectation gap among the respondents on Shariah auditor’s performance in Islamic banks. Table 5.5: Existence of Expectation Gap in Shariah Audit Practices on Shariah Auditor’s Performance 3.32* 3.95* 3.39* 3.36* 3.31* 3.47* 3.51* 3.42* 3.46* 3.54* Avg. Mean Shariah Governance And Assurance In Islamic Financial Sectors 138 05/08/2019 4:02 PM
  27. Layout Syariah Governance .indd 139 3.33 3.18 3.33 3.39 3.27 2.93 3.06 2.93 3.06 3.06 3.81 4.11 4.00 3.97 3.88 3.28 3.75 3.53 3.62 3.43 3.10 3.07 3.10 3.14 3.21 3.36* 3.53* 3.47* 3.53* 3.50* The results reveal that the external auditors and the internal auditors find a deficiency in the performance of Shariah auditors concerning communicating effectively, prescribing remedies in the event of Shariah noncompliance issues, enforcing Shariah legal requirements, acquiring information related to Shariah noncompliance, forming correct judgements and coping with professional rules and Shariah rulings. * Significantly different among overall respondents p<0.001 based on Kruskal-Wallis test. IA: Internal auditors; SA: Shariah auditors; SC: Shariah Committee; EA: External auditors; DEP: Depositors; SO: Shariah officers; REG: Regulator 3.21 o) Coping with professional rules and Shariah rulings. 3.57 3.57 Shariah n) Forming correct judgements. to 3.42 related 4.14 m)Enforcing Shariah legal requirements. l) Acquiring information noncompliance. k) Predicting the future in the event of Shariah litigation. Shariah Audit Practices in Malaysian Islamic Banks: An Audit Expectation-Performance Gap Analysis 139 05/08/2019 4:02 PM
  28. Layout Syariah Governance .indd 140 -0.29 -0.33* -0.79* -0.87** -0.18 -0.09 -0.39* 0.12 3.81 3.06 3.27 3.39 3.33 3.18 3.33 -0.54** -1.08* -0.82** -0.91** -1.07** -1.05** -0.88** -1.44** -1.03** -1.1** 0.39 0.45* 0.35* 0.47* 0.36* 0.53** 0.5* 0.59** 0.38 0.37 0.22 0.48** 0.43* 0.68** 0.18 -0.51* 0.17 0.57* ** Significantly different from internal auditors overall gap at p<0.01 based on Man-Whitney U-test. IA: Internal auditors; SA: Shariah auditors; SC: Shariah Committee; EA: External auditors; DEP: Depositors; SO: Shariah officers; REG: Regulators 0.38 0.21 0.33* 0.4 0.12 0.4* 1.19** 0.34* 0.22 USERS GROUP (OVERALL GAP) SC EA DEP SO REG -0.96** 0.18 -1** 0.29 0.61** -1.33** -0.31 -0.79** 0.19 0.62** -1.34** -1.04** 0.03 0.16 0.8** -1.3** 0 -0.85** 0.41* 0.05 -1** 0.34 -0.94** 0.19 0.15 0.05 0.03 -1.17** 0.48* 0.25 3.21 3.03 3.18 2.81 2.87 3.12 3.21 2.90 IA/SA * Significantly different from internal auditors overall gap at p<0.05 Providing a useful service to the stakeholders. Reporting truthfully. Providing a useful service to the IFIs. Detecting errors and irregularities pertaining to Shariah. Acting independently without regard to self-interest. Communicating effectively. Prescribing remedies in the event of Shariah noncompliance issues. h) Preventing errors and irregularities pertaining to Shariah. i) Coping with risk and uncertainty in the transactions related to Shariah. j) Diagnosing problem. k) Predicting the future in the event of Shariah litigation. l) Acquiring information related to Shariah non-compliance. m)Enforcing Shariah legal requirements. n) Forming correct judgements. o) Coping with professional rules and Shariah rulings. a) b) c) d) e) f) g) STATEMENTS Table 5.6: Overall Gap among the Respondents in Shariah Audit Practices on Shariah Auditor’s Performance Shariah Governance And Assurance In Islamic Financial Sectors 140 05/08/2019 4:02 PM
  29. Shariah Audit Practices in Malaysian Islamic Banks : An Audit Expectation-Performance Gap Analysis Based on past studies on the effectiveness of internal audit in Malaysian public sectors (Ahmad et. al., 2009), the main problems faced by the internal auditors which affect the performance of the internal auditors are lack of audit staff, internal audit function not having full support from top management, lack of training, lack of independence, lack of competence, lack of experienced staff and limited resources. Thus, the internal auditors and the management involved in the organisations must ensure that causes of gaps must be identified to boost the auditor’s performance. Regarding the extended analysis on significant findings using the Man-Whitney U-test, there are significant differences between internal auditor’s expectations with Shariah committee, depositors and regulators. Based on the average mean, the internal auditors are neutral on the statement ‘Shariah auditors provide a useful service to stakeholders’. The Shariah committee members and depositors agree with the statement. Unlike the Shariah committee members and depositors, the regulators score an average mean of 3.10, indicating that they think that Shariah auditor’s performance in serving stakeholders is only average. Even though Shariah auditors are directly involved with the Shariah audit functions, the internal auditors are unsure of their roles in the Shariah audit. This is evident since most of the questions on Shariah auditor’s performance answered by the internal auditors scores an average mean between 2.81 to 3.39, which reflects that the internal auditors believe that they have ‘adequately’ and ‘averagely’ accomplished the task. The internal auditors also rated 2.81 on ‘reporting truthfully’, which reflects that they adequately report Shariah audit findings. The Shariah committee, Shariah officers, depositors and regulators expect the Shariah auditors to perform well regarding performance. As such, the Shariah committee members perceived that Shariah auditors are able to predict the future in the event of Shariah litigation. Unfortunately, a significant gap exists of -0.87, which exceeds the expectations of the internal auditors on the statement. Also, the internal auditors score an average mean of 3.39 on diagnosing problems, which means that they averagely agree with the statement. This statement also involves a significant gap of -0.79 between the internal auditors and the Shariah committee members. 141 Layout Syariah Governance.indd 141 05/08/2019 4:02 PM
  30. Shariah Governance And Assurance In Islamic Financial Sectors Based on Table 6 .6, it can be concluded that among the respondents, the Shariah committee members, depositors, Shariah officers and regulators have high expectations of the Shariah auditor’s performance in Islamic banks whereby the internal auditors believe that they have adequately accomplished the tasks under the Shariah audit function. CONCLUSION This study contributes to the industry with regards to the practice of Shariah audit in Islamic banks. Audit gaps are growing rapidly in Shariah audit practices (Othman & Ameer, 2015; Zakari et al., 2014; Kasim et al., 2009; Sulaiman, 2005). Shariah audit has a key importance, as there is a growing awareness among IFIs that every such institution should contribute towards achieving the objectives of the Maqasid Shariah. There is a need to have regular independent Shariah audits in IFIs as people are now experiencing a movement along a continuum from a society that trusts everything and audits nothing to a society that trusts nothing and audits everything. The concept of Shariah auditing should be extended to activities that are related to, among others, the system, the products, the employees, the environment and the society. Based on these findings, there is an existence of a performance gap in Shariah audit practices which results in ‘deficient standards’ and ‘deficient performance’. The ‘performance gap’ in Shariah audit practices due to poor standards and deficient performance needs to be addressed to boost the performance of Shariah auditors. This study also found that performance gaps due to ‘deficient standards’ is a result of inadequate legal and professional standards on the roles and responsibilities of Shariah auditors. The research provides new insights into the structure, composition and the extent of the audit expectation-performance gap in Shariah audit practices and, more importantly, it may point to rational and comprehensive approaches towards narrowing the gap. As a consequence, good Shariah audit practice that meets the expectations of stakeholders will reduce criticism and the expectation differences regarding Shariah audit practices in Islamic banks. 142 Layout Syariah Governance.indd 142 05/08/2019 4:02 PM
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