1203 half of the respondents are within the range of 30 to 39 years old, 30 percent are within
40 to 49 years old, 12 percent are above 50 years and only 8 percent are within 20 to 29 years. Even though age might not be an absolute indication of level of maturity, however
these figures somehow reflect that the majority of the respondents in this study are considered matured.
Table 5 - Respondents’ Gender and Age
Accounting Lecturers
Auditors Shariah
scholars Total
N N
N N
Gender:
Male Female
Missing 17
37 6
28.3 61.7
10 19
8 -
70.4 29.6
- 9
2 81.8
18.2 -
45 47
6 45.9
47.9 6.1
60 100
27 100
11 100
98 100
Age:
20-29 years 30-39 years
40-49 years Above 50 years
Missing
5 33
12 6
4 8.3
55 20
10 6.7
3 14
8 2
11.1 51.9
29.6 7.4
- 1
6 4
- 9.1
54.5 36.4
- 8
48 26
12 4
8.2 49
26.5 12.2
4.1
60 100
27 100
11 100
98 100
Table 6 further illustrates the education and working experience of the respondents. In overall, 50 percent of the respondents possessed Master degrees while the rest were partly
degree holders and PhD holders accordingly . While academicians and Shari‘ah
committee members mostly possess Master degrees, auditors on the other hand are degree holders and only 3 respondents are having Masters. This composition can be
rationalized since auditors are mostly degree graduates and having Master qualification is perhaps not popular among the auditors.
In addition, 50 percent of the total respondents are having professional qualification in accounting. While 43 of the academicians have professional certification in accounting,
major
ity of the auditors 81 possess the certification and only one of the Shari‘ah scholars has the certification. In term of working experience, more than 50 of the
sample 54 have been working for about 6-15 years. The rest of respondents are almost equally divided into the other ranges of working years. Given that majority of
respondents posses Master degree and professional qualification in accounting and have been working for about 6-15 years, therefore it is expected that they would give fruitful
and credible responses to this study.
Table 6 - Respondents’ Educational Background Working Experience
Accounting Lecturers
Auditors Shariah
scholars Total
N N
N N
Highest Qualification:
Diploma Degree
- -
- -
- 23
- 85.2
1 -
9.1 -
1 23
1 23.5
1204
Master PhD
Missing 44
14 2
73.3 23.3
3.3 3
- 1
11.1 -
3.7 2
7 1
18.2 63.6
9.1 49
21 4
50 21.4
4.1
60 100
27 100
11 100
98 100
Professional Qualification in Accounting:
Yes No
Missing 26
32 2
43.3 53.3
3.3 22
4 1
81.5 14.8
3.7 1
9 1
9.1 81.8
9.1 49
45 4
50 45.9
4.1
60 100
27 100
11 100
98 100
Working Experience:
– 5 Years 6
– 15 Years 16
– 20 Years Above 20 Years
Missing 10
36 6
6 2
16.7 60.0
10.0 10.0
3.3 3
14 7
3 -
11.1 51.9
25.9 11.1
- -
3 2
5 1
- 27.3
18.2 45.5
9.1
13 53
15 14
3 13.3
54.1 15.3
14.3
3
60 100
27 100
11 100
98 100
Since there is no significant variation in the job position of accounting academicians εost of the respondents fill up their positions as ―lecturer‖ and Shari‘ah committee
members, table 7 is solely dedicated to portray the job position of auditors. It can be seen that most of the auditors participating in this study are the owners or partners of the audit
firms 37 followed by managers 26, supervisors 19 and associates for only 7 . More participation from higher level of audit practitioners would hopefully enrich the
opinion gathered from this study.
Table 7 – Job Position of Auditors
N
Partner 10
37 Manager
7 25.9
Supervisor 5
18.5 Associates
2 7.4
Missing 3
11.1
Total 27
100
4.3.
Statistical Analysis for Each of the Research Questions
4.3.1. Research Question No.1
The first research question is to identify the importance of establishing the discipline of Shari‘ah audit as well as its definition. This question examines the awareness of
respond ents of the term Shari‘ah audit and the importance of establishing the discipline
of Shari‘ah audit. Since there has been no standardized and formal definition given to Shari‘ah audit, this question also examine the appropriateness of the definition of
―Shari‘ah review‖ by AAOIFI to be equated to the understanding of Shari‘ah audit.
1205
4.3.1.1 The Awareness of the Term “Shari’ah audit”
As the issue of Shari‘ah audit is closely associated with the position of SSB, hence as expected that most of the Shari‘ah scholars 64 are aware of the term ―Shari‘ah audit‖
as opposed to most of the auditors 70 who are not aware or not sure of the term ―Shari‘ah audit‖. Whereby for the academicians, nearly 50 are aware of the term
―Shari‘ah audit‖ and the rest are not sure or not aware of such term.
Table 8 - Awareness of the term ―Shari’ah Audit‖
No. Statement
Acctg. Lecturers
Auditors Shariah
scholars Overall
N N
N N
1. Awareness of the term
―Shari‘ah Audit‖: Yes
Not Sure No
Missing 28
9 22
1 46.7
15 36.6
1.7 7
5 14
1 26
18.5 51.8
3.7 7
- 3
1 63.6
- 27.3
9.1 42
14 39
3 42.8
14.3 39.8
3.1
60 100
27 100
11 100
98 100
4.3.1.2 The Importance of Developing the Discipline “Shari’ah Audit”
According to the findings in table 9, it can be inferred that the overall respondents highly believed the importance of establishing the discipline of Shari‘ah audit mean of 4.50,
but to the lesser extent regard the appropriateness of the definition of ―Shari‘ah review‖
by AAOIFI to be equated to the understanding of Shari‘ah audit. Even though the mean for statement no.γ on the appropriateness of the definition of ―Shari‘ah review‖ by
AAOIFI to be equated to the understanding of Shari‘ah audit is still considered high 4.23 but it is still much lower than the mean score for the previous statement.
Table 9 - The Importance of Developing the Discipline ―Shari’ah Audit‖
No Statement
Acctg. Lecturers
Auditors Shariah
scholars Overall
Kruskal- Wallis
Test Asymp.
Sig. N
M ea
n
N M
ea n
N M
ea n
N M
ea n
2. It is important to develop another
discipline namely
―Shari‘ah audit‖ apart from the 60
4.55 27 4.29
11 4.73
98 4.50
0.081
1206
existing auditing areas e.g. financial audit, social audit, etc.
3. The definiti on of Shari‘ah audit
for IFIs can be equated to the definition of ―Shari‘ah review‖
by AAOIFI which is: ―An examination of the extent of
an IFI‘s compliance, in all its activities with the Shari‘ah‖
59 4.15
27 4.37 11
4.27 97
4.23 0.831
Among the reason s put by some of the respondents who disagree to define Shari‘ah audit
based on such definition are; 1 Shari‘ah review AAOIFI is not an audit, 2 compliance
only is not sufficient – it must accord with the spirit of the Shari‘ah – issue of substance
over form, 3 the definition should not only limit to ―activities‖ of IFIs but also ―products
and services‖, 4 to measure the extent of compliance it must have benchmark. As the definition of Shari‘ah review by AAOIFI is not intended to comprehend the term
S hari‘ah audit therefore further effort need to be put, perhaps by AAOIFI, to formulate
the proper definition of Shari‘ah audit and implement it in the practice of IFIs all over the world.
Moreover,
the term ―review‖ should be understood differently from the term ―audit‖. While the former implicate a lower assurance level, the latter has a more comprehensive
assurance level. CPA Australia 2006: 44 stated that ―Review engagement is a service
where the auditor‘s objective is to provide a moderate level of assurance, being a lower level of assurance than that provided by an audit‖. Review has also been defined as ―a
formal assessment of an activity with the intention of suggesting or implementing changes‖ or a review ―implies an audit type investigation that does not meet the full
requirements of Generally Accepted Auditing Standards GAAS‖ O‘Regan, β004μ ββ4- ββ5. Therefore, perhaps Shari‘ah review should not be equated with the term Shari‘ah
audit as the understanding of the terminology between the two terms are significantly different.
Furthermore, the Kruskall-Wallis test reveals no significant difference between the three
groups‘ opinions on the statement no.β and no.γ. This indicates that the respondents from various backgrounds are basically in the same inclination in their responses towards these
two statements. 4.3.2. Research Question No.2
The second research question is to investigate
the qualification requirements for Shari‘ah auditors. This question seeks to identify who are supposed to perf
orm Shari‘ah audit, who should appoint the Shari‘ah auditors and what are the qualification and competence
requirements for Shari‘ah auditors.
1207
4.3.2.1 Who Should Perform Shari’ah Audit?
To investigate the respondents‘ perception on who should perform Shari‘ah audit, the respondents were requested to select among the five categories which are; 1
conventional external auditor, β Islamic Jurists ‗Ulama, γ Internal auditors under supervision of SSB, 4 SSB, 5 Shari‘ah auditors – a new group of professionals who are
specifically certified in Shari‘ah audit. Interestingly about 87 of respondents agree to the Shari‘ah auditors new group professionals who are specifically certified in Shari‘ah
audit to perform the function of Shari‘ah audit. This finding indicates a demand for the new profession so called Shari‘ah auditors to be established instead of delegating to the
existing other parties to perform the function of Shari‘ah audit. The profession of Shari‘ah auditors as proposed by this study is congruent to the concept of effective
framework to monitor and assess Shari‘ah compliance in IFIs as suggested by Grais Pellegrini β006 where they place Shari‘ah audit firm as part of the external process of
monitoring and assessing the Shari‘ah compliance and SSB is positioned in the internal process accordingly.
Table 10 - Who should perform Shari’ah audit for IFIs
No Statement
Acctg Lecturers
Auditors Shariah scholars
Total N
N N
N
4a. Conventional external auditors Yes
No 2
58 3.3
96.7 5
22 18.5
81.5 -
11 100
7 91
7.1 92.9
60 100
27 100
11 100
98 100
4b. Islamic Jurists ‗Ulama
Yes No
7 53
11.7 88.3
3 24
11.1 88.9
2 9
18.2 81.8
12 86
12.2 87.8
60 100
27 100
11 100
98 100
4c. Internal auditors under supervision o
f Shari‘ah Supervisory Board SSB
Yes No
14 46
23.3 76.7
10 17
37 63
5 6
45.5 54.5
29 69
29.6 70.4
60 100
27 100
11 100
98 100
4d. Shari‘ah Supervisory Board
Yes No
16 44
26.7 73.3
5 22
18.5 81.5
2 9
18.2 81.8
23 75
23.5 76.5
60 100
27 100
11 100
98 100
4e. Shari‘ah auditors – A new
group of professionals who are specifically certified in Shari‘ah
audit Yes
No 53
7 88.3
11.7 22
5 81.5
18.5 10
1 90.9
9.1
85 13
86.7 13.3
60 100
27 100
11 100
98 100
1208
4.3.2.2 Who Should Appoint Shari’ah Auditors?
For the appointment of Shari‘ah auditors, 60 of the overall respondents perceive that the Shari‘ah auditors should be appointed by a newly established regulatory and
supervisory body which is dedicated to oversee the practice of Shari‘ah audit. The reason
could be that other parties might be perceived as not sufficiently independent to appoint the auditors. In the conventional auditing practice, it has been widely criticized that
shareholders are not in the best party to appoint the auditors and this idea seems to also be agreed
in the case of Shari‘ah audit by the respondents who mostly disagree to the statement 5a
Table 11 - Who should appoint Shari’ah auditors for IFIs
No Statement
Acctg Lecturers
Auditors Shariah scholars
Total N
N N
N
5a. Shareholders of the respective IFI through its AGM
Yes No
6 54
10 90
7 20
25.9 74.1
3 8
27.3 72.7
16 82
16.3 83.7
60 100
27 100
11 100
98 100
5b. Bank Negara of Malaysia Yes
No 5
55 8.3
91.7 4
23 14.8
85.2 2
9 18.2
81.8 11
87 11.2
88.8
60 100
27 100
11 100
98 100
5c. Islamic Financial Service Board IFSB
Yes No
23 37
38.3 61.7
16 11
59.3 40.7
1 10
9.1 90.9
40 58
40.8 59.2
60 100
27 100
11 100
98 100
5d. A newly established regulatory and supervisory
body dedicated to oversee the practice of Shari‘ah audit
Yes No
46 14
76.7 23.3
14 13
51.9 48.1
5 6
45.5 54.5
65 33
66.3 33.7
60 100
27 100
11 100
98 100
4.3.2.3 The Competence Qualification Requirements for Shari’ah Auditors
The respondents also highly believe the importance of establishing the competence and qualification requirements for Shari‘ah auditors εean of 4.65. Interestingly the
respondents subsequently demand the Shari‘ah auditors to have a minimum qualification of degree or professional qualification in accounting and specialized certification in
Shari‘ah audit mean of 4.53. Even though mean score for statement 7b is also considered high 4.31, however it is not as high as the score for statement 7c. This finding is
congruent with the finding in the statement no 4 where the respondents support for the
