Abstract:

Auditing in the Islamic framework has wider a scope than the current practice of auditing due to the distinct worldviews and concepts (Hamid et.al., 1993; Haneef, 1997; Abdul Rahman, 2008) embedded in Islamic regulation known as ‘shariah’. In fact, in the light of Islamic teaching, the role of auditor would assimilate some different approach and objectives especially in upholding shariah principles (Khan, 1985). The two main issues relate to the shariah audit framework and the factors affecting their judgment of internal auditors while conducting audit of Islamic financial institutions. Shariah audit might be simply be defined as an audit attestation for shariah compliance. However, little is known on what should be the practical model defining issues such as scope, extent, audit reporting and qualification as well as factors affecting the judgment of the auditors. This can only be done through conducting audit on their operations based whether it is comply with shariah principles. This study attempts to draw the general framework that may be adopted for auditing Islamic financial institutions. In addition, it seeks to identify the factors that influence the auditor’s judgment during shariah audit that will ensure the credibility of Islamic banking activities in terms of fulfilling shariah principles and meeting the objectives of the IFI. Research data for this study will be obtained from primary source which come from individuals and focus groups (internal auditors from IFIs). The study will employ field experimental research.