Difference between revisions of "Audit Issue of Islamic Banking"

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AUDIT & SHARIA COMPLIANCE –
 
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ISSUES IN ISLAMIC BANKING AND
 
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FINANCE
 
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Presentation By:
 
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Omar Mustafa Ansari
 
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Partner
 
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Ford Rhodes Sidat Hyder & Co.
 
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(Member of Ernst & Young Global Limited)
 
  
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                  ‫الرحمن الرحیم‬        ‫ٰ‬                ‫بسم ہللا‬
 
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                          ‫ب ا ْش َر ْح ِّلي َ‬
 
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                  ‫ص ْد ِّري‬                          ‫قَا َل َر ِّ‬
 
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                            ‫َویَ ِّس ْر ِّلي أ َ ْم ِّري‬
 
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                    ‫سانِّي‬                    ‫احلُ ْل ُ‬
 
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                            ‫ع ْق َدة ً ِّمن ِّل َ‬          ‫َو ْ‬
 
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                                ‫یَ ْفقَ ُهوا قَ ْو ِّلي‬
 
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                              ‫(سورہ طه)‬
 
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‫‪Presentation By:‬‬ ‫‪Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.‬‬
 
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Role of Auditors and Accountants in
 
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Islamic Finance
 
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 Allah SWT says in Quran that “Allah doth command you to
 
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  render back your trusts to those to whom they are due; And
 
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  when ye judge between people that ye judge with justice.”
 
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 According to the code of ethics for accountants and auditors of
 
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  Islamic financial institutions, accounting (duly including auditing
 
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  – external, as well as, internal) is one of the professions that is
 
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  required by Shariah as a Fard Kifaya.
 
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 In other words it is a duty which, if performed by some, would
 
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  exempt others in the society. Otherwise, the whole society is
 
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  sinful.
 
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  Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Purity of Transactions and Building
 
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Reliance on Islamic Finance
 
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 Islamic banking industry is presently growing at a very high
 
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  pace.
 
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 One of the critical issues the industry is facing is the matter of
 
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  purity in transactions which, in longer run, will ensure reliance of
 
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  Muslim Ummah in this model of Islamic finance and banking.
 
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 If this issue, at this stage, is ignored, it may result in a disaster
 
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  in the name of Islamic Finance.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Strategy to Build Reliance on Islamic
 
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Finance and Banking
 
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 A three fold strategy may help out the industry to ensure
 
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  Shariah compliance on an ongoing basis.
 
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    1. Standardization of Shariah Compliance Regulations for
 
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        Islamic Finance;
 
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    2. Improved governance and Shariah Compliance Assurance
 
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        for Islamic Financial Institutions; and
 
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    3. Shariah Compliance Rating of Islamic Financial Institutions
 
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        and Products.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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STANDARDIZATION OF SHARIAH
 
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COMPLIANCE REGULATIONS FOR
 
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ISLAMIC FINANCE
 
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Standardization of Shariah Compliance
 
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Regulations for Islamic Finance
 
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 Standardization is necessary to ensure that all the matters of
 
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  Islamic financial institutions are dealt with, within a framework
 
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  which is acceptable for all Muslims.
 
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 Internationally, there have been a lot of efforts for
 
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  standardization of practices being followed by various Islamic
 
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  financial institutions. These efforts include a lot of research
 
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  work.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Standardization of Shariah Compliance
 
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Regulations for Islamic Finance
 
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 The most admirable job has been performed by:
 
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      the Islamic Fiqh Academy of the Organization of Islamic
 
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      Countries; and
 
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     the Accounting and Auditing Organization of Islamic
 
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      Financial Institutions (AAOIFI).
 
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 In respect of governance and risk management, Islamic
 
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  Financial Services Board has also performed a commendable
 
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  job.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Introduction to AAOIFI
 
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 AAOIFI was established in 1990 in Algiers under an Agreement
 
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  of Association between a number of Islamic financial institutions
 
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  (IFIs). Now it is based in Bahrain.
 
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 Its objectives primarily include development of accounting,
 
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  auditing, governance and Shariah standards for Islamic
 
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  financial institutions.
 
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 Accounting, Auditing and Governance Standards (AAGS) are
 
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  issued by AAOIFI’s Accounting and Auditing Standards Board
 
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  whereas the Shariah Standards Board issues the Shariah
 
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  Standards.
 
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  Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Introduction to AAOIFI
 
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 These Boards have, to date, performed a remarkable job by
 
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  issuing accounting, governance, auditing and Shariah
 
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  standards for Islamic financial institutions.
 
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 These Boards have been established by choosing the experts
 
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  of the fields from throughout the Islamic world. Accordingly,
 
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  their works, are considered to be a consensus (Ijma) of the
 
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  experts from the field.
 
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 These work may be used for standardization of practices of
 
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  Islamic finance and banking throughout the world.
 
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  Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Introduction to IFSB
 
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 Officially inaugurated on November 03, 2002 and started
 
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  operations on March 10, 2003.
 
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 Serves as an international-standard setting body of regulatory
 
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  and supervisory agencies that have vested interest in ensuring
 
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  the soundness and stability of the Islamic financial services
 
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  industry.
 
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 Promotes the development of a prudent and transparent Islamic
 
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  financial services industry through introducing new, or adapting
 
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  existing international standards consistent with Islamic Shariah
 
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  principles.
 
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  Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Pakistan’s Perspective
 
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 Accounting and Financial Reporting
 
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      The Institute of Chartered Accountants of Pakistan has issued
 
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      Islamic Financial Accounting Standards for Ijara and Murabaha
 
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      which are under implementation stages. These standards are
 
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      approved by SBP and notified by SECP.
 
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 Shariah Compliance
 
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     SBP has established a Shariah Board.
 
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     SBP has issued essentials for Islamic banking and financial
 
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      products and a bunch of model agreements. But all these are
 
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      considered to be guidelines, and not regulations. SBP has also
 
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      issued various circulars in this respect.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Pakistan’s Perspective
 
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 Governance – What SBP is Doing
 
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      Shariah compliance framework being established. Draft Islamic
 
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      banking guidelines issued and comments received.
 
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      A Shariah compliance inspection mechanism is being introduced
 
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      and a Shariah compliance inspection manual has been
 
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      developed.
 
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      Risk management standards are being adopted with suitable
 
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      modifications.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Pakistan’s Perspective
 
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 Takaful
 
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      Takaful Rules developed and now being reviewed for
 
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      improvement. Revised Rules will include accounting regulations
 
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      for Takaful.
 
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     SECP has established a Central Shariah Board.
 
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     Mandatory Shariah Compliance Audit for Takaful.
 
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 Modarabas
 
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     All model agreements and products are being reviewed from
 
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      Shariah compliance perspective.
 
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     Religious Board for Modarabas is now in operation after a long
 
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      gap.
 
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Presentation By:  Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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IMPROVED GOVERNANCE AND
 
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SHARIAH COMPLIANCE
 
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ASSURANCE FOR ISLAMIC
 
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FINANCIAL INSTITUTIONS
 
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Shariah Non-Compliance Risk: What &
 
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Why?
 
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    Shariah non-compliance risk is a significant risk for an Islamic
 
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    financial institution from two perspectives:
 
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    1.  It impacts the reputation of the Islamic financial institution
 
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          and deteriorates reliance of the depositors, investors,
 
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          customers and other stakeholders in the long-term; and
 
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    2.  It impacts the revenue as well, because in case of an
 
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          identified Shariah non-compliance, the income arising
 
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          from such transaction is to be given in charity.
 
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 But, for the society, and considering it a step towards
 
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    complete transition of economy on Islamic principles, Shariah
 
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    compliance is the essence of Islamic banking and finance.
 
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  Presentation By:      Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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            How to Manage Shariah Non-
 
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            Compliance Risk?
 
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                                  Shariah Review
 
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                                      Shariah
 
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                                Supervisory Board
 
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                                / Shariah Advisor
 
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                                                                          Consideration of
 
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Internal Shariah                                                              Shariah
 
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    Review                                                              Compliance by the
 
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                                                                          External Auditor
 
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              Presentation By: Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Assurance for
 
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Islamic Financial Institutions
 
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 Rules, regulations and standards might not work unless and
 
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  until an effective network of check and balance is established to
 
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  ensure compliance of the same in letter and spirit.
 
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 Shariah compliance cannot be ensured merely on the basis of
 
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  approval of products by the Shariah Supervisory Boards and
 
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  the Shariah Advisors.
 
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 Approvals have to be matched with the ground realities.
 
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  Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Assurance for
 
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Islamic Financial Institutions
 
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1.  Shariah compliance review report of Shariah Supervisory
 
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    Board or the Shariah Advisor (May, or may not be, based on
 
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    Internal Shariah Review).
 
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2. Shariah compliance audit by the external auditors of the
 
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    Islamic financial institutions.
 
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3. Shariah Compliance Inspection of Islamic commercial banks.
 
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4. Independent Shariah compliance assurance (internal or
 
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    external) from professionals.
 
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  Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Review By Shariah
 
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Advisor – Issues
 
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 Competence (From Assurance Perspective)
 
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      Without any disregard to the individuals, and not as a
 
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        generalized rule, it needs to be realized that the jurists
 
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        sitting on the Board or working as Shariah Advisors
 
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        possess little knowledge about the accounting and
 
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        auditing, and more importantly, the operations of the
 
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        financial institutions.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Review By Shariah
 
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Advisor – Issues
 
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      Consequently, their compliance review generally remains
 
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        limited to the extent of assurance of the legal form of
 
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        transactions i.e. vetting of agreements and documents etc.
 
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      On the contrary, the operational matters which include the
 
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        substance of the transaction might remain unattended
 
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        because it is not the core competence of these respectable
 
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        jurists.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Review By Shariah
 
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Advisor – Issues
 
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 Management’s Attitude
 
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      Generally the management does not wish to bring each and
 
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      every matter in the attention of the Board or the Advisor.
 
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      Accordingly, unless they have enough time to review things
 
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      on their own, and they take reasonable interest in the same,
 
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      it is not possible for them to have a look on most of the
 
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      operational matters.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Review By Shariah
 
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Advisor – Issues
 
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 Independence
 
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      Although we don’t have any doubt on the personal
 
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      independence and integrity of these respectable jurists, they
 
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      would themselves appreciate that the work performed under
 
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      one’s guidance should always be counter checked by an
 
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      independent person.
 
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      Particularly, keeping in view the human tendency of errors,
 
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      it cannot be advised that the person supervising and
 
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      monitoring the transactions is also entrusted to recheck and
 
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      audit the same.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Review By Shariah
 
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Advisor – Issues
 
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 Scarcity of Resources (Time and Skilled Staff)
 
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      Generally those on the Shariah Boards and on the seat of
 
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      Shariah Advisors are busy guys. They are generally serving
 
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      a number of Boards and educational institutions and are
 
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      involved in a number of social and religious activities.
 
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      In addition, they do not have sufficient budgets available for
 
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      their departments, nor an adequate number of skilled staff
 
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      hired for the purpose of assisting them in the assurance
 
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      work.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Review By Shariah
 
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Advisor – Issues
 
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      Consequently, you can easily imagine that it is humanly not
 
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      possible for a single person to perform a comprehensive
 
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      Shariah compliance audit of the operations of a full-fledged
 
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      Islamic financial institution which may even have a number
 
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      of branches.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Audit by External
 
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Auditors – Issues
 
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      According to AAOIFI standards, the auditor should, to a
 
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      limited extent, ensure compliance with Shariah
 
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      requirements.
 
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      Option being used by certain Islamic mutual funds in the
 
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      country is Shariah compliance audit by their external
 
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      auditors.
 
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      According to Takaful Rules, a Shariah compliance audit is
 
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      required. But this is not being performed by external
 
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      auditors, as the Rules do not provide any further detail.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Audit by External
 
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Auditors – Issues
 
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      Since the external auditor is also entrusted with the task of
 
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      performing the Shariah compliance audit, his expertise in
 
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      Islamic finance is not ensured. You would appreciate that if
 
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      the auditor is not equipped with the necessary skills and
 
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      knowledge, the output of the assignment might not be as
 
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      good as may be expected from an experience auditor; and
 
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      Since the scope of the audit is pre-defined and the matter of
 
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      permissibility of a transaction is generally subject to the
 
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      opinions and perspectives of the Shariah Supervisory Board
 
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      or the Shariah Advisor, the independence of the exercise, to
 
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      some extent, remains in jeopardy.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Inspection by SBP
 
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- Issues
 
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      This is a very good approach, as it is independent and
 
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        authoritative in nature.
 
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      Issues identified are forwarded to the SBP’s Shariah Board
 
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        so the exercise remains independent.
 
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      Nevertheless, since the results of such inspections are
 
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        considered to be confined to the management of the Bank
 
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        and the State Bank, the benefits of such exercises cannot
 
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        be forwarded to the general public.
 
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  Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Inspection by SBP
 
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- Issues
 
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      Moreover, such exercise is limited to the Islamic commercial
 
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        banks and the Islamic banking branches of conventional
 
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        commercial banks and consequently other financial
 
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        institutions that are governed by the SECP including Islamic
 
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        mutual funds, Modarabas, Takaful companies, Housing
 
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        finance companies, Investment finance companies and
 
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        leasing companies shall remain out of ambit of such
 
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        exercise.
 
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  Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Independent Shariah Compliance
 
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Assurance by Professionals
 
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 This approach is now being applied by a few Islamic banks.
 
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 This may be applied in form of:
 
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    1.  Internal Shariah Review; and
 
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    2.  External Shariah Compliance Assurance / Audit.
 
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  Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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SHARIAH COMPLIANCE RATING
 
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OF ISLAMIC FINANCIAL
 
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INSTITUTIONS AND PRODUCTS
 
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Shariah Compliance Rating of Islamic
 
−
Financial Institutions and Products
 
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      Anyone having basic understanding of Islamic finance
 
−
      would easily understand that generally all the products
 
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      being launched by Islamic financial institutions cannot be
 
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      termed equivalent for Shariah compliance purpose.
 
−
      There might be certain provisions in an Ijara contract that
 
−
      may render it less desirable as compared to a similar Ijara
 
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      contract. Or in general a Murabaha may be less preferable
 
−
      as compared to a Modaraba product.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Shariah Compliance Rating of Islamic
 
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Financial Institutions and Products
 
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      In addition to the products being launched by the Islamic
 
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      financial institutions that are subject to the approval of their
 
−
      respective Shariah Advisors and Shariah Supervisory
 
−
      Boards there are certain Islamic financial products that are
 
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      launched by the conventional financial institutions or by
 
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      various companies and even by the Government.
 
−
      These products, for example, include the housing finance
 
−
      option offered by the House Building Finance Corporation,
 
−
      Sukuks being issued by the Government of Pakistan and
 
−
      various government owned entities, Musharaka TFCs
 
−
      issued by the Sitara Energy and operating lease options
 
−
      offered by various leasing companies.
 
−
Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
−
 
−
Shariah Compliance Rating of Islamic
 
−
Financial Institutions and Products
 
−
      In view of the same it is imperative that a Shariah
 
−
      compliance rating mechanism be introduced so that the
 
−
      general public may be able to differentiate between various
 
−
      products being launched.
 
−
      In addition, this will encourage the financial institutions to
 
−
      continuously improve the purity factor in their financial
 
−
      products.
 
−
Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
−
 
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GOVERNANCE STANDARDS BY
 
−
AAOIFI
 
−
 
−
Governance Standards
 
−
 Shari’a Supervisory Board: Appointment, Composition and
 
−
  Report
 
−
 Shari’a Review
 
−
 Internal Shari’a Review
 
−
 Audit and Governance Committee for Islamic Financial
 
−
  Institutions
 
−
Presentation By:  Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
−
 
−
Shari’a Supervisory Board (SSB)
 
−
 It is an independent body of specialized jurists in fiqh
 
−
  almua’malat (Islamic commercial jurisprudence).
 
−
 Appointment, Composition and Report
 
−
 It is appointed by shareholders in AGM upon recommendation
 
−
  of Board of Directors (BOD), they may authorize BOD to fix the
 
−
  remuneration of SSB. SSB shall be consisted of atleast three
 
−
  members, it may seek the service of consultants but excludes
 
−
  directors and significant shareholders of IFI.
 
−
Presentation By:  Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
−
 
−
Shari’a Review
 
−
 The objective of the Shari’a review is to ensure that the
 
−
  activities carried out by an IFI do not contravene the Shari’a. It
 
−
  is the responsibility of SSB to form and express an opinion on
 
−
  the extent of an IFI’s compliance with the Shari’a.
 
−
Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
−
 
−
Internal Shari’a Review
 
−
 The internal Shari’a review is an integral part of the organs of
 
−
  governance of the IFI and operates under the policies
 
−
  established by the IFI. It shall be carried out by an independent
 
−
  division or part of internal audit department, depending on the
 
−
  size of an IFI. The primary objective of internal Shari’a review is
 
−
  to ensure that the management of an IFI discharge their
 
−
  responsibilities in relation to the implementation of the Shari’a
 
−
  Rules and Principles as determined by the IFI’s SSB.
 
−
  Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
−
 
−
Audit and Governance Committee
 
−
(AGC)
 
−
 The importance of the AGC for an IFI emanates from its role in:
 
−
      achieving the fundamental objectives of an IFI, by
 
−
      enhancing greater transparency and disclosure in financial
 
−
      reporting; and
 
−
      enhancing the public’s confidence of the IFI as genuine in
 
−
      its application of Shari’a rules and principles.
 
−
Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
−
 
−
AUDITING STANDARDS BY AAOIFI
 
−
Auditing
 
−
 Objective and Principles of Auditing
 
−
 The Auditor's Report
 
−
 Terms of Audit Engagement
 
−
 Testing for Compliance with Shari'a Rules and Principles by an
 
−
  External Auditor
 
−
 The Auditor's Responsibility to Consider Fraud and Error in an
 
−
  Audit to Financial Statements
 
−
Presentation By:  Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
−
 
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Objective
 
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And Principles
 
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 Objective
 
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  To enable the auditor to express an opinion as to whether the
 
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  financial statements are prepared, in accordance with Shari’a
 
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  Rules and Principles and the accounting standards of the
 
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  Accounting and Auditing Organization for Islamic Financial
 
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  Institutions (AAOIFI).
 
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Presentation By:  Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Objective
 
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And Principles
 
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 Principles
 
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  The auditor should comply with Code of Ethics for
 
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  Professional Accountants which include; righteousness,
 
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  integrity, trustworthiness, fairness, honesty, independence,
 
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  objectivity, professional competence, due care, confidentiality,
 
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  professional behavior and technical standards.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Auditor’s Report
 
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 The auditor should review and assess the conclusions drawn
 
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  from the audit evidence obtained as the basis for the expression
 
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  of an opinion on the financial statements, it should contain a
 
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  clear written expression of opinion on the financial statements
 
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  taken as a whole.
 
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Presentation By:  Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Terms of Audit Engagement
 
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 The auditor and the client should agree on the terms of the
 
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  engagement. The agreed terms would need to be recorded in
 
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  an audit engagement letter.
 
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 The engagement letter documents and confirms the auditor’s
 
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  acceptance of the appointment, the objective and the scope of
 
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  the audit, the extent of the auditor’s responsibilities to the client
 
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  and the form of any reports to be provided by the auditor.
 
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Presentation By:  Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Testing for Compliance with Shari’a Rules and
 
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Principles
 
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 When testing for Shari’a compliance, the auditor shall obtain
 
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  sufficient appropriate audit evidence that provides the auditor
 
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  with reasonable assurance that the Islamic Financial Institution
 
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  (IFI) has complied with Islamic Shari’a Rules and Principles
 
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  (the Fatwas, Rulings and Guidance issued by Shari’a
 
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  Supervisory Board (SSB) constitutes Islamic Shari’a Rules and
 
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  Principles).
 
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Presentation By:  Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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Fraud and Errors
 
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 The fact that an audit is carried out may act as a deterrent, but
 
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  the auditor is not and can not be held responsible for prevention
 
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  of fraud and error, however, the auditor shall be held
 
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  responsible for negligence and misconduct.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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WHAT ISSUES I HAVE FACED?
 
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What Issues I Have Faced?
 
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 As External Auditor
 
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      Management is of the view that I have nothing to do in
 
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      respect of Shariah compliance (Even if I feel that it has
 
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      something to do with the Objects of the Bank / Modaraba).
 
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      Even if I have some evidence in hand, coupled with some
 
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      sort of research work, I am told that the Shariah Advisor is
 
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      the final authority. (I am independent, and without any
 
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      disregard, he is a paid employee and a party to the
 
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      transaction as he approved it).
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
−
 
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What Issues I Have Faced?
 
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 As Internal Shariah Reviewer / External Shariah Auditor
 
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      Top management and Shariah Advisor, are on my side, but
 
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      the middle level management makes all efforts to fail the
 
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      exercise.
 
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      I am bound to follow the advice of the Shariah Advisor,
 
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      without any opportunity of being heard at any independent
 
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      forum.
 
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Presentation By:  Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
−
 
−
What Issues I Have Faced?
 
−
 As Shariah Compliance Inspector
 
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      Management of the bank under inspection makes all efforts
 
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      that either no inspection be carried out or if an inspection is
 
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      inevitable, then it should remain limited to whatever Shariah
 
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      Advisor has approved.
 
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      Shariah Advisor becomes a party along with the
 
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      management, as he has approved the transactions and
 
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      issued a clean Shariah review report.
 
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      SBP’s management is not sure as to what extent it may
 
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      interfere into the matters of the Bank with respect to Shariah
 
−
      compliance.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
−
 
−
What Issues I Have Faced?
 
−
      SBP’s management changes its decisions with regard to the
 
−
      scope of inspection and the responsibility for inspection
 
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      within various departments.
 
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      SBP’s Shariah board includes a member who was the
 
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      Government’s advocate in the case against the declaration
 
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      of bank’s interest as Haram, and another member, who is
 
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      on a number of Shariah boards and Shariah Advisor of a
 
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      Bank whose independence from this perspective is not
 
−
      ensured.
 
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Presentation By:    Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 
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                        Thank you…..
 
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Presentation By: Omar Mustafa Ansari – Partner – Ford Rhodes Sidat Hyder & Co.
 

Revision as of 00:34, 21 September 2016