MANAMA: Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has issued three final governance standards for industry adoption.
The standards issued by the organisation’s Governance and Ethics Board (AGEB) are AAOIFI Governance Standard (GS) 10, Sharia Compliance and Fiduciary Ratings for Islamic Financial Institutions, GS 11 Internal Sharia Audit for Islamic Financial Institutions, and GS 12 Sukuk Governance.
In 2018, the projects were initiated and completed the various phases of standards development process which starts from preparing the preliminary study and consultation notes to issuing the exposure draft for industry feedback.
The standards were discussed substantively in several public hearings.
AGEB deliberated on the comments received during the public hearings, and in writing. Accordingly, the board directed the secretariat to finalise and issue the standards.
The Sharia Compliance and Fiduciary Ratings for Islamic Financial Institutions standard was presented in eight countries, namely Bahrain, Pakistan, the UAE, Saudi Arabia, Sudan, Oman, Malaysia, and Turkey, as part of the public hearing phase.
The objective of the standard is to introduce and set out a principle-based guidance in Sharia governance and fiduciary ratings.
It provides independent and comparable assessment based rating (or scoring) to the stakeholders with regards to an Islamic Financial Institutions (IFI), adherence to Sharia compliance, governance and fiduciary responsibilities.
AAOIFI GS 11 is Internal Sharia Audit for Islamic Financial Institutions.
This standard is built on GS 3 Internal Sharia Review issued in 1999.
Accordingly, it aims to supersede GS 3. The revised internal Sharia audit standard was presented in three countries, namely, Malaysia, Bahrain and Pakistan.
It provides improved guidance on internal Sharia audit in IFIs and prescribes the compliance, quality control and ethical requirements, objectives and organisational structure along with the professional requirements with regard to the principal procedures, documentation and reporting for internal Sharia audit.
On the other hand, AAOIFI GS 12 Sukuk Governance is part of a comprehensive Sukuk project that was initiated by AAOIFI in 2015 to develop and revise the standards on Sukuk, in line with the changes in the field over the last two decades.
It provides detailed guidelines on Sukuk governance to the IFIs and corporates worldwide, by specifying a comprehensive framework for managing Sukuk issuance, management during investment and maturity / termination phases.
This standard was presented in five countries, namely, the UK, Morocco, Egypt, Pakistan and Saudi Arabia.
Sixteen public hearings were held in eleven countries as part of the public consultative phase of the three standards development process. These standards are expected to strengthen public and stakeholders’ confidence in the Islamic finance industry.
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