Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions’ (AAOIFI) has taken a significant step in bolstering the governance and reporting framework for the global Islamic finance industry.
The AAOIFI Governance and Ethics Board (AGEB) has approved, in principle, the issuance of two crucial Standards on Auditing and Assurance (SOAAs), concluding a major part of the organisation’s ongoing standards revision project. The decision was reached during the board’s 42nd meeting.
The two standards are: ‘Framework of Auditing’ and ‘Auditing Requirements for Assessing Compliance with Sharia Principles and Rules’.
The comprehensive standards revision was initiated to align AAOIFI’s auditing framework with international best practices while simultaneously ensuring consistency with Sharia principles and rules.
The ‘Framework of Auditing’ is designed to provide auditors with a structured, principle-based guide for conducting audits of financial statements for institutions that report in line with Sharia principles and rules.
Meanwhile, ‘Auditing Requirements for Assessing Compliance with Sharia Principles and Rules’ zeroes in on the specific requirements for auditors assessing an institution’s compliance with Sharia principles and rules.
This standard is essential for audits of Islamic financial institutions and other entities that operate under Sharia-compliant frameworks, cementing the auditor’s role in ensuring the integrity of Islamic finance operations.
The move marks a key development for the Islamic finance sector, reinforcing the quality and comparability of financial reporting across the industry.
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