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1.

NAME OF COURSE / MODULE

AL-TADQIQ AL SHARIE

2.

COURSE CODE

MGA3033

3.

NAME(S) OF ACADEMIC STAFF

NURAZALIA ZAKARIA

4.

RATIONALE FOR THE


INCLUSION OF THE
COURSE/MODULE IN THE
PROGRAMME

5.

SEMESTER & YEAR OFFERED

This course is an introduction to Shariah Compliance Audit for Islamic Financial


Institutions (IFIs) and intends to enhance student understanding on the main
concepts and current issues in Shariah Auditing as there is limited exposure on this
topic to students in the current education curriculum.

Face to face:

6.

TOTAL STUDENT LEARNING


TIME (SLT)

L
28

T
28

O
3

Total Guided and


Independent Learning:
120

L=lecture ; T=Tutorial; P=Practical; O=Others (Exam)

7.

CREDIT VALUE

120/40= 3 credit; 2+2

8.

PREREQUISITE (IF ANY)

nil
1.
2.

9.

OBJECTIVES
3.

10.

LEARNING OUTCOMES

At the end of the course, learners will be able to:


1. Explain the nature and needs for Shariah Compliance audit as a measure to
address Shariah Compliance Risk in Islamic Financial institutions (LO6-EM2,
A3)
2. Compare and contrast the roles and responsibilities of relevant regulators,
authorities and organs of Shariah governance in relation to ensuring business
operations are Shariah compliant. (LO1, C3)
3.

11.

12.

TRANSFERABLE SKILLS

TEACHING-LEARNING AND
ASSESSMENT STRATEGY

To provide knowledge on the nature and needs for Shariah Compliance


Audit as a measure to address Shariah Compliance Risk in Islamic
Financial Institutions.
To increase students awareness on the roles and responsibilities of
relevant regulators, authorities and organs of Shariah governance in
relation to performing Shariah auditing in IFIs.
To provide insights on the annual report disclosure requirements of IFI
based on respective regulations/standards/guidelines.

Work in groups to analyse annual report for compliance to regulation/standards.


(LO5-TS3,P3 )

Student should be able to develop a good understanding of Shariah auditing


framework, concepts and practices through a process of lectures, tutorial and group
assignment/project.
Teaching-learning strategy:

The course will be taught through a combination of formal lectures,


exercise, group work, using authentic materials, informal activities and various
textbooks. Collaborative teamwork will be fosters throughout the course. The
use of examination and internal reporting assessment will assess the students
ability to apply theoretical concept in context.
Assessment strategy:

Formative

Summative

13.

SYNOPSIS

This course caters the aspects of auditing in the Islamic Financial Institutions (IFIs)
including Islamic banks, Shariah-compliant fund management companies and
takaful companies. This includes the needs for Shariah Compliance risk
management in Islamic financial institutions in form of Shariah compliance audit
practices. To begin with, students will be introduced to the relevant regulators and
authorities in Shariah auditing environment. This course also discusses the roles

and responsibilities of Shariah Advisory Council and internal auditors in relation to


performing Shariah auditing in Islamic financial institutions. Beyond the regulation
requirements and conceptual framework of Shariah audit compliance, this course
will cover the current issues in practicing Shariah Audit in IFIs in Malaysia.

14.

MODE OF DELIVERY

Lectures and tutorial (SCL)

%
10%
10%
20%
10%
50%
100

16.

Content outline of the


course/module and SLT per
topic

Corporate
Governance:
Islamic
Perspectives
Principles for Shariah Compliant
Shariah Governing Bodies
Shariah Governance Framework for
IFIs
Shariah Committee Report
Risk Management Strategies
Risk Mitigation
Shariah review and audit
Audit Planning
Audit Scope
Audit Report
Financial Reporting in IFIs
Presentations
TOTAL

0.5

2
2

2
2

0.5
0.5

0.5

2
2
2
2
2
2
2
2
4

2
2
2
2
2
2
2
2
4

28

28

2
3
2

0.5

0.5

1
2
1

1
2

0.5
0.5
0.5
0.5

0.5
1
1
0.5
5

TOTAL SLT

Self-study

Assignment

SELF-STUDY

Practical/SCL

Exam

Tutorial

Topics

Lecture

FACE TO FACE

Library search

15.

Assessment methods and


types

Component
Continuous Assessment
Group article review
Mid Term Test
Group Project Paper
Presentations
Final examination
Total

3
3
3

10
8
11

3
3
3
3
3
3
3
3
3
8

10
7
7
7
9
8
9.5
9
8.5
16

44

120

Textbook:
1. Mustafa Mohd Hanefah, Zurina Shafii, Supiah Salleh & Nurazalia Zakaria,
2012, Governance and Shariah Audit in Islamic Financial Institutions,
Penerbit USIM.

17

References

Other references
2. Bank Negara Malaysia, 2010, Shariah Governance Framework for Islamic
Financial Institutions, BNM, Kuala Lumpur.
3. Abdul Rahim, 2008. Shariah Audit for Islamic Financial Services: The
needs and challenges paper presented at ISRA Islamic Finance Seminar
Mandarin Hotel, Kuala Lumpur
4. Syed Alwi Mohamed Sultan, 2007, Shariah Audit for Islamic Financial
Institutions A Primer, CERT Publications.
5. Engku Rabiah Adawiah 2007, Shariah Framework for Shariah Compliance
Review, Audit & Governance Workshop on Shariah Review, Audit and
Governance
for
Islamic
Financial Institutions, Kuala Lumpur 30-31 January 2007.
6. Shahul Hameed, Ratna Mulyany 2007, Shariah Audit for Islamic Financial
Institutions (IFIs): Perceptions of Accounting Academicians, Audit
Practitioners and Shariah ScholarsPaper presented at the IIUM
Accounting Conference, Gombak

Mapping of the course/module to the Programme Learning Outcomes


TOPIC
Corporate Governance: Islamic
Perspectives
Concepts, meaning and importance
of corporate governance
Types of corporate governance
models
Importance of corporate
governance from Islamic
perspectives
Principles for Shariah Compliance
Guidelines

Foundations
of
Islamic teaching

Philosophies
of
Islamic economy

Principles
of
Muamalat

Primary
and
secondary sources of Shariah

Main
rules
of
Shariah in Fiqh Muamalat
Shariah Governing Bodies

Roles
and
responsibilities of local and
international regulatory bodies
of Islamic Financial Institutions.

Shariah
governance
framework of Bank Negara
Malaysia and Islamic Financial
Services Board.

Governance standards
issued by AAOIFI.

Contact
hours
(week)

Lesson Learning Outcome


(Students are able to)

1.
4
(1)

2.

3.

1.
2.
4
(2)

3.
4.
5.

1.
2.
4
(3)
3.

Understand the concepts,


meaning and
importance of corporate governance.
Differentiate and analyze the different types of
corporate governance models.

CLO

LO1

KI

C3

Teaching & Learning


Activities

Assessment
Tasks

o Lecture
o Active reading &
presentation
W2: Grais & Pellegrini
(Corp Gov & Shariah
Compliance)

Feedback on
active reading

o Lecture
o Active reading &
presentation

Feedback on
group discussion

Understand the importance of corporate


governance from Islamic perspectives

Explain the foundations of Islamic


teaching
Summarise philosophies of Islamic
economy
Elaborate on the Principles of Muamalat
Identify the primary and secondary
sources of Shariah
Explain the main rules of Shariah in Fiqh
Muamalat

Explain the roles and responsibilities of local


and international regulatory bodies of Islamic
financial institutions.
Compare and contrast
the Shariah
governance framework of Bank Negara
Malaysia and Islamic Financial Services
Board.
Summarise the salient points in the
governance standards issued by AAOIFI.

LO6
LO5

LO5
LO1

EM2
TS3

TS3
C3

W3: Discussion of
products offered by
Islamic banks utilising fiqh
muamalat principles

o Lecture
o Active reading &
presentation

Feedback on
active reading &
presentation

W4: IFSB 10 Corporate


Governance VS
BNM compare Shariah
Governance Framework

Article
review(w3):
Asyraf Wajdi
(CG &
Stakeholder
mgmt: Islamic
perspective)

Shariah Governance Framework for


IFIs

Main organs of IFIs


Shariah governance system

Roles and functions


of the organs in the Shariah
governance framework

Interrelationships
among the important organs of
the
Shariah
Governance
Framework
Shariah Committee Report
Purpose and content of Shariah
Committee Report
Improvements in content of the
Shariah Committee Report by Bank
Negara Malaysia
Similarities and differences of the
reporting requirements of Bank
Negara Malaysia and AAOIFI on
Shariah Committee Report
Risk Management Strategies & Risk
Mitigation

Three lines of defense


approach
in
risk
management

Risk management processes


in IFIs

Types of risks face by IFIs

Risk
management
techniques
Shariah review and audit

Definition of Shariah Review


and Audit

Similarities and differences


between Shariah Review and
Shariah Audit

Area of responsibilities of

1.
2.
4
(4)

3.

1.
2.
4
(5)

3.

1.
2.
4
(6)

3.
4.

Identify the main organs of an IFIs Shariah


governance mechanism.
Analyse the main roles of each of the parties
involved in the Shariah governance
framework.
Elaborate on the interrelationships among
the important organs of the Shariah
Governance Framework.

Describe the main purpose and content of


Shariah Committee Report.
Discuss the changes that BNM have made to
the format and content of the Shariah
Committee Report.
Compare and contrast between the
requirements of Bank Negara Malaysia and
AAOIFI on Shariah Committee Report

Identify and explain three lines of defence


approach in risk management
Discuss the risk management processes in
IFIs
Explain the types of risks related to the
management of IFIs
Identify the risk management techniques
applicable to each types of risk

o Lecture
o Active reading &
presentation
LO1

W5: Find annual report of


IBs takaful operators in
Malaysia. Compare what
information is reported on
Shariah governance.

C3

o Lecture
o Active reading &
presentation
LO1

Feedback on
active reading &
presentation

W6: Zulkifli Hasan (Roles &


Responsibility of Shariah
Committee)

C3

o Lecture
o Active reading &
presentation
LO1
LO6

Feedback on
active reading &
presentation

C3
EM2

Feedback on
active reading &
presentation

W7: Annual report


disclosure on risk mgmt
strategies & mitigation by
IFIs group presentation
Additional readings: Risk
mgmt. in Islamic banking

4
(7)

1.
2.
3.

To define Shariah Review and audit.


To compare and contrast between Shariah
Review and Shariah Audit
To determine the area of responsibilities of
Internal Audit function and External Audit in
conducting Shariah Audit.

LO5
LO1

TS3
C3

o Lecture
o Active reading &
presentation
W8: Nurazalia & Zurina
(2011) (Comparative
analysis of Shariah review

Feedback on
active reading &
presentation

Internal Audit function and External


Audit in conducting Shariah Audit

Audit Planning

Processes in Shariah audit


planning

Materiality
indicator
in
Shariah audit practice

Internal Control for Shariah


Compliance

Audit Scope

Audit scope in Shariah Audit


practices

Components in the audit


scope

Audit Report

Main purpose and


content of Audit Report

Similarities and
differences in the content of audit
report in accordance to BNM and
AAOIFI

Differences between the


Auditor Report and Shariah
Committee report
Financial Reporting in IFIs

IFIs set of financial


statements

& audit)

1.
8
(8-9)

2.
3.

To identify the processes in Shariah audit


planning.
To determine the materiality indicator in Shariah
audit practice.
To develop understanding on the Internal Control
for Shariah Compliance

o Lecture
o Active reading &
presentation
LO5
LO1

TS3
C3

Feedback on
active reading &
presentation

W9: Zurina Shafii & Supiah


Salleh (2010) audit of
Shariah internal control
system
W10: review chapter on
audit process

1.
2.
4
(10)

3.

1.
2.
4
(11)

4
(12)

3.

1.
2.

To identify the audit scope in Shariah Audit


practices.
To determine related components in the audit
scope.
To develop an insight idea of the overall scope of
Shariah Audit.

To identify the main purpose and content of


Audit Report.
To compare and contrast the content of audit
report required by BNM and AAOIFI
To differentiate between the Auditor Report
and Shariah Committee report.

Describe the main financial reports that make


up the IFIs Financial Statement.
Explain the main components of the

LO5
LO1

TS3
C3

LO5
LO1

TS3
C3

LO5
LO1

TS3
C3

o Lecture
o Active reading &
presentation

Feedback on
active reading &
presentation

W11: Sheila Ainon Yusoff


(2013) Shariah audit
framework

Article review
(w10): Abdul
Rahim Abdul
Rahman 2008
(Shariah
audit_needs &
challenges)

o Lecture
o Active reading &
presentation

Feedback on
active reading &
presentation

W12: current issues Hisham Yaacob 2012


(issues and challenges of
shariah audit)

o Lecture
o Active reading &
presentation

Feedback on
active reading &
presentation

Main components of the


Statement
of
Financial
Position,
Statement
of
Comprehensive Income and
Statement of Changes in
Equity

Comparison of financial
statement
disclosure
requirement by MASB and
AAOIFI

Industry sharing session/


Project paper presentation

3.

8
(13-14)

1.

W13: Case study on


Shariah audit A to Z
Transaction Processing
Tawarruq Commodity
Murabahah

Statement of Financial Position, Statement of


Comprehensive Income and Statement of
Changes in Equity
Compare the financial statement disclosure
of IFI in accordance to MASB and AAOIFI

Analyse the annual report of IFIs based on


compliance to regulations/standards/guidelines.

LO5
LO1

TS3
C3

o Presentation & discussion


of Project Paper
W14:
Student presentation of
group project

Feedback on
presentation