Tuesday 03, January 2017 by Isla MacFarlane

AAOIFI approves draft standard for central Shari'ah boards

The principle contents has been approved and a revised draft is expected in the first quarter of this year

At the third meeting of its Governance and Ethics Board, Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) the exposure draft of the governance standard on central Shari’ah boards was approved. The board identified some areas for improvement which will be amended before a revised draft is published later in the year.

The proposed standard covers several key aspects such as the appointment, composition and dismissal of the board members; tenure of the board; functions of a central Shari'ah board; responsibilities of the appointing authority; fit and proper criteria and independence. 

The exposure draft is expected to be issued by beginning of 2017 and will be posted on AAOIFI website, according to a media statement. Public hearings, as per AAOIFI policy, will be held during the beginning of 2017 to get the industry feedback on the exposure draft. 

The board also discussed progress on projects being carried forward into 2017, including the Internal Shari’ah Audit, Shari’ah Compliance and Fiduciary Rating, and Comprehensive Ethics projects.

The Auditing Guidance Note No. 1 – ‘Communication of Key Audit Matters in the Independent Auditors' Report’, was discussed and approved. The report will be issued after approval from the AAOIFI Accounting Board.

The next AGEB meeting is proposed to be held by March 2017, in Oman.

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