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The Independence of Religious and External Auditors: The Case of Islamic Banks

The Independence of Religious and External Auditors: The Case of Islamic Banks Islamic banks are subject to religious audit in addition to the normal financial auditing process which is carried out in other business organisations. The former type of audit is conducted by in‐house religious advisers who are employed by the bank. These advisers issue a special report to assure readers that the financial statements of the bank were in accordance with the Islamic Law. This article compares and contrasts the independence of these religious auditors with external auditors. It puts forward theoretical propositions which reflect the possible behaviour of the consumers of the financial statements under situations where Shari′a Supervisory Board (SSB) reports discovered breaches of Islamic precepts by management. It is also argued that it is necessary that both SSB and the external auditor be perceived to be independent to ensure the credibility of the financial statements. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting, Auditing & Accountability Journal Emerald Publishing

The Independence of Religious and External Auditors: The Case of Islamic Banks

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Publisher
Emerald Publishing
Copyright
Copyright © 1990 MCB UP Ltd. All rights reserved.
ISSN
0951-3574
DOI
10.1108/09513579010004097
Publisher site
See Article on Publisher Site

Abstract

Islamic banks are subject to religious audit in addition to the normal financial auditing process which is carried out in other business organisations. The former type of audit is conducted by in‐house religious advisers who are employed by the bank. These advisers issue a special report to assure readers that the financial statements of the bank were in accordance with the Islamic Law. This article compares and contrasts the independence of these religious auditors with external auditors. It puts forward theoretical propositions which reflect the possible behaviour of the consumers of the financial statements under situations where Shari′a Supervisory Board (SSB) reports discovered breaches of Islamic precepts by management. It is also argued that it is necessary that both SSB and the external auditor be perceived to be independent to ensure the credibility of the financial statements.

Journal

Accounting, Auditing & Accountability Journal – Emerald Publishing

Published: Dec 1, 1990

Keywords: Auditors; Banks; Islam; Religion; External audit

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