AAOIFI Governance and Ethics Board (AGEB) approves one-time optional deferment on long form report for External Shari’ah Audit under ASIFI 6

The AAOIFI Governance and Ethics Board (AGEB) ratified an amendment related to the auditing standard for Islamic Financial Institutions No. 6 on “External Shari’ah Audit”. The objective of the amendment is to allow one-time optional deferment for the long form report in view of numerous requests received from professional practice firms and industry.

Amendment is as follows:

“Resolution for Amendment of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI): AAOIFI Governance and Ethics Board (AGEB): Auditing Standard for Islamic Financial Institutions No. 6  on “External Shari’ah Audit”

In paragraph 44, at the end, following sentence shall be added:

“However, the requirements of paragraph 40 shall become mandatory for the external Shari’ah auditors’ reports covering periods beginning on or after 01 January 2020”.

Accordingly, Appendix E: brief history of the preparation of the standard was updated.

AAOIFI recently held a roundtable on the implementation challenges of the auditing standard on External Shari’ah Audit (ASIFI 6) to discuss certain practical challenges that are facing the auditors and reach a technical consensus before issuing audit opinions.

The roundtable was attended by big 4 representative as well as leading auditing experts from across the region. Different practices particularly those of Bahrain, Pakistan, Oman and Kuwait were discussed. One of the recommendations of the roundtable was to consider the first year practical implementations challenges of ASIFI 6 and allow optional deferment for one year of the long form report. AGEB approvedthe request by circulation on 16 January 2020.

Mr. Omar Mustafa Ansari, Secretary General, AAOIFI commented “We understand the external Shari’ah audit is a complicated process and ASIFI 6 has enhanced the professional requirements applicable on the external Shari’ah auditors significantly, particularly with regard to the detailed long form report. We believe that at times the industry and the practitioners need more time to improve the processes to be able to fully comply with the requirements of the relevant standards. It becomes more complicated when there are different regulatory regimes addressing the external Shari’ah audit in different manner and hence it is difficult for the practitioners to develop methodology duly fulfilling the requirements of the standard without compromising on the regulatory requirements. Considering these factors, we believe that there was a genuine justification for a one-time deferment of the requirements related to the long form report.”

 

You can access AAOIFI auditing standard on External Shari’ah Audit BY CLICKING HERE