The Governance and Ethics Board (AGEB) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has officially published the exposure draft of AAOIFI’s governance standard No.10 ‘Shari’ah Compliance and Fiduciary Ratings for Islamic Finance Institutions’ and has invited opinion and feedback from the Islamic finance industry.
The objective of this standard is to introduce and set out a principle-based guidance in Shari’ah governance and fiduciary ratings. It is expected that this will result in strengthening the stakeholders’ confidence. This will also inculcate market discipline by way of improved level of transparency. This standard applies to the Shari’ah compliance and fiduciary rating engagements conducted by independent rating agencies with an intention of providing independent comparable, assessment based rating (or scoring) to various stakeholders with regard to an IFI’s Shari’ah compliance, governance and adherence to fiduciary responsibilities.
The standard includes key compliance requirements applicable to rating agencies, assessment scope and benchmarked parameters for ratings and the principal procedures for rating agencies. This standard is applicable primarily on rating agencies conducting Shari’ah governance and compliance ratings, however all IFIs are highly encouraged to have their Shari’ah governance and compliance ratings conducted in line with this standard.
The AAOIFI public hearings will be held in the upcoming months in different parts of the world. This is to obtain industry feedback on the exposure draft in addition to the comments received in writing. Futher details with respect to dates and venues, will be announced shortly. Comments on the exposure draft are welcome and should be directed no later than 28 Feburary 2018 to this email: [email protected]. All comments and suggestions provided at the public hearings are presented to AGEB to discuss and incorporated as necessary into the standard draft.
The exposure draft can be accessed on the AAOIFI website by clicking here