The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held the 19th meeting of its Governance and Ethics Board (AGEB / the board) recently via video conference. The meeting agenda covered two main topics which are discussing AGEB’s 2020 performance report and work plan for the term (2020 – 2023), as well as, continuing the discussion on the Shari’ah decision making process exposure draft.
Mr. Farrukh Raza, Chairman of AGEB, opened the meeting and he expressed his appreciation to all the members for their commitment and continuous efforts despite their eventful work agendas and engagments.
The board reviewed the performance report of 2020 and highlighted the key achievements parameters. These include the issuance of the statement on application of AAOIFI governance, ethics and auditing standards in view of the impacts of COVID-19 pandemic, as well as, holding 6 board meetings, 25 working groups’ meetings and 10 committees’ meetings. Also, the board initiated during the year several projects such as Shari’ah Compliance and Fiduciary Ratings for Instruments, Internal Shari’ah Audit Guidelines, and the Governance Standard on Alternative Benchmark Rate. The members also agreed on the plan for 2021 and prioritized the projects in line with the market needs.
The members discussed the Shari’ah decision making (SDM) process exposure draft which aims to facilitate a greater level of harmonization and convergence in the area of SDM in Islamic financial institutions (IFIs). Standardization of practices in this area will provide clear-cut guidelines to the management and the Shari’ah compliance function department, enabling them to perform their jobs efficiently and effectively. The board approved in principle the exposure draft of the said standard and it will be issued to the market after completing the due process.
The Chairman of the AGEB, Mr. Farrukh Raza, stated: “I believe that a robust SDM process is essential to boost the stakeholders’ confidence in the IFIs’ products and crucial in safeguarding the reputation of Islamic finance industry as a whole. Therefore, the board felt the need to develop an end-to-end control framework to govern and manage the issues in the process.”
On this occasion, Mr. Omar Mustafa Ansari, the Secretary General, AAOIFI stated: “2020 has been a challenging year for the whole humanity in all aspects because of the global pandemic and I am grateful for the board and the relevant working group members for their time and contributions that led to remarkable achievements during such a difficult year. The members tireless efforts and continuous dedication will certainly serve the best interest of Islamic finance industry.”