The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held the 22nd meeting of its Governance and Ethics Board (AGEB / the board) on 12, 23 and 24 August, 6 and 7 September 2021, respectively, via video conference.
Mr. Farrukh Raza, Chairman of AGEB, opened the meeting and expressed his appreciation to all the members for their commitment and dedicating their valuable time to the cause of AAOIFI despite their eventful work agendas and engagements.
The board deliberated on the exposure draft of IFSB-AAOIFI Revised Guiding Principles on Shari’ah Governance Framework for Institutions Offering Islamic Financial Services (RSGF). The RSGF is a collaboration between AAOIFI and IFSB that aims to provide a revised set of guiding principles and rules on the key components of a sound and effective Shari’ah governance framework for Islamic financial institutions (IFIs). The RSGF exposure draft discusses fourteen principles on Shari’ah governance framework: key organs of Shari’ah governance framework, role of regulatory and supervisory authorities, role of the board of directors and senior management, central Shari’ah board, Shari’ah supervisory board, Shari’ah compliance function, Internal Shari’ah audit function, independent external Shari’ah audit, Islamic windows, Islamic subsidiaries, other considerations, applicability to different sectors as well as disclosure and transparency. The board discussed the conceptual issues and directed the secretariat to incorporate the required changes.
The Chairman of the AGEB, Mr. Farrukh Raza, stated: “I would like to thank the board, the joint working group members of IFSB-AAOIFI as well as the secretariat for their efforts that cater to the growing needs of the global Islamic finance industry in a more efficient and effective manner”. He added: “I am optimistic that this standard will enhance the public confidence in the industry and reduce reputational risk of Shari’ah non-compliance through enhanced Shari’ah governance framework, greater transparency and better accountability”.
On this occasion, Mr. Omar Mustafa Ansari, the Secretary General, AAOIFI stated: “I am pleased with the success of the collaboration between AAOIFI and IFSB that seeks to combine the efforts of the two Islamic standard setting bodies to provide consistent and harmonized Shari’ah governance guidelines for different stakeholders. I further hope to continue our mutual collaboration in different areas to support the growth and needs of the Islamic finance industry. He added: “I would like to extend my appreciation to the board and the joint working group members for their commitment and devotion in developing this significant standard. In terms of the way forward, the draft RSGF will be reviewed by the joint Shari’ah committee, after which it is expected to be issued as an exposure draft. Following the public and regulators consultation process, comments will be compiled, and any suitable changes will be incorporated. The final standard will be issued after the due process of reviews and approvals by both institutions.”