Sharia Audit as a Mechanism for Institutional Compliance and Accountability

Abstract

Objective: This study aimed to examine the role of Sharia audits in strengthening institutional compliance, accountability, and governance while identifying key challenges associated with their implementation. Method: This qualitative narrative literature review synthesized relevant regulations, professional standards, scholarly books, and academic studies addressing Sharia auditing, Islamic financial institutions, and institutional accountability. The literature was examined through a comparative interpretation of auditing functions, Sharia supervision, and internal governance mechanisms. Results: The reviewed literature indicated that Sharia auditing extended beyond financial statement assurance to assess the compliance of contracts, financial products, transactions, and operational practices with Sharia principles. Its effectiveness depended on auditor competence and independence, the availability of appropriate auditing standards, the reliability of audit evidence, and effective coordination among Sharia auditors, Sharia Supervisory Boards, and institutional management. The findings also highlighted inconsistencies in auditing practices and limitations in specialized professional expertise and institutional audit capacity. Conclusion: Sharia auditing could strengthen institutional transparency, accountability, and governance when its independent assurance function was clearly distinguished from supervisory and managerial responsibilities. Strengthening Sharia auditing standards, enhancing professional competencies, and improving institutional coordination emerged as key priorities for effective implementation. However, as a narrative literature review, this study did not quantify the effects of Sharia auditing on institutional performance or establish the prevalence of Sharia noncompliance.