Competency of Shariah Auditors: Issues and Challenges in Pakistan

Purpose: The Islamic financial system has a crucial necessity to manage the competency requirement including knowledge, skills and some other obligatory abilities to fulfill the increasing industry loads. This paper proposes a novel idea of knowledge, skills and other abilities (KSOA) for the framework of Shariah auditors that can enhance their current performance to improve the Islamic financial system. Design/methodology/approach: The study is based on mix method to present a new model for Shariah auditors in the Islamic Financial Institutions of Pakistan. The study has utilized the collection of information available in the previous literature. The study presented a model to be followed by IFIâÃâÃâ¬ÃâÃâ¢s while appointing Shariah Auditor based on their knowledge, skills and other related abilities. Extensive study of the literature has been undertaken to present the model. Research limitations: This paper is a Pakistan based study, so situation may differ from that of Pakistan in other countries. Findings: This article gives an overview of current situation regarding issues and challenges, concerning the competencies required for Shariah auditors in the Islamic Financial Industry of Pakistan. Literature review and study of practitionerâÃâÃâ¬ÃâÃâ¢s qualification shows that required knowledge about Shariah audit is still not established. It has been found that the internal auditors perform Shariah audit in IFIs in the light of Shriah governance framework given by State Bank of Pakistan (SBP). The study also resulted that most of Shariah auditors working in IFIs have no experience and qualification about Shariah audit and Islamic banking. Moreover the past study in Pakistan has not pointed the specific knowledge, skills and other abilities required for shariah auditors. Originality/value: This paper is a value addition in the literature of Islamic finance which suggests that Shariah audit is one of the major concerns for the Islamic financial institutions of Pakistan. Therefore, the need of skillful and professional manpower which efficiently and effectively apprehends the both i.e. Shariah and Contemporary audit set of regulations has been established in Islamic banking industry of Pakistan.