E&Y, AAOIFI ink Shari’a agreement
Dubai, March 5, 2013
Ernst & Young has signed a working agreement with Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) to assist in Shari’a certification of core banking systems (CBS) used by Islamic banks.
On the back of this mandate, E&Y is launching its new advisory Solution, CBS Shari’a assessment, to assist international and regional technology firms, a statement from the institution said.
The agreement was signed by AAOIFI’s secretary general Dr Khaled Al Fakih and Essa Al-Jowder, office managing partner of Ernst & Young Bahrain. The certification programme will assess CBS services to ensure that they conform to the approved global Shari'a and accounting standards.
Ashar Nazim, partner and head of Global Islamic Banking Center at Ernst & Young, said: "In a technology-driven world, banking products and processes have to be mapped on to the core banking system which is invariably based on conventional foundations with a patchwork of Shari'a features. The issue of sub-optimal IT solutions can be an obstacle to the profitability of Islamic banks. Uncertified IT solutions pose a serious Shari’a non-compliance risk which the boards of these banks are no longer willing to tolerate."
"Regulators are also taking notice. For instance in Oman, the recently launched Islamic banking regulatory framework requires Islamic windows and banks to ensure that, in the next three years, their CBS are certified to be Shari’a compliant.”
AAOIFI has issued 88 standards in the areas of Shari’a, accounting, auditing, ethics, and governance for international Islamic finance. Its standards are currently followed by several leading Islamic financial institutions across the world. This has helped introduce a progressive degree of harmonisation of international Islamic finance practices, the statement said.
Headquartered in Bahrain within the Ernst & Young Global Centre of Excellence, the award-winning Islamic Financial Services team assists Islamic financial institutions on operational transformation, operational recovery, capital planning, structured transactions and regulatory compliance amongst its other services. – TradeArabia News Service