A working group comprising representatives of "Big Four" professional services firms and other Sharia reviewers will be set up in Bahrain to develop an external auditor's framework, in collaboration with Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).

This follows agreement by key industry stakeholders on the need for Islamic financial institutions to be audited by an external Sharia audit function, reported the Gulf Daily News, our sister publication.

It was also agreed that an independent Sharia audit should be made mandatory by regulators in order to achieve the desired benefits of external Sharia audit.

These were the outcomes of key discussions - at the Ritz-Carlton Bahrain, Hotel and Spa, led by Bahrain's Waqf Fund chairman Khalid Hamad - on ways and means of strengthening Islamic financial institutions' Sharia compliance and providing additional comfort to regulators, investment account holders, shareholders and the general public about such compliance.

Participants included a select group of professionals including representatives of the "Big Four" professional services firms, chief executives of Islamic banks and AAOIFI, internal Sharia reviewers and officials of the Central Bank of Bahrain (CBB).

EY partner Imtiaz Ibrahim, AAOIFI chief executive Dr Khaled Fakih and Sharia scholar Shaikh Abdul Sattar Al Kattan delivered presentations at the meeting, which were followed by discussion among the participants.

The participants said AAOIFI's Certified Islamic Professional Accountant (CIPA) certification - currently being revamped and supported financially and technically by the fund to be in line with similar international high level qualifications - will serve the purpose of developing the right human resources for Sharia external audit function.

Participants also agreed on the need to revamp the relevant AAOIFI standards on Internal Sharia review and audit and supplement them with particulars that characterise each of the functions separately.

It was felt that with the expansion of Islamic financial services and increasing complexity of financial products, it was important for Internal Sharia reviewers to be qualified in not only Sharia, but also have reasonable understanding of accounting, business, finance, law and economics.

AAOIFI's revamped Certified Sharia Advisor and Auditor certification will also be supported by the fund to be in line with similar international qualifications. It may be considered as one of the mandatory requirements that enhance the skills of Sharia reviewers and auditors.

The conclusions and recommendations will be submitted to the CBB.-TradeArabia News Service