Professionalisation of shariah audit in Malaysia

Abstract

This study empirically investigates the professionalisation of Shariah audit (SA) in Malaysia using the theory of the System of Professions. In doing so, it examines the development of jurisdictions within the auditing profession from pre-independence of Malaysia to date and investigates the strategies to secure and maintain SA jurisdiction. The study relied on archival review and interview of participants within the ecology of the auditing profession. The findings on jurisdictional development indicate that professional groups deployed various social structure (association, professional controls and worksites) and culture machinery (methodology and knowledge) strategies to claim jurisdiction over internal and external audits. However, jurisdictional settlement is mainly intellectual since the government controls the issuance of audit licence with mandatory membership to the state-sponsored Malaysian Institute of Accountants (MIA). The Institute of Cooperative and Management Auditors gained full jurisdiction over external audit of cooperative societies. The findings also inform that the Institute of Internal Auditors Malaysia (IIAM) could not maintain the full jurisdiction over SA which Bank Negara Malaysia (BNM) granted it in 2010. Instead, members of IIAM delegated SA work to non-members who eventually assimilated the culture of IIAM. More importantly, this caused the Association of Malay Chartered Accountants Firms to compete for SA jurisdiction by establishing the Institute of Shariah Auditors Malaysia. For SA professionalisation, the majority of interviewees recommend that the IIAM be the independent association for Shariah auditors. Others suggest MIA to certify Shariah auditors. Conversely, the documentary evidence suggests that BNM favours the establishment of a new independent association subject to certain conditionalities, namely, inclusive industry players support, quality standards assurance, role clarification, to name a few. Finally, apart from obtaining the mandate from regulators for an association of Shariah auditors, SA jurisdictional development will significantly depend on the outcome of the ongoing restructuring of the entire auditing profession.