Islamic legal maxim for Shari’ah audit in Islamic bank

Abstract

Purpose

The purpose of this paper looks into how the Islamic legal maxims (ILM) could provide a basis for Sharīʿah audit practices in assisting the institution’s managerial practice to achieve Maqasid al Shari’ah (MS).

Design/methodology/approach

The findings of the study recorded in this paper are based on a single case study selected from a preliminary study. The qualitative approach was used, where two phases of a semi-structured interview were conducted on the targeted participants in their natural settings.

Findings

It was found that with the implementation of Sharīʿah audit practices, ILM supports the achievement of MS by Islamic banks. With this, the income generated by these banking institutions is halal, and all business transactions and operations will not violate the Sharīʿah principles. Furthermore, the ILM includes principles such as “certainty is not overruled by doubt,” “matters determined according to intentions,” “the norm in transactions is that of permissibility,” “harm must be eliminated” and “judgment is to be based on knowledge and understanding.”

Social implications

The findings of this study have provided valuable information that would lead Muslim auditors to exhibit a strong character while abiding by Islamic principles.

Originality/value

MS is strongly recommended in Islamic banking institutions because of the significant relationship between MS and the objectives of business transactions where wealth must be protected in the prevention of incoming hardships occurring in society. Moreover, this paper focuses on the application of ILM in the Sharīʿah audit practices as a part of the Sharīʿah governance in Islamic banks.

Citation

Abd Rahman, N., Mastuki, N., Osman, M.R. and Kasim, N. (2020), "Islamic legal maxim for Shari’ah audit in Islamic bank", Journal of Islamic Accounting and Business Research, Vol. 11 No. 2, pp. 457-471. https://doi.org/10.1108/JIABR-11-2017-0170