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Article
Publication date: 19 November 2020

Mustafa Mohd Hanefah, Muhammad Iqmal Hisham Kamaruddin, Supiah Salleh, Zurina Shafii and Nurazalia Zakaria

The existence of internal control for Sharīʿah-compliance promotes reasonable assurance that the Islamic financial institution’s (IFI’s) objectives are achieved in the…

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Abstract

Purpose

The existence of internal control for Sharīʿah-compliance promotes reasonable assurance that the Islamic financial institution’s (IFI’s) objectives are achieved in the following categories, namely, the effectiveness and efficiency of operations, the reliability of financial reporting and the level of compliance with applicable laws and regulations, as well as accounting and auditing standards. Sharīʿah non-compliant income (SNCI) is an important issue in IFIs’ operations. Thus, the purpose of this paper is to identify issues related to governance and internal control of SNCI in selected IFIs in Malaysia.

Design/methodology/approach

This research uses a case study approach to gather data on the measures of governance and risk management in relation to the internal control for SNCI in IFIs. Interviews were conducted with officers of the Sharīʿah and internal audit departments on internal control practices regarding SNCI.

Findings

Regulator’s guidelines on SNCI are simple and brief, lacking rigour in terms of governance, risk management and audit procedures. The section on SNCI is only a brief statement within the Bank Negara Malaysia’s Guidelines on Financial Reporting for Islamic Banking Institutions and also in the Operational Risk Integrated Online Network system operated by IFIs. Most of the respondents in the interviews suggested that there should be a proper guideline in determining the classification of SNCI. Second, although IFIs have established the purification account to manage SNCI, the real practice varies from one IFI to another. Third, although there are supposedly documented procedures established in relation to management and administration of SNCI, the following events still occur in practice, namely, no authorisation from the Sharīʿah Committee (SC) on various types of income channelled to the SNCI account; unauthorised use of SNCI for other purposes; SNCI not being reported in the annual financial reports; and distribution of SNCI prior to obtaining the SC’s consent. Fourth, there is an absence of Sharīʿah risk assessment conducted on operational risk by IFIs to identify any potential Sharīʿah non-compliant event.

Research limitations/implications

This research contributes to the importance of Islamic corporate governance theory and Sharīʿah risk management, as well as strengthening the case for reporting SNCI to shareholders. It also contributes to the body of knowledge on the capability of the management in managing the internal control system of IFIs’ SNCI.

Originality/value

A new internal control assessment matrix is proposed for Sharīʿah-compliance in IFIs.

Details

ISRA International Journal of Islamic Finance, vol. 12 no. 3
Type: Research Article
ISSN: 0128-1976

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Article
Publication date: 21 November 2016

Khaled Ali Endaya and Mustafa Mohd Hanefah

The purpose of this paper is to investigate the direct relationship between internal auditor’s characteristics[1] and internal audit effectiveness[2], and the moderating…

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5749

Abstract

Purpose

The purpose of this paper is to investigate the direct relationship between internal auditor’s characteristics[1] and internal audit effectiveness[2], and the moderating effect of senior management[3] support.

Design/methodology/approach

Standard multiple regression and moderated multiple regression are applied, and the data were collected from 114 members of Libyan Association of Accountants and Auditors[4] by using personally administered questionnaire.

Findings

The findings reveal that internal auditor’s characteristics have a significant impact on internal audit effectiveness, and senior management support has a moderating effect.

Practical implications

The findings would encourage Libyan organizations to concentrate on the issue of internal audit effectiveness, and will strengthen the capacity of internal auditing in public organizations.

Originality/value

This paper contributes to the literature of both internal audit and management studies and represents the first effort to examine the impact of internal auditor’s characteristics on internal audit effectiveness with senior management support as a moderating variable.

Details

Journal of Economic and Administrative Sciences, vol. 32 no. 2
Type: Research Article
ISSN: 1026-4116

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Article
Publication date: 10 May 2021

Muhammad Iqmal Hisham Kamaruddin and Mustafa Mohd Hanefah

This study aims to examine and compare the current waqf governance practices in waqf institutions in Malaysia.

Abstract

Purpose

This study aims to examine and compare the current waqf governance practices in waqf institutions in Malaysia.

Design/methodology/approach

This paper reviews professional documents and literature to propose a new and practical waqf governance measurement. Waqf governance measurements were used to examine and compare the current waqf governance practices among waqf institutions in Malaysia. The annual reports of all waqf institutions under the State Islamic Religious Councils (SIRCs) were analysed using content analysis on the current waqf governance practices using binomial logic.

Findings

Overall, the results indicate moderate waqf governance practices under three waqf governance categories, namely waqf governance policy, waqf governance board and waqf governance processes. This study also found a significant impact of corporatisation reformation of waqf institutions on waqf governance practices.

Research limitations/implications

The findings indicate the need for all waqf institutions in Malaysia, especially for non-corporate waqf institutions, to enhance their waqf governance practices by disclosing all relevant information to the public. This is because the success of waqf fund management can be portrayed through the management’s transparency in waqf governance practices on how they deliver and use their resources to attain socio-economic objectives.

Originality/value

To the best of the authors’ knowledge, this study is among the first studies that examined and evaluated the current waqf governance practices in several waqf institutions in Malaysia.

Details

Journal of Financial Reporting and Accounting, vol. 19 no. 3
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 3 October 2016

Abdul Hadi Ibrahim and Mustafa Mohd Hanefah

This study aims to investigate the impact of board diversity characteristics, namely, independence, gender, age and nationality of directors on the level of corporate…

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2142

Abstract

Purpose

This study aims to investigate the impact of board diversity characteristics, namely, independence, gender, age and nationality of directors on the level of corporate social responsibility (CSR) disclosures.

Design/methodology/approach

Content analysis was used to determine CSR disclosure. This study used panel data analysis to investigate the influence of board diversity characteristics on CSR disclosures.

Findings

Panel data analysis show that the level of CSR disclosure has increased over the period of study. Results also reveal a positive and significant association between the level of CSR disclosure and board diversity variables.

Research limitations/implications

This study examined only companies listed on Amman Stock Exchange. Therefore, the generalisation of the results might be limited to the listed companies only.

Practical implications

Findings are relevant to policymakers, professional organisations and practitioners in Jordan and in other Arab countries.

Social implications

The role of women in the boardroom is important to ensure more CSR activities by the listed companies. Jordan being a Muslim country should take the initiative to introduce laws to increase the number of women to the board.

Originality/value

This study offers significant contributions to existing CSR literature in Jordan and in other Arab countries by introducing female directors. Findings are important to policymakers. They should implement quotas for women in the boardroom, and adopting such a policy will increase the participation of women in the decision-making process of the companies and reduce gender bias.

Details

Journal of Financial Reporting and Accounting, vol. 14 no. 2
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 6 January 2003

Mustafa Mohd Hanefah and Samihah Hj. Ismail

Many researchers have debated the relevance of accounting curriculum to the employers in the US and other developed counries. Accounting graduates are said to lack various…

Abstract

Many researchers have debated the relevance of accounting curriculum to the employers in the US and other developed counries. Accounting graduates are said to lack various skills that are important in today’s job market. Among them are technological skills, oral and communication skills, and professional skills. This phenomenon is not only common in developed countries, but als in the developing countries like Malaysia. In Malaysia, graduates from local universities and colleges are facing unemployment due to the lack of such skills. Although the Malaysian economy is performing better than other countries in this region, yet the unemployment rate among graduates is still high.

Details

Journal of Financial Reporting and Accounting, vol. 1 no. 1
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 21 October 2013

Adel Mohammed Sarea and Mustafa Mohd Hanefah

The objective of this paper is to determine the level of compliance with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) accounting…

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3539

Abstract

Purpose

The objective of this paper is to determine the level of compliance with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) accounting standards by Islamic banks of Bahrain.

Design/methodology/approach

The paper is based on diffusion of innovation theory whereby the perceived relative advantage, compatibility, complexity, trialability and observability factors are expected to influence the level of compliance with AAOIFI accounting standards.

Findings

The findings indicate that Islamic banks of Bahrain are in full convergence with AAOIFI accounting standards.

Research limitations/implications

This research, just like many other studies, faces data limitations. Sample size employed for this study contains only the accountants in Islamic banks of Bahrain.

Originality/value

The results of this paper are expected to serve as a guide to the regulatory bodies and the setter of accounting standards for Islamic financial institutions (IFIs).

Details

Journal of Financial Reporting & Accounting, vol. 11 no. 2
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 12 April 2013

Adel Mohammed Sarea and Mustafa Mohd Hanefah

The purpose of this paper is to determine the need of Islamic Accounting Standards – a review of the literature – for Islamic financial institutions (IFIs).

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5098

Abstract

Purpose

The purpose of this paper is to determine the need of Islamic Accounting Standards – a review of the literature – for Islamic financial institutions (IFIs).

Design/methodology/approach

The basis of the paper was stakeholder theory to analyse the need of accounting standards and to design the conceptual framework as evidenced from Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The evidence reviewed suggests the need for Islamic accounting standards to fill the gap in accounting practice among Islamic financial institutions.

Findings

The AAOIFI accounting standards serve as a guideline that may reflect the unique characteristics of IFIs and become a useful tool to meet the various needs of IFIs. Currently, one of the major challenges facing IFIs lies in the preparation of the financial statements under different accounting standards and which may lead to problems of comparability, reliability and compliance level measurement. This has resulted in a heated debate among scholars which has hitherto translated to the evolving existing literature surrounding the interpretation of the level of compliance with the Islamic accounting standards. The paper concludes with various recommendations for future research, the most important of which is the need for future studies on how AAOIFI accounting standards can be made mandatory in all Muslim countries.

Originality/value

This paper contributes towards a better understanding and acceptability of the need of Islamic Accounting Standards.

Details

Journal of Islamic Accounting and Business Research, vol. 4 no. 1
Type: Research Article
ISSN: 1759-0817

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Article
Publication date: 15 May 2009

Ali Saleh Al Arussi, Mohamad Hisyam Selamat and Mustafa Mohd Hanefah

The purpose of this paper is to investigate whether the voluntary financial and environmental disclosures through the internet can be explained by the same determinants as…

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4829

Abstract

Purpose

The purpose of this paper is to investigate whether the voluntary financial and environmental disclosures through the internet can be explained by the same determinants as in conventional reporting. Specifically, this paper examines the relationship between the extent of financial and environmental disclosures on the internet and six variables, namely, ethnicity of chief executive officer (CEO), leverage, level of technology, existence of dominant personalities, profitability, and firm size.

Design/methodology/approach

Six hypotheses were tested using data collected from 201 Malaysian listed companies on the Bursa Malaysia's Main and Second Boards for the financial year 2005. A regression model is utilized to analyze the results of this paper and this is in tandem with the previous studies.

Findings

The results indicate that level of technology, ethnicity of CEO and firm size are determinants of both internet financial and environmental disclosures. However, the existence of a dominant personality is found to negatively affect the level of financial disclosures but not environmental disclosures. The other variables did not show any significant relationship with either financial or environmental disclosures.

Originality/value

This paper investigates whether internet financial and environmental disclosures can be explained by the same determinants used in other similar studies. The results indicate that only level of technology, ethnicity of CEO and firm size are found to be significant for both internet financial and environmental disclosures.

Details

Asian Review of Accounting, vol. 17 no. 1
Type: Research Article
ISSN: 1321-7348

Keywords

Content available
Article
Publication date: 21 December 2020

Beebee Salma Sairally

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173

Abstract

Details

ISRA International Journal of Islamic Finance, vol. 12 no. 3
Type: Research Article
ISSN: 0128-1976

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Article
Publication date: 4 December 2020

Waled Younes E. Alazzabi, Hasri Mustafa and Mohamed Issa

This paper provides a theoretical foundation and conceptual framework to explain the interactions among risk management (RM), top management support (TMS), and internal…

Abstract

Purpose

This paper provides a theoretical foundation and conceptual framework to explain the interactions among risk management (RM), top management support (TMS), and internal audit activities (IAA) to achieve internal control quality (ICQ).

Design/methodology/approach

A review of the extant literature in RM, auditing and management control is conducted to develop and establish theoretical relationships.

Findings

In this work, interconnectedness among organisational factors is discussed by drawing on contingency theory to provide the theoretical logic and support the conceptual framework.

Research limitations/implications

Although this work illustrates the significance of the moderation effect of TMS and the mediation effect of IAA to link RM processes with the quality of internal controls, limitations exist, as the study is conceptual and lacks empirical evidence. The paper emphasises education and training on RM and internal audit to address emerging issues and arising challenges in RM and ICQ.

Originality/value

The paper extends the existing literature in the area of ICQ, which is discussed extensively in developed contexts. However, studies on ICQ in emerging economics, specifically the Middle East and North Africa region, which suffers from high levels of corruption, and asset misappropriation cases are limited. Hence, this work is important because it addresses under-researched issues in relation to ICQ in an attempt to develop a conceptual framework from the available and most effective organisational factors to attain better ICQ.

Details

Journal of Financial Crime, vol. 28 no. 4
Type: Research Article
ISSN: 1359-0790

Keywords

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