The Reality of Internal Sharia Auditing in Institutions Providing Islamic Financial Services in Yemen: A Study and Evaluation

Abstract

The research aims to study and analyze the reality of internal Sharia auditing in institutions that provide Islamic financial services in Yemen through the practical and applied practice of the Sharia auditing function regarding the standards and guidelines issued by: the (AAOIFI) and the Central Bank of Yemen. The study used descriptive analytical method in the theoretical side, and Analytical Investigative approach in the practical side and Design a comprehensive questionnaire that included the information and data necessary for the study, focusing on six main areas, which are: Sharia auditing, appointment and formation, competence and qualifications of the Sharia audit team, independence and objectivity, duties and powers of the Sharia audit team, Sharia audit procedures, and finally, the obstacles and difficulties facing the Sharia audit team. The study relied on a comprehensive inventory of all institutions providing Islamic financial services in Yemen from the beginning of Islamic financial activity in Yemen until 2020 AD. The data was processed using SPSS. The findings in this research interestingly reveal that there are an absence of a regulatory framework governing the internal Sharia audit function in all Yemeni institutions that provide Islamic financial services based on the description of the regulatory standards for them There is also a decline and deficiency in the application of all research areas according to the results extracted from the research analysis. The research presents a series of recommendations forwarded to three main parties: financial institutions represented by general assemblies, boards of directors, Sharia supervisory boards, executive management, and any responsible bodies within them; official bodies represented by the Central Bank of Yemen; and researchers and specialists in Islamic finance, with the aim of strengthening the role of financial institutions and improving governance and Sharia auditing systems in line with the latest practices.