Journal of Islamic Accounting and Business Research - 2023 : The Extent Of Mandatory And Voluntary Shariah Compliance Disclosure: Evidence From Malaysian Islamic Financial Institutions

Prof. Dr. Abdul Rahim, Abdul Rahman (2023) Journal of Islamic Accounting and Business Research - 2023 : The Extent Of Mandatory And Voluntary Shariah Compliance Disclosure: Evidence From Malaysian Islamic Financial Institutions. Journal of Islamic Accounting and Business Research. ISSN 1759-0817

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Abstract

Purpose This study aims to assess the extent of the mandatory and voluntary Shariah compliance disclosure in the ShariahCommittee Report of Islamic fi nancial institutions (IFIs) in Malaysia. The study highlights the accountability andtransparency of the Shariah Committee members to provide full disclosure of relevant Shariah compliance informationto the stakeholders. Design/methodology/approach The study adopts content analysis to quantify and code the number of sentences in the Shariah Committee Reportdisclosed in the 2016 annual report of 47 IFIs in Malaysia. The extent of Shariah compliance disclosure in the ShariahCommittee Report is measured based on the Standard (S) and Guidance (G) items outlined in the Shariah GovernanceFramework (SGF) as well as the Financial Reporting for Islamic Banking Institutions and takaful operators guidelinesissued by Bank Negara Malaysia (BNM) as the reference. Findings The fi ndings indicate that majority of IFIs complied with the minimum mandatory disclosure requirement based on theStandard (S) items in the Shariah Committee Report as required by the SGF. Highest information on the purpose ofShariah Committee engagement and scope of work performed is disclosed to the stakeholders in almost all IFIs. Only The extent of mandatory and voluntary Shariah compliancedisclosure: evidence from Malaysian Islamic fi nancial institutions Nur Laili Ab Ghani (UKM-Graduate School of Business, Universiti Kebangsaan Malaysia , Bangi, Malaysia ) Noraini Mohd Ariffi n (Department of Accounting, Kulliyyah of Economics and Management Sciences, International IslamicUniversity Malaysia , Kuala Lumpur, Malaysia ) Abdul Rahim Abdul Rahman ( Universiti Poly-Tech Malaysia (UPTM) , Kuala Lumpur, Malaysia )  Journal of Islamic Accounting and Business Research : 1759-0817 Article publication date: 31 March 2023 Permissions  Issue publication date: 5 March 2024 ISSN (International Standard Serial Number.) DOWNLOADS  391 Access and authentication: Please visit our page. Close  Advanced search Enter your search terms here  Skip to main content two prominent full-fl edged Islamic bank and Islamic banking business in development fi nancial institutions have shownhighest accountability to go beyond the minimum disclosure requirement. This includes disclosing higher voluntaryinformation on Shariah governance processes in the Shariah Committee Report of these two IFIs. Research limitations/implications This study adopts the SGF (Bank Negara Malaysia, 2010), Financial Reporting for Islamic Banking Institutions (BankNegara Malaysia, 2016) and Financial Reporting for Takaful Operators (Bank Negara Malaysia, 2015) as the reference todevelop the measurement of Shariah compliance disclosure in the Shariah Committee Report. These guidelines issuedby BNM are still eff ective during the period of study, i.e. the year 2016. Practical implications The fi ndings contribute towards the relevance for BNM as the regulator to enhance the current disclosure requirementin the Shariah Committee Report as stated in the SGF especially in Islamic windows and takaful operators. The mainargument of this paper is that the more information being disclosed in the Shariah Committee Report will lead to betterShariah assurances. The issuance of Shariah Governance Policy Document in 2019 is expected to enhance thecredibility, accountability and transparency of the Shariah Committee members concerning their oversightresponsibility towards Shariah matters in IFIs’ business operations. Originality/value After fi ve years since the issuance of the SGF in 2010, further study on the extent of mandatory and voluntary Shariahcompliance disclosure is important to highlight the accountability and transparency on the implementation of theShariah governance across various types of IFIs in Malaysia.

Item Type:	Article
Uncontrolled Keywords:	Shariah compliance Shariah governance Shariah disclosure Shariah Committee members Shariah Committee Report Islamic fi nancial institutions
Divisions:	Institute of Graduate Studies (IGS)
Depositing User:	LIBRARY2 UPTM
Date Deposited:	02 Jul 2025 07:04
Last Modified:	02 Jul 2025 07:04
URI:	http://eprints.kuptm.edu.my/id/eprint/4744

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