In practice, the Sharia-compliant audit process does share similarities with conventional audits. However, there are several important differences between the two that auditors should understand. See the following article for a full explanation.
What is a Sharia Audit?
A sharia audit is an examination process by an independent auditor to ensure that all activities conducted by a specific entity comply with sharia standards and principles. The sharia principles underlying a sharia audit include fairness, honesty, and transparency.
While this audit encompasses the examination of products, contracts, transactions, and policies implemented within the entity, Sharia principles are the focus and basis for auditors' assessments during the audit process.
In this case, the sharia standards that serve as a reference for the audit process are standards set by official authorities, such as the National Sharia Council – Indonesian Ulema Council (DSN–MUI), Accounting and Auditing Standards for Islamic Financial Institution (AAOIFI), as well as the fatwas of scholars and the principles of Islamic law (fiqh muamalah).
The Purpose of Sharia Audit in Modern Business
- Ensuring that all business and financial activities carried out by a particular entity are in accordance with sharia principles.
- Ensuring that the products offered operate without any obstacles and in accordance with sharia principles.
- Maintaining public trust and the reputation of Islamic financial institutions by ensuring transparency and accountability in conducting business in accordance with Islamic values.
- Evaluate the effectiveness and efficiency of the entity's operations, so that improvements can be recommended if necessary.
- Provides insight into an entity's sharia compliance for better decision making.
- Increase the selling power of sharia-based products.
Differences between Sharia and Conventional Audits
| Aspect | Sharia Audit | Conventional Audit |
|---|---|---|
| Audit object | Islamic financial institutions | Financial institutions that do not operate according to Sharia |
| The Role of the Sharia Supervisory Board (SSB) | There must be a DPS | No DPS |
| Auditor qualifications | The audit process is carried out by auditors with Sharia Accounting Certification (SAS) | The audit process is carried out by the general auditor without any SAS provisions. |
| Audit standards | Accounting and Auditing Standards for Islamic Financial Institution (AAOIFI) | Indonesian Institute of Accountants (IAI) |
| Types of audit opinions | Assessing the existence of sharia elements in Islamic financial institutions. | Assess the fairness of the presentation of an institution's financial statements. |
How Does the Sharia Audit Process Work?
The Sharia audit process follows nearly the same stages as a conventional audit. However, this type of audit is conducted based on Islamic values.
1. Planning
The first step is to understand the entity to be audited, including its organizational structure, products and services offered, and the Sharia policies implemented. At this stage, the auditor also determines the scope and strategy of the audit to be used.
2. Implementation
At the implementation stage, auditors examine documents, interview related parties, and test transactions and contracts to ensure compliance with sharia.
In addition, auditors also perform several key activities, including reviewing the products and services offered, implementing operational policies and procedures, and conducting random transaction tests. The goal is to ensure that products and services comply with Sharia law, policies and procedures comply with Sharia law, and that there are no elements that conflict with Sharia principles.
3. Reporting Results
The third stage is the preparation of the audit report, which includes key findings, compliance with sharia principles, and recommendations for improvement if any discrepancies or violations are identified. The report will then be submitted to the DPS and management for review and follow-up.
4. Follow-Up
The auditor then works closely with management to ensure the recommendations are implemented effectively. The goal is to ensure that corrective actions are taken to address any identified issues.
Development of Sharia Audit in Indonesia
Based on a study conducted by Rahmadhani (2025) in Journal of Islamic Economic Studies, the development of sharia audits in Indonesia shows quite rapid progress along with the significant growth of the sharia financial industry.
Since the introduction of the Islamic financial system, audit practices based on Islamic law have increased. Growing public awareness of the importance of adhering to Sharia principles in financial transactions has also contributed to this progress.
Furthermore, regulations from institutions such as the Financial Services Authority (OJK) and the National Sharia Council (DSN-MUI) actively regulate and provide guidelines for the implementation of sharia audits. However, challenges such as the lack of comprehensive and consistent sharia audit standards and the limited number of competent and certified auditors remain major obstacles to this development.
Despite guidelines from international organizations like the AAOIFI, their implementation in Indonesia remains limited and lacks binding legal force. Overall, despite positive developments, sharia auditing still requires improvement.
These include strengthening the regulatory framework, improving human resource quality, and developing audit methodologies. The goal is simple: to ensure these audits can effectively contribute to maintaining the integrity and accountability of the Islamic financial sector in Indonesia.
Conclusion
Sharia audits focus on assessing an entity's compliance with Sharia principles. To ensure successful implementation, auditors are required to have a sufficient understanding of AAOIFI audit standards, be SAS certified, be competent in accounting, and uphold independence.
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