By A Staff Reporter -
MUSCAT — Ernst & Young signed a working agreement with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) to assist in Sharia certification of Core Banking Systems (CBS) used by Islamic banks.
On the back of this mandate, Ernst & Young is launching its new Advisory Solution, CBS Sharia Assessment, to assist international and regional technology firms.
The agreement was signed by AAOIFI’s Secretary-General Dr Khaled al Fakih and Essa al Jowder, Office Managing Partner, Ernst & Young Bahrain. The certification programme will assess CBS services to ensure that they conform to the approved global Sharia and accounting standards.
Ashar Nazim, Partner and Head of Global Islamic Banking Center at Ernst & Young said: “In a technology driven world, banking products and processes have to be mapped on to the core banking system which is invariably based on conventional foundations with a patchwork of Sharia features. The issue of sub-optimal IT solutions can be an obstacle to the profitability of Islamic banks. Uncertified IT solutions pose a serious Sharia non-compliance risk which the boards of these banks are no longer willing to tolerate.”
He continued: “Regulators are also taking notice. For instance in Oman, the recently launched Islamic Banking Regulatory Framework requires Islamic windows and banks to ensure that, in the next three years, their CBS are certified to be Sharia compliant.”
AAOIFI has issued 88 standards in the areas of Sharia, accounting, auditing, ethics, and governance for international Islamic finance.