The main purpose of this research is to figure out the most effective determinants that play a vital role in enhancing the effectiveness of the internal Shari'ah audit in the Islamic banking industry. This paper reviews the existing literature to build comprehensive knowledge that would assist in determining the main factors that impact on the effectiveness of Shari'ah audit in Islamic banks. This research proposes a conceptual framework of factors that impact on Shari'ah audit effectiveness in IBs based on previously published studies. The proposed framework includes external and internal factors as well as internal Shari'ah audit structure, process and requirements. First, the regulators need to provide a detailed framework for Shari'ah audit which covers the main requirements for effective Shari'ah governance. Second, Islamic financial institutions (IFIs) need to pay more attention to following the Shari'ah audit process in order to achieve the objective of effective Shari'ah governance. Finally, the dearth of empirical research on the role and effectiveness of Shari'ah audit in Islamic banking highlights the need to develop an appropriate methodology to enhance the study of the effectiveness of Shari'ah governance practices. The Shari'ah ensures compliance with its rules and regulations and enhances the soundness and credibility of the Islamic finance industry. This study identifies a number of issues that require further investigation in order to establish a better system of Shari'ah audit and to identify the factors that affect Shari'ah auditing practices. This paper is unique in covering the main elements that have influence on the effectiveness of Shari'ah audit and proposes them in one framework.

Prior studies have identified that not all "intangibles" are reported as "intangible assets" in the statement of financial position. This particularly concerns the Islamic finance industry where intangibles are often used as underlying assets in structuring products. Accordingly, this research examines the unique Shari'ah requirements and the dichotomous views on the validity and permissibility of intangibles to be recognized as assets. As a result of an apparent need to re-examine the sufficiency of international financial reporting standards (IFRS/IAS) and the views of Shari'ah scholars on financial assets, the research is designed to analyse the sufficiency of IAS 38 Intangible Assets with reference to the Conceptual Framework for Financial Reporting of International Accounting Standards Board (IASB). For this purpose, an in-depth interview, two focus group discussions and a survey of target respondents from both academia and industry directly involved in reporting of Islamic financial services are carried out. From the engagement session with the Shari'ah scholars, the research has identified an alternative view of concern with reference to appropriate Shari'ah rulings to determine the permissibility and validity of intangible assets and its reporting implications. Whereas, a mixed response is observed in the survey in terms of clarity on accounting policy, treatment and disclosures with reference to the technicality of the standards as well as the peculiarity of the context in Islamic finance industry.

This paper aims to address the financial reporting dimensions of intangible assets with specific reference to International Accounting Standards (IAS) 38 as well as relevant International Financial Reporting Standards (IAS 38 exclusion) that are embedded within intangible assets. These have implications for Islamic financial assets with identifiable and measurable intangible components. The study uses the qualitative research method by way of interviews followed by focus group discussions with professional accountants/accounting academics and Shar??ah scholars/advisors from academia, the industry and regulatory bodies. Analysis of relevant literature is made to understand the subject matter and Shar??ah-related issues. The study observes that the accounting dimensions of tangible assets are generally consistent with Shar??ah requirements. However, significant variation arises when the dimensions of intangible assets are represented in financial assets.