The Muamalat Newsletter Vol. 2 2023

FEM eNewsletter | Dec 2023 34 their role beyond traditional auditing that focused on financial integrity and performance, but to contribute to the achievement of objectives of Islamic economy. The roles of Shariah auditors, postulated by him early in the journey of Islamic economics and finance are to provide religious assurance on i. auditors’ liability towards outside financiers, ii. assessment of management practices; iii. compliance with Shariah; iv. reporting on ihsan and v. determination and payment of zakat. In addition to the role of the audit to provide assurance as a check and balance mechanism to manage agency issue between top management and shareholders, the assessment should include sustainability risk management criteria such as Environment, Social and Governance (ESG) as well as Sustainability Development Goals (SDGs). The study aims to examine the issue of under-developed and under-utilised non-financial performance measures that are relevant for assurance in Shariah-based institutions. Shariah-based institutions, in the context of the study collectively consist of institutions that adopt Shariah-compliant principles. The institutions comprise of establishments in the Islamic banking and takaful sector, Islamic capital market, Islamic co-operatives, Public Trust Entities (PTEs) and other Islamic institutions such as State Islamic Religious Councils (SIRCs). Relevant assurance in Shariah- based institutions is audit that relates to achievement of the roles of the institutions, that could range from social impact audit, ESG audit or Shariah audit, depending on the strategic governance approach of the governance organs of the institutions. The emergence of non-financial audit includes Environment Social Governance (ESG), Sustainable Development Goals (SDGs), carbon audit, social impact audit and Shariah audit, among others as presented in Table 1.1. Shariahgovernanceandassurance adoption in Shariah-based sectors varies as the multiple regulators governing the institutions adopts diverse governance styles. This is due to the diverse approach taken by the regulators on what amounted to Shariah assurance. Non-standardised approach of governance and Shariah assurance, in the opinion of the author sends fragmented perceptions to the stakeholders. Need for Accountability Performance Indicators for Shariah-Based Sectors The second issue addressed in this study is to fill in the gap arises from the need for the demonstration of accountability from what (Maznah Mohamad, 2017) referred to as the centralized and extensive state Islamisation. Many government initiatives are implemented following the approach of Islamic Revivalism during the first Mahathir’s leadership as a Prime Minister (1981-2002). The adoption of Assimilation of Islamic Values (AIV) policy however lacks accurate measures on the effectiveness of Islamic ethics implementation (Kamri et al., 2014). This starves the much-needed feedback to the Shariah-based institutions to The ability of Malaysia to demonstrate the quality of progressive Muslim society that possesses good governance could score the leadership role to more than 1 billion world Muslim population “ “