Balanced score card approach for better Shari’ah corporate governance
Islamic financial institutions have emerged due to the non-Shari’ah compliant nature of conventional financial from interest, uncertainty, gambling and prohibited activities from the Islamic perspective. In order to achieve the mission of Shari’ah compliance, organizations such as Accounting and A...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Science Publications
2013
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| Subjects: | |
| Online Access: | http://irep.iium.edu.my/32863/ http://irep.iium.edu.my/32863/ http://irep.iium.edu.my/32863/ http://irep.iium.edu.my/32863/1/BALANCE_SCORE_CARD.pdf |
| Summary: | Islamic financial institutions have emerged due to the non-Shari’ah compliant nature of conventional
financial from interest, uncertainty, gambling and prohibited activities from the Islamic perspective. In
order to achieve the mission of Shari’ah compliance, organizations such as Accounting and Auditing
Organization for Islamic Financial Institutions, Islamic Financial Services Board and countries like
Malaysia have provided Shari’ah governance guidelines. However, there are some court-cases regarding
non-Shari’ah compliant issues and consequently, this has tarnished the reputation of the Islamic financial
institutions. There is no guideline on Shari’ah performance measures available to find out to what extent
Islamic financial institutions meet its mission. This study tries to fulfill the needs of the industry by
providing the balanced score card for Shari’ah governance. This proposed score card is designed based on
the concepts of accountability, responsibility, independence and competency of the Shari’ah board
members. It suggests measures how any Islamic financial institutions discharge their fiduciary duty towards
shareholders, depositors, participants of Islamic industry. The main drive towards Islamic financial
institutions is to provide fair and just financial system free insurance, borrowers and society with the
expectation of long-term success of the institutions within the Shari’ah framework. The proposed balanced
score card is developed based on the opinions of 7 representatives from Islamic banks and 5 representatives
from Takaful (Islamic Insurance) Operators. It is expected that this score card can be used as a platform for
improving the Shari’ah corporate governance of Islamic financial institutions.
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