The Journal of Asian Finance, Economics and Business

Korea Distribution Science Association (한국유통과학회)
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Determinants of the Effectiveness of Internal Shariah Audit: Evidence from Islamic Banks in Bangladesh

  • ISLAM, K.M. Anwarul (Department of Business Administration, The Millennium University) ;
  • BHUIYAN, Abul Bashar (Faculty of Business and Accountancy, University of Selangor)
  • Received : 2020.11.05
  • Accepted : 2021.01.08
  • Published : 2021.02.28
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Abstract

The concept of Shariah-based internal audit has received increasing attention from researchers in recent times especially since Islamic financial institutions have been developing in several Asian countries like Bangladesh. To avoid financial irregularities and to maintain Shariah-based financial transactions, an effective Shariah-based internal audit system is extremely important for Islamic financial institutions such as Islamic banks. Hence, the objective of this study is to determine the factors that influence the effectiveness of the Shariah-based audit system. Study data has been gathered from Shariah auditors, members of the Shariah board and audit committee of six private Islamic banks in Dhaka, Bangladesh. A total of 210 survey questionnaires were sent and finally 136 responses were retained, indicating a final sample size of n=136, with a survey feedback rate of 65%. The study adopted a quantitative measure and collected only primary data, followed by convenience sampling. SPSS has been used to run necessary statistical interpretation. Results reveal that auditor's work autonomy, level of competency, and work performance significantly impact the Shariah-based internal audit effectiveness. The study findings can be adopted as guidelines to improve the overall effectiveness of the Shariah-based internal audit system in Islamic financial institutions.

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References

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