ERNST & YOUNG signed a working agreement with Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) to assist in Shari’a 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 Shari’a 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 Shari’a and accounting standards.
Ashar Nazim, Partner and Head of Global Islamic Banking Centre 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 Shari’a features. The issue of sub-optimal IT solutions can be an obstacle to the profitability of Islamic banks. Uncertified IT solutions pose a serious Shari’a non-compliance risk which the boards of these banks are no longer willing to tolerate.”
AAOIFI has issued 88 standards in the areas of Shari’a, accounting, auditing, ethics, and governance for international Islamic finance. Its standards are currently followed by several leading Islamic financial institutions across the world. This has helped introduce a progressive degree of harmonisation of international Islamic finance practices.