EXPERIENCES OF SHARIAH AUDITING IN NIGERIAN ISLAMIC BANKS
DOI:
https://doi.org/10.33102/e9snw324Keywords:
Islamic Bank, Shariah audit, Nigeria, Shariah compliance, Non-interest Banking, Interpretative Phenomenological AnalysisAbstract
Existing studies of Shariah auditing within Nigerian Islamic Banks highlights fragmented governance structures, limited auditor competence, inconsistent regulatory oversight, and the absence of a unified national Shariah audit framework. This study’s objectives include: (i) to examine current Shariah audit practice within Nigerian Islamic Banks; (ii) to identify factors influencing the adoption of Shariah auditing; and (iii) to determine where and why gaps exist between regulators, Shariah auditors, management, and board members in the implementation of Shariah audit best practices. The study employs a qualitative methodology grounded in interpretative phenomenological analysis to capture the lived experience of Shariah auditors, regulatory practitioners, and Shariah governance experts, using focus groups and one-to-one interviews. The findings revealed six interconnected themes relating to ethics, collaboration, self-regulation, operational capacity, competing priorities, and divergences between regulators and auditors. These themes illustrate structural, cultural, and resource-based constraints that hinder the adoption of comprehensive Shariah auditing practices. This study makes contributes to field with a novel application of Structuration Theory, distinct findings in relation to Islamic Accountability in Nigerian Banks, fresh insights into auditor’ professional entanglements, an up-to-date assessment of training needs, as well as recommendations for policy reform.
Downloads
References
Ab Ghani, N. L., & Abdul Rahman, A. R. (2015). Analysis of Shariah audit practices in Islamic banks in Malaysia. Jurnal pengurusan, 43, 107-118.
Ab Ghani, N. L., Mohd Ariffin, N., & Abdul Rahman, A. R. (2022). Effectiveness of internal Shariah audit function in Malaysian Islamic financial institutions. International Journal of Economics, Management and Accounting, 30(2), 311–347.
Abdul Kareem, I. A., Mahmud, M. S., & Abdul Ganiyy, A. (2022). Shariah Compliance Practice: An Analysis of Trends among Islamic Banks in Nigeria. International Journal of Business and Society, 23(1), 137-151.
Abdul Rahim, M. S. (2025). Revolutionising The Shariah Secretariat Function Through Artificial Intelligence: Prospects and Challenges for Malaysia’s Islamic Banking Sector. Journal of Central Banking Law and Institutions, 4(3), 567-594.
Abdullah, E. A. M., Hassan, S. A., & Bahari, Z. (2024). The Independence of the Internal Sharia Audit in Islamic Banks. al-Qanatir: International Journal of Islamic Studies, 33(3), 491-499.
Adiyaman, G. (2025). Digital audit model in Islamic financial institutions: Integration of Turkish accounting standards (TAS) and computer-assisted audit techniques (CAATs). Turkish Economic Review, 12(3), 143-154.
Ahmad, Z., Muneeza, A., Rahman, M. M., & Mahomed, Z. (2023). A Comparative Analysis of Shariah Governance Framework of Islamic Bank in Malaysia and Pakistan. Talaa: Journal of Islamic Finance, 3(1), 01-17.
Alam, M. K., Tabash, M. I., Thakur, O. A., Rahman, M. M., Siddiquii, M. N., & Hasan, S. (2022). Independence and effectiveness of Shariah department officers to ensure Shariah compliance: evidence from Islamic banks in Bangladesh. Asian Journal of Accounting Research, 8(1), 15-26.
Alaro, A. A., & Alao, I. A. E. (2019). Challenges of the Emerging Markets of Islamic Finance in Africa: Nigeria as a Case Study. Journal of Islamic Banking and Finance, 2(1).
Al-Haija, E. A., & Syed, F. (2021). The Impact of Fintech on Sharia’h Compliance and Decision-Making Process in Islamic Financial Institutions. International Journal of Business, Economics and Law, 25(2).
Ali, N. A. M., Mohamed, Z. M., Shahimi, S., & Shafii, Z. (2015). Competency of Shariah auditors in Malaysia: Issues and Challenges. Journal of Islamic Finance, 176(3160), 1-9.
Aslam, S., & Haron, S. A. (2020). Environmental, Social and Governance Practices and Financial Performance of Islamic Banks in South Asia. Journal of Islamic Accounting and Business Research, 11(5), 860-875.
Aspiranti, T., Ali, Q., Sudrajad, O. Y., & Rusgianto, S. (2023). Shariah governance reporting of Islamic banks: An insight from Malaysia. Cogent Business & Management, 10(2), 2247220.
Bahari, N. F., & Akhtar Baharudin, N. (2016). Shariah Governance Framework: The Roles of Shariah Review and Shariah Auditing. In Proceedings of the 3rd International Conference on Management & Muamalah 2016 (3rd ICoMM).
Basiruddin, R., & Ahmed, H. (2020). Corporate Governance and Sharīʿah Non-compliant Risk in Islamic Banks: Evidence from Southeast Asia. The International Journal of Business in Society, 20(2), 240262.
BNM. (2019). Shariah Governance Policy Document. Kuala Lumpur: Bank Negara Malaysia.
CBN. (2011). Guidelines for the Regulation and Supervision of Institutions Offering Non-Interest Financial Services in Nigeria. Abuja: Central Bank of Nigeria.
Cheah, C. K., Wong, K. Y., Tan, K. L., Ong, H. S., Kong, Y. M., & Erusan, D. (2023). Islamic bank audit committee and risk-taking behavior. A conceptual framework. In 10th International Conference on Business, Accounting, Finance and Economics (BAFE 2022) (pp. 149-158). Atlantis Press.
COMCEC. (2022). Standardization Efforts in Islamic Finance. COMCEC Coordination Office. <https://www.comcec.org/wp-content/uploads/2022/11/ITEM-7-Madde-4-EN-Research-Report-Financial-3.pdf>
El-Halaby, S., & Hussainey, K. (2016). Determinants of Compliance with AAOIFI Standards by Islamic Banks. International Journal of Islamic and Middle Eastern Finance and Management, 9(2), 143-168.
Esa, M. S., Wahid, H., Yaacob, S. E., Fazni, W. N., Nazarie, W. M., & Mohamad, A. H. H. (2025). Measuring Competency Impact on Shariah Audit Effectiveness: A Systematic Literature Review. International Journal of Research and Innovation in Social Science, 9(02), 2077-2091.
Farook, S. Z., & Farooq, M. O. (2011). Shariah Governance for Islamic Finance: Challenges and Pragmatic Solutions. SSRN, 1813483.
Fatmawati, D., Ariffin, N. M., Abidin, N. H. Z., & Osman, A. Z. (2022). Shariah governance in Islamic banks: Practices, practitioners and praxis. Global Finance Journal, 51, 100555.
Hamdan, H., & Salim, N. (2024). The Effect Oof Corporate Governance on Financial and Social Disclosure of Takaful Companies in Malaysia. Journal of Law and Governance, 7(1), 160-174.
Hamman, A. M. (2016). The Role of Advisory Committee of Experts and Product Development in Nigerian Islamic Banks. In 4th International Conference on Accounting, Business and Economics, Kuala Terengganu, Malaysia (pp. 22-46).
Hanefah, M. M., Shafii, Z., & Salleh, S. (2020). Internal control, risk and Sharīʿah non-compliant income: Evidence from Malaysian Islamic banks. International Journal of Islamic and Middle Eastern Finance and Management, 13(1), 42–63.
Hassan, M. K., Sohel, M. N. I., Choudhury, T., & Rashid, M. (2024). A systematic literature review of risks in Islamic banking system: research agenda and future research directions. Risk Management, 26(1), 3. IFSB. 2019. Core Principles for Effective Islamic Finance Regulation (CPIFR). Kuala Lumpur: Islamic Financial Services Board.
Ijaiya, H. (2021). A Review of Literature on the Challenges of Shariah Governance in Islamic Banking in Nigeria. Journal of Shariah Law Research, 6(1), 1-10.
Isa, F. S., Ariffin, N. M., & Abidin, N. H. Z. (2020). Shariah Audit Practices in Malaysia: Moving Forward. Journal of Islamic Finance, 9(2), 42-58.
Jum’ah, H. A. (2023). Islamic Finance in Nigeria: Between Islamization and Shariah Non-Compliance Polemics. Qiraat Africa. <https://qiraatafrican.com/en/8847/islamic-finance-in-nigeria-between-islamization-and-shariah-non-compliance-polemics>
Kamaruddin, M. I. H., Shafii, Z., Hanefah, M. M., Salleh, S., & Zakaria, N. (2024). Issues and Challenges in Shariah Audit Practices in Malaysian Shariah-Based Sectors. The Journal of Muamalat and Islamic Finance Research, 82-100.
Khalid, A. A., & Sarea, A. M. (2018). Independence and effectiveness of internal Shariah audit: An Islamic agency theory. In 5th International Conference on Management and Muamalah (pp. 15-16).
Khalid, A. A., Hussin, M. Y. M., Sarea, A., & Shaarani, A. Z. B. M. (2021). Development of effective Internal Shariah audit framework using Islamic agency theory. Asian economic and financial review, 11(8), 682.
Khatib, S. F., Abdullah, D. F., Al Amosh, H., Bazhair, A. H., & Kabara, A. S. (2022). Shariah Auditing: Analyzing the Past to Prepare for the Future. Journal of Islamic Accounting and Business Research, 13(5), 791-818.
Kholmi, M. (2023). Islamic Bank Financial Accountability in the Perspective of Shariah Enterprise Theory. International Journal of Religious and Cultural Studies, 5(1).
Kurfi, S. U. A., & Haron, M. H. (2025). Institutional mechanisms and audit shari’ahness in Nigeria. Journal of Islamic Accounting and Business Research, 1-27.
Lailiya, R. (2024). Impact and risk management of Sharia non-compliance in Islamic banking. Proceedings of International Conference on Accounting & Finance, 2, 583–593.
Lapalme, J., Kabiwa, V., & Tardiff, P. (2019). Relationship between information technology auditors and auditees and their impacts on auditors. International Journal of Engineering Business Management. 11.
Lathifah, R. N., & Taufik, R. (2025). Competencies of Shariah Auditors: Skills, Knowledge, and Challenges in Islamic Banking Practice. Journal of Islamic Contemporary Accounting and Business, 3(1), 40-48.
Mahmud, M. S., Abdul Kareem, I. A., Ali, M. O., Fadah, I., & Arifin, A. A. (2021). Shariah Governance in Islamic Financial Institutions in Nigeria: An Empirical Study. In International Conference on Management, Business, and Technology (ICOMBEST 2021). Dordrecht: Atlantis Press. (pp. 168-179).
Masruki, R., Hanefah, M. M., & Dhar, B. K. (2020). Shariah Governance Practices of Malaysian Islamic Banks in the Light of Shariah Compliance. Asian Journal of Accounting & Governance, 13, 91–97.
Merriam, S. B., & Tisdell, E. J. (2016). Qualitative Research: A Guide to Design and Implementation (4th ed.). San Francisco: Jossey Bass.
Mohamad Puad, N. A., Abdullah, N. I., & Shafii, Z. (2020). The Shariah audit framework from practitioners’ perspective: a mirage or fact. The Journal of Muamalat and Islamic Finance Research, 17(2), 1-16.
Mohd Ali, N. A., Shafii, Z., & Shahimi, S. (2020). Competency model Model for Shari’ah Auditors in Islamic Banks, Journal of Islamic Accounting and Business Research, 11(2), 377-399.
Ramdani, R., & Kamal, M. (2023). Corporate Governance and Shariah Non-Compliance Risk: Evidence from Islamic Banks in Indonesia. Jurnal Akuntansi dan Keuangan Islam, 11(1), 49–66.
Saleh, A. O. H., Alsirhani, S. M. M., & Muayyad, D. M. (2023). Shariah governance and audit in the Islamic banks: A literature review. AI and business, and innovation research: Understanding the potential and risks of AI for modern enterprises, 823-831.
Sani, S. D., & Abu Bakar, M. (2021). A Proposed Framework for Implementing Risk-based Shariah Audit. Journal of Financial Reporting and Accounting, 19 (3), 349-368.
Sarea, A. M., & Hanefah, H. M. (2013). The Need of Accounting Standards for Islamic Financial Institutions. International Management Review, 9(2), 50–59.
Seriki, A., & Salleh, S. (2025). Challenges of Shariah Audit in Nigeria: The Need for Effective Shariah Governance Framework. Karatay Journal of Islamic Economics and Finance, 3(1), 36-46.
Shafii, Z., Abidin, A. Z., Salleh, S., Jusoff, K., & Kasim, N. (2013). Post implementation of Shariah governance framework: The impact of Shariah audit function towards the role of Shariah committee. Middle-East Journal of Scientific Research, 13(Special Issue on Contemporary Islamic Finance and Wealth Management), 7–11.
Shafii, Z., Ali, N. A. M., & Kasim, N. (2014). Shariah Audit in Islamic Banks: An Insight to the Future Shariah Auditor Labour Market in Malaysia. Procedia-Social and Behavioral Sciences, 145, 158-172.
Shafii, Z., Salleh, S., & Shahwan, S. H. (2010). Management of Shariah Non-compliance Audit Risk in the Islamic Financial Institutions via the Development of Shariah Compliance Audit Framework and Shariah Audit Programme. Kyoto Bulletin of Islamic Area Studies, 3(2), 3-16.
Sori, M. Z., Mohamad, S., & Mohd Rashid, M. E. S. (2015). Shariah governance practices in Malaysian Islamic financial institutions. SSRN, 2579174.
Sulistyowati, S., Daud, D., & Kasim, E. S. (2023). Recognizing the Current State of Operational Shariah Audit of Islamic Banks. European Proceedings of Social and Behavioural Sciences, 419-431.
System Property Development Ltd. and 1 v Jaiz Bank Plc. [2018] FCT/HC/CV/280/2015
Tekdogan, O. F., Al-Jarhi, M., & Yazici, A. (2020). Improving Shariah Governance Framework in Islamic Finance. COMCEC Coordination Office. <https://ebook.comcec.org/Kutuphane/Icerik/5da9134b-2438-4ee5-890c-d78ad3669d41.pdf>
Witari, N. K. A. A., Sudana, P., Astika, I. B. P., & Yasa, G. W. (2022). Framing Effect in Tax Auditor Judgment (A Phenomenology Study). Research Journal of Finance and Accounting, 13(16), 44-52.
Yahya, Y. (2016). Shariah Audit in Islamic Financial Institutions: The Effects of Spirituality and Moderating Role on Judgment and Decision Making (Doctoral Thesis) Institute of Postgraduate studies, University of Malaya. Kuala Lumpur.
Yahya, Y., Abu Hasan, H., & Mahzan, N. (2020). Regulations of Shariah audit for Islamic financial institutions. Jurnal Pengurusan / Journal of Management, 58, 1–16.
