This unit will focus on the definitions, components, and the criteria for regulatory, governance and Sharia compliance frameworks as applicable to different legal structures that Islamic MFIs usually take. A general overview of regulatory dimensions for microfinance, although these vary from jurisdiction to jurisdiction, will be provided, with specific attention to I-MFIs operating outside regulatory frameworks that recognise Islamic financing.
The concept of Sharia compliance will be discussed and the implications for management and governance in line with the industry best practices and according to the Standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) will be outlined. Course participants will learn to:
1. Differentiate between different corporate governance requirements for the different types of Islamic MFIs
2. Identify the particular regulatory dimensions of relevance to Islamic MFIs (subject to in-country jurisdiction) and recognise their implications for corporate governance
3. Outline the role and importance of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB)
4. Identify Shariah non-compliance risks, the pillars of Shariah Governance and technicalities of Shariah audit in the Islamic microfinance arena.
5. Differentiate between various types of Shariah audits, reviews, and compliance tests with the aim of enabling participants to gain a better understanding of the nature and the operations of how Shariah non-compliance risks can be managed.