DEVELOPING SHARIA AUDIT IN ISLAMIC FINANCIAL INSTITUTIONS: A SYSTEMATIC REVIEW OF 11 YEARS

Abstract

This Systematic Literature Review (SLR) is structured to detail the development of Sharia audit research, confirming the implementation of strong internal control processes in Islamic Financial Institutions (IFIs) to eliminate the risk of Sharia non-compliance. Review reveals an over-reliance on Agency Theory, which restricts the analysis of Sharia regulation, social responsibility, and the environment. This calls for a necessary paradigm shift towards comprehensive theories such as Institutional Theory, Islamic Accountability Theory, and Maqasid al Shariah to close the theoretical gap. Employed in the analyzed literature is predominantly survey based (nine studies), with only three adopting a normative perspective. The heavy concentration of research in Malaysia limits the generalizability of findings and highlights a lack of in-depth study into Sharia audit jurisprudence interpretation. Identify significant knowledge gaps in Islamic Financial Institutions (IFIs) regarding factors that drive effective Sharia audit, including auditor independence and disclosure quality. Systemic obstacles are both internal (inadequate internal policies) and external (outdated Sharia norms, lack of a universal governance framework, and a shortage of Sharia specialists). For legislators and regulators emphasize the necessity of ensuring Sharia auditors possess the requisite skills and knowledge. Policy must focus on international human resource capacity building and professional standardization to alleviate the expert shortage. This review lie in the creation of a critical research agenda that directs future causality and effectiveness studies. Its uniqueness is in promoting the theoretical shift towards the islamic accountability perspective to enhance the legitimacy of Sharia audits beyond traditional agency conflicts.