Shari ah oversight has received a certain amount of attention from the Islamic finance industry, especially in the areas of theory and research. Perhaps the series of annual conferences of the Shari’ah boards of Islamic financial institutions, organized through the efforts of the Accounting and Auditing Organization of Islamic Financial Institutions, is a clear indicator of the magnitude of interest in Shari’ah oversight on the part of one of the most important support institutions for the Islamic finance industry. Despite that, Shari’ah oversight in Islamic financial institutions is still in need of further efforts at the level of practical applications, exemplary procedures, legislation and organizational rules. It is a known fact that the advancement of any industry depends on the level of its accumulated expertise and human experiences, which will sift and refine its practices. This will lead to the best model for the conduct of the industry by distilling and condensing experience and expertise to strengthen positive practices, weed out the negative, and reduce gaps in practice to a minimum. For example, the field of financial auditing and accounting developed over the years and passed through numerous stages before arriving at its current level of precision in all its activities. Despite that, the accounting profession continues to gain experience that refines and adds to its practice on a periodic basis. In this regard, the Enron crisis and the events that followed in its wake, including new legislation and changes in the practice of external auditing, are evidence that the industry continues to grow and evolve, even though it has already arrived at a stable set of procedures, regulations and legislation by which it is systematically conducted. That is the nature of human efforts; they are always marked by shortcomings, no matter how good they get.
If the profession of Shari’ah oversight is compared with the profession of account auditing in regards to the comprehensiveness of its systems, procedures and legislation-considering that financial auditing is the closest profession to Shari’ah oversight in nature-a clear difference will appear between the two professions in favor of financial auditing. This highlights the need for continuous research in the area of Shari’ah oversight and the application of the new findings of such research to the Islamic finance industry, with a view to upgrading it and eliminating deficiencies in it. Perhaps this paper and the other papers that will be presented in this blessed conference will enrich the [collective] experience of Shari’ah oversight in the Islamic financial industry, as embodied by Shari’ah consultancy companies. The objective of this paper is to shed light on the Shari ah consultancy firms that have recently appeared, which offer services to Islamic financial institutions by carrying out the functions of Shari’ah supervisory boards. It is a phenomenon deserving of research and discussion because it represents a shift in the function of the Shari’ah boards from individual to institutional efforts, which is a necessary step in itself. However, controls, principles and criteria need to be put in place that will form the mandatory professional standards for the practices of Shari’ah consultancy companies.
