Future Directions of Shariah Audit for Takaful Industry: Perceptions of Shariah Committee

Takaful is a shariah-compliant insurance provider that has grown to be a crucial part of Malaysia’s Islamic financial system. Compared to other financial industry sectors, Malaysia’s takaful industry is still relatively new, yet it has experienced rapid growth. Nevertheless, despite its strong expansion, the Takaful business still faces several problems, such as inefficient governance practices. Ineffective governance practices will increase the likelihood that they will encounter shariah risk in their operations and activities. One of the governance organs that helps to ensure that the takaful operator has a strong and efficient internal control system for shariah compliance is the shariah audit function. This study aims to explore the future direction of shariah audit by getting the perceptions from the shariah committee. Semi-structured interviews were conducted with these shariah committee. The findings of the study discovers that there are three improvements that need to be focused by Takaful Operators. This study may provide relevant guidelines for future development of shariah audit practice.