Corporate governance

Mar 2, 2016

The different law at the moment breathing among the various money establishments create it tough for money establishments, regulators and rating agencies outside the Muslim Community to grasp the Muslim money business that they’ll not understand as being fully clear, since there’s no normal frame work for examination establishments on identical basis.

In response to the current drawback and therefore the demand from Muslim establishments, the Accounting and Auditing Organization for Muslim money establishments has issued normal on company Governance, which give comprehensive steering for the structure of the law Board, for the inner law review method, and for the connection between the law higher-up Board and external auditors.

The organization has conjointly established a law Board comprising members from varied Muslim countries United Nations agency area unit cooperating within the development and promulgation of law standards and seeking to harmonies law rulings among Muslim money establishments and across national boundaries. It is vital that associate degree audit method is established to make sure compliance with the law.

The boards should play an energetic role in guaranteeing compliance with law, not showing any leniency in their vital role of disallowing financial gain derived from sources, that area unit in dispute of the law.

The organization have conjointly developed a core set of accounting, auditing and governance normal for Muslim money establishments, cooperating with relevant parties everywhere the planet, as well as international standard- setting bodies and central banks with a read to having them globally adopts as benchmarks for business.

Financial establishments within the world market place area unit taking an additional proactive approach to risk management. Qualitative assessments of risks have become wide used, management of risk is additional active and risk measures have become additional correct, giving rise to new tools and structure structures to manage risk. Those money establishments that actively manage their risks have a decisive competitive advantage, they undertake risks additional briefly, anticipate adverse changes, shield themselves from surprising events and last, however not lest gain the experience to cost risk befittingly.

Methodologies like “price at risk” and “capital risk” have currently been developed for managing risk. So as to achieve competitive advantage, Muslim finance related organization should have a transparent understanding of the risks inherent within the business and adapt these strategies to manage them.

In these days, an identical frame work is very important to make sure that the Muslim banking and finance business is clear, features a robust company governance system and aware of the necessity for risk management, beat accordance with international best observe.