The Effect of Shariah Committee Composition on Malaysian Islamic Banks’ Audit Report Lag

Abstract

Financial reporting is one of the primary sources of information about a company. Financial reports must be issued on time to ensure that the users of financial information receive them on time to allow them to make decisions. Delays in issuing financial reports interfere with users of financial information making decisions. This research aimed to identify the effect of Shariah committee composition on the audit report lag of Malaysian Islamic banks. The study quantitatively analysed the financial reporting of 16 Islamic banks in Malaysia from 2011 to 2020. The analysis revealed that Shariah committee expertise and meeting frequency had significant relationships with audit delay. However, Shariah committee independence and size displayed insignificant relationships. The study's findings support the agency theory hypothesis. The results suggest that principal and agent conflict can be relieved by equipping more members of the Shariah committee with accounting and financial knowledge.

Bibliometric Review of Corporate Governance of Islamic Financial Institutions Through AI-Based Tools

“…The third stream of literature expands the impact of SG on IFIs' financial performance, stability, growth, and sustainability. A few notable studies in this context substantiate that effective functioning of the features of SG such as SSBs (Mollah and Zaman, 2015), BoDs (Al Maani et al, 2023;Nodeh et al, 2015;Bansal et al, 2023), audit quality (Alam et al, 2022), audit committee (Ben Abdallah and Bahloul, 2021;Uyob et al, 2022) positively influence the performance of IFIs.…”

Research Map on Islamic Audit Literatures

“…Research that discusses audit report lag and extent on sharia audits is still very rare. As for some research that is relevant to this topic, Uyob et al (2022) explain the effect of the composition of the Sharia Committee on the Lag of Audit Reports of Malaysian Sharia Banks. The results of the analysis reveal that the expertise of the Sharia committee and the frequency of meetings have a significant relationship with audit delay.…”