AAOIFI Governance and Ethics Board issues its Statement 1/2025 “AAOIFI Governance Standard (GS) 1 (Revised 2024) “Shari’ah Governance Framework”: External Shari’ah Audit Exemption”

31 December 2025

PR/__/2025

Accounting and Auditing Organization for Islamic Financial Institutions' (AAOIFI's) Governance and Ethics Board (AGEB / the board) has officially issued AGEB Statement 1/2025 "AAOIFI Governance Standard (GS) 1 (Revised 2024) "Shari'ah Governance Framework": External Shari'ah Audit Exemption". Through the statement, the board, in response to the stakeholders' comments, has communicated its decision to provide exemption from mandatory (or preferred) requirement of having external Shari'ah audit conducted, if the respective institution is subject to audit under the requirements of relevant AAOIFI Standards of Auditing and Assurance (SOAAs).

The exemption is intended to streamline the Shari'ah assurance processes across the industry by reducing duplication of efforts and overlapping engagements, while fully preserving the core objective of independent Shari'ah compliance assurance. This initiative ensures that institutions continue to receive a fully independent opinion on their compliance with Shari'ah principles and rules governing financial arrangements, contracts and transactions for the relevant reporting period but with greater efficiency, reduced cost and improved alignment with best practices.

On this occasion, Mr. Farrukh Raza, chairman of AGEB, stated: "This step reflects our commitment to ensure that Shari'ah governance remains robust, efficient and value-adding, while optimising the cost. By removing unnecessary duplication of efforts, time and cost, we are allowing institutions to focus resources where they matter most, while maintaining the highest standards of accountability and transparency."

Mr. Omar Mustafa Ansari, secretary general of AAOIFI, stated: "This exemption is fully aligned with our mission to support the sustainable growth of Islamic finance. It simplifies processes without compromising integrity, and it reinforces AAOIFI's role in advancing globally consistent Shari'ah governance practices. AAOIFI remains committed to strengthening transparency, enhancing Shari'ah governance frameworks, and supporting the sustainable development of Islamic finance globally."

The statement can be accessed on AAOIFI website: Link