The Adoption of Generalized Audit Software (GAS) and Digital Analytics by Shariah Auditors in Islamic Banks

Abstract

This paper identifies the adoption of information systems (IS) in the form of generalized audit software (GAS) and digital analytics by Shariah auditors (SAR) in Islamic banks (IBs). To explore further, this paper identifies this practice among four types of banking groups, namely full-fledged Islamic banks (FFIB), Islamic banking subsidiaries (IBS), development financial institutions (DFI), and Islamic windows (IW). In attaining its objective, this study employs a qualitative method by utilizing semi-structured interviews with six (6) key individuals in Malaysian IBs. Our findings support the notion that most SARs adopt and use GAS in their audit execution. Interestingly, few of them use digital analytics in conducting their audit assignments. This digital analytics application will undoubtedly help SAR seek the Shariah non-compliance (SNC) cases effectively. The samples selected by GAS would be much bigger compared to manual audit exercise, which depends on few selected samples only. However, there is an argument that the audit software application is not enough since SAR must pay visit physically to their auditee’s premises. Finally, this study suggests that there should be some training for the SARs, especially regarding the GAS application, to detect the SNCs thoroughly in IFIs operations. Eventually, GAS can assist SAR in mitigating SNC cases while strengthening the public confidence and achieving Maqasid As Shariah.