Sharia is revealed guidance and is God’s eternal will for humanity, as expressed in the Quran and Prophet Muhammad ‘s (pbuh) teachings (Sunnah). When the word Sharia is used in legal discourse, it refers to the Islamic legislation codified by the schools of Islamic law. To respond to contextual and Islamic financial practices, contemporary scholars exercise their expertise to deduce new principles and legislation from the legal codification of the classical schools of Islamic law.

AAOIFI - Accounting and Auditing Organization for Islamic Financial Institutions:

A Bahrain based not-for-profit organization primarily responsible for development, issuance and promotion of standards in the areas of Sharia, accounting, auditing, ethics and governance for Islamic financial institutions, participants and the overall industry.

Sharia Standards:

Sharia standards (like but not limited to AAOIFI Sharia standards) are a set of common rules and principles so that Sharia compliance of products or services can be consistent, reliable, transparent, and comparable. They specify how investments and transactions must be structured to maintain Sharia compliance, defining types of Islamic modalities, and there guiding principles along with permissible and restrictive rules.    

Sharia Scholar:

A specialized jurist who has pursued academic and intellectual activities in Fiqh al-Muamalat (Islamic commercial jurisprudence), particularly expertise in Islamic law and contemporary transactional jurisprudence. A Sharia scholar may be an academic, who works as a professor, teacher or researcher at a university or other higher Islamic education institution.

Sharia Supervisory Board:

Jurists [scholars] specializing in contemporary transactional jurisprudence, who are well acquainted with and experienced in the Islamic financial system in particular and the Islamic economic system in general. They issue binding Sharīa pronouncements and recommendations, and oversee the task of supervising and auditing the institution. [Source: IFSB terminologies]

Sharia Compliant:

A status which confirms that the activity of a product, service or investment complies with the specifications of the Sharia standard being used such as but not limited to AAOIFI Sharia standards, rulings of the Central Sharia Board of the respective jurisdiction, approvals and rulings given by the Sharia Supervisory Board of the IFI (as the case may be). It should be noted that current use of the term “Sharia-compliant” generally refers to the Sharia ruling as per the review and interpretation of the participating Sharia scholar or SSB typically in conformance to the four primary schools of Islamic jurisprudence namely Hanafi, Shafi’i, Maliki and Hanbali rites.

Sharia Certificate:

A document given by the Sharia Supervisory Board (SSB) expressing its opinion, based on the appropriate methodology, that the product, service, financial offering or institution in question meets specific requirements of Sharia standards. The Sharia Certificate is issued after conducting a comprehensive examination of the legal documents making up the product, service, offering or institution (as the case may be).  

Sharia Review:

A comprehensive examination process of a specific product, service, investment or institution that results in the issuance of a Sharia certificate proving that the product or the institution’s offerings (and related procedures and policies) are in compliance with the Sharia standards.  

Sharia Consultation:

Providing professional or expert advice on products, investments or business case according to the client’s requirement for the purpose of examining their structures (or ideas) from a view of including provisions that are guided by Sharia standards while removing any difficulties there may be in the way towards attaining Sharia compliance.

Sharia Equity Screening:

The process by which the status of a listed stock is screened in light of Sharia standards or under the guidelines of Sharia Supervisory Board in order to determine if the investment is Sharia compliant or not. The process broadly involves analyzing the business activities and measuring the financial statements as per the defined accounting ratios.

Sharia Board Audit:

A review-based assessment involving the examination of the extent of an IFI’s compliance during a specific time period including assessing contracts, agreements, policies, products, transactions, financial statements etc. This assessment is conducted for the purpose of measuring the compliance of executed transactions and related operations in light of Sharia standards upon which the Sharia Certificate was issued. 

Internal Sharia Audit:

To provide assurance, in the form of an opinion, to those charged with Sharia governance in respect to adherence of the IFI with the Sharia rulings as laid down by the IFI’s Sharia Supervisory Board. This also involves giving an opinion whether adequate internal controls have been designed and implemented and that adequate governance structure is in place for proper functioning of the IFI in line with Sharia principles and rules and relevant governance requirements and that the management has established adequate risk assessment criteria and management mechanism to ensure compliance with Sharia principles and rules and to cater to the specific risks related to Islamic finance transactions. [Source: CBB SG module]

External Sharia Audit:

An independent assurance engagement to provide reasonable assurance that an Islamic Financial Institution (IFI) complies with the Sharia principles and rules applicable to its financial arrangements, contracts and transactions during a specific period based on a specific set of Sharia principles and rules contained in the criteria (like AAOIFI Sharia standards, regulatory Shari’ah requirements, rulings of the Central Sharia Board for the respective jurisdiction, approvals and rulings given by the Sharia Supervisory Board of the IFI, as the case may be). [Source: AAOIFI External Sharia audit Std’s]

ISAE 3000:

International Standard on Assurance Engagements (ISAE 3000) is a principles-based international assurance standard issued by the International Federation of Accountants (IFAC) for assurance over non-financial information. It is generally applied for audits of internal control, sustainability and compliance with laws and regulations*. Given its capability of being applied effectively to a broad range of underlying subject matters, it provides a basis for Sharia compliance subject-specific engagements.

Assurance Engagement:

An engagement in which an assurance practitioner aims to obtain sufficient appropriate evidence in order to express a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of an underlying subject matter against a specific criteria.


Fintech stands for Financial Technology. These are innovative business models that automate and improve (and also invent new) financial services using software and modern technology such as (but not limited to) mobile payment apps or cryptocurrency.

Peer to Peer lending:

P2P Lending is a form of crowd-funding used to raise funds for people or businesses who need to borrow, from individuals who want to invest. By using online services P2P enables individuals to borrow and lend money directly from each other without an intermediary. P2P lending company typically takes a fee for providing match-making and credit checking the borrower. To achieve Sharia compliance P2P platforms are typically structured using the Commodity Murabaha modality.

Sharia Governance:

A system defining set of relationships between the IFI management, its Sharia Supervisory Board, Sharia auditors, board of directors, shareholders and other stakeholders for the purpose of assuring that the IFI complies with Sharia standards in all its activities. The main objectives of a Shari’a Governance framework are:

  1. To provide a structure and a system to govern all the business activities of an IFI in order to ensure Sharia compliance at all times and at all levels.
  2. To enable the IFI to be perceived as Sharia compliant by the stakeholders including the general public. [source: CBB Sharia Governance module]

Islamic regulatory requirements:

An Islamic regulatory requirement is a rule that a government entity (like a central bank) imposes on an organization, product or entity for the purpose of regulating its business to ensure its activities comply with Sharia standards (as defined by the respective jurisdiction). These regulations govern how organizations manage their business and core functions along with the Sharia Supervisory Board, internal Sharia audit practice and how they interact with each other, among many other areas.

Internal Sharia Reviewer:

A subject matter expert in Islamic Sharia who is a full-time employee responsible for reviewing the company offerings, policies, products and any other document to assure that those documents / projects will be Sharia complaint at the time of launching it and thereafter.

Internal Sharia Control:

Policies and procedures set for the purpose of mitigating Sharia non-compliance risks and executing corrective actions to realign and maintain the Sharia compliance status as per the directives or rulings of the SSB.


Sukuk is an Islamic financial instrument which is defined by AAOIFI as “Certificates of equal value representing undivided shares in the ownership of tangible assets, usufructs. and services or (in the ownership of) the assets of particular projects or special investment activities.” Though this instrument may be perceived as similar to a conventional bond but in reality bonds evidence a debt the issuer owes to the bondholders whereas sukuk certificates evidence the investors’ ownership interest in the underlying sukuk asset, business, enterprise or project which entitles them to receive a share of the income generated thereby.

Islamic Capital Markets:

A financial market in which sukuks or equity-backed securities are bought and sold. Like the conventional market, Islamic capital market are designed to channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments that comply to Sharia standards.

Ethical Investments:

Ethical investing refers to the practice of using moral principles as the primary filter for the selection of securities or other forms of investments. These types of investments typically do not offer guarantees on performance and avoid trading in sin stocks such as gambling, alcohol, smoking, or firearms.


A decentralized system of recording digital information in a way that makes it difficult or impossible to change, hack, or cheat the system. It is based on a peer-to-peer (P2P) topology and a distributed ledger technology (DLT) allowing data to be stored globally on hundreds of thousands of servers. The technology works as a growing list of records, called blocks, that are linked using cryptography and each block contains a hash of the previous block, a timestamp, and transaction data and allows anyone on the network see everyone else’s entries in real-time. 


A digital asset or virtual currency designed to work as a medium of exchange. It is secured by cryptography, making it nearly impossible to counterfeit or double-spend. The individual coin ownership records are stored in a distributed ledger, existing in a form of computerized database using strong cryptography to secure transaction records.


It is an open-source innovative payment network created in January 2009. It uses peer-to-peer technology to operate with no central authority or banks. Unlike fiat currency, it is created, distributed, traded and stored with the use of blockchain.

Sharia advisory firm:

An institution that provides Sharia consulting services including Sharia reviews, certification and Sharia Board services. The institution can also provide other services such as outsourcing internal Sharia audit, equities screening, external Sharia audit and advice on Sharia compliant product development, as part of its professional services.

Central Sharia Supervisory Board:

A body of specialized jurists in Fiqh al-Muamalat (Islamic commercial jurisprudence) and experts in Islamic banking, finance, economics and law providing guidance and advice on Sharia matters. It is established in a specific country or jurisdiction for providing uniformity and harmony in the products and practices with regard to Islamic finance. The Central Sharia Supervisory Board decisions, fatawas or guidelines are generally applicable on all licensed institutions in the respective jurisdiction.

Remote Sharia audit:

A Sharia audit conducted using electronic means whereby the Sharia audit evidence is obtained remotely and the evaluation is done digitally in order to determine the extent of conformity to the Sharia standards. To learn more about Shariyah Review Bureau’s remote audit service click here.