Date: 29-03-2024 Digital Publication Services : JABM | JAM | ABMR | ABMCS | BLOG

Faculty Research

INTERNAL CONTROL SYSTEM MODEL AND IMPLEMENTATION ON INDONESIAN SHARIAH BANKS

Detail
Author ISTUTIK (Tim: Anggota 1)
ID 202.710.153
Published Date 01-01-1900

Abstract

Abstract Rapid changes on Islamic bank business orientation from more margin-based financing to profit-sharing based financing which is the core business of Islamic banks have affered challenges. One of the unique challenges confronted by the banks is the existence of adequate internal control systems to reduce risks from profit-sharing based financing and to increase its performance in the frame of the effective banks practices. A survey and an in-depth interview on the management of Indonesian Islamic banks, customers, and academia were conducted to have an insight about the possibility to create model for internal control system that is fit with the Islamic banks characteristics. In doing so, the internal control system promoted by COSO framework (Committee of Sponsoring Organizations of the Treadway Commissions) was adapted to expand the model. The expanded model was then used as a benchmark for the existing internal control system used by the banks. The result offered a model of internal control system that is fit with the Islamic banks. The model covers five component of COSO (the control environment, risk assessment, control activities, information and communication and monitoring) in wich each component elaborates sharia laws. The results also showed variation with respect to the adoption of COSO's elements. Keywords:Internal Control, Islamic Banks.