IFR 6.4 IFR 6.4 Internal Shari'a review
IFR 6.4.1 IFR 6.4.1(a) The Fund Manager of a Domestic Fund that is a Public Fund must perform an internal Shari'a review to assess the extent to which the Fund complies with fatawa, rulings and guidelines issued by the Fund's Shari'a Supervisory Board.(b) The Fund Manager must perform the internal Shari'a review in accordance with AAOIFI GSIFI No. 3.(c) The Fund Manager of an Umbrella Fund which has an Islamic Sub-Fund must, to the extent possible, perform the internal Shari'a review in accordance with AAOIFI GSIFI No. 3 and must document the manner in which it will conduct that part of the internal Shari'a review that is not conducted in accordance with AAOIFI GSIFI No. 3.
Guidance(i) Although the Fund Managers of Exempt Funds and Qualified Investor Funds are not subject to the specific internal Shari'a requirements under IFR 6.4, they would need to ensure that the Exempt Fund or Qualified Investor Fund continues to meet the applicable Shari'a requirements. However, the manner in which they demonstrate to the Unitholders of the Fund how they achieve such compliance is a matter left to negotiation (i.e. subject to contractual terms) between the Unitholders and the Fund Manager.(ii) AAOIFI GSIFI No. (3) (Internal Shari'a Review) establishes standards and provides guidance on the internal Shari'a review in institutions that conduct business in conformity with Shari'a. The standard covers the following:(A) objectives;(B) internal Shari'a review;(C) independence and objectivity;(D) professional proficiency;(E) scope of work;(F) performance of the internal Shari'a review work;(G) management of the internal Shari'a review;(H) quality assurance; and(I) elements of an effective internal Shari'a review control system.
IFR 6.4.2 IFR 6.4.2
The Fund Manager must ensure that the internal Shari'a review referred to in this IFR 6 is performed by the internal audit function of the Fund or the compliance function of the Fund and that the individuals or departments involved in performing the review are competent and sufficiently independent to assess compliance with Shari'a.
For the purposes of assessing competency of personnel or departments which perform the internal Shari'a review, Fund Manager should consult AAOIFI GSIFI No. 3 paragraphs 9 to 16 inclusive.