Islamic (Shariah) Auditing as a Paradigm for Auditing of Corporate Social Responsibilities

Corporate social responsibility (CSR) is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. The concern for social responsibility is also important to Islamic enterprises, which regard ethics and social responsibility as enduring principles. In comparison with Western theories, Islam assumes a relatively holistic approach to CSR. This approach suggests an integrated spiritual vision of Shari’ah (Islamic law), which is based on the Qur’an and Sunnah, to provide an alternative philosophical framework for people’s relations with nature and with other people. Therefore, to evaluate and audit the social responsibility of companies in the Islamic framework, Islamic auditing can be introduced as a comprehensive approach. In an Islamic framework, the auditor in addition to his clients, i.e. owners of the business being audited should be liable also to financiers, should assess management practices, and report on its compliance with Shari'ah, (e.g. fulfillment of contracts, honesty, avoidance of monopoly and extravagance). The scope of auditing in the Islamic framework is much larger as compared to the scope of traditional auditing. From the traditional concept of attest and authority it would expand to report on various social and economic aspects of business organization.