2. Shariah Governance One of the main standard setting bodies for the Islamic finance industry is AAOIFI. Accounting, Auditing, and Governance for Islamic Financial institutions are AAOIFIs area of focus.

(a) What is a Shariah supervisory board? What is its role in an Islamic financial institution? Give at least two examples of an actual Shariah supervisory board of Islamic financial institution in Bahrain. Refer to AAOIFIs Governance Standards for Islamic Financial Institutions (GSIFI). (9 marks)

(b) There are four (4) models of governance. Mention and explain each one. Which of these models are in line with governance from an Islamic perspective? Explain why. (9 marks)

(c) There was a research done by a Germany-based consulting company called fund@work. It highlighted an issue related to Shariah scholars on the board sitting in too many board positions of Islamic financial institutions. Rationally, explain two (2) negatives of having Shariah scholars holding too many board positions? What are two (2) solutions of how to overcome this issue? (7 marks)