Accounting for Islamic finance

http://www.icaew.com/en/library/subject-gateways/islamic-finance/accounting-for-islamic-
finance

The accounting practices adopted by firms in the Islamic finance sector have not
unexpectedly varied across the world, being largely dependent on the regulatory
environment of each jurisdiction. On this page we highlight some of the articles, research
papers and reports from the ongoing discussion on the application and development of
accounting standards for Islamic finance.

What's on this page?

Articles

Useful links

Further reading

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Articles
The ICAEW Library & Information Service provides access to a range of content on Islamic
accounting from various online sources, including a selection of articles from premium
databases.

Islamic Financial Institutions and the Implications of Accounting under IFRS

Article by Mohammed Amin, PWC, which looks at whether Islamic Financial Institutions have a
choice between IFRS and AAOIFI accounting standards and where the differences lie. Originally
published in the July-September 2012 issue of the IIBI magazine 'New Horizon'.
Shariaa Challenge
Mohammad Faiz Azmi (PWC) considers whether it is possible to align Islamic finance to IFRS
standards. Published in Accountancy, May 2011.
Accounting for sukuk under IFRS and AAOIFI accounting standards
Article by Mohammed Amin, PWC, who looks at the difference in treatment of sukuk under
IFRS and under AAOIFI standards. The article includes a worked example which shows how a
sukuk transaction can be accounted for under both. Published in May 2011.
Logged-in ICAEW members and ACA students can also access the full text of the Journal of
Islamic Accounting and Business Research, which publishes a wide range of articles to advance
accounting and business knowledge based on Shariah. Topics covered include current practice
in Islamic accounting, auditing and corporate governance.

Useful links
Islamic accounting
A dedicated section of the IAS Plus (Deloitte) website focused on recent developments in
Islamic accounting requirements and practices.

Organisations

Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)

AAOIFI develops, prepares and issues Financial Accounting Standards (FASs) and Shari'a
Standards (SSs). A full list of the standards developed by the AAOIFI can be found through
the publications section of their website.
Asian Oceanian Standard Setters Group (AOSSG)
The Asian-Oceanian Standard-Setters Group is a grouping of the accounting standard-setters in
the Asian-Oceanian region. The AOSSG has established a working group on Financial Reporting
relating to Islamic Finance
International Accounting Standards Board (IASB)
The IASB established a working group with a focus on Shariah-Compliant Instruments and
Transactionsin 2013. The agenda, minutes and papers from the group are available on the IASB
website.
Reports and papers

The Application of the International Financial Reporting Standards in Islamic Financial

Transactions: Some Issues - Part 2
A research paper from International Shari'ah Research Academy for Islamic Finance (ISRA)
which looks at the issues that arise when accounting for Islamic financial transactions using
IFRS; in particular, covering transactions related to takaful, murabahah and leases. Published in
2013.
An Appraisal of the Principles Underlying International Financial Reporting Standards: A
Shari'ah Perspective - Part 1
A research paper from International Shari'ah Research Academy for Islamic Finance (ISRA)
which asks whether the key underlying principles of IFRS are acceptable from the Shari'ah
perspective. Published in 2013.
Financial Reporting Issues relating to Islamic Finance
Paper published by the AOSSG which presents brief discussions of issues in applying IFRS to
Islamic financial transactions identified by working group members up to 30 June 2010. Topics
covered include: recognising a financing effect, profit-sharing contracts, Ijarah, Sukuk and
Takaful. Published in in October 2010.
Open to comparison: Islamic finance and IFRS
Report from PwC looking at issues of how best to account for Islamic finance on an international
basis. Published in April 2010.

Surveys

Accounting and Islamic finance in the Middle East and North Africa
International survey conducted by the AOSSG from July to October 2013. Topics include:
practitioners' views on the reporting environment and accounting for Islamic financial
transactions. Published in November 2013.
Accounting for Islamic financial transactions and entities
International survey conducted by the AOSSG from July to October 2011. Topics include: the
Islamic finance landscape, applicable financial reporting standards, views on Islamic accounting
standards and Islamic accounting requirements. Published in December 2011.

Updates and briefings

 AAOIFI Statement on Sukuk and its implications
A short briefing from international law firm Norton Rose Fulbright which considers the AAOIFI
statement on Sukuk. Published in September 2008.

Further reading
The library provides access to a range of online articles from leading business and finance
journals on accounting for Islamic finance, supplemented by a collection of articles and books
that can be obtained through the library's enquiry service.

Islamic finance in a nutshell

Kettell, Brian (John Wiley & Sons, 2010)
A pocket sized guide for non-specialists which includes a chapter on financial statement analysis
for banks with five examples of Islamic financial statements (detailed balance sheets) to show
how different these are to the statements that would be prepared for their conventional
counterparts. If you would like to borrow this title, please contact the enquiry team.
View a list of articles and books available from the library on accounting for Islamic finance

To find out how you can borrow books from the Library please see our guide
to book loans.

You can obtain copies of articles or extracts of books and reports by post, fax
or email through ourdocument supply service.