The need for Islamic accounting standards: the Malaysian Islamic financial institutions experience

Abstract

Purpose The purpose of this paper is to examine views of financial statements preparers with regard to the practices in reporting Islamic Financial Institutions (IFIs), thereby contributing to answer whether there is indeed a need for a separate set of Islamic accounting standards for IFIs. Design/methodology/approach Drawing upon seven in-depth semi-structured interviews conducted with IFIs’ leading officers who are highly involved in preparing financial statements in Malaysia, the paper offers evidence on the current stance of reporting the operation of IFIs, the influence of AAOIFI accounting standards and the feasible application of IFRSs in reporting IFIs. Findings While it is shown that most of the interviewees admit the feasibility of IFRSs in reporting IFIs, many interviewees placed greater emphasis on the spirit of Islam based on Islamic contract. In that case, the findings show that to convince the public that they offer Shariah compliance products approved by Shariah Advisory Council, there is a need for specificity guidelines or standards for IFIs within the IFRS framework. The main concern raised in the paper is that separate Islamic accounting standard is not needed, instead the option needs to be within the IFRS framework with the collaboration work of Accounting and Auditing for Islamic Financial Institutions (AAOIFI) and the International Accounting Standard Board (IASB). Originality/value With the recent rapid growth of IFIs, this paper contributes regarding the inconclusive stance on the need for specificity accounting standards for IFIs such as the ones issued by AAOIFI. It adds to the current body of knowledge by highlighting the collaboration of the AAOIFI and the IASB for the intended specific guidelines for IFIs to be accepted globally.

Islamic Banking Performance: A Bibliometric Review

“…Macroeconomic variables, such as inflation, GDP, interest rate, and unemployment, are complementary (Kouser and Saba 2012;Erol et al 2014;Ifeacho and Ngalawa 2014;Hadriche 2015;Rashid and Jabeen 2016;Suresh and Bardastani 2016. In relevance to IBs objective and concerning religious beliefs, alternative measurements were developed. For example; the incorporation of Islamicity disclosure (Ibrahim et al 2004;Ascarya et al 2017), Islamicity Performance Index (Meilani et al 2016;Mutia et al 2019), ethical identity (Haniffa and Hudaib 2007), Islamic moral economy (Asutay and Harningtyas 2015), and Maqāṣid al-Sharīʿah (the objective of Islamic law) (Mohammed et al 2008;Hudaefi and Noordin 2019). These studies represent the novelty in measuring IBs performance adopted from Islamic theory.…”

“…Incorporating religious features in IBs' performance measurement is necessary to avoid the failure in investigating Sharīʿah tenets. IBs' elements of religiosity can be in the form of integrated Maqāṣid al-Sharīʿah-based performance measure (Hudaefi and Noordin 2019) or Maqāṣid al-Sharīʿah index (Mohammed et al 2008). The Maqāṣid al-Sharīʿah helps to determine whether IBs are practicing Islamic principles (Dusuki and Bouheraoua 2011).…”

“…The functioning of Mit Ghamr Local Savings Banks in Egypt from 1963 to 1967 is believed as a pioneering experiment of the current development of the Islamic banking industry worldwide (Maali and Napier 2010;Haniffa and Hudaib 2010;Hafsa Orhan Åström 2013;Jinjiri Ringim 2014;Alharbi 2017;Islam and Rahman 2017;Shome et al 2018;Lujja et al 2018;Mohammed et al 2019;Farooq 2019;ElMassah et al 2019;Pitchay et al 2019;Chamberlain et al 2020).…”

“…Some researchers rely on the use of conventional benchmarks, while others have developed methods for investigating the nature of IBs. Such divergence in evaluating IBs performance leads to a debate among experts on how to measure IBs performance correctly (Mohammed and Razak 2008;Muhammad and Taib 2015;Hudaefi and Noordin 2019).…”

Kritik Atas Pelaksanaan Standar Akuntansi Rumah Sakit Syariah

“…Perkembangan akuntansi syariah mau tidak mau akan diikuti oleh perkembang an lembaga keuangan syariah (Fariz et al, 2020;Mohammed et al, 2019). Hal ini tentu membutuhkan sebuah sistem atau pelaksa naan praktik akuntansi syariah untuk men dukung perkembangan lembaga keuang an yang berkonsep syariah.…”