Financial Reporting for Islamic Financial Institutions: Accounting Standards, Interpretation and Application

The book explains the Islamic accounting principles and practices for Islamic Financial institutions and compares them to mainstream accounting principles in a simple and practical manner. It covers the accounting treatment of major Islamic finance products,including trade-based,rental-based,and risk-sharing based products,as well as Sukuk accounting,Zakah accounting,and provisions and impairments. Each chapter includes learning objectives,a glossary,end-of-chapter multiple choice questions,practical insights,and concept checks to enhance the understanding of readers.

Format: Hardback
Length: 342 pages
Publication date: 19 January 2024
Publisher: Taylor & Francis Ltd

The utilization of mainstream accounting rules, particularly International Financial Reporting Standards (IFRS), in conventional banking, presents a significant challenge when reporting the financial results of Islamic banks. These rules employ financial logics and principles that are at odds with the Shariah, rendering them unsuitable for the accounting of Islamic financial institutions. Recognizing this gap, the book aims to provide a comprehensive explanation of Islamic accounting principles and practices tailored specifically for Islamic Financial institutions.

The book commences by providing an overview of the Islamic Finance environment, elucidating the rationale behind Islamic accounting and introducing the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions), the professional body responsible for the issuance of Islamic accounting standards. Chapter 2 delves into the AAOIFI Conceptual Framework, comparing it with the IFRS framework and highlighting the key differences and similarities. Chapters 3 to 9 then explore the accounting treatment of various Islamic finance products, including trade-based (Murabaha, Salam, and Istisnaa), rental-based (Ijarah), and risk-sharing-based products (Mudarabah and Musharakah). Chapter 10 specifically focuses on the accounting and reporting issues related to Sukuk, a significant component of Islamic finance, while Chapters 11 and 12 address Zakah accounting (charity) and provisions and impairments.

To facilitate the learning process, the chapters are structured in a manner that begins with a discussion of the product itself, followed by the AAOIFI accounting treatment and concluding with the IFRS perspective. Each chapter begins with learning objectives and a captivating cover story, and concludes with a summary of the key learning points. To enhance accessibility, each chapter includes a comprehensive glossary of relevant terms and concepts.

By presenting Islamic accounting principles and practices in a simple and practical manner, this book serves as a valuable resource for both academic scholars and professionals working in the Islamic finance industry. It aims to bridge the knowledge gap between Islamic and mainstream accounting, promoting greater understanding and harmonization of accounting standards across different financial sectors.

Weight: 807g
Dimension: 234 x 156 (mm)
ISBN-13: 9781032464022