The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) announces the finishing of new seven shari'a standards, which shall be added to the existing 41 shari'a standards and the 40 accounting standards which have been announced previously.
Minhaj Advisory, in its turn, organizes an event for announcing these standards, the event titled: "Ceremony for New AAOIFI Shari'a Standards 42 - 48" which shall take place on May 23rd at Grand Hyatt Dubai, to discuss these standards with the Islamic Bank industry practitioners, and how to implement them in their applications.
Rapid growth of Islamic finance is increasing pressure for the industry to enter the accounting mainstream, by seeking guidance from the International Accounting Standards Board (IASB), the global body which sets the tone for book-keeping in conventional finance.
It would be a controversial move - by basing itself on religious principles, Islamic finance seeks to set itself apart from conventional finance. But some experts think the industry is becoming so big that it can no longer sit comfortably outside a trend towards harmonizing accounting rules across the world.
The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has proposed more detailed accounting standards for real estate while increasing disclosure for Islamic banks’ investment accounts.
The move by the Bahrain-based AAOIFI, one of the main standard-setting bodies in Islamic finance, suggests it is responding to the same kind of pressure to tighten standards that has been seen in the conventional finance industry since the global financial crisis erupted in 2008.
The Islamic capital market will sustain its growth momentum over the next decade. Its next phase of growth will be characterized primarily by greater internationalization, which will help address some of the challenges faced by the industry and will provide Malaysia the opportunity to strengthen its position as a hub for Islamic capital market activities. This is the prediction of the Securities Commission of Malaysia, the securities regulator.
Regional governments need to issue more sukuk in order to provide short-term liquidity instruments that Islamic finance needs. That was the claim by Kuwait Finance House-Bahrain (KFH-Bahrain) managing director and chief executive officer Abdulhakeem Alkhayyat on the sidelines of the AAOFI conference yesterday.
The Islamic finance industry desperately needs more short-term liquidity but we cannot look to the private sector to provide this in the region," he said.
Sharia standards are essential to Islamic finance because they promote harmonisation of international standards, enhance users' confidence and encourage growth in demand. That was the message from Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) chairman Shaikh Ebrahim bin Khalifa Al Khalifa at the opening of the AAOIFI conference at the Gulf Hotel yesterday.
"Most importantly, Sharia standards provide clarity to the industry on rules and principles that must be incorporated into Islamic financial operations so as to ensure full compliance with Sharia principles," he said.
Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the international standard-setting organisation for Islamic finance, has issued two new accounting standards and one new accounting guidance note. Issuance of the new accounting standards and guidance note was approved by AAOIFI Accounting and Auditing Standards Board in its meeting held last week on 22 July 2010 in Dubai, United Arab Emirates.
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