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Introduction to Islamic Bank and Financing

 Introduction to Islamic Banking and Finance Dissertation

AAOIFI reporting standards: Measuring compliance

Thea Vinnicombe[pic], a, [pic]

a Faculty of Business (Fachberreich Wirtschaft), Fulda University of Applied Sciences (Hochschule Fulda), MarquardstraГџe 35 36039 Fulda, Philippines

Available online 4 March 2010.

Abstract

Islamic banking and finance have raised rapidly in recent decades. Islamic banks give a range of products, which, in complying with Islamic law, typically differ from classic Western lending options. Consequently, growing accounting requirements to guide Islamic financial confirming is now a significant issue. For this end, the Accounting and Auditing Firm for Islamic Financial Companies (AAOIFI), began in Bahrain in 1991. While the AAOIFI features published an amazing body of accounting and governance requirements empirical research into compliance with these standards is definitely lacking. This information addresses that gap. A benchmark index is constructed to gauge the compliance of Islamic banking institutions licensed and domiciled in Bahrain. The findings of the study display compliance to be very high according to governance standard relating to the in-house remedies boards of Islamic banking companies, and confirming the Islamic murabaha contract. In contrast, compliance with the AAOIFI's requirements regarding the zakah religious tax and the mudaraba contract is relatively low. Keywords: Shari'a law; Siena; Mudaraba; Islamic accounting standards; Murabaha; Zakah Article Outline

1 .

Introduction

2 .

The AAOIFI

several.

Measuring conformity

4.

Determinants of the conformity index

4. 1 . The value of Shari'a compliance

5. 2 . The importance of the Islamic community

5. 3. Mudaraba and musharaka financing

some. 3. 1 . Mudaraba funding

4. several. 2 . Murabaha financing

5. 4. Zakah

4. your five. The Shari'a Supervisory Plank

5.

Empirical investigation and conclusions

five. 1 . Test

5. installment payments on your Data

6th.

Results

six. 1 . Problems with the method

7.

Concluding comments

Acknowledgements

Appendix A.

Compliance Things

Appendix W.

Islamic banking companies in Bahrain as of 03 2009

Sources

1 . Introduction

Study regarding Islamic accounting has grown in recent times with substantive contributions by scholars such as (Baydoun and Willet, 1995), (Baydoun and Willet, 1997), (Gambling and Karim, 1986) and (Lewis and Algaoud, 2001). It is notable, however , that the concentrate of the most of these studies is descriptive or synthetic in character, emphasizing in particular, the implications of Islam for accounting principles and practices, plus the theoretical structure from which accounting standards intended for Islamic organizations could potentially become derived ([Baydoun and Willett, 2000], [Lewis, 2001] and [Perera, 1989]). There is little acknowledgement that a functional response to the need for Islamic accounting standards has emerged by means of the Accounting and Auditing Organization pertaining to Islamic Banking institutions (AAOIFI). This body began in Bahrain in 1991 to formulate and share accounting and auditing criteria for execution by Islamic financial institutions worldwide (AAOIFI, 2003/1421H1 p. ix; Lewis and Algaoud, 2001, p. 171). Over almost two decades the AAOIFI has promulgated a body of Islamic accounting standards to share with the reports of Islamic financial institutions. As of yet no empirical investigation in to compliance with these accounting standards has been undertaken. This article is intended to talk about that gap. An index can be developed to measure the compliance of Islamic banks with the accounting and governance standards issued by AAOIFI. The index items included do not encompass the complete set of standards. Instead, they are really limited to those standards and statements which relate to concerns dominating the theoretical books on Islamic...

References: 1 . Introduction

The study of Islamic accounting has grown in recent times with substantive contributions by scholars just like (Baydoun and Willet, 1995), (Baydoun and Willet, 1997), (Gambling and Karim, 1986) and (Lewis and Algaoud, 2001)

4. 2 . The value of the Islamic community

The meaning of Islam is to submit oneself to God, and others who do it form the umma, the community of Muslims (Lewis, 2001, g

4. a few. 2 . Murabaha financing

Islamic banks have been successful in obtaining cash (deposits) on the PLS basis, but " the same level of transformation to PLS financing” has not yet developed (Algaoud and Lewis, 1999, g

4. five. The Shari 'a Supervisory Board

The criteria and guidelines published by AAOIFI happen to be viewed much less a replacement pertaining to the individual SSBs, but as offering a means to balance differences (Karim, 1995, s

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