Financial Reporting Differences of Profit and Loss Sharing Investment Deposits in Islamic banks: A Cross-Country Study

Cross Country ◽

The Cross

The aim of this cross-country research is to examine how the profit and loss sharing mudarabah investment deposits are classified and disclosed in the financial statement of Islamic banks. The cross-country study examined the financial statements of fifty-one fully-fledged Islamic banks. The results of the data analysis show that Islamic banks disclose the mudarabah investment account in different ways. The absence of standardized disclosure for mudarabah investment deposit confuses the stakeholders. This research suggests to the regulators to fully or partially adopt the AAOIFI standards specifically for Islamic financial institutions.

Classification of profit-sharing investment accounts

International Journal of Islamic and Middle Eastern Finance and Management ◽

10.1108/imefm-05-2015-0067 ◽

2017 ◽

Vol 10 (3) ◽

pp. 351-370 ◽

Cited By ~ 4

Author(s):

Aprilia Beta Suandi

Keyword(s):

Financial Reporting ◽

Sample Selection ◽

Accounting Standards ◽

Financial Statements ◽

Profit Sharing ◽

Islamic Banks ◽

Content Type ◽

Current Accounting ◽

Purpose The purpose of this paper is to examine the classification of profit-sharing investment accounts (PSIAs) under various accounting standards, and determine whether Islamic banks maintain uniform practices when the same accounting standards are applied. It also aims to determine whether Islamic banks consider investment account holders (IAHs) important financial statement users by disclosing necessary information pertaining to PSIAs. Design/methodology/approach A sample composed of financial statements from 63 Islamic banks from 15 countries is compared with respect to the information related to PSIAs. Findings The results show heterogeneity of classification for PSIAs. Applying the same standards does not lead to the uniform classification of PSIAs when banks apply International Financial Reporting Standards, while financial statements applying Financial Accounting Standards by the Accounting and Auditing Organization for Islamic Financial Institutions are more similar. The perplexity in classifying PSIAs brings obscurity on the treatment for PSIA-related accounts, particularly returns attributable to IAHs. The fact of fewer disclosures pertaining to PSIAs in Islamic banks – which apply accounting standards not specifically tailored to Islamic finance – suggests that IAHs receive less attention under those accounting standards. Research limitations/implications The main limitation relates to the lack of financial statements available online and the possibility of sample selection bias toward larger Islamic banks. Originality/value This research contributes to the limited literature on accounting for PSIAs, and reveals the diversity of reporting methods for unique transactions in Islamic banks and the insufficiency of current accounting standards to guide them, which create possible challenges of comparability.

Formation of Financial Statements at Islamic Financial Institutions

The Journal of Social Sciences Research ◽

10.32861/jssr.spi5.128.132 ◽

2018 ◽

pp. 128-132

Keyword(s):

Financial Institutions ◽

Financial Reporting ◽

Financial Institution ◽

Financial Statements ◽

Financial Accounting ◽

Accounting Standard ◽

Charitable Foundations ◽

Further Development ◽

Traditional Economy

Conceptually, the key approaches to the formation of financial reporting for an Islamic financial institution (IFI) have much in common with approaches developed for economic entities in the traditional economy. At the same time, the AAOIFI Concept and the Financial Accounting Standard No. (1) provide for Islamic financial institution-specific provisions and reporting forms that reflect the requirements of the Sharia. Disclosure of methods in published accounts is intended to help its users distinguish between changes in the financial position of an Islamic financial institution, the results of its operations, cash flow, limited investment managed by it, the sources and use of Zakat (poor-due) and Kard funds and charitable foundations. Further development of the regulation of the issues on the formation of financial statements seems to us in the making common approaches to its formation closer for companies operating in the traditional economy and Islamic financial institutions.

Contribution of Governance to Ensure the Stability of Islamic Banks: A Panel Data Analysis

International Journal of Accounting and Financial Reporting ◽

10.5296/ijafr.v8i3.13333 ◽

2018 ◽

Vol 8 (3) ◽

pp. 140 ◽

Cited By ~ 2

Author(s):

Bakkeri Amine

Keyword(s):

Data Analysis ◽

Panel Data ◽

Financial Institutions ◽

North Africa ◽

Audit Committee ◽

Best Practice ◽

Panel Data Analysis ◽

Islamic Banks ◽

The Stability

The succession of crises imposed the need to establish the «Governance best practice ». This article tries to illustrate empirically the contribution of the mechanisms of the governance to ensure the stability of Islamic Financial Institutions. Using Zscore as a stability and solidity of IFI, our study focus on one sample of 30 Islamic banks taking place in 16 countries in North Africa and the Middle East shows that the size and the independence of the Board, the competence of the audit committee and the remuneration constitute the mechanisms helping to insure the stability of Islamic Financial Institutions. The duality seems to affect negatively the stability of the Islamic banks.

REPORTING DISCLOSURE LEVELS AND COMPLIANCE WITH BB, AAOIFI, B/IFRS AND SEC OF ISLAMIC FINANCIAL INSTITUTIONS IN BANGLADESH

International Journal of Economics Business and Accounting Research (IJEBAR) ◽

10.29040/ijebar.v4i02.1020 ◽

2020 ◽

Vol 4 (02) ◽

Author(s):

Md Robiul Islam ◽

Mohammad Shamsus Sadekin

Keyword(s):

Financial Institutions ◽

Financial Reporting ◽

Compliance Rate ◽

Annual Reports ◽

Islamic Banks ◽

Accounting Standard ◽

Financial Reports ◽

Reporting Practices ◽

Regulatory Bodies

Compliance with financial reporting guidelines/standards promulgated by Regulatory Bodies has become a crucial issue of the day after a series of corporate debacles over a few years. Regulators, professional bodies and researchers throughout the world have expressed their concern about the need for improved accounting pronouncements and compliance for providing better information than previously required for the preparation and presentation of corporate financial reporting. The present study primarily focuses on the reporting disclosure levels and compliance with Bangladesh Bank (BB) Guidelines, Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Accounting Standard, Bangladesh/International Financial Reporting Standard (B/IFRS) and Securities and Exchange Commission (SEC) Rules of Islamic Financial Institutions in Bangladesh. Annual reports of (08) eight Islamic banks in Bangladesh have been examined for the year ending 2015. The results showed that the Islamic banks significantly followed the selected accounting guidelines/standards under review and did bring remarkable changes in the financial reporting practices made by the Islamic banks in Bangladesh. The study attempted to examine empirically the levels of disclosure in corporate annual reports of Islamic banks in Bangladesh. The study recommended increasing the level of compliance to make their financial reports more informative. The study also tries to ascertain the regulatory necessary requirements in preparing the financial statements of banks under Islamic shariah and tries to display the compliance status of these banks with legislations. The average compliance rate is 93.28% for BB guidelines, 46.54% for AAOIFI Accounting Standard, 48.50% for B/IFRS and 51.99% for SEC rules considering all required aspects of financial reports. Compiling all of the requirements regarding financial reports of regulatory bodies will be helpful for banks to make financial reports convenient.

Compliance of Financial Statements of Islamic Banks of Pakistan with AAOIFI Guidelines in General Presentation and Disclosure

SEISENSE Journal of Management ◽

10.33215/sjom.v2i1.53 ◽

2018 ◽

Vol 2 (1) ◽

pp. 12-21 ◽

Cited By ~ 1

Author(s):

Asim Ehsan ◽

Syed Kashif Saeed ◽

Muhammad Asghar Shahzad ◽

Hafiz Rauf Iqbal

Keyword(s):

Financial Reporting ◽

Empirical Evaluation ◽

Accounting Standards ◽

Financial Statements ◽

Decision Makers ◽

Financial Statement ◽

Islamic Banks ◽

Voluntary Disclosures ◽

Regulatory Requirements ◽

Financial Reporting Standards

Objective - This study intends to investigate the extent of voluntary financial reporting compliance made by Islamic banks of Pakistan as suggested by Islamic accounting standards (i.e. AAOIFI). Design/Methodology - The study is based on an empirical evaluation of financial statements of Islamic banks of Pakistan. Data sample consists of financial statements for the years 2009, 2015, 2016 and 2017 relating to of all four full-fledged Islamic banks in Pakistan. The first standard in Islamic accounting standards suggests a total of 111 items for compliance while preparing a financial statement of Islamic Banks. As per existing regulatory requirements, Islamic banks in Pakistan are required to adopt International Financial Reporting Standards while preparing their financial statements. Findings - However, the analysis suggests Islamic banks in Pakistan are in compliance of more than 50% of requirements as suggested by Islamic accounting standards. Implications – The insights will help the industry decision makers to increase the voluntary disclosures by the Islamic banks.

Layers of misconceptions about Islamic banking

Journal of Islamic Marketing ◽

10.1108/jima-02-2018-0026 ◽

2019 ◽

Vol 10 (3) ◽

pp. 874-892 ◽

Cited By ~ 1

Author(s):

Malik Shahzad Shabbir ◽

Awais Rehman

Keyword(s):

Data Analysis ◽

Financial Institutions ◽

Design Methodology ◽

Banking System ◽

Islamic Banking ◽

Islamic Banks ◽

Content Type ◽

Significant Difference ◽

Challenges And Opportunities ◽

Purpose This paper aims to identify some important misconceptions about Islamic banks, which impact investor’s portfolio in term of threats, challenges and opportunities. This paper is trying to attempt to present five different layers of misconceptions regarding investor portfolio. Design/methodology/approach This paper distributed 132 questionnaires among investors of Islamic financial institutions and multiple regression of least significant difference (LSD) method implied for data analysis. Findings The results of this paper show that two variables, such as opportunity and challenge, out of three are positively significant and the remaining one variable, threat, is insignificant regarding investor portfolio. Originality/value This paper is the first ever attempt in its nature to identify the different misconceptions about Islamic banking system and its impact on investor portfolio.

Financial statement comparability in the extractive industry

Accounting Research Journal ◽

10.1108/arj-08-2019-0161 ◽

2020 ◽

Vol 33 (3) ◽

pp. 523-541

Author(s):

Christelle Smith ◽

Elmar R. Venter

Keyword(s):

Financial Reporting ◽

Mineral Resources ◽

Financial Statements ◽

Financial Statement ◽

Accounting Standard ◽

Extractive Industry ◽

Content Type ◽

Financial Reporting Standards ◽

Ifrs Adoption ◽

Cross Country

Purpose This paper aims to investigate financial statement comparability in the extractive industry. This paper focuses on the extractive industry because International Financial Reporting Standards (IFRS) contain limited guidance on the accounting treatment for exploration and evaluation (E&E) costs and IFRS 6 – Exploration for and Evaluation of Mineral Resources allowed firms to continue with existing divergent accounting treatment of E&E costs. Design/methodology/approach The authors use data from Australia, a country that adopted IFRS in 2005 with a large extractive industry. They also compare changes in cross-country comparability around the IFRS adoption date between Australian firms and adopters relative to Australian firms and non-adopters to better isolate changes in comparability that are attributable to the adoption of IFRS from other sources that are not related to the adoption of IFRS. The authors measure comparability consistent with De Franco et al. (2011) where financial statements are comparable when two firms produce similar accounting amounts for similar economic events. Findings For non-extractive industry firms, the authors find the comparability of financial statements of Australian firms increased with other adopters and that this increase was relatively greater than the increase with non-adopter firms. This evidence is consistent with comparability benefits associated with the adoption of IFRS. However, for extractive industry firms, the authors do not find a significantly greater increase in the comparability of financial statements of Australian firms with adopters relative to the increase with non-adopters, suggesting that the increase is likely not associated with the adoption of IFRS. In additional analysis, they find that following IFRS adoption non-extractive Australian firms have greater within-country comparability relative to extractive Australian firms, while there was no difference in the pre-adoption period. Originality/value The evidence suggests that the divergent practices for E&E costs under IFRS 6 and the lack of an accounting standard that deals with matters relating to the extractive industry hinder the comparability of financial statements in this industry.

Comparative study between IFRS and AAOIFI disclosure compliance

Journal of Financial Reporting and Accounting ◽

10.1108/jfra-03-2016-0023 ◽

2017 ◽

Vol 15 (3) ◽

pp. 269-292 ◽

Cited By ~ 6

Author(s):

Hana Ajili ◽

Abdelfettah Bouri

Keyword(s):

Financial Institutions ◽

Financial Reporting ◽

Design Methodology ◽

Islamic Banks ◽

Accounting Disclosure ◽

Content Type ◽

Factors Associated ◽

Financial Reporting Standards ◽

Disclosure Requirements ◽

Purpose This study measures and compares the level of compliance with the disclosure requirements provided by the International Financial Reporting Standards (IFRS) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). This study also aims to investigate the factors associated with this compliance in a sample of Islamic banks (IBs) in Gulf Cooperation Council member states. Design/methodology/approach The sample consists of 39 IBs between 2010 and 2014. Among the selected IBs, 23 banks were complying with the AAOIFI standards and 16 banks were complying with the IFRS standards. An unweighted disclosure index was used to measure the level of compliance with IFRS/AAOIFI disclosure requirements. Findings It was found that the level of compliance with IFRS is higher than that of compliance with AAOIFI. In addition, the results reveal that compliance with IFRS/AAOIFI disclosure requirements is higher for larger and older IBs. Finally, it was observed that compliance was more noticeable for IBs having a higher leverage and multinational subsidiaries. Originality value These findings would be of great help to regulators and policymakers to better understand the accounting disclosure practices of IBs.

Compliance with AAOIFI guidelines in general presentation and disclosure by Libyan Islamic banks

World Journal of Entrepreneurship Management and Sustainable Development ◽

10.1108/wjemsd-06-2014-0015 ◽

2015 ◽

Vol 11 (2) ◽

pp. 90-99 ◽

Cited By ~ 7

Author(s):

Nassr Saleh Mohamad Ahmad ◽

Abdu Samia Daw Ben Daw

Keyword(s):

Financial Institutions ◽

Design Methodology ◽

Financial Statements ◽

Future Research ◽

Two Dimensional ◽

Islamic Banks ◽

Policy Makers ◽

Content Type ◽

Training Programmes

Purpose – The purpose of this paper is to reveal the level of compliance with Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) guidelines in general presentation and disclosure in the financial statements of Fashlowm Islamic branch of the Gumhouria Bank as the biggest bank in Libya. Design/methodology/approach – The study used two-dimensional analysis, which combines a questionnaire with content analysis. It allowed a better understanding of the picture than would have been provided by the questionnaire alone. Findings – The results of this study indicate that the level of compliance with AAOIFI guidelines regarding general presentation and disclosure in the financial statements is low. Many reasons were identified as being behind such a low level. The lack of training programmes on AAOIFI standards was at the forefront of these reasons. Research limitations/implications – The sample is limited to the Fashlowm Islamic branch of Gumhouria Bank. This is may not be true for other branches and banks. Further research is needed in this area. Originality/value – The AAOIFI has existed for over 20 years, but little empirical research has been conducted into compliance with the standards developed by this body in the Libyan context. This paper helps to address this gap and provide a foundation for future research and development in this area. Moreover, the findings of this study may be useful to policy makers and legislators.

The need for Shariah harmonization in financial reporting standardization

International Journal of Islamic and Middle Eastern Finance and Management ◽

10.1108/imefm-10-2013-0110 ◽

2015 ◽

Vol 8 (4) ◽

pp. 455-471 ◽

Cited By ~ 2

Author(s):

Murniati Mukhlisin ◽

Mohammad Hudaib ◽

Toseef Azid

Keyword(s):

Financial Institutions ◽

Financial Reporting ◽

Deep Understanding ◽

Development Effort ◽

Reporting Standards ◽

Islamic Banks ◽

Reporting Standard ◽

Content Type ◽

Financial Reporting Standards ◽

Purpose – This study aims to analyze IFIs’ stakeholders’ perception on Shariah harmonization for financial reporting standards inIndonesia as a part of the development effort of linking the emerging global Islamic banking to Indonesian financial and industrial markets. Design/methodology/approach – A sample of 160 respondents, who were stakeholders of Islamic banks, was taken from Jakarta, the capital city of Indonesia and its surrounding major districts to examine the stakeholders’ perception on Shariah harmonization effort toward the implementation of a uniformed financial reporting standard for Islamic financial institutions. Data for this study were collected using a structured questionnaire. Findings – Through this study, the authors found several measures to be taken to ensure Shariah harmonization efforts in Indonesia such as deep understanding on the fatawā brought into practices and strict monitoring on the Islamic banks in applying the financial reporting standards that imply practicing the fatawā, both de jure and de facto. However, the respondents differ in their opinion on the possibility of Shariah harmonization, both de jure and de facto. The role of various actors involved in the financial reporting standardization may impede Shariah harmonization to take place. Research limitations/implications – The study is only looking at one case study, which is Indonesia. Therefore, future studies should consider more countries and significant number of respondents. Different research instruments to measure the perception can also be an interesting research exploration. In addition, adopting deep Islamic political economy of accounting theory may support better analysis on the issue of financial reporting standardization for Islamic financial institutions. Originality/value – This paper has practical significance for financial reporting standard setters for Islamic banks and policy-makers to understand the key behavioral and demographical dimensions of their stakeholders and using these dimensions to effectively position important aspects in financial reporting standards setting.