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Deloitte survey reveals support for harmonisation of Islamic accounting standards with IFRS

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23 Sep 2010

The Deloitte Islamic Finance Knowledge Center (IFKC) has released a report entitled The Deloitte Islamic Finance leaders survey in the Middle East - Benchmarking practices, which analyses the first survey outcomes in a biannual series targeted at industry practitioners and leaders of Islamic Financial Institutions (IFIs) in the Middle East.

This report has been constructed based on an online survey sent out to executives, practitioners, and policymakers. Face to face interviews were conducted with heads of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the International Islamic Financial Market (IIFM) to give an update on current concerns on the regulatory and practice front.

In relation to accounting standards for Islamic finance, the survey found 79% of the industry leaders surveyed support a convergence initiative of the AAIOFI standards with IFRS, while 7% do not support the convergence. The report notes the following:

We recognize the challenges that arise from seeking a convergence discussion between the AAOIFI Islamic Accounting Standards (IASs) and other international accounting bodies such as the IASB, FASB, and the UK Accounting Standard Board (ASB). In the past, Islamic Finance stakeholders have voiced concerns about any possible convergence. The impact of the global financial crisis on the Islamic Finance industry and other interrelated factors have made it necessary to reconsider the commitment to improving consultations between these standard-setters and the AAOIFI. It is crucial, however; that any discussion of convergence between the AAOIFIs' IASs and IFRSs should address the particular differences of Islamic Finance modes of financing, contracts, profit-sharing and equity structures.

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