Updated AOSSG survey on the financial reporting practices of Islamic financial institutions
13 Feb 2017
In March 2015, the Asian-Oceanian Standard-Setters Group (AOSSG) released the results of a 2014 survey into the financial reporting standards that Islamic financial institutions (IFIs) are legally required to comply with in their jurisdiction and the extent of compliance. This research has now been updated with 2016 data.
In comparison with the 2014 results, the 2016 data shows a 2% increase in the number of IFIs asserted compliance with IFRS, however, 52% of IFIs still don't use IFRS but apply local GAAP (33%), the accounting standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) (17%), or do not specify the accounting standards or law complied with in their financial statements (2%). The study concludes:
The IFIs in the study continued to apply a variety of financial reporting frameworks. As a result, the differing recognition and measurement bases impede users’ ability to meaningfully compare the financial statements. Further efforts must be made to engage with relevant standard-setters and regulators to persuade them of the merits of IFRS compliance. This is all the more important when there may be indications that affected entities in those jurisdictions would prefer IFRS over other frameworks.
Please click for access to the study on the AOSSG website. It offers a general survey of the standards applied and the treatment of the three areas of focus (lessor accounting for ijarah with an arrangement to transfer ownership, classification of customer investment accounts, and recognition and measurement of finance income) for the whole sample as well as findings listed by jurisdiction.