Islamic Finance Systems: Synergies with Conventional Finance Systems 1 st French Islamic Finance Forum Paris, France December 2007 Accounting & Auditing Organisation for Islamic Financial Institutions (AAOIFI)

Islamic Finance Systems Primary Financial Intermediation Islamic Insurance Market Islamic Capital Market Zakah and Awqaf Institutions Components of Islamic finance systems include …

Primary Financial Intermediation Islamic banks and financial institutions. Islamic money market. Islamic foreign exchange market. Islamic Finance Systems Islamic Insurance Market Takaful / Islamic insurance. Re-takaful / Islamic reinsurance. Islamic Capital Market Sukuk / Islamic bonds market. Islamic equity market. Zakah & Awqaf Institutions Zakah – wealth purifi- cation & distribution. Awqaf – Islamic endow- ment.

Islamic finance allows greater financial Inclusion Islamic finance mechanisms are structurally appropriate for economic development Islamic finance facilitates equitable wealth creation and distribution Ultimately, Islamic finance promotes economic and social harmony Synergies with Conventional Finance Systems Islamic finance complements conventional finance …

AAOIFI is the independent organisation responsible for formulation and issuance of international Islamic finance standards on: - Shari’a, - Accounting, - Auditing, - Ethics, and - Governance. Roles of AAOIFI

AAOIFI is supported by more than 165 institutional members from more than 30 countries. Members include: - Central banks and regulatory authorities, - Islamic and conventional financial institutions, - Accounting and auditing professions, - Legal professions, and - Other institutions in international Islamic finance industry. Roles of AAOIFI

Standards issued: 30 Shari’a standards. 25 accounting standards. 5 auditing standards. 2 codes of ethics. 6 governance standards. Standards are:  Mandatory in 9 jurisdictions, and  Adopted as basis of national standards and guidelines in all other leading jurisdictions that practice Islamic finance. AAOIFI Standards All in all, AAOIFI standards are followed by all Islamic financial institutions across the world.

AAOIFI is reviewing the existing standards and formulating a number of new standards. Adoption of standards is also supported through AAOIFI’s professional development programs: - Certified Shari’a Adviser and Auditor (CSAA), and - Certified Islamic Professional Accountant (CIPA). AAOIFI Standards

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