AAOIFI Accounting Standards Beirut Islamic Financial Institutions Forum Beirut, Lebanon, 5 November 2010

Content Overview of AAOIFI standards Development of AAOIFI Accounting Standards How AAOIFI Standards Support Islamic Finance Industry

Overview of AAOIFI Standards AAOIFI AAOIFI is responsible for developing and issuing standards for international Islamic finance industry. Supported by over 200 institutional members from over 45 countries. Members are central banks, regulatory authorities, financial institutions, accounting & auditing firms, legal firms, etc.

Overview of AAOIFI Standards (cont’d) Standards44 Shari’a standards. 27 accounting standards. 5 auditing standards. 7 governance standards. 2 codes of ethics. In addition, new standards are being developed and existing standards reviewed.

Overview of AAOIFI Standards (cont’d) Adoption of standards AAOIFI standards have been followed – as part of regulatory requirement, or internal guidelines – by leading Islamic financial institutions throughout the world. Also adopted by Islamic Development Bank Group.

Overview of AAOIFI Standards (cont’d) Application of standards Expertise for technical application of standards is supported by AAOIFI’s professional development qualification programs: Certified Shari’a Adviser and Auditor (CSAA). Certified Islamic Professional Accountant (CIPA). AAOIFI has also launched Contract Certification Program.

Development of AAOIFI Standards Technical Infrastructure for Accounting Standards Accounting and Auditing Standards Board Ultimate authority on accounting, auditing, ethics, and governance standards. Comprises Shari’a scholars and senior representatives of regulatory authorities, Islamic financial institutions, accounting and auditing firms, legal firms, etc. Accounting Standards Committee Sub-committee of the Accounting and Auditing Standards Board. Working group on development of accounting, auditing, ethics and governance standards.

Preliminary study Based on suggestions from industry and standards committee and board. Study is submitted for discussion at standards committee and board. Also applies to review of existing standards. Exposure draft Prepared by consultants. Discussions with industry. Draft preparation overseen by standards committee. Draft is subject to standards board’s approval. Draft is distributed to industry and submitted to public hearing. Approval of standard Final version of standard takes into account comments from industry and public hearings. Standard is subject to standards board’s approval. Publication of standard Standards are issued through AAOIFI’s standards publications. Announcements on approval and issuance of standards carried out in industry publications, etc. Development of AAOIFI Standards

How AAOIFI Standards Support Islamic Finance Industry AAOIFI standards reflect concept and essence of Islamic finance transactions. And bring about harmonisation of Islamic finance practices. Enhance confidence of users of Islamic finance products. Promote growth of demand for Islamic finance.

AAOIFI standards also ensure convergence of financial reporting by IFIs. And introduce greater clarity to the financial reports of IFIs. Promote better view of financial performance of IFIs. Enhance transparency of financial reports. How AAOIFI Standards Support Islamic Finance Industry (cont’d)

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