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Islamic Accounting

Islamic Accounting

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Published by Mohamed Qubati

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Published by: Mohamed Qubati on Jun 10, 2011
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06/11/2013

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The Effect Of Shariah Principles on Accounting Methods for Islamic Banks

10 November 2010

Daud Vicary Abdullah, CIFP Global Islamic Finance Leader, Deloitte.
1

Agenda Rapid Acceptance of Islamic Finance The fundamental principles of Islamic Finance Issues & Supporting Infrastructures In Islamic Accounting Perceived Gaps & Possible Solutions 2 .

Rapid Acceptance of Islamic Finance Increasing pressure to have global standards Global Crisis Product Development & Innovation Increasing Market demand Islamic Finance Opportunities Access to Liquidity Increasing Muslim Population Government & Infrastructure Support 3 .

The Fundamental Principles of Islamic Finance An overview No conflict with Principle of Islam & Assertion of Religious Law Risk & profit sharing Real Economic Transactions & Asset Backed Ethical Value & Social Justice (Maqasid AlShariah) Prohibited Activities & Elements Islamic Finance 4 .

Islamic Finance : Issues & Supporting Infrastructures Key issues & who is responsible for what • Substance Vs. . Governance Framework • Ensure consistency in requirements and policies concerning reporting practices • Roles & duties between Shariah Advisors and Auditors AAOIFI IFSB IIFM Local Shariah Board 5 & Local Regulators. Financial Reporting • Harmonisation of accounting standards • Flexibility and transformation with the development of Islamic financial innovations • Building consumer’s confidence and trust AAOIFI IFSB IFRS Auditing • Ex-Ante compliance & Ex-post compliance • Lack of expertise & human capital AAOIFI IFRS Local Shariah Board & Local Regulators. Form • Liability & equity • Interest & dividend • Ownership in Sukuk & Sukuk Default Accounting AAOIFI IFRS Local Shariah Board & Local Regulators.

Convergence Applying IFRS in every aspect 6 .Islamic Finance : Issues in Islamic Accounting The possible roadmap Live side by side with its conventional counterpart Exclusivity All Islamic financial institution transactions will be recorded by way of Islamic Accounting 3 options International Financial Reporting Standards (IFRS) are fine tuned Harmonisation The certain exemptions are allowed/disallowed.

Perceived Gaps & Possible Solutions The way moving forward Having the right perception Misperception & Unanimity in understanding Shariah law Research & development Shortage of literature & research on Islamic accounting Perceived gaps & Possible Solutions Shortage of Islamic accounting expert & human capital Education & Training Lack of understanding of Islamic finance opportunities Perceived gaps Possible Solutions Articulating value proposition 7 .

CIFP Global Islamic Finance Leader Deloitte Email : dvicary@deloitte.islamicfinance.deloitte.com Tel : +603 77236500. 77261833 Website : www.Any Questions? Daud Vicary Abdullah.com 8 .

THANK YOU! 10 November 2010 9 .

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