The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has issued two new accounting standards, one of which is a conceptual framework for financial reporting by Islamic financial institutions. AAOIFI is an Islamic international body that prepares accounting, auditing, governance, ethics and  Shari’a standards for Islamic financial institutions and the industry. It has so far issued 42 standards covering areas of accounting, auditing, ethics and governance.

The Islamic financial institutions often encounter accounting problems because the existing accounting standards such as IFRSs or local GAAP etc are developed based on conventional institutions, conventional product structures or practices, and may be perceived to be insufficient to account for and

report Islamic financial transactions. Shariah compliant transactions that observe the prohibition to charge interest may not have parallels in conventional financing and therefore, there may be significant accounting implications. For more details, please click on http://www.aaoifi.com/