Accounting Issues in the Reporting of Profit Sharing Investment Accounts in Islamic Banks’ Financial Statements Under IFSA 2013

Abstract

Issues in the reporting of Islamic financial instruments have been discussed since early 2000. Among these issues is the debate about whether the accounting standards promulgated by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) or the International Financial Reporting Standards (IFRS) should be adopted for reporting Islamic financial transactions. Abdel Karim (2001) explained the need to implement the AAOIFI accounting standards as these standards specifically cater for the unique characteristics of the contracts that govern the operations of Islamic banks.