A study of compliance with AAOIFI accounting standards by Islamic banks in Bahrain

Thea Vinnicombe

50 citations0/0 files storedJournal of Islamic accounting and business research

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Islamic Finance and Banking Studies Auditing, Earnings Management, Governance Accounting and Financial Management

Abstract

Purpose The purpose of this paper is to provide an extension of a previous study by the author into compliance by Islamic banks in Bahrain with accounting standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Design/methodology/approach A number of compliance indexes are constructed to better understand compliance by the sample banks. The use of multiple indexes addresses methodological shortcomings identified in the previous study. Findings Compliance is found to be higher for some Islamic issues than for others. In a relative sense, compliance is found to be similar to that for the region with standards issued by the International Accounting Standards Board. Research limitations/implications The sample is limited to Islamic financial institutions in Bahrain. This is necessitated by the lack of adaptation elsewhere. The relatively high compliance found in Bahrain suggests broader adoption would be successful and would contribute to the overall regulation of the Islamic financial sector. Originality/value The AAOIFI has existed for over 20 years, but little empirical research had been conducted into compliance with the standards developed by this body. This paper, along with the previous study by the author, helps address this gap.

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References

2007Exploring the Ethical Identity of Islamic Banks via Communication in Annual Reports 2006Social reporting by islamic banks 2008Using accounting ratios to distinguish between Islamic and conventional banks in the GCC region 2008An investigation of compliance with international accounting standards by listed companies in the Gulf Co-Operation Council member states 2001International accounting harmonization, banking regulation, and Islamic banks 2010The Effects of the Global Crisison Islamic and Conventional Banks 2006Diversity in the regulation of Islamic Financial Institutions 2009Defining Islamic accounting: current issues, past roots

Cited by

2018The compliance of disclosure with AAOIFI financial accounting standards 2021A systematic literature review on AAOIFI standards 2018Comparative compliance status of AAOIFI and IFSB standards 2015Islamic Accounting; History, Development and Prospects 2019Diverse accounting standards on disclosures of Islamic financial transactions

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