Accounting and Auditing Organization for Islamic Financial Institutions

Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)[7] is a Bahrain-based not-for-profit organization that was established to maintain and promote Shariah standards for Islamic financial institutions, participants and the overall industry.[8] The commission also organizes a number of professional development programs (especially the Islamic legal accountant program, observer program and forensic auditing program) in their effort to improve the industry.[9]

Accounting and Auditing Organization for Islamic Financial Institutions
AbbreviationAAOIFI
FormationFebruary 26, 1990 (1990-02-26)[1] in Algeria.
FoundersIslamic Development Bank, Dallah Al-Baraka, Faysal Group (Dar Al Maal Al Islami), Al Rajhi Banking & Investment Corporation, Kuwait Finance House and Al-Bukhary Foundation
TypeIndependent international not-for-profit organization
PurposeStandardization[2][3] and harmonization of international Islamic finance practices and financial reporting in accordance to Sharia[4][5][6]
HeadquartersManama,  Bahrain
Location
  • Yateem Center, Block: 304, Al-Muthana road
Coordinates26°14′2″N 50°34′38″E
Region served
Worldwide
Official language
English, Arabic
Main organ
General Assembly
Websitewww.aaoifi.com

History

AAOIFI was established in accordance with the Agreement of Association which was signed by Islamic financial institutions on 26 February 1990 in Algiers. Then, it was registered on 27 March 1991 in Bahrain. It has members from more than 45 countries,[10] including central banks and Islamic financial institutions and other parties working in the financial industry and banking, Islamic International.

The commission has obtained support for the application of the standards issued by it, where these standards have been applied in the Kingdom of Bahrain and the Dubai International Financial Centre, Jordan, Lebanon, Qatar, Sudan and Syria. The competent authorities in Australia, Indonesia, Malaysia, Pakistan, Saudi Arabia and South Africa issued guidelines derived from the standards and publications.[11]

Organizational structure

The organizational structure of AAOIFI includes a general assembly. AAOIFI also has a board of trustees and an accounting and auditing standards board each consisting of fifteen part-time members, a Shari'ah committee consisting of four part-time members, an executive committee, and a secretary-general who is a full-time executive and heads the general secretariat.[12]

Objectives

The objectives of AAOIFI are:

  • To develop accounting and auditing thoughts relevant to Islamic financial institutions
  • To disseminate accounting and auditing thoughts relevant to Islamic financial institutions and its applications through training, seminars, publication of periodical newsletters, carrying out and commissioning of research and other means
  • To prepare, promulgate and interpret accounting and auditing standards for Islamic financial institutions
  • To review and amend accounting and auditing standards for Islamic financial institutions

AAOIFI carries out these objectives in accordance with the precepts of Islamic Shari'a which represents a comprehensive system for all aspects of life, in conformity with the environment in which Islamic financial institutions have developed. This activity is intended both to enhance the confidence of users of the financial statements of Islamic financial institutions in the information that is produced about these institutions, and to encourage these users to invest or deposit their funds in Islamic financial institutions and to use their services.

References
  1. Sajid P.P. "Islamic Banking in the Gulf". Role of Islamic Microfinance in Bahrain Since 2000 (PhD thesis). Jamia Milia Islamia University. p. 66. hdl:10603/195473 – via Shodhganga.
  2. Shusak Aroonpoolsup. "Bibliography". Islamic financial markets: performance and prospects (PhD thesis). Aligarh Muslim University. p. 291. hdl:10603/11410 – via Shodhganga.
  3. Waheed, Khalid. "Concept of Murabahah". Critical study of murabahah as an Islamic mode of financing (PhD thesis). Aligarh Muslim University. p. 146. hdl:10603/241907 – via Shodhganga.
  4. Sajid P.P. "Islamic Banking in the Gulf". Role of Islamic Microfinance in Bahrain Since 2000 (PhD thesis). Jamia Milia Islamia University. p. 67. hdl:10603/195473 – via Shodhganga.
  5. Smeet Esore. "The Concept and Functioning of Islamic Banking System". Experiments in Islamic Banking: a case study of Saudi Arabia and Thailand (PhD thesis). Aligarh Muslim University. p. 48. hdl:10603/182917 – via Shodhganga.
  6. Yaqoob, P K (2009). "Theoretical Frame Work". Case for interest free financial institutions in Kerala (PhD thesis). Mahatma Gandhi University. p. 96. hdl:10603/27094 – via Shodhganga.
  7. Sajid P.P. "Abbreviations". Role of Islamic Microfinance in Bahrain Since 2000 (PhD thesis). Jamia Milia Islamia University. p. 8. hdl:10603/195473 – via Shodhganga.
  8. Sajid P.P. "Islamic Economics, Banking and Microfinance: Theoretical Perspectives". Role of Islamic Microfinance in Bahrain Since 2000 (PhD thesis). Jamia Milia Islamia University. p. 59. hdl:10603/195473 – via Shodhganga.
  9. Adam Hayes. "Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)". Investopedia. Retrieved 30 October 2013.
  10. Sajid P.P. "Islamic Banking in the Gulf". Role of Islamic Microfinance in Bahrain Since 2000 (PhD thesis). Jamia Milia Islamia University. pp. 68–69. hdl:10603/195473 – via Shodhganga.
  11. "Our History". Accounting and Auditing Organization for Islamic Financial Institutions. Archived from the original on 1 November 2013. Retrieved 30 October 2013.
  12. Rifaat Ahmed Abdel Karim. "Accounting and Auditing Standards for Islamic Financial Institutions". Proceedings of the Second Harvard University Forum on Islamic Finance: Islamic Finance into the 21st Century. p. 2. Archived from the original on 30 May 2014. Retrieved 15 November 2013.
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