KUALA LUMPUR: A new report by the Association of Chartered Certified Accountants (ACCA) and KPMG has called for standard setters and Islamic banks to work together to harmonise financial reporting.
ACCA said the rapid global growth in Islamic finance meant that it must be reported in a way that was harmonised and more consistent.
“The report calls on the International Accounting Standards Board (IASB) and the Islamic finance industry to work together to develop guidance, standards and educate the investor community on key issues,” it said in a statement.
“IASB should consider issuing guidance on the application of International Financial Reporting Standards (IFRS) when accounting for certain Islamic financial products which are offered by Islamic financial institutions and conventional banks.”
ACCA said they should also consider issuing guidance on additional disclosures that could be made for stakeholders who were seeking information on the entity's syariah-compliant operations.
“The industry needs to engage more with local regulators to understand their expectations of financial reporting and the disclosure of Islamic financial instruments,” it said.
ACCA head of international development Aziz Tayyebi said the key challenge faced by Islamic finance and global standards setters was how to resolve the fact that Islamic finance institutes (IFIs) in different countries reported transactions in different ways.
“If they are to remain competitive with conventional counterparts, their financial reports need to be comparable. This will involve a great deal of work and education, but should be beneficial for IFIs and those who rely on their reports,” he added.
(The Star Online / 05 Dec 2012)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com