AAOIFI Footprint Report 2020

A study on the adoption status of AAOIFI standards across

jurisdictions of various regulatory and supervisory authorities

Ver. 1.0
Prepared by: AAOIFI Secretariat
© The Accounting and Auditing Organization for Islamic Financial Institutions 2020
First edition (e-copy): Published October 2020

P.O. Box: 1176, Manama, Kingdom of Bahrain.

Tel.: +97317244496
Fax: +97317250194
Website: www.aaoifi.com
Email: rsas@aaoifi.com

Disclaimer: Readers and all concerned are hereby informed that the study is based on primary research (i.e. information provided by the regulatory and supervisory bodies via the questionnaire
sent to them for response, and their confirmation of their respective country profiles; and in-house secondary research (involving sourcing and compilation of information available on the
internet). While utmost care has been taken to ensure the authenticity and correctness of the information provided in this report, readers are requested to highlight any information that is
incorrect or outdated together with suitable references. As AAOIFI do not claim every information given in the report is 100% correct or up to date, therefore stands corrected if brought to the
notice of its secretariat. Any corrections and updates will be incorporated, in the subsequent version / issue of the report. The information published is in good faith for supporting, encouraging
and gauging the level of penetration and adoption of AAOIFI standards around the globe. Hence, AAOIFI does not make any warranties about the completeness, reliability and accuracy of the
information presented here. Any action taken based on the information presented here is strictly at your risk and AAOIFI will not be liable for any losses and damages in connection with the use of
the data presented in this report. Please get in touch with AAOIFI secretariat with regards to the report via rmalik@aaoifi.com or ssiddiq@aaoifi.com.
In the name of Allah, the most gracious, the most merciful
 Contents

• Message from the Chairman of AAOIFI Board of Trustees. ............................................................................................................................................................... 8

• Message from the Chairman of AAOIFI Shariah Board......................................................................................................................................................................... 10

• Message from the Chairman of AAOIFI Accounting Board (AAB)................................................................................................................................................. 11

• Message from the Chairman of AAOIFI Governance and Ethics Board (AGEB).................................................................................................................. 12

• Messages from selected Islamic finance stakeholders......................................................................................................................................................................... 13

• About AAOIFI........................................................................................................................................................................................................................................................................ 24

• AAOIFI objectives.............................................................................................................................................................................................................................................................. 25

• AAOIFI historical timeline........................................................................................................................................................................................................................................... 26

• AAOIFI key facts and figures. .................................................................................................................................................................................................................................... 28

• AAOIFI membership........................................................................................................................................................................................................................................................ 29

• AAOIFI boards’ members............................................................................................................................................................................................................................................ 32

• Acknowledgements......................................................................................................................................................................................................................................................... 40

• Acronyms. ............................................................................................................................................................................................................................................................................... 41

• Executive Summary......................................................................................................................................................................................................................................................... 44

• Terminologies. ..................................................................................................................................................................................................................................................................... 46

• Brief report............................................................................................................................................................................................................................................................................ 47

• 1. Introduction............................................................................................................................................................................................................................................................ 47

• 2. Methodology. ........................................................................................................................................................................................................................................................ 49

4 AAOIFI Footprint Report 2020

• 3. Summary of AAOIFI standards adoption status........................................................................................................................................................................... 53

Table 3.1 List of countries and regulatory jurisdictions that have full adoption of AAOIFI standards................................................ 53

Table 3.2 List of countries and regulatory jurisdictions that have partial adoption of AAOIFI standards........................................ 55

Table 3.3 List of countries and regulatory jurisdictions adopting AAOIFI standards as guidelines or as

reference material...................................................................................................................................................................................................................... 56

Table 3.4 List of countries and regulatory jurisdictions that have local standards / regulations based on

AAOIFI standards......................................................................................................................................................................................................................... 57

Table 3.5 List of countries and regulatory jurisdictions that adopt AAOIFI standards as guidelines and

have local standards / regulations based on AAOIFI standards. .............................................................................................................. 58

Table 3.6 List of countries and regulatory jurisdictions where supplementary reporting is allowed as per

AAOIFI standards......................................................................................................................................................................................................................... 58

• 4. Potential countries / regulatory jurisdictions that are presently considering adopting AAOIFI standards..................................... 59

• 5. The way forward.................................................................................................................................................................................................................................................. 60

• 6. Country profiles................................................................................................................................................................................................................................................... 63

6.1. Afghanistan, Islamic Republic of.................................................................................................................................................................................................... 64

6.2. Bahrain, Kingdom of. .............................................................................................................................................................................................................................. 68

6.3. Bangladesh, People’s Republic of. ................................................................................................................................................................................................ 71

6.4. Brunei Darussalam................................................................................................................................................................................................................................... 75

AAOIFI Footprint Report 2020 5

6.5. Djibouti, Republic of............................................................................................................................................................................................................................... 78
6.6. Egypt, Arab Republic of........................................................................................................................................................................................................................ 80
6.7. Indonesia, Republic of........................................................................................................................................................................................................................... 83
6.8. Iraq, Republic of......................................................................................................................................................................................................................................... 87
6.9. IsDB (Kingdom of Saudi Arabia)...................................................................................................................................................................................................... 94
6.10. Jordan, Hashemite Kingdom of. .................................................................................................................................................................................................. 97
6.11. Kazakhstan, Republic of..................................................................................................................................................................................................................... 101
6.12. Kuwait, State of....................................................................................................................................................................................................................................... 106
6.13. Kyrgyz Republic........................................................................................................................................................................................................................................ 110
6.14. Lebanon, Republic of........................................................................................................................................................................................................................... 114
6.15. Libya................................................................................................................................................................................................................................................................. 116
6.16. Malaysia........................................................................................................................................................................................................................................................ 118
6.17. Maldives, Republic of.......................................................................................................................................................................................................................... 125
6.18. Mauritius, Republic of........................................................................................................................................................................................................................ 130
6.19. Nigeria, Federal Republic of........................................................................................................................................................................................................... 133
6.20. Oman, Sultanate of............................................................................................................................................................................................................................... 137
6.21. Pakistan, Islamic Republic of. ........................................................................................................................................................................................................ 141
6.22. Palestine, State of (Palestinian Authority)........................................................................................................................................................................... 146
6.23. Qatar, State of . ........................................................................................................................................................................................................................................ 150

6 AAOIFI Footprint Report 2020

 6.24. Russian Federation................................................................................................................................................................................................................................ 155
6.25. Saudi Arabia, Kingdom of................................................................................................................................................................................................................. 157
6.26. Seychelles, Republic of....................................................................................................................................................................................................................... 161
6.27. Singapore, Republic of. ...................................................................................................................................................................................................................... 163
6.28. Sudan, Republic of the....................................................................................................................................................................................................................... 165
6.29. Syrian Arab Republic............................................................................................................................................................................................................................ 169
6.30. Tajikistan, Republic of......................................................................................................................................................................................................................... 174
6.31. Tunisia, Republic of . ............................................................................................................................................................................................................................ 177
6.32. Turkey, Republic of................................................................................................................................................................................................................................ 179
6.33. United Arab Emirates.......................................................................................................................................................................................................................... 185
6.34. West African Monetary Union (BCEAO)................................................................................................................................................................................ 194
6.35. Yemen, Republic of............................................................................................................................................................................................................................... 196
• Appendices............................................................................................................................................................................................................................................................................ 199
• Appendix A - AAOIFI standards and technical pronouncements in issue as of August 2020............................................................. 200
• Appendix B - AAOIFI members as of August 2020............................................................................................................................................................. 208
• Appendix C - AAOIFI organizational structure....................................................................................................................................................................... 218
• Appendix D - AAOIFI standards adoption survey questionnaire............................................................................................................................. 219
• Appendix E - AAOIFI standards publications.......................................................................................................................................................................... 221
• Appendix F - AAOIFI other publications..................................................................................................................................................................................... 222

AAOIFI Footprint Report 2020 7

 Message from the Chairman of AAOIFI Board of Trustees
Ebrahim Bin Khalifa Al Khalifa
Chairman of the AAOIFI Board of Trustees
8 AAOIFI Footprint Report 2020
Praise be to Allah and prayers and peace be upon our
Prophet Muhammad and his noble household and
companions.
It gives me utmost pleasure to present this first ever
AAOIFI Footprint Report to you today. AAOIFI has been
in existence for nearly 3 decades now. Only through the
rigorous efforts of the team and an unparalleled support
by the regulators and market players, as well as, the
scholars, professionals and experts in the field of Islamic
finance, it has been able to achieve a great feat in the
development, growth, standardization and harmonization
of Islamic finance in light of the divine guidance and the
best industry practices. This study has been conducted to
measure such impact that AAOIFI has made to the Islamic
finance industry and economies of the Muslim countries
to a reasonable, measurable degree.
The purpose of this study is to recognize the importance of
implementation of AAOIFI standards for the ultimate goal
of progressing the Islamic finance industry. AAOIFI aims
to develop globally consistent and harmonized standards
in order to develop and maintain the industry’s relevance
for the benefit of various industry stakeholders and to
contribute to the Islamic financial economy around the
globe. Another objective that this report has successfully
achieved is creating a channel of communication of AAOIFI
with around 90 regulators and supervisory authorities
around the globe, who were part of the background work
performed for the purpose of this report.
This report sheds light on an important and untold
synopsis on the extent of adoption of AAOIFI standards
around the globe, a process that is complex in this growing
industry aiming for harmonization of practices which
are open to various Shari’ah interpretations. It is true
that adoption and implementation of standards require
years of advocacy, outreach, partnership, scholarship and
capacity building, among others, AAOIFI is glad that in the
past three decades of its existence it has been successful
in all these fronts.
AAOIFI has currently 114 standards and technical
pronouncements in issue which are followed in more than
27 regulatory jurisdictions globally. In addition, it has made
a significant contribution by guiding and inculcating Islamic
finance thought among the conventional counterparts to
recognize Islamic finance industry’s distinct position as an
alternate to conventional banking and finance that is in
line with Shari’ah principles and rules. AAOIFI standards
and its various initiatives including its capacity building
programs, events, conferences and journal publication
has enhanced the observance of the core Islamic finance
principles, rules and practices worldwide.
I am glad that this study made a humble attempt to
quantify and measure the level of adoption of AAOIFI
standards globally by different jurisdictions. It also
encourages and provides a roadmap for more and more
Islamic finance jurisdictions to adopt AAOIFI standards to
leapfrog their efforts towards building a sizable Islamic
finance industry. This will be an ongoing exercise carried
out periodically by the AAOIFI secretariat that will provide
insights to all those regulatory jurisdictions that are aiming
to offer Islamic finance products and services in their
markets.
AAOIFI Footprint Report 2020 9
 Message from the Chairman of AAOIFI Shari’ah Board
Sheikh Muhammad Taqi Usmani
Chairman, AAOIFI Shari’ah Board
10
The age of COVID-19 has agonizingly exposed and among the regulatory and supervisory bodies but also
widened the existing economic and social divisions. various stakeholders at different levels of the financial
Regulatory and supervisory authorities around the globe industry.
are doing their best to tackle the financial repercussions
These standards are developed for the industry. As
of this pandemic. The crisis calls for re-thinking of our
such, adoption of AAOIFI standards plays an important
priorities and reconsidering the very structure of the
role not only for jurisdictions aiming to diversify their
world economy towards a future that is more equitable,
economies to accommodate Islamic finance structures,
resilient and sustainable.
but also to those that seek to have internationally
Similar to the 2007-08 global financial crisis, this recognized and harmonized standards for their banking
pandemic has provided another opportunity for the and financial needs in line with global best practices
Islamic financial industry to prove its worth to the global together with robust Shari’ah compliance.
banking and finance stakeholders. Islamic economic
I pray and hope that the world will soon emerge
system based on Shari’ah principles have the innate
resilient from this dark patch of COVID-19.
ability to build a more sustainable, inclusive, and
socially responsible economic and financial system.
It is really up to its stakeholders to embrace this as a
challenge and demonstrate that Islamic finance can
help withstand the test in the times of such crises. The
revival of the economies may lie in going back to the
basics, with concepts inherent to Islamic finance such
as risk-sharing, linking financial system with the real
economy and ensuring an interest-free economy, social
responsibility, etc.
AAOIFI Shari’ah Board on its part has carried out its
mandate to provide harmonized and Shari’ah compliant
standards to help the development of global Islamic
financial industry without compromising on Shari’ah
rules and principles. AAOIFI has a remarkable distinction
of bringing scholars from different jurisdictions and from
different schools of thoughts under its Shari’ah board,
and has fostered international cooperation not only
AAOIFI Footprint Report 2020

Mr. Hamad Abdulla Al-Oqab
Chairman, AAOIFI Accounting Board
Deputy CEO, Al Baraka Banking Group
Message from the Chairman of AAOIFI Accounting Board
It gives me an immense pleasure that this report is able to
quantify the level of adoption of AAOIFI standards around
the globe. AAOIFI Financial Accounting Standards (FAS) are
developed to mainly cater to the information needs of the
users of financial statements of Islamic Financial Institutions
(IFIs), particularly considering the nature of the relationships,
transactions, events or conditions in accordance with
Shari’ah principles of rules. It is widely acknowledged that
Islamic finance transactions and products have certain
fundamental differences with conventional counterparts,
and consequently their accounting treatment can be quite
challenging in real-life applications.
As part of its mandate, AAOIFI Accounting Board (AAB) seeks
to phase in continuous improvements in the existing financial
accounting standards and guidelines and has recently
embarked on a comprehensive project that aims to revisit
and revise the existing conceptual framework in line with the
global good practices. The improved framework will provide
a wider anchor of reference on the fundamental principles
and underpinnings for developing accounting standards,
as well as a basis for improved recognition, measurement
and presentation, and in specific situations where Shari’ah
principles and rules permit, towards reconciling differences
with good practices in the field. This reflects the overarching
role of AAB in promoting harmonization of practices and
where possible moving closer to the global good practices.
We also expect that revised FASs and framework will also
further widen the adoption of AAOIFI standards worldwide,
as this set of standards constitutes a part of the whole
universe of standards issued by AAOIFI which compliments
each other in multiple areas- Shari’ah, accounting, auditing,
and governance standards. In this regard, AAB encourages
regulatory jurisdictions that aim to embrace Islamic finance
in their markets to adopt AAOIFI FAS, and welcomes any
feedback relating to application / implementation by
institutions facing challenges in their attempts to initiate
conversions to AAOIFI standards.
Another prime example where the board has been proactive
to serve the needs of the broader stakeholders in the
industry is the financial accounting standard on first time
adoption of AAOIFI’s accounting standards, which has been
developed to provide a principle-based guidance to IFIs to
smoothly transition from other accounting framework(s) to
AAOIFI framework, that would enable such institutions to
prepare their financial statements according to AAOIFI FASs.
Likewise, and in a timely response to the ongoing COVID-19
pandemic, AAB formed a special-purpose taskforce that
worked diligently to develop and issue a statement that
provides guidance, clarifications and interpretations on
accounting treatments in addressing the impact of this global
pandemic on the individual institutions.
I would like to reiterate here that AAB is wholeheartedly
committed to meeting the high expectations of the industry
in order to ensure the continuing progress of Islamic
financial institutions and the broader industry around the
globe. On behalf of the board, I would also like to commend
and appreciate all stakeholders for their usual support
and contribution in its activities and initiatives, including
standards development and adoption. I wish everybody
safety and well-being in these unprecedented times and in
the years to come.
AAOIFI Footprint Report 2020 11
 Message from the Chairman of AAOIFI Governance and Ethics Board
Mr. Farrukh Raza
Chairman, AAOIFI Governance and
Ethics Board
Group CEO, Islamic Finance Advisory &
Assurance Services (IFAAS), UK
12 AAOIFI Footprint Report 2020
AAOIFI’s footprint report is a very encouraging evidence Having such footprint, as demonstrated by this
of an increasing consistency and harmonization across report, is a remarkable achievement. Our focus lies on
the rapidly growing Islamic finance industry worldwide. increasing the adoption of AAOIFI standards, across
As Islamic finance becomes more mainstream in all jurisdictions, working in collaboration with all
many countries and spreads beyond the traditional stakeholders and partner organizations, and producing
borders as an inclusive and ethical option for people standards that are well-grounded to respond adequately
and businesses of diverse backgrounds, it requires a to today’s needs but also forward looking in readiness of
continuously evolving support system to ensure its addressing the future trends and technology revolutions
integrity, growth and direction. This is precisely where happening. At AGEB, we strive for making Islamic
AAOIFI has played a centric role in providing guidance finance a world class solution and the financial option of
and support to all stakeholders in the critical matters first choice for everyone.
of Shariah, accounting, auditing, governance and
ethics. Collectively, these standards have facilitated the
development of the industry on sound foundations and
with strong guard rails.
AAOIFI’s Governance and Ethics Board (or AGEB)
is charged with the responsibility of developing
standards that warrant and promote highest levels
of transparency, responsibility, accountability,
professionalism and ethics amongst the financial
institutions offering Islamic financial products and
services. These standards also aim to put fore the true
spirit of Shariah in financial operations and the industry
best practices, helping Islamic financial institutions to
become the most trusted, competitive and sustainable
players within the financial sector. AGEB is committed
to work tirelessly with the industry stakeholders to
ensure their evolving needs with regards to governance
and ethics are optimally met, the industry flourishes
worldwide with the Maqasid (objectives) of Shariah
at its heart and Islamic finance serves as a real driver
of change and growth in social, moral and economic
development of individuals, businesses and countries.
 Messages from selected Islamic finance stakeholders

“As a founding member of AAOIFI, we are pleased to commend the important role AAOIFI has played in the last
three decades in providing benchmark standard-setting guidance to the global Islamic finance industry. AAOIFI,
in-line with its mandate, has developed robust accounting, auditing, governance, ethics, Shari’ah and other topical
standards that comply with Shari’ah rules and principles. The Islamic Development Bank Group will continue its
support, helping AAOIFI to execute its mandate for the further development and strengthening of the global Islamic
finance industry. We encourage the Islamic financial institutions in our member countries to adopt and implement
the various AAOIFI standards.”
H.E. Dr. Bandar M. H. Hajjar
President, Islamic Development Bank Group

“Central Bank of Bahrain was the first jurisdiction that fully adopted AAOIFI’s Shari’ah, Accounting and Governance
standards. We have witnessed the widespread benefit of these standards for guidance, reporting and disclosure
of Islamic financial institutions in Bahrain over the past three decades. We believe that the global Islamic finance
industry will be well served in the future as an increasing number of countries decide to adopt AAOIFI standards”
H.E. Mr. Rasheed M. Al Maraj
Governor, Central Bank of Bahrain

AAOIFI Footprint Report 2020 13

 “Qatar Central Bank, as the regulatory and supervisory authority for banks and Islamic banks operating in the State
of Qatar, including banks and Islamic banks, is eager to implement the best international accounting standards,
especially in the Islamic banking sector, and in this regard we affirm our complete keenness to apply the standards
issued by the Accounting and Auditing Organization for Islamic financial institutions (AAOIFI), Qatar Central Bank
also seeks, within the framework of the strategic plan for the financial sector in the State of Qatar (2017-2020), to
develop Islamic finance, diversification and innovation in the field of Islamic financial services and products, and we
are pleased in this field to affirm full cooperation with AAOIFI to achieve the full compliance with [its] accounting
standards. The great challenges facing Islamic banking require more efforts and devising appropriate solutions
that contribute to reshaping the Islamic banking environment, such as financial technology, digital finance, social
responsibility, and other initiatives.”
H.E. Sh. Abdulla Saoud Al-Thani
Governor, Qatar Central Bank

“Capital Markets Authority Kuwait has recently become a member of AAOIFI. We truly believe that harmonization
of practices across jurisdictions is key for the greater benefit of the Islamic finance industry. The technical boards of
AAOIFI consisting of experienced and sought after scholars and professionals haves assisted in the development of
the industry in a significant manner. CMA Kuwait encourages a collective effort in this direction.”
Prof. Ahmad A. Al-Melhem
Chairman of Board of Commissioners & Managing Director, Capital Markets Authority Kuwait

14 AAOIFI Footprint Report 2020

“Central Bank of Oman congratulates AAOIFI on the completion of three decades of its establishment as a pioneer
Islamic finance standard setting body and applauds its accomplishments for the development and propagation of
Shari’ah, accounting, governance and ethics standards for Islamic financial institutions. Similarly, its capacity building
and knowledge sharing work program through certifications, workshops and conferences has greatly benefited the
global Islamic finance industry. Islamic Banking Entities in Oman follow AAOIFI for the preparation of their books of
accounts and use its other standards as a reference. Central Bank of Oman wishes AAOIFI well for its enhanced and
effective role in the future.”
H.E. Mr. Tahir bin Salem bin Abdullah Al-Amri
Executive President, Central Bank of Oman

“In the Kyrgyz Republic, AAOIFI standards are recognized at the legislative level. To date, all the necessary legal
framework has been developed on the Islamic principles of banking and financing. Regulatory legal acts of the
National Bank of the Kyrgyz Republic in terms of Sharia standards, accounting for banks operating in accordance with
Islamic principles of financing are developed in accordance with AAOIFI standards. In 2019, within the framework
of the CIPA AAOIFI program, employees of the National Bank, representatives of financial and credit institutions and
the Islamic University of Kyrgyzstan were trained in the following areas: “Sharia Standards” and “Accounting and
Reporting”. Currently, Islamic financial products are provided to the population by two commercial banks and five
microcredit companies.”
H.E. Mr. Tolkunbek Abdygulov
Chairman, National Bank of the Kyrgyz Republic

AAOIFI Footprint Report 2020 15

 “As Chairman of AAOIFI Governance and Ethics Board it was a great privilege to have been a first-hand witness to
the process of the formulation, discussion, finalization, and dissemination of the process of standard setting under
AAOIFI. The selection of top experts on the Board, the high-quality internal debate and consultations with relevant
stakeholders made it sure that the standards were transparent, easy to comprehend, enforceable and benefitted
from the feedback received. The success measure was as to how many jurisdictions adopted these standards.”
H.E. Dr. Ishrat Husain
Adviser to the Prime Minister on Institutional Reforms and Austerity, Islamic Republic of Pakistan

“As an alternative financial system, participation banking and interest-free finance has become one of the
strategically supported sectors for many countries today. The importance of the participation finance sector, which
has a long history in Turkey, is increasing with each day. We believe that we have a significant potential for the
participation finance sector, which we see as one of the most important components of our Istanbul International
Financial Center goal, and we work towards this goal. BRSA has always given great importance to establishing close
relationships with AAOIFI in order to develop the participation finance sector in accordance with international best
practices and regulations. Turkey is significantly compliant with the standards of AAOIFI, and our compliance process
continues in the framework of the roadmap determined for our country. In addition, AAOIFI standards have always
been a very important reference source for us in our studies.”
H.E. Mr. Mehmet Ali Akben
Chairman, Banking Regulation and Supervision Agency of Turkey

16 AAOIFI Footprint Report 2020

“As Islamic banking business develops around the globe, there is a need for IFIs to prepare and keep their disclosures
and statements in accordance with the accounting standards in a manner that is Shari’ah compliant. AAOIFI’s
standards provide the required guidance for the development of the industry. This report is very timely and provides
a gauge to industry stakeholders on the relevance of AAOIFI and its standards of coverage.”
H.E. Sheikh Abdulla Bin Saoud Al-Thani
Chairman, Qatar Financial Centre Regulatory Authority

“We acknowledge AAOIFI’s efforts which have served as one of the major standard benchmarks for the Islamic
finance industry for three decades. As the industry size increases, it becomes increasingly necessary to tangibly
demonstrate its value addition in terms of resilience and stability, financial inclusion, sustainable development and
social finance. Meaningful partnerships will bring synergies and move us closer to our shared interests
and objectives, and the IFSB is pleased to be working jointly with AAOIFI to produce a revised set of Guiding
Principles on Shari’ah Governance Framework for Institutions Offering Islamic Financial Services.”
Dr. Bello Lawal Danbatta
Secretary General, Islamic Financial Services Board (IFSB)

AAOIFI Footprint Report 2020 17

 “As the oldest standards setting organization in Islamic financial industry, AAOIFI has made great strides when it
comes to regulations in the Islamic financial industry by developing standards in five very specific areas—Shariah,
accounting, auditing, governance, and code of ethics—which are all interlinked to form a bouquet of standards
for the regulators trying to protect and enhance the integrity of their local Islamic financial industry. The National
Committee for Islamic Economy and Finance (KNEKS), the Republic of Indonesia as the coordinator of Islamic
economy and finance development in Indonesia, also has been actively collaborating with AAOIFI in the areas
of common interest that support the development of Islamic banking and financial Industry in Indonesia such as
making guidelines for Interim Financial Reporting, as well as translating and advocating AAOIFI’s Zakah standard to
Bahasa Indonesia to be used as a reference for Islamic finance stakeholders in Indonesia. We wish all the best for the
AAOIFI which always gives constant contribution towards the development of Islamic financial industry.”
Mr. Ventje Rahardjo
Executive Director, National Committee for Islamic Economy and Finance (KNEKS), Republic of Indonesia

“The rapid growth of the Islamic Financial Services Industry at international and regional levels continues to
exponentially day by day, even in times of crises, thanks to the firm foundation and robust concepts on which this
industry is built. The role played by various experts and scholars at AAOIFI in support of the Islamic banking sector to
reflect the true principles of Islam has been the cornerstone for the development of this industry. This is evident in
the Shari’a, accounting, auditing & governance standards and codes of ethics issued by the Accounting and Auditing
Organization for Islamic Financial Institutions (AAOIFI). Al Baraka Banking Group with its subsidiary banking units and
representative offices spread across seventeen countries, is proud to be a founding member of AAOIFI and affirms its
full support to strengthen the cause of AAOIFI.”
Mr. Adnan Ahmed Yousif
Board Member and President & Chief Executive, Al Baraka Banking Group

18 AAOIFI Footprint Report 2020

“The AFSA has facilitated development of Islamic finance in AIFC jurisdiction by creating Islamic finance framework
based on standards of AAOIFI. This enables access to financial services for Shari’ah-sensitive clients and businesses.
AFSA has accommodated AAOIFI standards to be followed in its jurisdiction through its AIFC Islamic Finance Rules
and Takaful Prudential Rules, which include requirements applicable to parties conducting financial services or
offering financial products in a Shari’ah-compliant manner. AFSA also praises the positive steps taken by AAOIFI in
translating the AAOIFI standards to Russian as this will play a positive role in spreading the standards in Eurasia.”
Mr. Mukhtar Bubeyev
Chief Executive Officer, Astana Financial Services Authority (AFSA)

“Since AAOIFI’s establishment in 1991, it has worked diligently to develop and spread various sets of sharia
standards, accounting standards, as well as auditing and governance standards, and codes of ethics. DIEDC is
delighted to have signed an MoU with AAOIFI in 2019 to leverage this long-standing expertise in further developing
the Islamic Finance and Islamic Economy sectors with likeminded stakeholders.”
Mr. Abdulla Al Awar
Chief Executive Officer, Dubai Islamic Economy Development Centre (DIEDC)

AAOIFI Footprint Report 2020 19

 “The IMF has endorsed the use of the “Core Principles for Islamic Finance Regulation” (Banking Sector), which
was developed by the IFSB, and their assessment methodology for the purpose of undertaking financial sector
assessments. Close cooperation between relevant key institutions is important to develop comprehensive standards
for Islamic financial services. The AAOIFI plays a key role in the improvement and implementation of the relevant
framework for the Islamic banking industry across jurisdictions. We look forward to continuing collaboration with
AAOIFI in its work to promote the safe development of this industry.”
Mr. Simon T. Gray
Regional Advisor for Africa, the Middle East and Central Asia, International Monetary Fund (IMF)

“AAOIFI as a standard setting-body for Islamic financial institutions has played a vital role and has facilitated the
development of Islamic finance industry globally in the last three decades. KFH is glad that it has been one of the
founding members of AAOIFI and the collective wisdom and efforts of its founding members have been fruitful.
AAOIFI standards has not only been a guiding light for the Islamic financial industry but have also been instrumental in
introducing Shari’ah rules and principles to wider banking and finance stakeholders around the globe. It is important
for AAOIFI to continue harmonizing its standards in line with other global international standards-setting bodies.”
Mr. Shadi Zaharan
Group Chief Financial Officer, Kuwait Finance House

20 AAOIFI Footprint Report 2020

“ The Institute of Chartered Accountants of Pakistan (ICAP) has a long association with AAOIFI of mutual
collaboration in the field of accountancy and audit. AAOIFI has recently done commendable work in revising the
accounting standards and aligning them as closely as possible to the requirements of IFRS, in making them truly
global standards. ICAP through its representation on the AAOIFI Accounting Board is part of the standard setting
process and is pleased to be contributing to improving the global Islamic financial reporting.”
Mr. Khalilullah Shaikh
President, The Institute of Chartered Accountant of Pakistan (ICAP)

“AAOIFI’s standards setting process adopts inclusive approach with different stakeholders around the globe.
Increased convergence with international accounting standards will ensure wide-spread acceptance to AAOIFI
standards. AAOIFI may consider to collaborate and coordinate the development of standards with IASB and IAASB
to ensure synergies are explored for a wide ranging Shariah-compliant transactions and events. Islamic finance
is growing in many parts of the globe and hence AAOIFI’s role is of paramount importance for the growth of the
industry. We hope and support AAOIFI in increasing its footprint and adoption of its technical standards.”
Mr. Rıza Çelen
Chairman, Public Oversight, Accounting and Auditing Standards Authority of Turkey (KGK)

AAOIFI Footprint Report 2020 21

 “For nearly three decades, AAOIFI has significantly contributed to the development of the Islamic Financial Services
Industry. Standard-setting organizations, due to their neutral and developmental focus, play an important role in
the establishment of a sound, transparent and harmonized financial system. The collaboration between standard-
setting organizations is essential for the progression of a robust Islamic finance industry and AAOIFI and IIFM recent
collaborative efforts and their continuation will be key to achieving common goals and objectives of expanding the
reach of Islamic finance globally.”
Mr. Ijlal Ahmed Alvi
Chief Executive Officer, International Islamic Financial Market (IIFM)

“AAOIFI standards have the highest level of acceptance within the Islamic financial institutions in Bangladesh.
Bangladesh Bank and CSBIB also promote adoption of AAOIFI standards. These standards are referred to in
Bangladesh Bank’s guidelines and quarterly reports on Islamic Banking. Recently, three commercial banks obtained
AAOIFI membership as per advice of Bangladesh Bank. CSBIB also exclusively pursues its member banks and financial
institutions to obtain AAOIFI membership and adopt AAOIFI standards. CSBIB started to offer CIPA and CSAA
programs for capacity building. Thus far the programs have attracted a large number of candidates showing the
market demand for AAOIFI certifications.”
Mr. Md. Abdullah Sharif 
Secretary General, Central Shariah Board for Islamic Banks of Bangladesh

22 AAOIFI Footprint Report 2020

“IIRA has been providing independent rating assessments to its various clients that conform to principles of Islamic
finance that help their stakeholders make informed decisions and manage risks. As Islamic finance infrastructure
institutions IIRA and AAOIFI share common goals to develop Islamic finance markets with robust practices while
harmonizing with wider financial industry’s good practices.
AAOIFI standards have been a source of guidance for financial institutions not only in developed Islamic finance
markets, but also for markets that aim to give way to Islamic finance products and services within their jurisdictions.
As such, adoption of AAOIFI standards by the respective regulatory authorities will not only prevent reinventing the
wheel, but will also promote standardization, uniformity, [better] comparability and reporting of Islamic finance
transactions across jurisdictions, which will in-turn help the industry grow at a much faster rate. An independent
review of the implementation of these standards enables IIRA to add value to the Islamic financial system by
promoting transparency and raising the confidence of the investors.”
Dr. Omar Zuhair Hafiz
Chairman, Islamic International Rating Agency (IIRA)

AAOIFI Footprint Report 2020 23

 About AAOIFI
Accounting and Auditing Organization for Islamic
Financial Institutions (AAOIFI), established in
1991 and based in the Kingdom of Bahrain, is the
leading international not-for-profit organization
primarily responsible for development and
issuance of standards for the global Islamic
finance industry. It has 114 standards and
technical pronouncement in issue in the areas of
Shari’ah, accounting, auditing, governance and
ethics. It is supported by a number of institutional
members, including central banks and regulatory
authorities, financial institutions, accounting
and auditing firms, Shariah advisory and legal
firms, from over 45 countries. Its standards are
currently followed by a large number of leading
Islamic financial institutions across the world
and have introduced a progressive degree of
harmonization of international Islamic finance
practices.
1. Standards development
The standards are developed and issued
to achieve AAOIFI’s overall objectives to
standardize and harmonize international Islamic
finance practices and financial reporting, in
accordance with Shari’ah rules and principles,
24 AAOIFI Footprint Report 2020
so as to support growth and expansion of the
international Islamic finance industry.
The standards are followed as part of mandatory
regulatory requirement or Islamic financial
institutions’ internal guidelines in various
regulatory jurisdictions, and are adopted
on a voluntary basis or used as guidelines in
Islamic financial institutions across the globe.
Consequently, the standards have introduced
greater harmonization of Islamic finance practices
across the world.
2. Capacity building
In order to support understanding and
application of the standards, AAOIFI also offers
professional development programs, i.e. Certified
Shari’ah Adviser and Auditor (CSAA) and Certified
Islamic Professional Accountant (CIPA) – which
includes both certification/examination as well
as trainings. In addition, to inculcate and develop
scientific debate in the areas of Islamic finance
accountancy and the areas of AAOIFI’s mandate,
AAOIFI publishes Journal of Islamic Finance
Accountancy (JOIFA), which is a double-blind
peer-reviewed research journal.
3. AAOIFI members
AAOIFI is currently supported by around 150
institutional members – including central
banks, Islamic financial institutions and other
participants of the international Islamic finance
industry – from over 37 countries. Its standards
are fully or partially adopted by multiple
regulators in more than 18 countries, besides
several others who follow these as guidelines or
adapt them to develop their own standards and
regulations.
4. Awareness and advocacy
AAOIFI also coordinates initiatives on industry-
related issues, including organizing of two of
its flagship annual conferences, roundtables,
public-hearings, seminars for regulators and
industry stakeholders. This endeavor is deeply
rooted in continuous industry engagement that
brings together relevant international, regional
and national stakeholders, research / educational
institutions and market participants to discuss
relevant and evolving issues for the continuous
development of the Islamic finance industry on
an inclusive and sustainable basis.
 AAOIFI objectives

Primary objectives Ancillary objectives

1. C
 reating awareness in respect of its primary objectives
AAOIFI’s primary objectives are development, advocacy, and through, but not limited to, conferences, training programs,
promulgation of accounting, auditing, governance, ethics and seminars, publications, journals, and magazines, etc..
Shari’ah standards for Islamic financial institutions and Islamic
2. Developing human resources and building capacity
finance transactions and structures, including Waqf and other
at institutional level through offering professional
ancillary institutions, in line with Shari’ah principles and rules.
development, educational and training programs in
As an institution, AAOIFI operates strictly in accordance with
support of its primary objectives.
the Shari’ah principles and rules.
3. Providing certification, advisory and assurance services in
furtherance of its primary objectives.

AAOIFI Footprint Report 2020 25

 AAOIFI historical timeline

● IRTI commissioned a
study on the need of
accounting standards to
cater to the needs of
Islamic banks
● AAOIFI was founded by Islamic
Devlopment Bank Group, Al-Baraka
Banking Group, Al-Rajhi Bank,
Kuwait Finance House, Dal Al Maal
Al-Islami, AlBukhary Foundation
● Issued first accounting standard on ● Established a separate Shari'ah Board to ● Held first AAOIFI
Murabaha, Mudharaba and Musharaka develop Shari'ah standards Shariah conference
● Also issued first auditing standard on ● Issued first code of ethics for accountants
Objective and Principles of Auditing and auditors of Islamic financial institutions

1987 1990 1991 1993 1996 1997 1998 2000 2002

● Memo signed in
Algeria to establish an
Islamic accounting and
auditing organization
● Issued two Statements of Financial
Accounting (SFAs) and a standard on
General Presentation and Disclosure
in the Financial Statements of Islamic
Banks and Financial Institutions, both
in Arabic and English languages
● Issued first governance standard ● Issued first Shari'ah
on Shari'ah Supervisory Board: standard on Trading in
Appointment, Composition and Currencies
Report.

26 AAOIFI Footprint Report 2020


● Introduced professional
qualifications (CIPA and
CSAA)
● Launched AAOIFI transformation strategy project
● Launched Russian translation and initiated Chinese
● Launched first French translation of Shari'ah standards ● Commenced translation
translation of Shari'ah ● Launched revised Shari'ah standards in French of AAOIFI Shari'ah
standards ● Launched JOIFA and formulated its Editorial Board standards in Bengali

2005 2006 2009 2011 2015 2017 2018 2019 2020

● Held first AAOIFI - World
Bank conference
● Certified first core Islamic
banking industry software
to facilitate Islamic banks'
operations
● Bifurcated AASB into AAOIFI
Accounting Board (AAB) and
AAOIFI Governance and Ethics
Board (AGEB)
● Launched revamped CIPA program ● Launched first study to
● Formulated AAOIFI Education Board (AEB) assess the level of
● Launched Urdu and Turkish translations of adoption of AAOIFI
Shari'ah standards standards around the
● Started joint standard development with globe
IFSB

AAOIFI Footprint Report 2020 27

 AAOIFI key facts and figures

1991 140+ 5 114

Founding year Member institutions*
Not-for-profit standard-setting In 37 countries which includes
organization based in the 17% central banks, regulatory
Kingdom of Bahrain authorities, and other Islamic
financial institutions
Areas of standard Standards and techical
development pronouncements in issue
By a team of 50+ Shari’ah Scholars
Standards and technical & 60+ professionals (besides
pronouncements in issue (Shari’ah
100+ working group members)
- 59, Accounting - 31, Governance, representing 20+ countries
Auditing & Ethics - 24)

3 35+
Technical boards Countries / regulatory
jurisdictions Footprint
- A
 AOIFI Shariah Board (20 members)
- A
 AOIFI Accounting Board (15 members) Where AAOIFI standards are either
- A
 AOIFI Governance & Ethics Board (15 members) adopted in full or partial or where it is
used as guidelines

* Active members only (Full list of AAOIFI standards and technical pronouncements in issue is available in the appendices)

28 AAOIFI Footprint Report 2020

 AAOIFI membership

Founding members Membership distribution

Founding members

Regulatory members

Semi-regulatory members

Associate members

(Full list of AAOIFI members is available in appendix B)

AAOIFI Footprint Report 2020 29

30 AAOIFI Footprint Report 2020
AAOIFI boards’ members

AAOIFI Footprint Report 2020 31

 AAOIFI Board of Trustees

H.E. Shaikh Ebrahim Bin Khalifa Al-Khalifa

Chairman, AAOIFI Board of Trustees, Former Minister of Housing
and Former Deputy Governor of Central Bank of Bahrain

Mr. Abdul Rahman Abdullah Mr. Abdulmohsen A. Al-Fares Mr. Abdulrazzak M. Alkhraijy
GM / Head, Strategic Clients, Abu Dhabi Islamic Bank CEO, Alinma Bank Kingdom of Saudi Arabia

Dr. Gaffar Khalid Mr. Hamza Bawazir Mr. Irfan Siddiqui

Manager IFATA Division, Islamic Development Bank Executive Vice President, Head, Sharia’h Group, The President & CEO, Meezan Bank Ltd
National Commercial Bank

32 AAOIFI Footprint Report 2020

 Mr. Khalid Hamad Shaikh Prof. Dr. Mohamed Ali Elgari Tan Sri Dr. Munir Majid
Executive Director of Banking Supervision, AAOIFI Shari’ah Board representative, KSA Chairman, Board of Directors
Central Bank of Bahrain Bank Muamalat

Prof. Dr. Necdet Sensoy Mr. Noor Abid Shaikh Dr. Sayyed Mohammed Al-Sayyed
Member, Board of Directors, Central Bank of Turkey Former Managing Partner, EY Middle East and North Abdulrazzaq Al-Tabtabae
and former Accounting Professor in Turkish and Africa (MENA) Chairman, Supreme Advisory Committee
Malaysian universities

Mr. Shadi Ahmad Zahran Mr. Samar Hasnain Shaikh Yousif Khalawi
CFO, KFH Group Executive Director, State Bank of Pakistan Shari’ah Scholar

AAOIFI Footprint Report 2020 33

 AAOIFI Shari’ah Board

Sh. Mufti Muhammad Taqi Usmani Sh. Dr. Abdul Sattar Abu Ghuddah
Chairman and member of IFIs’ Shari’ah Chairman and member of IFIs’ Shari’ah
supervisory boards, Pakistan supervisory boards, Syria
Chairman, AAOIFI Shari’ah board Deputy Chairman, AAOIFI Shari’ah board

Sh. Abdulla Bin Sulaiman Al Manea Sh. Dr. Abdullah AlMutlaq Sh. Dr. Abdullah Al Zubair Sh. Dr. Abdullah Muhammad
Member, Council of senior scholars, and advisor Member, Council of senior scholars, and advisor Chairman, Supreme authority for the legal Islamic Development Bank, KSA
to Saudi Arabia Royal Court, KSA to Saudi Arabia Royal Court, KSA supervision of banks and financial institutions of
the Central Bank of Sudan, Sudan

Sh. Dr. Abdul Rahman Al Atram Sh. Dr. Ahmed Bin Abdul Aziz AlHaddad Sh. Dr. Aznan Hasan
Chairman and member of IFIs’ Shari’ah Head of supreme board, Central Bank of UAE, Chairman, Securities Commission Shari’ah board,
supervisory boards, KSA member of the higher committee for fatwa, Dubai Malaysia

34 AAOIFI Footprint Report 2020

Sh. Dr. Basheer Ezzeddine AlGhariani Sh. Dr. Esam Al Enezi Sh. Esam Ishaq Sh. Dr. Kahlan Al Kharusi
Deputy Chairman, Central authority for legal Professor, University of Kuwait, Chairman and Shari’ah Scholar Discover Islam, chairman and Assistant grand Mufti, Oman
supervision, Central Bank of Libya, Libya member of IFIs’ Shari’ah supervisory boards, member of IFIs’ Shari’ah supervisory boards,
Kuwait Bahrain

Shaikh Prof. Dr. Mohamed Ali Elgari Sh. Dr. Mohamed Jamil Mubarak Sh. Nizam Mohammad Yaqubi Sh. Dr. Osaid Muhammad Adeeb Kailani
Chairman and member of IFIs’ Shari’ah Member, Higher scientific council and Chairman and member of IFIs’ Shari’ah Global head of Shari’ah, Abu Dhabi Islamic Bank
supervisory boards, KSA chairman of Agadir local scientific council, supervisory boards, Bahrain Group, UAE
Morocco

Prof. Dr. Saleh Bin Abdullah Alheidan Sh. Dr. Walid Bin Hadi Sh. Dr. Yousef al Shubaily
General Manager, Sharia group, member and Chairman, Shari’ah board Chairman and member of IFIs’ Shari’ah
secretary of the Sharia Board, Al Rajhi Bank, KSA Qatar Islamic Bank, Qatar supervisory boards, KSA

AAOIFI Footprint Report 2020 35

 AAOIFI Accounting Board

Mr. Hamad Abdulla Al Oqab Mr. Syed Najmul Hussain

Deputy CEO, Al Baraka Banking Group, Bahrain Partner, KPMG Taseer Hadi & Co, Chartered
Chairman, AAB Accountants, Pakistan
Deputy Chairman, AAB

Mr. Abdelhalim Elsayed Elamin Mr. Abdulmalik Alsuwayni Dr. Abdulrahman M. Alrazeen Ms. Amal Al Masri
Principal Partner, Abdelhalim Elsayed & Co, Sudan Financial Economic Researcher Assistant Secretary General, SOCPA, Head of Supervision Department – Islamic Banks,
Saudi Arabian Monetary Authority (SAMA) KSA Central Bank of Syria, Syria
KSA

36 AAOIFI Footprint Report 2020

 Dr. Bello Lawal Danbatta Mr. Firas Hamdan Mr. Imtiaz Ibrahim
Secretary Genaral, IFSB, Malaysia Executive Director - HR, Banque Du Liban, Lebanon Partner, EY, Qatar

Mr. Hondamir Nusratkhujaev Mr. Irshad Mahmood Dr. Muhammad Beltagi

Manager – Accounting and Reporting Division, Partner, Deloitte Middle East, Bahrain General Manager, Shari›a Supervisory Central
Islamic Development Bank, KSA Administration, Banque Misr, Egypt

Mr. Samet Arslan Mr. Saud Al Busaidi Mr. Yousif Ahmed Ebrahim
Expert/Coordinator of. International Affairs, Public Manager, Islamic Banking Department, Central Bank CFO, Al Salam Bank, Bahrain
Oversight, Accounting & Auditing Standards of Oman, Oman
Authority – KGK. Turkey

AAOIFI Footprint Report 2020 37

 AAOIFI Governance and Ethics Board

Mr. Farrukh Raza Dr. Walid Hegazy

Group CEO, Islamic Finance Advisory & Managing Partner& Co- Founder,
Assurance Services (IFAAS), United Kingdom Hegazy& Partners, Egypt
Chairman, AGEB Deputy Chairman, AGEB

Dr. Abdulbari Mashal Mr. Abdullah Almoqbel Dr. Ahmet Albayrak Dr. Ali Sartawi
Founder and Managing Partner, Raqaba Head of Financial and Economic Research, Deputy CEO, Kuveyt Turk Participation Chairman of Shariah Supervisory Board,
Group, United States of America Capital Market Authority (CMA), KSA Bank, Turkey Palestine Islamic Bank, Palestine

38 AAOIFI Footprint Report 2020

 Mr. Ebrahim Sidat Ms. Ibtihal Alshamali Prof. Mohammad Kabir Hassan
(Former) Country Managing Partner and Chief Governance Manager, Capital Markets Authority, Professor of Finance, The University of New Orleans,
Executive, Ernst & Young Ford Rhodes, Pakistan Kuwait United States of America

Mr. Mohamad Midani Mr. Moosa Khoory Mr. Muzammil Kasbati

Lead Investment Specialist in the Economic Empowerment Head of Internal Shari’ah Audit, Dubai Islamic Bank, Associate Partner, Ernst & Young - Middle East,
Department, Islamic Development Bank, KSA United Arab Emirates Kingdom of Bahrain

Mr. Sohaib Umar Mr. Wael Merza Dr. Zahid Ur Rehman Khokher
Advisor, Islamic Financial Services Development, Islamic Finance Consultant, Islamic Banking Expert, Central Bank of Oman, Oman
Central Bank of Bahrain, Kingdom of Bahrain Saudi Arabian Monetary Authority (SAMA), KSA

AAOIFI Footprint Report 2020 39

 Acknowledgements

Firstly, AAOIFI would like to thank Allah SWT for His mercy and blessings in guiding us through this exercise of ‘AAOIFI Footprint Report 2020’ which is first of
its kind of report that AAOIFI has published.

Secondly, AAOIFI would like to thank all the regulatory and supervisory authorities (RSAs) for their participation in and responding to AAOIFI standards
adoption survey questionnaire, and also confirming the country profiles for their respective regulatory jurisdictions. Without their assistance this report
could not have reached a reasonable level of accuracy.

Thirdly, much gratitude is due to all institutional members of AAOIFI for their extraordinary support for the cause of AAOIFI and for playing a strong advocate
role for AAOIFI in their respective jurisdictions.

Fourthly, AAOIFI Secretariat offers its sincere thanks to all members of the AAOIFI Board of Trustees, AAOIFI Shari’ah Board, AAOIFI Accounting Board (AAB),
AAOIFI Governance and Ethics Board (AGEB), AAOIFI Education Board (AEB), AAOIFI’s JOIFA Editorial Board, and members of all the working groups and
committees for their unstinted and continuous guidance, support and blessings.

Last but not the least, special appreciation is due to all the AAOIFI stakeholders in the industry and also academia, as well as, leaders from regulatory
institutions and respective governments for their continuous support in the growth and adoption of AAOIFI standards globally.

40 AAOIFI Footprint Report 2020

 Acronyms

AAOIFI Accounting and Auditing Organization for Islamic Financial Institutions

ACC AAOIFI Accounting standards and pronouncements

AFSA Astana Financial Services Authority

ASIFI Auditing Standard for Islamic financial Institutions

BCBS Basel Committee for Banking Supervision

FSB Financial Stability Board

GOV AAOIFI Governance standards (as well as auditing and codes of ethics for the purpose of this report)

GSIFI Governance standard for Islamic financial Institutions

IAASB International Auditing and Assurance Standards Board

IASB International Accounting Standards Board

IFIs Islamic Financial Institutions

IFRS International Financial Reporting Standards

IFSB Islamic Financial Services Board

IRTI Islamic Research and Training Institute

IsDB Islamic Development Bank

RSAs Regulatory and Supervisory Authorities

SHA AAOIFI Shari’ah standards

AAOIFI Footprint Report 2020 41

42 AAOIFI Footprint Report 2020
AAOIFI Footprint Report 2020

AAOIFI Footprint Report 2020 43

 Executive summary
Mr. Omar Mustafa Ansari
Secretary General, AAOIFI
44
Islamic banking and finance industry has reached the
shores of numerous financial economies and its market
is expected to grow even further. Driven by Shari’ah
compliance, various stakeholders increasingly seek
clear guidance on practices to be applied aiming at
standardization and harmonization with the widely
accepted standards and best practices. AAOIFI standards
address this need by providing a harmonized and
quality standards approved by world renowned Shari’ah
scholars and industry experts in Shari’ah, accounting
and governance areas. AAOIFI standards provides much
needed guidance to strengthen Shari’ah compliance
among the financial institutions which forms the
bedrock of Islamic banking and finance industry.
Accordingly, it was important to assess the footprint
of AAOIFI standards being adopted by regulators and
supervisors around the globe and to further develop
standards in line with the demands of the industry. It
gives me immense pleasure to present to you this study
that captures the level of adoption of AAOIFI standards
by various regulatory jurisdictions around the globe. I
must admit that developing such a report was not easy
as this has been one of the first attempts by AAOIFI in
the last thirty years or so. AAOIFI standards have been
adopted by various countries which have seen many
peaks and valleys over time in their local and regional
markets, in addition to global economic uncertainties
which seem to have varied the level of adoption of
AAOIFI standards over the years, and therefore this
report might not be totally flawless in its first attempt.
AAOIFI Footprint Report 2020
AAOIFI has been devoted to its cause with the help of
its three technical boards: Shari’ah Board, Accounting
Board and Governance and Ethics board, spearheaded
by tremendous support from its Board of Trustees.
I would like to take this opportunity to express my
sincere gratitude for their abundant support, guidance,
cooperation, and for providing far-sighted direction to
AAOIFI to carry out its mandate to develop relevant
and updated standards for Islamic banking and finance
industry.
Summary of methodology
The work on the report began by researching on the
existing documentation of regulatory and supervisory
bodies around the globe that incorporate AAOIFI
standards in their laws and regulations. This provided
an initial outline on where AAOIFI standards are being
adopted and their different levels of adoption. The next
step lead to creating a record of information on laws
and regulation governing the Islamic finance market in
different countries and regulatory jurisdictions, with
special focus on AAOIFI’s mention in these laws and
regulations.
An extensive exercise was undertaken to update the
contact information of relevant departments at various
RSAs around the globe. This proved an important
initiative in communicating with these institutions
in the following phases of study. The next step was
construction of standards adoption survey questionnaire
to assess the level of adoption of different standards
developed by AAOIFI both with open and closed- ended
questions. The questionnaire was sent to over
90 regulatory jurisdictions around the globe. The
responses received varied from jurisdictions to
jurisdiction but provided first-hand information.
It was noted that there is lack of awareness
on the adoption and / or there is a lack of
enforcement of the standards in certain
jurisdiction although the regulation paves the
way for it. Some information provided under
open-ended questions gave insights on local
regulatory practices and the areas of divergence
in standards and practices adopted by them.
AAOIFI will continue to evaluate this information
to help achieve greater level of adoption and
also assist in enhancing awareness about AAOIFI
standards and its other activities.
Additional efforts were made to gather updated
information on laws and regulations that RSAs
apply to govern and guide Islamic finance /
banking activities which has helped in building
references to support the findings of the report.
In the next step individual country profiles were
created based on the primary and secondary
information gathered. In certain cases, other
sources of information were also used to
update the country profiles, including industry
practitioners and experts.
Following this exercise, RSAs were again
contacted with the country profiles to confirm
/ update the information in these profiles. All
the regulatory jurisdictions in a country were
included in the country profile, including offshore
regulatory jurisdictions. The confirmation of the
country profiles was an important step as RSAs
had an opportunity to confirm their responses to
the questionnaire that was sent earlier and also
some updated / additional information. Based
on these steps a draft report was prepared and
feedback was sought from selected stakeholders
for their comments to improve it.
Summary of findings
AAOIFI standards are adopted by 40 regulatory
jurisdictions either fully or partially, as guidelines
/ reference, supplementary reporting basis or
local standards / regulations, based on AAOIFI
standards, with 26 of them fully adopting either
Shari’ah, accounting or governance standards.
Regulatory jurisdictions that adopt individual
AAOIFI Shari’ah, accounting and governance
standards are 19, 24 and 18, and number of
countries that adopt them are 16, 18 and 15,
respectively. The below table summarizes the
different levels of adoption of AAOIFI standards.

No. of regulatory jurisdictions No. of countries

Level of AAOIFI standards adoption
SHA ACC GOV SHA ACC GOV
Full adoption 19 24 18 16 18 15
Partial adoption 4 5 6 3 5 6
Guidance / reference material 9 7 8 9 7 8
Local standards based on AAOIFI standards 2 4 4 2 4 3
Guidance & local standards based on AAOIFI standards 1 2 3 1 1 2
Supplementary reporting 0 1 1 0 1 1
(SHA – AAOIFI Shari’ah Standards, ACC – AAOIFI Accounting Standards, GOV – AAOIFI Governance / Auditing Standards)

AAOIFI Footprint Report 2020 45

 Terminologies
Full adoption of AAOIFI standards
This essentially means that a regulatory
jurisdiction adopts respective set of AAOIFI
standards viz. AAOIFI Shari’ah standards, AAOIFI
Accounting standards, AAOIFI Governance
standards, AAOIFI Auditing standards and
AAOIFI Code of Ethics. Whenever a regulatory
jurisdiction says it adopts / follows AAOIFI
standards without specifying which set of
standards it adopts, it is taken as it adopts all
three sets of AAOIFI standards.
Partial adoption of AAOIFI standards
Where a regulatory jurisdiction adopts a certain
or few AAOIFI standard(s) on a selective basis. For
example, it may adopt a Governance Standard
for Islamic Financial Institutions on Shari’ah
Supervisory Board: Appointment, Composition
and Report (AAOIFI GS 1) and may not adopt
other AAOIFI governance standards. The
regulatory jurisdiction may also adopt AAOIFI
standards with certain modifications to suit their
local market conditions (these modifications
are highlighted in individual country profile
references, where applicable).
46 AAOIFI Footprint Report 2020
Adoption as guidelines or reference material
Where a regulatory jurisdiction adopts AAOIFI
standards as a set of guidelines or as use /
recommend them as reference to their Islamic
financial institutions. There might not be
specific regulatory requirement for reporting
or disclosure as per the AAOIFI standards.
However, RSAs may allow financial institutions
offering Islamic finance products and services
in their regulatory jurisdictions to follow AAOIFI
standards as guidelines. Financial institutions may
also adopt AAOIFI standards on a voluntary basis.
Local standards based on AAOIFI standards
There are many regulatory jurisdictions
where AAOIFI standards are used as a basis of
developing their local standards for the Islamic
financial transactions. These jurisdictions do not
fall under any of the categories and refer to or
rely on AAOIFI standards.
Supplementary reporting allowed
Where regulatory jurisdictions allow financial
institutions to report and/or audit as per AAOIFI
standards. Formal reporting and disclosure will
be done as per their local / other international
standards.
Regulatory jurisdiction
For the purpose of this report a regulatory
jurisdiction is defined as a jurisdiction or a
territory, which has an authority to grant
licenses and administer / supervise their
commercial operations and activities. There can
be multiple regulatory jurisdictions in a country.
Legislation on regulatory rules and treatments of
transactions and operations may be significantly
different among the jurisdictions within the same
country. For example, In Malaysia, Bank Negara
Malaysia is a different regulatory jurisdiction from
Labuan Financial Services Authority. Regulatory
jurisdiction may also signify supra-national
institution such as Islamic Development Bank
which operate in multiple stakeholder countries
and adopt its own reporting and disclosure
mechanism in-line with its statute.

1. Introduction
1.1 Background
AAOIFI which made its humble beginnings to
support the Islamic finance industry is considered
as a major international body that guides the
Islamic finance industry. With much effort and
hard work done over the past three decades, to
codify, standardize and harmonize Islamic finance
practices, many in the industry now consider
AAOIFI standards as a market authority on Islamic
finance practices, perhaps the most authoritative
since the civil code of Al-Majalla Al-Ahkam Al-
Adliyyah, of the late 19th and early 20th century.
In these three decades, AAOIFI has worked
with sustained efforts and consistently
developed world-class standards and technical
pronouncements. Definitions, concepts and
principles of Islamic finance, as well as industry-
specific rules developed by AAOIFI are considered
as a widespread benchmark for the industry.
All AAOIFI’s technical standards i.e. Shari’ah,
accounting, auditing, ethics and governance
standards complement each other to ensure that
disclosures and reporting of financial transactions
is done in line with the Shari’ah principles, and
at the same time adoptable by various markets
around the globe.
AAOIFI’s standards on governance, auditing and
codes of ethics to guide and help to maintain
all round robustness and development of the
industry practices. In addition, AAOIFI’s focus
has been towards a harmonized approach for
its standards in addition to convergence with
the standards issued by other prominent global
standards-setting bodies, where applicable.
While it is important to note that many regulatory
jurisdictions adopt AAOIFI standards with different
levels of adoption there are RSAs that despite
strong political and government encouragement
to promote Islamic finance do not adopt AAOIFI
standards. They may be committed to adopting
conventional international standards for two basic
presumptions:
a) r eporting and disclosure principles of
conventional reporting standards do not conflict
with Shari’ah; and
b) financial reporting is a recording function that
neither sanctifies nor nullifies the Shari’ah
validity of a transaction. However, these
jurisdictions may still adopt AAOIFI Shari’ah
and governance standards which will provide
guidance for their Islamic finance industry
needs.
In addition, certain jurisdictions are committed
to conventional reporting standards for their
affiliation to international treaties and conventions
which bind them morally and politically to follow
conventional reporting standards. However,
many experts including conventional finance
AAOIFI Footprint Report 2020
Brief report
professionals believe that Islamic finance is
driven by unique set of principles and that Islamic
financial transactions should be presented
and reported based on a separate framework
suitable for fulfilling the information needs of
Shari’ah sensitive users, and presented in a way
that reflects the true nature and form of these
transactions.
AAOIFI’s technical standards development, be it
Shari’ah, accounting or governance standards,
requires continuous efforts to review, revise, and
formally incorporate updated requirements, in
line with the industry developments and market
demands. Standards developed in Arabic are
translated in English and vice versa, in addition to
translating in other languages.
A historical timeline chart given on pages 22-23
provides a snapshot of major milestones reached
by AAOIFI since its inception.
1.2. Rationale of the study
AAOIFI is considered as a global standard-
setting body for Islamic finance industry. Since
its establishment, it has developed numerous
standards in the areas of Shari’ah, accounting,
auditing and governance and ethics. AAOIFI
standards are considered as a reliable source of
guidelines for various regulatory and supervisory
authorities (RSAs), organizations, Shari’ah scholars,
47
institutions of learning, other individuals and
stakeholders for Shari’ah compliant finance
practices and Islamic finance transactions.
AAOIFI standards are being followed by these
stakeholders in varying degrees, ranging from
full adoption in as-is form to partial adoption, to
extracting guidance from them to suit their local
market conditions of Islamic finance and / or
apply it with some modifications to them. AAOIFI
standards have also been used as reference in
drafting their jurisdiction-specific standards, laws
and regulations.
However, prior to this exercise it was unclear
where AAOIFI standards are being followed
and to their extent of adoption by the industry
participants around the globe. This study,
therefore, is a first such formal attempt to take a
stock of the level of adoption of AAOIFI standards
around the globe.
It has been noticed that, while many regulatory
jurisdictions adopt AAOIFI standards directly, some
of them have provided generalized responses
having selected multiple options from among
48 AAOIFI Footprint Report 2020
the answers provided in the questionnaire. This
may be because of various limitations, including
differences in their economic and regulatory
environments and perhaps their hesitation to
follow other reporting standards from the one
followed traditionally within their jurisdiction.
This may also be because every regulatory
jurisdiction applies their own understanding and
interpretation of principles of Shari’ah, and / or
following their own (or international) accounting
standards for Islamic financial institutions (IFIs)
in their regulatory frameworks in compliance
with country-specific professional practices and
regulatory considerations. Another reason could be
language barrier and lack of trained and equipped
human resources to understand the nuance of the
Islamic finance principles and contracts.
It is also noted that most regulatory jurisdictions
including leading financial hubs of conventional
finance, recognize that Islamic finance (Also called
with other terminologies, such as interest-free
finance, participation finance etc.) is driven by
a unique set of principles and rules and hence
they appreciate the need of developing technical
industry standards based on these principles by
AAOIFI.
These regulatory jurisdictions have played
a positive and constructive role in AAOIFI’s
strive to develop the standards giving due
consideration to their local standards and
practices. Some regulatory jurisdictions also base
their local standards on AAOIFI standards with
an acknowledgement that AAOIFI standards play
an important role in drafting their local laws and
regulations on Islamic finance and as one of the
sources in consideration in preparing and issuing
Fatwas and providing inputs in Shari’ah accounting
standards.
Therefore, gauging the level of adoption of AAOIFI
standards by these RSA’s plays an important role
in furthering AAOIFI’s mandate to cater to the
requirements of the Islamic finance industry and
its stakeholders in a focused manner.
2. Methodology

1. 2. 3.
Secretariat’s desk research Gathering references Updating contact
on laws and regulations in of laws / regulations to information and contact
different RSAs concerning AAOIFI standards person(s) of RSAs around
AAOIFI standards the globe

4. 5. 6.
Development of the Administering and Requesting copies
AAOIFI standards receiving responses to the of updated laws /
adoption survey AAOIFI standards adoption regulations, if any, from
questionnaire survey questionnaire RSAs

7. 8. 9.
Preparing individual Updating / amending
Contacting RSAs for
country profiles based on references of laws /
confirmation of country
desk research and survey regulation relating to
profiles
responses AAOIFI standards

10. 11.
Drafting the report and sending
to selected stakeholders for
Publishing report
their feedback and addressing
them as appropriate

Chart 1.1: Steps undertaken for the study

AAOIFI Footprint Report 2020 49

Methodology steps
The study is based on various steps, from
gathering existing publicly available information
to a survey questionnaire and confirmation of the
information with the regulatory and supervisory
bodies. The methodology flowchart (Chart No.
1.1) provides various steps that were undertaken
to get the best possible and most accurate picture
of adoption of AAOIFI standards by different
regulatory jurisdictions. A separate segregation
is also made to capture different set of AAOIFI
standards i.e. Shari’ah standards, accounting
standards and governance and auditing standards.
Step 1 S ecretariat’s desk research on laws and
regulations in different RSAs concerning
AAOIFI standards
At the outset, AAOIFI’s secretariat undertook a
study of related laws and regulations of various
regulatory jurisdictions that have Islamic finance
markets reviewing publicly available information,
documents, copies of laws and regulations etc.,
including websites and portals of regulatory and
supervisory bodies. Preliminary research also
included speaking with industry experts and
professionals where necessary. This helped to
develop an initial framework on where AAOIFI
standards are being adopted and their level
of adoption, including any or all of the AAOIFI
Shari’ah, accounting, auditing and governance
standards.
50 AAOIFI Footprint Report 2020
Step 2 G athering references of laws / regulation
to AAOIFI standards
This formed the initial content of the report
where the Secretariat gathered information on
laws and regulation governing the Islamic finance
market and transactions in different countries
and regulatory jurisdictions. These documents
and information were studied to ascertain if
these laws and regulations mentioned AAOIFI
standards and to the extent these were applied in
these countries and jurisdictions.
Step 3 Updating contact information and
contact person(s) of at RSAs around the
globe
A review and updating of list of various regulatory
jurisdictions was undertaken to ensure maximum
participation in the AAOIFI standards adoption
survey. This included the contacts at the
supervision department, governor’s office or
relevant department in charge of Islamic finance
/ banking.
Step 4 Development of the AAOIFI standards
adoption survey questionnaire
The questionnaire was developed based on
AAOIFI’s different sets of standards with both
open and closed- ended questions asking the
respondents the level of adoption in varying
degrees of adoption of AAOIFI standards. The
open-ended questions were asked to provide
RSAs explanation on each set of AAOIFI standards
and provide references of their laws / regulations.
A copy of the AAOIFI standards adoption
questionnaire is provided in the appendices.
Step 5 A  dministering and receiving responses
to the AAOIFI standards adoption survey
questionnaire
The questionnaire was then sent to more than
90 regulatory and supervisory bodies around the
globe to understand their views and to further
ascertain their level of adoption of AAOIFI
standards. This exercise was again one of the
first attempts to reach out to the global RSAs
to voice their opinions regarding adoption of
AAOIFI standards in their jurisdictions. A follow
up communication was also done to increase the
response rate and also to understand and clarify
where responses provided were not consistent
with the previous step, preliminary research.
The responses not only provided first-hand
information on the level of adoption of AAOIFI
standards but also information on their individual
challenges and suggestions that hindered
the adoption and implementation of AAOIFI
standards across jurisdictions. These included
challenges such as low level of awareness
of Islamic finance products, scarcity and
undersupply of human capital, legal impediments
hindering adoption of AAOIFI standards etc.
AAOIFI has started using their feedback to work
on the areas including holding public hearings
of exposure drafts of its standards in various
markets where they were not focused earlier, in
addition to enhancing capacity building initiatives
to train and equip human resources to cater to
the needs of the Islamic finance industry.
The comments received provided information
on local regulatory practices and in future may
assist in narrowing down the areas of differences
and divergence in practices, in addition to areas
of mutual agreement. It is expected that this
will not only help in persuading the regulatory
jurisdictions to achieve greater level of adoption
but also assist in enhancing awareness and
information in their markets about AAOIFI
standards and its activities.
Step 6 R  equesting copies of updated laws /
regulations, if any, from RSAs
Additional effort was made to gather updated
information on laws and regulations that RSAs
apply to govern and guide Islamic finance /
banking activities. This was done for two reasons.
Firstly, as a reference to support the responses
provided in the questionnaire. Secondly, to
ascertain their local practices for Islamic finance
products / services / transactions / governance
practices, and if there are adequate checks
in place to ensure their Shari’ah compliance.
For example, presence of Shari’ah governance
framework, guidelines for recording Islamic
finance transactions, flexibility for accounting
treatments as per Shari’ah, availability of array
of Islamic finance contracts in their regulations,
modes of Islamic finance transactions operating
under conventional legal system etc.
Step 7 P reparing individual country profiles
based on desk research and survey
responses
Based on the information gathered with regards
to respective laws and regulations along with
the references provided by the regulatory
jurisdictions in the standards adoption survey
questionnaires, country profiles were developed.
In certain cases, some other sources of
information were also used to update the country
profiles. For example, information provided by
industry practitioners and experts was used if
the regulatory jurisdictions did not respond to
the standards adoption survey questionnaire or
did not provide confirmation of their country
profiles.
Step 8 C ontacting RSAs for confirmation of
country profiles
As and when the country profiles were prepared
these were sent to the respective jurisdictions
for their confirmation. All the regulatory
jurisdictions in a country were included in the
country profile, including offshore regulatory
jurisdictions, such as DFSA, LFSA etc. These
country profiles reflect the country’s position
on adoption of AAOIFI standards. It may be
that one regulatory jurisdiction adopts AAOIFI
standards in a country and another jurisdiction
AAOIFI Footprint Report 2020
does not. Country profiles also include the level
of adoption of AAOIFI standards in individual
regulatory jurisdictions in a country. (For
definition of regulatory jurisdiction please refer
to terminologies).
Step 9 U pdating / amending references of laws
/ regulation relating to AAOIFI standards
Relevant laws and regulations were updated
based on the information confirmed by the RSAs
in the individual country profiles. The links to
these are provided for with reference numbers
under ‘References’ in the country profiles.
Step 10 Drafting the report and sending to
selected stakeholders for their feedback
and addressing them as appropriate
The draft of the report was sent to select
stakeholders to request their feedback and
comments, if any.
It may be noted that information on adoption
of auditing standards is merged and considered
under the governance standards. This is done
for two reasons. Firstly, because development
of auditing standards is not currently AAOIFI’s
main focus area, and secondly because
AAOIFI Governance and Ethics Board (AGEB)
is responsible for developing both governance
and auditing standards. For example, ASIFI 6
“External Shari’ah Audit (Independent Assurance
Engagement on an Islamic Financial Institution’s
Compliance with Shari’ah Principles and Rules)”,
51
and internal Shari’ah audit standard were
developed by AGEB. The response rate of the
questionnaire was close to 50% and is considered
fairly successful due to the fact that it was sent
to many RSAs which have very small or no Islamic
finance market.
52 AAOIFI Footprint Report 2020
AAOIFI will endeavor to periodically update this correctness of the information provided in this
report on the status of adoption of its standards, report.
and seek the support of all RSAs, including
banking, non-banking, capital and securities
markets, insurance / Takaful regulators, and other
government agencies to ensure consistency and
3. Summary of AAOIFI standards adoption status
The tables in this chapter provides a summary
of regulatory jurisdictions that adopt AAOIFI
standards, and the extent of their adoption.
These tables also indicate which of the standards
they adopt – AAOIFI Shari’ah standards, AAOIFI
accounting standards, or AAOIFI governance
standards. These are categorized as regulatory
jurisdictions that have full adoption, partial
adoption, and adoption as guidelines or use AAOIFI
standards to develop their own local standards
As this report demonstrates, many regulatory
jurisdictions, both from developed and
developing Islamic finance markets are
committed to or using AAOIFI standards as their
guidelines to strengthen market practices and to
meet Shari’ah compliance requirements.

Table 3.1 List of countries and regulatory jurisdictions that have full adoption of AAOIFI standards
# Countries Regulatory jurisdictions SHA ACC GOV
1 Afghanistan, Islamic Republic of Da Afghanistan Bank Yes Yes Yes
2 Bahrain, Kingdom of Central Bank of Bahrain Yes Yes Yes
3 Iraq, Republic of Central Bank of Iraq Yes Yes Yes
4 Jordan, Hashemite Kingdom of Central Bank of Jordan Yes Yes Yes
5 Jordan, Hashemite Kingdom of Jordan Securities Commission - Yes Yes
6 Kazakhstan, Republic of Astana Financial Services Authority (AFSA) Yes - -
7 Kyrgyz Republic National Bank of the Kyrgyz Republic Yes Yes Yes
8 Libya Central Bank of Libya Yes Yes Yes
9 Malaysia Labuan Financial Services Authority (LFSA) - Yes -
10 Mauritius, Republic of Bank of Mauritius Yes Yes Yes
11 Nigeria, Federal Republic of Central Bank of Nigeria Yes Yes -

AAOIFI Footprint Report 2020 53

 # Countries Regulatory jurisdictions SHA ACC GOV
12 Nigeria, Federal Republic of National Insurance Commission Yes Yes Yes
13 Oman, Sultanate of Central Bank of Oman - Yes Yes
14 Oman, Sultanate of Capital Market Authority Oman Yes Yes Yes
15 Palestine (Palestinian Authority) Palestine Monetary Authority Yes Yes Yes
16 Palestine (Palestinian Authority) Palestine Capital Market Authority Yes Yes Yes
17 Qatar, State of Qatar Central Bank - Yes -
18 Qatar, State of Qatar Financial Centre Regulatory Authority - Yes Yes
19 IsDB (Kingdom of Saudi Arabia) Islamic Development Bank - Yes -
20 Sudan, Republic of the Central Bank of Sudan Yes Yes Yes
21 Syrian Arab Republic Central Bank of Syria Yes Yes Yes
22 Tunisia, Republic of Banque Centrale de Tunis Yes Yes Yes
23 United Arab Emirates Central Bank of United Arab Emirates Yes - -
24 United Arab Emirates Dubai Financial Services Authority (DFSA) - Yes -
25 United Arab Emirates UAE Insurance Authority Yes Yes -
26 Yemen, Republic of Central Bank of Yemen Yes Yes Yes
(SHA – AAOIFI Shari’ah Standards, ACC – AAOIFI Accounting Standards, GOV – AAOIFI Governance / Auditing Standards)
(No. of countries: SHA - 16; ACC - 18; GOV- 15; No. of regulatory jurisdictions: SHA - 19; ACC - 24; GOV - 18)

54 AAOIFI Footprint Report 2020

Table 3.2 List of countries and regulatory jurisdictions that have partial adoption of AAOIFI standards

# Countries Regulatory jurisdictions SHA ACC GOV

1 Bangladesh, People’s Republic of Bangladesh Bank Yes
2 Bangladesh, People’s Republic of Bangladesh Securities and Exchange Commission Yes Yes
3 Brunei Darussalam Autoriti Monetari Brunei Darussalam Yes
4 Jordan, Hashemite Kingdom of Jordan Securities Commission Yes
5 Kazakhstan, Republic of Astana Financial Services Authority (AFSA) Yes Yes
6 Nigeria, Federal Republic of Central Bank of Nigeria Yes
7 Pakistan, Islamic Republic of State Bank of Pakistan Yes
8 Pakistan, Islamic Republic of Securities Exchange Commission Yes
9 Qatar, State of Qatar Central Bank Yes
10 Sudan, Republic of the Khartoum Stock Exchange Yes
11 Tajikistan, Republic of National Bank of Tajikistan Yes
12 United Arab Emirates Abu Dhabi Global Market (ADGM) Yes Yes
(SHA – AAOIFI Shari’ah Standards, ACC – AAOIFI Accounting Standards, GOV – AAOIFI Governance / Auditing Standards)
(No. of countries: SHA - 3; ACC - 5; GOV- 6; No. of regulatory jurisdictions: SHA - 4; ACC - 5; GOV - 6)

AAOIFI Footprint Report 2020 55

Table 3.3 List of countries and regulatory jurisdictions adopting AAOIFI standards as guidelines or as reference material

# Countries Regulatory jurisdictions SHA ACC GOV

1 Bangladesh, People’s Republic of Bangladesh Bank Yes Yes
2 Egypt, Arab Republic of Financial Regulatory Authority Yes
3 Jordan, Hashemite Kingdom of Insurance Commission of Jordan Yes
4 IsDB (Kingdom of Saudi Arabia) Islamic Development Bank Yes Yes
5 Indonesia, Republic of Bank Indonesia Yes Yes
6 Kuwait, State of Central Bank of Kuwait Yes
7 Lebanon, Republic of Banque du Liban Yes Yes Yes
8 Malaysia Bank Negara Malaysia Yes Yes Yes
9 Oman, Sultanate of Central Bank of Oman Yes
10 Sudan, Republic of the Khartoum Stock Exchange Yes Yes
11 Tajikistan, Republic of National bank of Tajikistan Yes Yes
12 Turkey, Republic of Banking Regulation and Supervision Authority (BRSA) (KGK) Yes Yes Yes
13 United Arab Emirates Securities and Commodities Authority Yes
(SHA – AAOIFI Shari’ah Standards, ACC – AAOIFI Accounting Standards, GOV – AAOIFI Governance / Auditing Standards)
(No. of countries: SHA - 9; ACC - 7; GOV- 8; No. of regulatory jurisdictions: SHA - 9; ACC - 7; GOV - 8)

56 AAOIFI Footprint Report 2020

Table 3.4 List of countries and regulatory jurisdictions that have local standards / regulations based on AAOIFI standards

# Countries Regulatory jurisdictions SHA ACC GOV

1 Indonesia, Republic of Otoritas Jasa Keuangan (OJK) Yes

2 Kazakhstan, Republic of National Bank of the Republic of Kazakhstan Yes Yes

3 Kuwait, State of Central Bank of Kuwait Yes

4 Kuwait, State of Capital Markets Authority Yes

5 Lebanon, Republic of Banque du Liban Yes

6 Maldives, Republic of Capital Market Development Authority Yes

7 Qatar, State of Qatar Central Bank Yes

8 Turkey, Republic of Banking Regulation and Supervision Agency (BRSA) Yes Yes

(SHA – AAOIFI Shari’ah Standards, ACC – AAOIFI Accounting Standards, GOV – AAOIFI Governance / Auditing Standards)
(No. of countries: SHA - 2; ACC - 4; GOV- 3; No. of regulatory jurisdictions: SHA - 2; ACC - 4; GOV - 4)

AAOIFI Footprint Report 2020 57

Table 3.5 L ist of countries and regulatory jurisdictions that adopt AAOIFI standards as guidelines and have local standards
/ regulations based on AAOIFI standards

# Countries Regulatory jurisdictions SHA ACC GOV

1 Brunei Darussalam Autoriti Monetari Brunei Darussalam Yes Yes

2 Pakistan, Islamic Republic of State Bank of Pakistan Yes Yes

3 Pakistan, Islamic Republic of Securities Exchange Commission Yes Yes

(SHA – AAOIFI Shari’ah Standards, ACC – AAOIFI Accounting Standards, GOV – AAOIFI Governance / Auditing Standards)
(No. of countries: SHA - 1; ACC - 1; GOV- 2; No. of regulatory jurisdictions: SHA - 1; ACC - 2; GOV - 3)

Table 3.6 L ist of countries and regulatory jurisdictions where supplementary reporting is allowed as per AAOIFI standards

# Countries Regulatory jurisdictions (Accounting / Auditing)

1 Maldives, Republic of Maldives Inland Revenue Authority (MIRA) Yes

2 United Arab Emirates Securities and Commodities Authority Yes

58 AAOIFI Footprint Report 2020

4. Potential countries / regulatory jurisdictions that are presently considering
adopting AAOIFI standards
Republic of the Philippines
Bangko Sentral Pilipinas’s (BSP) has on 1st
March 2020 approved introductory regulations
on Islamic banks and Islamic banking units.
These preliminary policy initiatives of the
BSP are expected to jumpstart the ensuing
implementation of Republic Act (R.A.) No. 11439
providing for the regulation and facilitation of
establishment of Islamic banks in the Philippines
and the relevant provisions on Islamic banking
under R.A. No. 11054, for the Bangsamoro
autonomous region in Muslim Mindanao. BSP
aims to create an enabling environment to allow
Islamic banks to operate in the country taking
into consideration the unique features of the
Islamic banking operations.
AAOFI is in communication with the BSP’s
integrated supervision department to provide
any required assistance through AAOIFI capacity
building initiatives that may facilitate adoption of
AAOIFI standards in the Philippines.
Russian Federation
A working group has been formed to explore
partnership banking under the auspices of the
Bank of Russia (BoR), which has approved the
road map on development of partnership banking
and related financial services in the Russian
Federation. AAOIFI has been informed that
this road map sets out steps to explore options
of implementing AAOIFI’s governance and
accounting standards and to establish a position
on the adoption of AAOIFI and IFSB international
standards.
AAOIFI has been informed that this work is
carried out by external participants of the
working group on a voluntary basis and they
have not yet finalized their analysis of the
matter. AAOIFI remains in contact with the
relevant stakeholder at the BoR to facilitate
any implementation and /or capacity building
measures needed for the adoption of AAOIFI
standards in the Federation.
West African Economic Monetary Union
(WAEMU)
Banque Centrale Des Etats de L’afrique de L’ouest
(BCEAO) (Central Bank of West African States) is
the common institution of the member States
of the West African Monetary Union (WAMU)
comprising the Republics of Côte d’Ivoire,
Benin, Burkina Faso, Mali, Niger, Mauritania,
Senegal (headquarters) and Togo. As per the
délégation du Gouverneur, l’Adjoint au Directeur
des Institutions de Crédit et du Financement
des Economies (delegation of the Governor,
AAOIFI Footprint Report 2020
Deputy to the Director of Credit Institutions and
Financing of Economies), BCEAO is conducting
work towards the adoption of AAOIFI standards
for Islamic financial institutions, it further says,
Islamic banking standards are being developed
in the WAEMU area, the banking regulation,
especially the prudential and the accounting
frameworks, are being supplemented and/or
revised to take into account the specific aspects
of Islamic banking, according to international
standards like those of AAOIFI.
Other countries
In addition to the above countries, AAOIFI has
plans to explore and promote adoption of its
standards in other developing Islamic finance
markets such as Kenya, Uganda, Tanzania and CIS
countries etc. in cooperation with local Islamic
finance stakeholders, and support and strengthen
implementation of its standards in existing
regulatory jurisdictions where it already has a
footprint.
AAOIFI endeavors to continue engaging with
relevant stakeholders to provide any required
technical assistance for adoption of its standards.
59
5. The way forward
The role of the regulators is paramount in ensuring
that AAOIFI standards (or any other standards)
are implemented in letter and spirit, as not being
implemented in its true spirit can mean violation
of set rules and regulations. AAOIFI can develop
the best of the standards in collaboration with the
best of scholars, experts and industry stakeholders,
however if they are not implemented with its true
essence and nature, their objectives will not be met.
It is therefore important for the regulators and
supervisory authorities to enforce the standards
and proper reporting and disclosures are made in
compliance with Shari’ah requirements as set out
in AAOIFI standards. Any additional guidance in the
form of technical assistance and resolution of specific
queries are welcome by AAOIFI secretariat as has
been the practice.
AAOIFI Shari’ah standards are available in Arabic
(official), English, French, Russian, Turkish and
Urdu languages, while the translation in Chinese
(Mandarin) and Bangali languages are being finalized.
Translation in Bahasa Indonesia has also commenced
which will initially target a few selected standards,
before translating all AAOIFI standards in future. The
availability of AAOIFI standards in different languages
have helped in the penetration of its standards
in various jurisdictions. AAOIFI would welcome
collaboration with industry stakeholders to translate
its standards in other languages.
60 AAOIFI Footprint Report 2020
As part of awareness and advocacy programmes
AAOIFI has also planned initiatives to connect
and promote dialogue between regulatory and
supervisory authorities to increase adoption of
AAOIFI standards in various markets, including the
newer entrants to the Islamic finance industry.
AAOIFI has and will encouraged relevant and
high industry experts to be part of its standards
development process by becoming members of the
various working groups. AAOIFI seeks to receive
nominations from qualified Shari’ah and other
industry professionals, including from among RSAs to
be part of AAOIFI’s standards development.
AAOIFI contiunes to collaborat with numerous
institutions with an ultimate aim to develop Islamic
finance industry and entered into Memorandums of
Understanding (MoU). Such ongoing initiatives will
strengthen AAOIFI’s relationship with the industry
stakeholders to lean and benefit from each other’s
strengths.
To ensure sufficient human capital and equip the
Islamic finance industry to apply its standards, a
robust, up to date capacity building structure is
made available by AAOIFI. AAOIFI’s capacity building
programmes coupled with the AAOIFI’s publications,
including the Journal of Islamic finance accountancy
(JOIFA) that aims to promote scientific dialogue and
scrutiny of areas of AAOIFI mandate, and newsletters
that provide periodic updates on AAOIFI activities
and initiatives, provide much needed insights to its
stakeholders.
AAOIFI certifications—Certified Islamic Professional
Accountant (CIPA) and Certified Shari’ah Adviser and
Auditor (CSAA) are being considered by regulators
under their fit and proper criteria to hire qualified
Islamic finance professionals in their jurisdictions.
Many international qualifications including ACCA
have regarded AAOIFI’s public hearing events of its
exposure drafts to qualify for their CPD hours.
AAOIFI has held and will continue to hold, its
public hearings in newer jurisdictions as a medium
to spread information and awareness of its
standards. With the onset of Covid-19 pandemic,
digital channels have gained more popularity and
prominence. AAOIFI has and continue to avail this
opportunity to conduct more of its public hearings /
workshops and other industry engagements virtually.

AAOIFI Footprint Report 2020 61

62 AAOIFI Footprint Report 2020
Country profiles

AAOIFI Footprint Report 2020 63

 Islamic Republic of Afghanistan
Last updated: 1 Oct 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah
board?
64 AAOIFI Footprint Report 2020
Yes Jurisdiction, its role and mandate
Yes Has the jurisdiction made public commitment to Yes
apply AAOIFI standards?
Extent of application of AAOIFI standards?
Not a member
Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
No
Are all or some financial institutions required or
permitted to apply AAOIFI standards?
Yes [1]
Does the jurisdiction allow dual reporting?
Da Afghanistan Bank –
Regulator of financial sector
• Shari’ah standards: Adopt [2]
• Financal accounting standards: Adopt [2]
• Governance standards: Adopt [2]
• Auditing standards: Adopt [2]
Yes[3]
Yes
Yes
No. Description / extract from source document(s) Reference(s)

[1] 5. Custodian of the Document Guidelines on Appointment of External Shariah Auditors for
The Guideline shall be under the safe custody of the Islamic Banking Division (“IBD”) of DAB. Any changes Islamic Bank/Window
to the Guideline shall be made by the IBD with prior consultation with the SSB, as reviewed by the DAB https://dab.gov.af/sites/default/files/32/12-2018Gu
Executive Board and upon approval by DAB Supreme Council. A copy of the amended Guideline shall be idelinesonAppointmentofExternalShariahAuditorv
made available to all stakeholders and SSB members for reference and implementation. 5f121201611258498553325325.pdf
4.3 c) iii. Shariah resolutions of the DAB SSB and the Bank’s Shariah Board;

[2] PART A: Preamble

2. Purpose and Application Da Afghanistan Bank
a) These Guidelines provide the considerations and criteria for appointment of an external Shariah auditor Guidelines on Appointment of External Shariah Auditors for
for Islamic bank/window with the aim of ensuring that the auditor is capable of obtaining sufficient Islamic Bank/Window
appropriate audit evidence that the Bank’s financial statements have been prepared in accordance with https://dab.gov.af/sites/default/files/32/12-2018Gu
the AAOIFI Accounting Standards and relevant national standard and practices in Afghanistan as well as idelinesonAppointmentofExternalShariahAuditorv
relevant statutory requirements. 5f121201611258498553325325.pdf
PART B: POLICY AND PROCEDURES
5 4.1. Conduct of audit in accordance with the Auditing Standards approved by the AAOIFI and other
approved standards or forms by the regulator
4.3 d) Pursuant to AAOIFI Standards on Auditing Standard 4/1: The auditor should comply with the
“Code of Ethics for Professional Accountants” issued by the AAOIFI and the International Federation of
Accountants which do not contravene Islamic rules and principles.

3.0
5. The bank should form Shariah Committee and internal Shariah compliance department in accordance
the National Shariah Governance Framework (NSGF) and governance standards issued by AAOIFI for Da Afghanistan Bank
Islamic financial institutions wherever applicable. Financial Supervision Department Islamic Banking Division
Regulation for Conversion of a Conventional Bank into an
B. Conversion of Conventional Bank into Islamic Bank Islamic Bank
v. The bank shall follow the AAOIFI Shariah standard No. (6): for conversion of a conventional bank to an https://dab.gov.af/sites/default/files/01-2019/Regulation20%
Islamic Bank, during the process of conversion for20%Conversion20%of20%a20%Conventional20%Bank20%
into20%an20%Islamic20%Bank-converted29%281%20%.pdf
2. Basis of Shariah Compliance from International Practises a) Shariah Compliance under the Accounting
and Auditing Organization for Islamic Financial Institutions (“AAOIFI”): Da Afghanistan Bank
Shariah compliance under AAOIFI Governance Standard for Islamic Financial Institutions No. 2 (hereinafter Shariah Compliance Manual
referred to as “the Standard”) describes the principles of Shariah compliance (termed as Shari’a Review https://dab.gov.af/sites/default/files/41/12-2018ShariahCompli
under AAOIFI) explaining the nature and objective of the compliance, its responsibilities, procedures, anceManualv10finalversion1212016114225198553325325.pdf
quality assurance and the reporting processes. Da Afghanistan Bank

AAOIFI Footprint Report 2020 65

No. Description / extract from source document(s) Reference(s)

[2] 6. Responsibility of Shariah Compliance - The primary objective of Shariah compliance is to ensure that the On-Site Examination Manual
Shariah compliant activities do not contravene the principles of Shariah with the Management of the Bank, 37/12Onsitetr756uyuexaminationgj3%Beir
as per the practise under AAOIFI… ti4121201612338535553325325.pdf

7. Shariah Compliance Procedures a) The procedures of the Shariah compliance shall be carried out Da Afghanistan Bank
pursuant to the rules applicable in the AAOIFI, Governance Standard for Financial Institutions No. 2 on Product Outline: Murabaha Tawarruq (Cash Financing / Working
Shari’a Review… Capital Financing)
https://dab.gov.af/sites/default/files/11/12-2018Muraba
7.13 b) For the purpose of application of the AAOIFI rules under Clause 7(a) above for the practice in the haTawarruq28%CashFinancing2%CWorkingCapitalFinanci
Islamic Republic of Afghanistan the following substitutions, unless expressly stated otherwise, shall apply.. ng2912120161420465553325325%.pdf

2.1 The basis of this On-Site Examination Manual is established under item No. 2 of the Governance Da Afghanistan Bank - Financial Supervision Department
Standard for Islamic Financial Institutions (GSIFI) No. 4 of the Accounting and Auditing Organization for Supervisory Circular 04-89 “Instruction on establishment of a
Islamic Financial Institutions (“AAOIFI”) (hereinafter referred to as “the Standard”). Islamic Banking Window”
https://dab.gov.af/sites/default/files/04-2019/SupervisoryCircul
1.4 In drafting the Product Outline, references have been made to the Accounting and Auditing ar28%Pashto04-2989%.pdf
Organization for Islamic Financial Institutions (“AAOIFI”) Shari’a Standard No. 30 on Monetization
Da Afghanistan Bank
(Tawarruq) and Shari’a Standards No. 8 on Murabaha in bringing the internationally accepted best practises
Verification Process Manual for Islamic Banking Products
of both standards to the Product Outline.
https://dab.gov.af/sites/default/files/43/12-2018Verif
icationProcessforIslamicBankingProductsv12finalversi
POST-REQUIREMENTS
on121201610153463553325325.pdf
Islamic Banking Division
(iv) The IBD must ensure that the submission of statistical report to Da Afghanistan Bank is complete, Da Afghanistan Bank
accurate and timely. They are also required to ensure that the AAOIFI accounting standards, legal and Murabaha Product Guide
regulatory requirements, directives and guidelines issued by Da Afghanistan Bank, https://dab.gov.af/sites/default/files/20/12-2018MurabahaProd
uctGuide131201611152840553325325.pdf
2.5 However in accordance with Clause 5 of the AAOIFI Governance Standards for Islamic Financial
Institutions No.2 Shariah Review (hereinafter referred to as “the Governance Standard”) the responsibility Guidelines on Ibra’ (Rebate) for Islamic Debt-Based Financing
for compliance rests with the Management Board of the Bank (hereinafter referred to as “the Products
Management”). https://dab.gov.af/sites/default/files/27/12-2018GuidelinesonIb
ra%E28%99%80%2Rebate29%forIslamicDebt-BasedFinancingPr
7.2 Basic Conditions of a Valid Sale 7.2.1 Following are the key conditions that have to be complied with for oducts121201614541203553325325.pdf
a Murabaha sale transaction to be in line with Shariah principles (as per AAOIFI Standards).
Approval Procedure Manual for Islamic Financial Products
2. International Practices on Ibra: Basis of the Imposition of Late Payment Charges https://dab.gov.af/sites/default/files/42/12-2018Approvalpr
a) Standard on Ibra’ by Accounting and Auditing Organization for Islamic Financial Institutions (“AAOIFI”): oceduremanualhjtyyutyforfinancialproductsv-11gdffinalversi
on12120161042647553325325.pdf

66 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[2] The practice of granting customers an Ibra’ is acceptable to international Shariah standard provided that Qard Product Guide
this has not been agreed upfront or made contractual by the contracting parties. This is essentially based https://dab.gov.af/sites/default/files/21/12-2018QardProductG
on AAOIFI Shariah Standard on “Murabaha to the Purchase Orderer” item 9/5 which states as follows:… uide1212016151522432553325325.pdf
2. Basis of Approval Procedures from International Practices
2.1 The basis of these approval procedures for Shariah compliant products is established under item No. 4
of the Governance Standard for Islamic Financial Institutions (GSIFI) No. 2 of the Accounting and Auditing
Organization for Islamic Financial Institutions (AAOIFI) (hereinafter referred to as “the Standard”).

[3] 1. BACKGROUND AND PREAMBLE Da Afghanistan Bank

1.7. In this Product Guide, text on the treatment of Qard as outlined in AAOIFI Shariah Standard No. (19) Guidelines on Late Payment Charges for Islamic Financing
(hereinafter referred to as “the Standard”) has been referred to extensively. Products
https://dab.gov.af/sites/default/files/-2018
2. International Practices on Late Payment Charges 30/12GuidelinesonLatepaymentchargesAfghanista
2.1. Basis of the Imposition of Late Payment Charges nv0_8121201611334267553325325.pdf
a) Standard of Late Payment Charges by AAOIFI: The practice of imposing the Late Payment Charges
has been accepted by international Shariah scholars and applied in many institutions offering Islamic
products worldwide...
b) Modified Practice of AAOIFI Standard:
Some Shariah Boards of Islamic Financial Institutions (hereinafter referred to as “IFI”) have modified
the abovementioned item 6/5 of AAOIFI on the Late Payment Charges to make it more flexible to suit
the financial conditions of the defaulting customer. For this purpose, the customer will provide an
undertaking either in the main document or in the schedule of any debt-based financing document as
follows:
2.3. The Usage of Late Payment Charges
d) DAB Adopted Practice on the Usage of Late Payment Charges: As DAB shall adopt the modified
practise of AAOIFI, the entire Late Payment Charges as collected shall follow the practise as stipulated
under Clause 2.3(b) above, and more particularly explained under Clause 3 hereto.

AAOIFI Footprint Report 2020 67

 Kingdom of Bahrain
Last updated: 1 Aug 2020

Are AAOIFI standards Yes [1] Jurisdiction, its role and mandate Central Bank of Bahrain (CBB)
incorporated as law / - the sole regulator of Bahrain’s financial
regulation? sector.

Does the jurisdiction Yes. It Has the jurisdiction made public commitment Yes
implements (or plan to implements to apply AAOIFI standards?
implement) AAOIFI standards? AAOIFI
standards
Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [3]
What is the membership Regulator • Financial accounting standards: Adopt [4]
profile of the regulating member • Governance standards: Adopt [5]
authority(ies) with AAOIFI? • Auditing standards: Adopt [6]

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?
Are AAOIFI standards Yes. All AAOIFI
translated / available in local standards are
language? available in Are all or some financial institutions required Yes
Arabic language or permitted to apply AAOIFI standards?

Is there a central Shari’ah Yes [2]

board? Does the jurisdiction allow dual reporting? Yes

68 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] Governor of the Central Bank of Bahrain

After reviewing the Central Bank of Bahrain and Financial Institutions Law promulgated by Law No. (64) of Central Bank of Bahrain official gazette
2006, and its amendments,
The following was decided
Article one
All transactions and contracts concluded by licensees who provide financial services in accordance with
the provisions of Islamic Sharia are subject to Sharia standards issued by the Accounting and Auditing
Organization for Islamic Financial Institutions, and published on the bank’s website….
Issued on: Dhu al-Hijjah 1441 ,2 AH
Corresponding to: 23 July 2020 AD

[2] Released a new Shari’ah Governance (SG) module after consultation with the industry and with the CBB’s https://www.cbb.gov.bh/wp-content/uploads/02/2019/CBB-
Centralized Shari’a Supervisory Board (CSSB), for the purpose of improving the Shari’a compliance and ANNUAL-REPORT-2017-English.pdf
governance standards among Islamic banks in Bahrain and setting proper benchmarks for global Shari’a
governance practices

[3] SG2.1.2- of Volume 2 (Rulebook for Islamic Banks) of the CBB Rulebook. http://cbb.complinet.com/cbb/display/display.
html?rbid=1821&element_id=10171
Bahraini Islamic bank licensees must comply with the Shari’a rules and principles as expressed in AAOIFI
Shari’ah standards and in the rulings of the Centralized Shari’a Supervisory Board and their respective SSB.

[4] AU4.1.1- of Volume 2 (Rulebook for Islamic Banks) of the CBB Rulebook.
http://cbb.complinet.com/cbb/display/display.
html?rbid=1821&element_id=3105
Islamic bank licensees must comply with Financial Accounting Standards (FAS) issued by the Accounting
and Auditing Organisation for Islamic Financial Institutions (AAOIFI). For products and activities not covered
by AAOIFI, International Financial Reporting Standards (IFRS) / International Accounting Standards (IAS)
must be followed.

HC9.2.6- of Volume 2 (Rulebook for Islamic Banks) of the CBB Rulebook. http://cbb.complinet.com/cbb/display/display.
html?rbid=1821&element_id=7638
All Islamic Bank Licensees must comply with all AAOIFI issued accounting standards as well as applicable
Shari’a pronouncements issued by the Shari’a Board of AAOIFI. The Islamic Bank Licensee must have a
separate function of Shari’a review to verify compliance with the above. The internal Shari’a review must
be carried out in accordance with AAOIFI governance standard No.3. The Shari’a review function may be
located in the Internal audit function of the Islamic Bank Licensee.

LR2.8.1- of Volume 2 (Rulebook for Islamic Banks) of the CBB Rulebook.

AAOIFI Footprint Report 2020 69

No. Description / extract from source document(s) Reference(s)
Article 59 of the CBB Law requires that Islamic bank licensees must maintain comprehensive books of http://cbb.complinet.com/cbb/display/display.
accounts and other records, and satisfy the minimum record-keeping requirements contained in Article html?rbid=1821&record_id=11350&element_
60 of the pre-mentioned Law and in Module OM. Books of accounts must comply with the Financial id=6357&highlight=LR#2.8.1-r11350
Accounting Standards issued by the Accounting and Auditing Organisation for Islamic Financial Institutions
(AAOIFI), or with International Financial Reporting Standards (IFRS) / International Accounting Standards
(IAS), where no relevant AAOIFI standard exists.
http://cbb.complinet.com/cbb/display/display.
BR1.2.5- of Volume 2 (Rulebook for Islamic Banks) of the CBB Rulebook. html?rbid=1821&element_id=4218
The annual accounts must be in full compliance with the Financial Accounting Standards issued by AAOIFI
or where AAOIFI standards do not cover a subject, International Financial Reporting Standards (IFRS) must
be used.

[5] CBB has adopted Governance Standards 1,2, and 3, which are found as under: http://cbb.complinet.com/cbb/display/display.
html?rbid=1821&element_id=7633
HC9.2.1- of Volume 2 (Rulebook for Islamic Banks) of the CBB Rulebook
Islamic bank licensees which are guided by the principles of Islamic Shari’a have additional responsibilities
to their stakeholders. Islamic bank licensees which refer to themselves as «Islamic» are subject to
additional governance requirements and disclosures to provide assurance to stakeholders that they are
following Shari’a Principles. In ensuring compliance with Shari’a principles, each Islamic bank licensee
must establish an independent Shari’a Supervisory Board consisting of at least three Shari’a scholars and
complying with AAOIFI’s Governance Standards for Islamic Financial Institutions No.1 and No.2.
http://cbb.complinet.com/cbb/display/display.
HC9.2.6- of Volume 2 (Rulebook for Islamic Banks) of the CBB Rulebook html?rbid=1821&element_id=7638
All Islamic Bank Licensees must comply with all AAOIFI issued accounting standards as well as applicable
Shari’a pronouncements issued by the Shari’a Board of AAOIFI. The Islamic Bank Licensee must have a
separate function of Shari’a review to verify compliance with the above. The internal Shari’a review must
be carried out in accordance with AAOIFI governance standard No.3. The Shari’a review function may be
located in the Internal audit function of the Islamic Bank Licensee.

[6] RM1.1.7- of Volume 2 (Rulebook for Islamic Banks) of the CBB Rulebook. http://cbb.complinet.com/cbb/display/display.
html?rbid=1821&element_id=8303
The Islamic bank licensee must make appropriate and timely disclosure of information to investment
account holders (IAHs) to enable assessment of risks and rewards of investments, using AAOIFI auditing
standards (see Paragraphs PD1.3.32- — PD1.3.35- for detailed disclosure requirements).

70 AAOIFI Footprint Report 2020

 People’s Republic of Bangladesh
Last updated: 1 Nov 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah
board?
Jurisdiction, its role and mandate Bangladesh Bank –the central bank and
Yes apex regulatory body for the country’s
monetary and financial system
Has the jurisdiction made public Yes
Yes. It commitment to apply AAOIFI standards?
implements
AAOIFI Extent of application of AAOIFI standards? • Shari’ah standards: Follow as guidelines /
standards has developed local standards based on
AAOIFI standards [2[ ]4]
Not a member • Financial accounting standards: Follow as
guidelines [3]
• Governance standards: Partially adopt [4]
• Auditing standards: Partially adopt [4]
Has the jurisdiction made any modifications No
Translation to any AAOIFI standards to suit its
of Shari’ah requirements?
standards into
Bengali language Are all or some financial institutions Yes
required or permitted to apply AAOIFI
Yes [1] standards?
Does the jurisdiction allow dual reporting? Yes
AAOIFI Footprint Report 2020 71
People’s Republic of Bangladesh
Last updated: 1 Aug 2020

Jurisdiction, its role and mandate Bangladesh Securities and Exchange

Commission

Has the jurisdiction made public Yes

commitment to apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Partial adoption [5]

• Financial accounting standards: Partial
adoption [6]
• Governance standards: Do not adopt
• Auditing standards: Do not adopt

Has the jurisdiction made any modifications No

to any AAOIFI standards to suit its
requirements?

Are all or some financial institutions Yes

required or permitted to apply AAOIFI
standards?

Does the jurisdiction allow dual reporting? Yes

72 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] ‘Central Shariah Board for Islamic Banks of Bangladesh’ is a national non-profit research organization http://csbib.com/
comprising Islamic banks and Islamic banking branches / windows of conventional banks operating in
Bangladesh. It is a registered organization under the Government of the People’s Republic of Bangladesh. https://greenwatchbd.com/39th-general-meeting-of-central-
shariah-board-held/

[2] Bangladesh Bank has issued Islamic Banking Guidelines in 2009 and Government Islamic Investment Bond https://www.bb.org.bd/aboutus/regulationguideline/
has been introduced in 2004. islamicbanking/guideislamicbnk.pdf
(Also extract from the response to AAOIFI standards adoption
survey questionnaire)

[3] Clause 1: “The objective of the Guidelines on Specimen Reports and Financial Statements for Banks under Bangladesh Bank - Islamic Banking Guideline 2009
Shariah is as follows: Guidelines on Specimen Reports and Financial Statements for
(i) To enable the banks under Islamic Shari’ah to prepare their financial statements as per provisions of Banks under Shariah – Appendix II
Banking Companies Act 1991. International Financial Reporting Standards (IFRS), the Companies Act 1994, (Home-About Us-Regulation and guidelines-Guidelines for
Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and Islamic Shari’ah. Islamic banking)

Clause 3.4: “This Guideline does not address all the aspects of Islamic Shari’ah. So, Reporting Institutions
are required to follow the Shari’ah rules set by their respective Shari’ah Supervisory Committee, if any, as
well as AAOIFI.”

[4] Clause 8.1: “ICC (Internal Control and Compliance) in respect to Shari’ah compliance in banks/windows Bangladesh Bank - Guidelines on Internal Control & Compliance
of banks operating based on Islamic Shari’ah needs to be ensured separately through Sharia’h audit. In in Banks, February 2016,
this context, these guidelines provide necessary provisions as guiding principles for ICC in Islamic Shari’ah https://www.bb.org.bd/mediaroom/circulars/brpd/
based banks/banking windows operating in Bangladesh in line with Sharia’h and informed decisions mar082016brpd03.pdf
(usually taken by Shari’ah Council/Sharia’h Supervisory Committee or SSC).

Clause 8.8: “Taking into consideration the concerned sections of BCA1991-, BB’s guideline for Islamic
Banking, AAOIFI’s Standard, IFSB’s guiding principles, etc., each bank will prepare a check list
with regard to Shari`ah compliance for both the branch level and Head Office level and submit
the findings of the same to the SSC, ACB, Board and MD/CEO on a quarterly basis for further
corrective measures.”

Islamic banks audit activities are done under the conventional framework of audit and inspection, but their
Shari’ah audits are being done by the Muraqibs of Shari’ah secretariat separately.

AAOIFI Footprint Report 2020 73

No. Description / extract from source document(s) Reference(s)

[5] Bangladesh Securities and Exchange Commission https://sec.gov.bd/crequest/Draft_Rules_on_

https://sec.gov.bd/slaws/Investment_Sukuk_Rules,_2019.pdf Sukuk_28.04.19_2019.docx
2. (l) “Shari’ah concepts” means all the types of Investment Sukuk allowed in Shari’ah and specially the
types of Sukuk in line with the AAOIFI Shari’ah Standard 17 issued by Accounting and Auditing Organization
of Islamic Financial Institutions (AAOIFI),that includes Ijara, Musharakah, Murabahah, Mudaraba, Istisna
and any other permitted concept;

[6] 17. Financial reporting, reports and disclosure.¾(1)The financial reports of the SPV of any Investment https://sec.gov.bd/crequest/Draft_Rules_on_
Sukuk shall be prepared taking into consideration relevant standards of the Accounting and Auditing Sukuk_28.04.19_2019.docx
Organization for Islamic Financial Institutions (AAOIFI) for Shari’ah principles and the International Financial
Reporting Standards (IFRS)

74 AAOIFI Footprint Report 2020

 Brunei Darussalam
Last updated: 31 Dec 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan
to implement) AAOIFI
standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah
board?
Jurisdiction, its role and mandate
Yes [1]
Has the jurisdiction made public commitment to
apply AAOIFI standards?
Yes
Extent of application of AAOIFI standards?
Not a member
No
Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
Yes [2] Are all or some financial institutions required or
permitted to apply AAOIFI standards?
Does the jurisdiction allow dual reporting?
AAOIFI Footprint Report 2020
Autoriti Monetari Brunei Darussalam (AMBD)​​​​​-
Monetary authority/central bank
Attorney General’s Chambers
Prime Minister’s Office Brunei Darussalam
No. An option of AAOIFI standard as one of the
accounting standard in the Securities Markets Order
does not necessarily mean Brunei has made public
commitment to apply AAOIFI standards.
• Shari’ah standards: Follow as guidelines / has
developed local standards based on AAOIFI /
voluntary adoption [1]
• Financial accounting standards: Partial adoption [3]
• Governance standards: Follow as guidelines/ has
developed local standards based on AAOIFI /
voluntary adoption [1]
• Auditing standards: Follow as guidelines/ has
developed local standards based on AAOIFI /
voluntary adoption [1]
No
Yes. Islamic Investment Business or Islamic Collective
Investment Schemes are permitted to apply AAOIFI
Standards. However, AMBD does not have any data
whether the businesses and Islamic CIS uses AAOIFI
standards.
Yes
75
No. Description / extract from source document(s) Reference(s)

[1] Securities Markets Regulations, 2015 Attorney General’s Chambers

Part III, Clause 4( 18) : Prime Minister’s Office Brunei Darussalam
An independent, competent and qualified auditor must audit the annual financial statements in www.agc.gov.bn/AGC%20Images/LAWS/Gazette_PDF/2015/EN/
accordance with the International Financial Reporting Standards or where applicable, the Accounting and S002.pdf
Auditing Organization for Islamic Financial Institutions Standards or such other international standards as
may be applicable. See also: SECURITIES MARKETS ORDER, 2013
(S 59/2013)
See also: SECURITIES MARKETS REGULATIONS, 2015
Part VI, Chapter V
Determination of single price. (Also extracted from the response to AAOIFI standards adoption
1( .96) An operator of a collective investment scheme must take all reasonable steps and exercise due survey questionnaire)
diligence, to ensure that the units in the collective investment scheme are correctly priced in accordance
with the accounting procedures of the International Financial Reporting Standards or the Accounting and
Auditing Organisation for Islamic Financial Institutions or such other international standards as may be
determined by the Authority to ascertain an accurate single price for a unit.

Chapter VII - Accounting Standards

Duty to maintain financial accounts and statements
2( .113) If a collective investment scheme is an Islamic collective investment scheme, the operator must
prepare and maintain all financial accounts and statements in accordance with the accounting standards
of the Accounting and Auditing Organisation for Islamic Financial Institutions or such other international
standards as may be determined by the Authority.

3( .113) If the operator of an umbrella collective investment scheme operates one or more Islamic sub-
collective investment schemes, it must prepare and maintain all financial accounts and statements in
accordance with the International Financial Reporting Standards and supplemented by Accounting
and Auditing Organisation for Islamic Financial Institutions.

Securities Markets Regulations, 2015 Attorney General’s Chambers

Functions of collective investment scheme’s auditor Prime Minister’s Office Brunei Darussalam
Chapter XI, Auditors www.agc.gov.bN/AGC%20Images/LAWS/Gazette_PDF/2015/EN/
135 {a) conduct an audit of the collective investment scheme’s accounts in accordance with the S002.pdf
requirements of International Financial Reporting Standards or the Accounting and Auditing Organisation SECURITIES MARKETS ORDER, 2013
of Islamic Financial Institutions in respect of any Islamic collective investment scheme, or such other (S 59/2013)
international standards as may be determined by the Authority; SECURITIES MARKETS REGULATIONS, 2015

76 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] Chapter XIII, Division III, Investment and Borrowing Powers (Also extracted from the response to AAOIFI standards adoption
1( 165) (a) the other collective investment scheme is the subject of an independent annual audit survey questionnaire)
conducted in accordance with International Financial Reporting Standards or, in the case of an Islamic
collective investment scheme, in accordance with Accounting and Auditing Organisation for Islamic
Financial Institutions or such similar standards as the Authority thinks fit;

[2] Establishment of Board: Constitution of Brunei Darussalam

Clause 3: There is hereby established a Board known as the Syariah Financial Supervisory Board, which (Order Under Article 83(3))
shall be the authority for the ascertainment of the Laws of Islam for the purposes of Islamic banking Syariah Financial Supervisory Board Order, 2006
business, takaful business, Islamic financial business, Islamic development financial business and any other http://www.agc.gov.bN/AGC%20Images/LOB/Order/MNOP/
business which is based on Syariah principles and which is supervised and regulated by the Authority. Syariah%20Financial%20Supervisory%20Board%20Order,%20
2006.pdf

[3] Notice No. TIU/N3/2016/3- ACCOUNTING STANDARDS FOR THE PREPARATION OF ANNUAL
Accounting Standards for the Preparation of Annual Accounts by Takaful Operators and Brokers ACCOUNTS BY TAKAFUL OPERATORS AND BROKERS
Clause 3.1 - Preparation of Annual Accounts: Notice on Accounting Standards for the Preparation of Annual
Accounts by Takaful Operators and Brokers – this Notice provides requirement to adopt IFRS, but in the https://www.ambd.gov.bn/
event of any contradiction to Shari’ah Principles, Takaful Operators to comply with AAOIFI Accounting https://bit.ly/3dXk6GN
standards.

Notice No. TIU/N8/2017/4-

Notice On Public Disclosure Requirements for Insurance Companies and Takaful Operators
Clause 3.1 and 3.1 - In addition to the requirements under paragraph 2, takaful operators shall also comply https://www.ambd.gov.bn/
with the Financial Accounting Standards issued by the Accounting and Auditing Organization of Islamic https://bit.ly/35yGdzE
Financial Institutions (AAOIFI).
Notice provides additional requirements for Takaful Operators to comply with FAS 12, FAS 13 and FAS 19. (Also extracted from the response to AAOIFI standards adoption
survey questionnaire)

AAOIFI Footprint Report 2020 77

 Republic of Djibouti
Last updated: 1 May 2020
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan
to implement) AAOIFI
standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah
board?
78 AAOIFI Footprint Report 2020
No Jurisdiction, its role and mandate Banque Centrale de Djibouti (BCD) – Regulator
of financial services in Djibouti
Has the jurisdiction made public commitment to No
No apply AAOIFI standards?
Extent of application of AAOIFI standards? • Shari’ah standards: Adopt as guidelines
• Financial accounting standards: Adopt as
guidelines
Regulator • Governance standards: Adopt as guidelines
member • Auditing standards: Adopt as guidelines
Yes, Shari’ah Has the jurisdiction made any modifications to No
standards are any AAOIFI standards to suit its requirements?
available in
Arabic & French Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
Yes [1]
Does the jurisdiction allow dual reporting? Yes
No. Description / extract from source document(s) Reference(s)

[1] “We have the National Shari’ah Committee which was created by the Presidential decree.” (confirmation provided by Banque Centrale de Djibouti)

AAOIFI Footprint Report 2020 79

  Arab Republic of Egypt
Last updated: 1 Dec 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah
board?
80 AAOIFI Footprint Report 2020
No Jurisdiction, its role and mandate  Central Bank of Egypt (CBE) -regulate
banking sector
No Has the jurisdiction made public commitment to No
apply AAOIFI standards?
Extent of application of AAOIFI standards? • Shari’ah standards: Do not adopt
Not members • Financial accounting standards: Do not adopt
(both FRA and • Governance standards: Do not adopt
CBE) • Auditing standards: Do not adopt
Has the jurisdiction made any modifications to No
any AAOIFI standards to suit its requirements?
Yes
Are all or some financial institutions required or No
permitted to apply AAOIFI standards?
Proposed [1]
Does the jurisdiction allow dual reporting? No
 Arab Republic of Egypt
Last updated: 1 Dec 2019
Jurisdiction, its role and mandate
Has the jurisdiction made public commitment to
apply AAOIFI standards?
Extent of application of AAOIFI standards?
Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or
permitted to apply AAOIFI standards?
Does the jurisdiction allow dual reporting?
AAOIFI Footprint Report 2020
Financial Regulatory Authority (FRA)
–Supervise and regulate non-banking
financial markets and instruments
No
• Shari’ah standards: Do not adopt
• Financial accounting standards: Adopt
as guidelines [2]
• Governance standards: Do not adopt
• Auditing standards: Do not adopt
No
No
No
81
No. Description / extract from source document(s) Reference(s)

[1] Board’s decision No. (42) of 2019 http://www.fra.gov.eg/content/efsa_en/efsa_news_en/

efsa_762_en.htm
FRA’s Chairman said that the Board’s decision No. (42) of 2019 stipulated the formation of a central
committee for Shari’ah Supervisory committee. The said committee shall include nine members of the
most prominent Islamic Shari’ah scholars and some specialists who have wide experience in legal and
financial fields and registered at FRA’s registry. Also, the decision stated that committee’s member shall
not be a major shareholder or a member of a board of directors of a company subjected to the provisions
of the Capital Market Law during the two years preceding the date of membership. The committee shall
have a technical secretariat from FRA’s staff. The committee’s secretariat shall record the minutes of its
meetings, follow up the implementation of its decisions and keep its record.

[2] FRA obliges auditors of Sukuk Companies to abide by the Egyptian Accounting Standards upon preparing http://www.fra.gov.eg/content/efsa_en/efsa_news_en/
financial statements - Sunday 2018/12/23 efsa_724_en.htm

Dr. Mohammed Omran, FRA’s Chairman issued a regulatory decision that obliges Sukuk Companies and
beneficiaries of Sukuk proceeds to abide by the Egyptian Accounting Standards upon preparing and
submitting the financial statements. He added that financial statements shall be revised according to
the Egyptian Auditing Standards and limited examination and guided by the Islamic standards issued by
the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in a manner that is
consistent with the Egyptian Accounting Standards

82 AAOIFI Footprint Report 2020

 Republic of Indonesia
Last updated: 1 April 2020
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah
board?
No Jurisdiction, its role and mandate Otoritas Jasa Keuangan (OJK) –
Financial Services Authority
Has the jurisdiction made public commitment to No
No. Follow as apply AAOIFI standards?
guidelines /
reference only Extent of application of AAOIFI standards? • Shari’ah standards: Use as reference
• Financial accounting standards: Use as
reference / local standards / regulations
Not members based on AAOIFI standards [2]
• Governance standards: Use as reference
• Auditing standards: Use as reference
Has the jurisdiction made any modifications to No
In process in any AAOIFI standards to suit its requirements?
collaboration
with KNEKS Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
Yes [1]
Does the jurisdiction allow dual reporting? No
AAOIFI Footprint Report 2020 83
Republic of Indonesia
Last updated: 1 April 2020

Jurisdiction, its role and mandate Dewan Syariah Nasional - Majelis

Has the jurisdiction made public commitment to
apply AAOIFI standards?
Extent of application of AAOIFI standards?
Ulama Indonesia (DSN - MUI).–
National Shari’ah Board – Indonesian
Council of Ulama [1]
No
• Shari’ah standards: Use as reference [1]
• Financial accounting standards: Use as
reference [1]
• Governance standards: Use as
reference [1]
• Auditing standards: Use as reference [1]

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or No

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? -

84 AAOIFI Footprint Report 2020

Republic of Indonesia
Last updated: 1 April 2020

Jurisdiction, its role and mandate Bank Indonesia -

Central Bank of Indonesia

Has the jurisdiction made public commitment to No

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Do not adopt

• Financial accounting standards: Use
as reference [3]
• Governance standards: Do not adopt
• Auditing standards: Do not adopt

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? No

AAOIFI Footprint Report 2020 85

No. Description / extract from source document(s) Reference(s)

[1] 1. DSN-MUI does not fully adopt Sharia Standard Accounting and Auditing Organization for Islamic Financial (Extracted from the response to AAOIFI standards adoption
Institutions (AAOIFI). AAOIFI is one of the references used by DSN-MUI besides Ma’jma’ Fiqh Al Islami and survey questionnaire)
other sources as consideration in preparing fatwa and providing input in Sharia accounting standard in
Indonesia. Therefore, DSN-MUI stands alone and in some ways is different from AAOIFI.

2. Based on the first point above, thus DSN-MUI is not able to fill the survey

[2] Policy of Islamic Banking Development in Indonesia https://www.ojk.go.id/en/kanal/syariah/tentang-syariah/Pages/

Perbankan-Syariah.aspx
”The Blueprint of Islamic Banking Development in Indonesia ” prepared by Bank Indonesia in 2002 provides
guidance to stakeholders of Islamic banking and to set the position and vision of Bank Indonesia in https://www.ojk.go.id/en/kanal/syariah/tentang-syariah/pages/
developing Islamic bank in Indonesia. In the process of preparing this Blueprint, various aspects have been pasar-modal-syariah.aspx
taken comprehensively into consideration such as the actual condition of national Islamic banking industry
including related tools, development trend of Islamic banking industry within international scale as well as
system development of national Islamic finance that has started to be materialized and inseparable from
wider architectural landscape such as Indonesian Banking Architecture (API) and Indonesian Financial
System Architecture (ASKI) including international best practices formulated by international Islamic
financial institutions such as IFSB (Islamic Financial Services Board), AAOIFI and IIFM.

[3] Bank Indonesia (Extracted from the response to AAOIFI standards adoption
survey questionnaire)
With this email we would like to inform you, that the bank supervisory function has been transferred from
Bank Indonesia (BI) to Indonesia Financial Services Authority (OJK) since 31 December 2013.
Since then, the scope of BI regulation of the banking industry has been more into financial system stability
and monetary aspect, e.g: regulation regarding short term of liquidity financing for Shari’ah Banks, Shari’ah
repurchase transaction, etc.
The accounting treatment for Shari’ah transaction uses the prevailing accounting standards in Indonesia,
which has been issued by the Islamic Financial Accounting Standard Board, Indonesia Institute of
Accountants.

86 AAOIFI Footprint Report 2020

 Republic of Iraq
Last Updated: 11 Nov 2019

Are AAOIFI standards Yes Jurisdiction, its role and mandate Central Bank of Iraq (CBI) – Control and
incorporated as law / regulate the financial sector
regulation?
Has the jurisdiction made public commitment to Yes
Does the jurisdiction Yes. It apply AAOIFI standards?
implements (or plan to implements
implement) AAOIFI standards? AAOIFI Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [2]
standards • Financial accounting standards:
Adopt [2]
What is the membership Regulator • Governance standards: Adopt [3]
profile of the regulating member • Auditing standards: Partial adoption
authority(ies) with AAOIFI? [3]

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?
Are AAOIFI standards Yes. AAOIFI
translated / available in local standards are
language? available in Are all or some financial institutions required or Yes
Arabic language permitted to apply AAOIFI standards?

Is there a central Shari’ah Yes [1]

Does the jurisdiction allow dual reporting? Yes
board?

AAOIFI Footprint Report 2020 87

No. Description / extract from source document(s) Reference(s)

[1] ‫صــادق مجلــس ادارة البنــك المركــزي العراقــي علــى إصــدار الضوابــط الخاصــة باللجنــة االستشــارية الشــرعية العليــا فــي‬ Central Bank of Iraq
‫ حيــث ســيكون ارتبــاط اللجنــة بمجلــس إدارة البنــك وقــد تــم توجيــه إعــان‬،‫البنــك المركــزي العراقــي ووافــق علــى تشــكيلها‬ https://cbi.iq/news/view/1314
‫لتقديــم الترشــيحات لعضويــة اللجنــة وتكــون مهــام اللجنــة متابعــة وإصــدار القــرارات الشــرعية وتنفيــذ متطلبــات تطويــر‬
.‫تطبيقــات الصيرفــة والماليــة االســامية‬
The Board of Directors of the Central Bank of Iraq approved the issuance of the special regulations of
the Higher Sharia Advisory Committee at the Central Bank of Iraq and approved the formation of the
committee for follow-up and issuance of Shari›ah resolutions and implementation of the requirements of
developing Islamic banking and financial applications.

‫ضوابط اللجنة االستشارية الشرعية العليا‬ https://cbi.iq/static/uploads/up/file-157120797821936.pdf

‫ أن يكــون ذا اطــاع واســع فــي مجــال المعاييــر اإلســامية الدوليــة الصــادرة عــن هيئــة المحاســبة والمراجعــة للمؤسســات‬- 6 Central Bank of Iraq
.)IFSB( ‫الماليــة اإلســامية (أيوفــي) والمعاييــر الصــادرة عــن مجلــس الخدمــات الماليــة اإلســامية‬ Banking Control Service
Controls of the Higher Sharia Advisory Committee Islamic Banking Control Section
6. To have extensive knowledge of the International Islamic Standards issued by the Accounting and Division of instructions and controls
Auditing Organization for Islamic Financial Institutions (AAOIFI) and Islamic Financial Services Board (IFSB).

[2] ‫متطلبات اإلفصاح‬ Central Bank of Iraq

‫) الصــادر عــن هيئــة المحاســبة والمراجعــة‬1( ‫يجــب مراعــاة متطلبــات اإلفصــاح الــواردة فــي معيــار المحاســبة الماليــة رقــم‬ ‫ضوابط أدوات التمويل اإلسالمي‬
‫للمؤسســات الماليــة اإلســامية (أيوفــي) بشــأن العــرض واإلفصــاح العــام فــي القوائــم الماليــة للمصــارف والمؤسســات‬ Controls of Islamic financing instruments
.‫الماليــة اإلســامية‬ https://cbi.iq/static/uploads/up/file-153372094957997.pdf

Disclosure requirements
The disclosure requirements shall be in accordance with of the Accounting standard (No. 1) issued by
Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) concerning the public
disclosure in the financial statements of Islamic banks and financial institutions.

The Central Bank of Iraq begins the establishment of a Takaful insurance company for Islamic banks Central Bank of Iraq
Information Office 23 June 2019
The Central Bank issued the company’s Takaful regulations according to the standards of the Islamic https://cbi.iq/static/uploads/up/file-156189034133602.pdf
Financial Services Board (IFSB) and the Accounting and Auditing Organization for Islamic Financial
Institutions (AAOIFI)

Chapter 8 (General Provisions) No. (43) Of 2015

Article – 7 – First: The Islamic Banks established under this law shall be subject to the Central Bank of Islamic Banks Law
Iraq Law No. 56 of 2004, Banks Law No. 94 of 2004, Anti-Money Laundering Law No. 93 of 2004 in force, https://cbi.iq/static/uploads/up/file-156759065639534.pdf

88 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[2] Companies Law No. 21 of 1997 and Public Companies Law No. 22 of 1997 and the International Accounting No. (43) Of 2015
Standards, Shariah and Accounting Standards issued by the Accounting and Auditing Organization for Islamic Banks Law
Islamic Financial Institutions (AAOIFI) in all cases not provided for in this Law. https://cbi.iq/static/uploads/up/file156759065639534-.pdf

CBI launches the Syndicate of Islamic Finance Program https://cbi.iq/static/uploads/up/file155893698766411-.pdf

The Central Bank of Iraq has launched the Syndicate of Islamic Finance Program (SIFP), which aims to
create a regular partnership in the financing and investment process between traditional and Islamic banks
on the one hand, and the public and private sectors on the other hand. This investment should fall under
criteria No. (24) Which issued by Accounting and Auditing for Islamic Financial Institutions (AAOIFI)

)2019( ‫سنة‬ ‫ضوابط التكافل‬

‫) التعريفات‬1( ‫المادة‬ Takaful controls
‫ هــي هيئــة دوليــة تضطلــع بإعــداد واعتمــاد معاييــر‬:)AAOIFI( ‫هيئــة المحاســبة والمراجعــة للمؤسســات الماليــة اإلســامية‬ https://cbi.iq/static/uploads/up/file156135645249399-.pdf
‫ إضافــة إلــى وضــع وتطويــر المعاييــر الشــرعية ومعاييــر الحاكميــة‬،‫محاســبية وماليــة خاصــة بالمؤسســات الماليــة اإلســامية‬
.‫المؤسســية‬
(2019)
Article (1) Definitions
International Organization for Accounting and Auditing of Islamic Financial Institutions (AAOIFI): It is an
International organization that specialize in preparation and development of accounting and financial
standards for Islamic financial institutions in addition to setting and developing Shariah and corporate
governance standards.

‫ والــذي يعــد مــن القطاعــات المصرفيــة‬،‫العــراق مــن الــدول التــي طبقــت معاييــر الشــريعة اإلســامية فــي قطاعهــا المصرفــي‬ ‫ محافظ المصرف المركزي العراقي‬،‫ علي محسن اسماعيل‬.‫كلمة د‬
.‫المتنامية‬ http://aaoifi.com/wp-content/uploads/12/2018/AAOIFI-WB-
Conf.-13-ARA-Report-FInal.pdf
“Iraq is one of the countries that have adopted standards in the banking and Islamic sector, which has
become a growing sector.” Speech of H. E. Dr. Ali Mohsen Ismail, Governor of the Central
Bank of Iraq – 23 October 2018
http://aaoifi.com/wp-content/uploads/12/2018/AAOIFI-WB-
Conf.-13-English-Report-Final.pdf

AAOIFI Footprint Report 2020 89

‫‪No.‬‬ ‫)‪Description / extract from source document(s‬‬ ‫)‪Reference(s‬‬

‫]‪[2‬‬ ‫‪ 2-5‬أهم تطورات البيئة التشريعية للقطاع المالي‪:‬‬ ‫‪Central Bank of Iraq‬‬
‫صــدرت مجموعــة مــن التعليمــات والضوابــط لتنظيــم عمــل المصــارف والشــركات الماليــة وخاصــة المصــارف اإلســامية‪ ،‬علــى‬ ‫‪Financial Stability Report 2018‬‬
‫النحــو اآلتي‪:‬‬
‫‪ .1-2-5‬ضوابط أدوات التمويل اإلسالمي‪:‬‬ ‫‪https://cbi.iq/static/uploads/up/file157293920376088-.pdf‬‬
‫بعــد صــدور قانــون المصــارف اإلســامية رقــم (‪ )42‬لســنة ‪ 2015‬الــذي ُيعــد الركيــزة القانونيــة األولــى التــي اســتندت عليهــا‬
‫المصــارف اإلســامية‪ ،‬واســتنادا إلــى المــادة (‪ )15،13‬مــن قانــون المصــارف اإلســامية‪ ،‬التــي ألزمــت المصــارف اإلســامية بتطبيــق‬
‫معاييــر هيئــة المحاســبة والمراجعــة للمؤسســات الماليــة اإلســامية (‪ )AAOIFI‬لتيســير مراجعــة المعاييــر المذكــورة مــن‬
‫ـدت هــذه الضوابــط فــي إطــار تحقيــق هــدف (دعــم وتطويــر الصناعــة‬ ‫قبــل المصــارف اإلســامية‪ ،‬وال س ـ ّيما الناشــئة منهــا‪ُ ،‬أ ِعـ َّ‬
‫المصرفيــة اإلســامية) بضمــن الخطــة االســتراتيجية للبنــك المركــزي العراقــي (‪ ،)2020-2016‬وقــد تطرقــت هــذه الضوابــط‬
‫إلــى المعالجــات المحاســبية لــكل منتــج مــن منتجــات الصيرفــة اإلســامية‪ ،‬والشــروط المتوافــرة فيــه‪ ،‬وقــد تطرقــت هــذه‬
‫الضوابــط إلــى المعالجــات المحاســبية لــكل منتــج مــن منتجــات الصيرفــة اإلســامية‪ ،‬والشــروط المتوافــرة فيــه‪ ،‬وقدمــت‬
‫ـرحا مفص ـ ًلا عــن هــذه المنتجــات‪ ،‬وبحســب معاييــر (‪.)AAOIFI‬‬ ‫شـ ً‬

‫‪5-2. The most important developments in the legislative environment for the financial sector:‬‬ ‫‪Central Bank of Iraq‬‬
‫‪ A set of instructions and controls were issued to regulate the work of banks and financial companies,‬‬ ‫‪Financial Stability Report 2018‬‬
‫‪especially Islamic banks as follows:‬‬
‫‪5-2-1. Regulations of Islamic Financial Instruments:‬‬ ‫‪https://cbi.iq/static/uploads/up/file157293920376088-.pdf‬‬
‫‪Following the promulgation of the Islamic Banking Law No. (42) of 2015, which consider as the first legal‬‬
‫‪pillar on which Islamic banks were based, And according to Article (13.15) of the Banking Law, which‬‬
‫‪obliged Islamic banks to apply the standards of the Accounting and Auditing Organization for Islamic‬‬
‫‪Financial Institutions In order to facilitate the review of these standards by Islamic banks.‬‬
‫‪These controls were developed in the context of achieving the objective of supporting and developing the‬‬
‫‪Islamic banking industry within the CBI Strategic Plan (2016-2020).‬‬
‫‪These controls have been modified through the accounting treatments for each of Islamic banking‬‬
‫‪products. A detailed explanation of these products has been submitted according to AAOIFI’s standards.‬‬

‫]‪[3‬‬ ‫تــم إصــدار الضوابــط المنظمــة لعمــل المصــارف والمؤسســات الماليــة اإلســامية كأجــزاء (ضوابــط ادوات التمويــل اإلســامي)‬ ‫‪Central Bank of Iraq‬‬
‫و(ضوابــط هيئــات الرقابــة الشــرعية والتدقيــق الشــرعي الداخلــي واالمتثــال الشــرعي) و(ضوابــط إدارة المخاطــر فــي المصــارف‬ ‫)‪(additional comments‬‬
‫اإلســامية) خــال عــام ‪ ،2018‬والتــي تــم إعدادهــا فــي ضــوء المعاييــر الشــرعية والمحاســبية الصــادرة عــن (‪ ،)AAOIFI‬والمعاييــر‬
‫والمبــادئ االرشــادية الصــادرة عــن (‪ )IFSB‬كمــا نــود اإلشــارة الــى أن ضوابــط هيئــات الرقابــة الشــرعية اســتندت الــى (‪ )4‬معاييــر‬
‫خاصــة بمعاييــر الحوكمــة واألخالقيــات الصــادرة عــن (‪.)AAOIFI‬‬
‫قــام البنــك بإصــدار ضوابــط التكافــل فــي منتصــف عــام ‪2019‬م‪ ،‬وذلــك باالسترشــاد بالمعيــار الشــرعي رقــم (‪ )26‬الصــادر عــن‬
‫(‪ ،)AAOIFI‬واالطــاع علــى التجــارب الدوليــة فــي هــذا المجــال‪ ،‬وقــد أخــذ علــى عاتقــه مســألة تقديــم الرعايــة بشــأن إنشــاء‬
‫شــركة تأميــن تكافلــي بمســاهمة القطــاع المصرفــي اإلســامي‪.‬‬
‫تــم العمــل علــى إعــداد برنامــج التمويــل اإلســامي المجمــع والــذي استرشــد بالمعيــار الشــرعي رقــم (‪ )24‬التمويــل المصرفــي‬

‫‪90‬‬ ‫‪AAOIFI Footprint Report 2020‬‬

No. Description / extract from source document(s) Reference(s)

[3] ‫) والــذي أخــذ بعيــن االعتبــار تقديــم الدعــم للمصــارف لتشــجيعهم علــى المشــاركة فــي‬AAOIFI( ‫المجمــع الصــادر عــن‬
.‫التمويــل واالســتثمار فــي مشــاريع إســتراتيجية ذات عائــد اقتصــادي واجتماعــي للمصــارف الممولــة و للمجتمــع‬
‫يقــوم البنــك المركــزي العراقــي بــإدارة شــهادات اإليــداع اإلســامية كجــزء مــن متطلبــات إدارة الســيولة مــا بيــن المصــارف‬
‫ ونوضــح أدنــاه المســودات التــي يعمــل علــى إعدادهــا البنــك المركــزي والمســتندة الــى المعاييــر الصــادرة عــن‬،‫االســامية‬
:‫المؤسســات الماليــة اإلســامية الدوليــة وبمــا يتناســب مــع البيئــة المحليــة‬
‫ مســودة قانــون صكــوك االســتثمار اإلســامي تــم تقديمهــا إلــى مجلــس الدولــة لغــرض تدقيقهــا وإصدارهــا بالشــكل‬-
.‫النهائــي‬
‫ مســودة قائمــة الســيولة الخاصــة بالمصــارف اإلســامية والتــي تأخــذ خصوصيــة المصــارف اإلســامية مــن حيــث طبيعــة‬-
.‫الودائــع واألدوات الماليــة المتوافقــة مــع الشــريعة‬
‫ مســودة شــبكة الحمايــة الماليــة اإلســامية والتــي تتنــاول مســألة توفيــر الســيولة بيــن القطــاع المصرفــي اإلســامي‬-
.‫برعايــة البنــك المركــزي لتوفيــر اإلطــار الشــرعي الخــاص بالملجــأ األخيــر لإلقــراض‬
‫ مســودة دليــل المبــادئ واألطــر األساســية لضوابــط النوافــذ اإلســامية والتــي تــم االسترشــاد فيهــا بالمعيــار المحاســبي‬-
‫) الصــادر عــن‬17( ‫ ومعيــار رقــم‬،)AAOIFI( ‫) الصــادر عــن هيئــة المحاســبة والمراجعــة للمؤسســات الماليــة اإلســامية‬18( ‫رقــم‬
.)IFSB(
 .‫مسودة ضوابط شهادات اإليداع واالستثمار المصرفية الخاصة بالمصارف‬

The regulations governing the work of Islamic banks and financial institutions have been issued in pars Central Bank of Iraq
(controls of Islamic finance tools), (controls of Sharia Supervisory Boards, Internal Sharia Auditing and (additional comments)
Sharia Compliance) and (controls of risk management in Islamic banks) during 2018, which were prepared
according to Shariah and Accounting standards issued by the AAOIFI, and standards and Guidelines issued
by the IFSB, we also want to mention that the Shariah Supervisory Board controls were based on (4)
AAOIFI’s Governance and Ethics Standards.
The Bank issued Takaful Regulations in mid-2019, issued by AAOIFI’s Standard No. (26). And through
perusal to the International experiences in this area, the bank has taken it upon itself to providing care for
the establishment of a Takaful insurance company with the contribution of the Islamic banking sector.
The preparation of the Islamic syndicate finance program has been working on, which was guided by
AAOIFI’s Shariah Standard No. (24), which took into account the provision of support to the Islamic banks
to encourage them to participate in financing and investment in strategic projects with an economic and
social return to the banks and the community.
The CBI manages Islamic deposit certificates as part of the interbank liquidity management requirements.
As clarified below, the drafts prepared by the CBI are based on the standards issued by the international
Islamic financial institutions in accordance with the local environment:
- A draft Islamic Investment Sukuk Law has been submitted to the State Council for the scrutiny and final
issuance.

AAOIFI Footprint Report 2020 91

No. Description / extract from source document(s) Reference(s)

[3] - Draft liquidity list of Islamic banks, which takes the privacy of Islamic banks in terms of the nature of
deposits and financial instruments compliant with Shariah.
- Draft Islamic financial protection network, which deals with the issue of providing liquidity between the
Islamic banking sector under the auspices of the central bank to provide the legal framework for the last
resort for lending.
- Draft Guide of the Basic Principles and Frameworks for Islamic Window Controls, guided by AAOIFI’s
Accounting Standard No. (18) and IFSB Standard No. (17).
- Draft controls of the deposit and investment banking certifications in Islamic banks.

‫ حيــث قــام عــدد مــن‬،‫ خاصــة بعــد األزمــة الماليــة العالميــة األخيــرة‬،‫لقــد شــهد موضــوع «الحوكمــة المؤسســية» تطــورات مهمــة‬ Central Bank of Iraq
‫ مثــل «منظمــة التعــاون االقتصــادي والتنميــة» و«لجنــة بــازل للرقابــة المصرفيــة» و«مجلــس‬،‫الهيئــات والمنظمــات المختصــة‬ Corporate Governance Guide for Banks
»‫االســتقرار المالــي» و«مجلــس الخدمــات الماليــة اإلســامية» و«هيئــة المحاســبة والمراجعــة للمؤسســات الماليــة اإلســامية‬ https://www.imtb.iq/
‫ بإصــدار العديــد مــن‬،‫و«مجلــس معاييــر المحاســبة الماليــة» و«المجلــس الدولــي لمعاييــر التدقيــق والتوكيــد» وغيرهــا‬
،‫ يأتــي إصــدار البنــك المركــزي العراقــي هــذا الدليــل‬،‫ وفــي ضــوء هــذه التطــورات‬،‫المبــادئ المنظمــة للحوكمــة المؤسســية‬ https://bit.ly/37IZcde
.ً‫وذلــك بمــا ينســجم مــع أفضــل الممارســات المتعــارف عليهــا دوليــ‬

The issue of “corporate governance” has witnessed important developments, especially after the recent
global financial crisis, where a number of competent bodies and organizations, such as OECD, Basel
Committee for Banking Supervision», Financial Stability Board and Islamic Financial Services Board,
Accounting and Auditing Organization for Islamic Financial Institutions, Financial Accounting Standards
Board, International Auditing and Assurance Standards Board, and others issued several principles
governing corporate governance. In light of these developments, the Central Bank of Iraq issued this guide
in line with the best of internationally accepted practices.

‫ضوابط هيئة الرقابة الشرعية والتدقيق الشرعي الداخلي واالمتثال الشرعي في المصارف اإلسالمية‬ ‫البنك المركزي العراقي‬
:‫تم اعتماد المواد القانونية والمعايير والوثائق الرقابية الدولية في إعداد هذه الضوابط؛ كما يلي‬ ‫دائرة مراقبة الصيرفة‬
.2015 ‫) لسنة‬43( ‫ قانون المصارف اإلسالمية رقم‬-1 ‫قسم مراقبة المصارف اإلسالمية‬
.2004 ‫) لسنة‬94( ‫ قانون المصارف رقم‬-2 ‫شعبة التعليمات والضوابط‬
‫) الصــادرة عــن هيئــة المحاســبة والمراجعــة للمؤسســات‬5،3،2،1( ‫ معاييــر الضبــط للمؤسســات الماليــة اإلســامية رقــم‬-3
.)AAOIFI( ‫الماليــة اإلســامية‬ To the Central Bank of Iraq
Banking Control Service
Regulation of Shari’ah Supervisory Board, internal Sharia Audit and Shari’ah Compliance in Islamic Banks. Islamic Banking Control Section
The legal articles, standards and international regulatory documents have been adopted in preparing these Division of instructions and controls
regulations as follows: https://cbi.iq/static/uploads/up/file152801782417238-.pdf
1- Islamic Banking Law No. (43) of 2015.

92 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[3] 2- Banking Law No. (94) of 2004.

3- Control standards for Islamic Financial Institutions No. (1,2,3,5) issued by the Accounting and Auditing
Organization for Islamic Financial Institutions (AAOIFI).

AAOIFI Footprint Report 2020 93

 Islamic Development Bank group
Last Updated: 1 Oct 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah
board?
94 AAOIFI Footprint Report 2020
Yes Jurisdiction, its role and mandate Islamic Development Bank Group
- multilateral development bank
(MDB), promotes social and economic
development in member countries and
Yes. It Muslim communities worldwide
implements  
AAOIFI Has the jurisdiction made public commitment Yes
standards to apply AAOIFI standards?
Founding Extent of application of AAOIFI standards? • Shari’ah standards: Guidelines[1]
member • Financial accounting standards: Adopt [1]
• Governance standards: Guidelines [1]
• Auditing standards: Adopt [2]
Has the jurisdiction made any modifications to No
AAOIFI any AAOIFI standards to suit its requirements?
standards are
available in 6 Are all or some financial institutions required Not applicable
languages or permitted to apply AAOIFI standards?
Not applicable
Does the jurisdiction allow dual reporting? Yes
No. Description / extract from source document(s) Reference(s)

[1] 2. BASIS OF PREPARATION Islamic Development Bank

Statement of compliance Financial Statements and Independent Auditor’s Report For the
The financial statements are prepared in accordance with Financial Accounting Standards («FAS») issued year ended 31 December 2018
by the Accounting and Auditing Organization for Islamic Financial Institutions («AAOIFI») and Shari’ah rules https://www.isdb.org/sites/default/files/media/
and principles as determined by the Shari’ah Board of the Bank. In accordance with the requirements of documents/09-2019/IsDB20%OCR20%FS20%
AAOIFI, for principal accounting matters for which no AAOIFI standard exists, the Bank seeks guidance YE1_19406019(18).PDF
from relevant International Financial Reporting Standards («IFRS») issued by the International Accounting
Standards Board («IASB»). Islamic Development Bank
Financial Statements (2017)
3. SIGNIFICANT ACCOUNTING POLICIES (continued) https://www.isdb.org/sites/default/files/media/
Critical accounting judgments and estimates documents/09-2019/IsDB20%OCR20%FS20%
The preparation of financial statements in accordance with FAS issued by AAOIFI, requires the use of YE1_19406020(17).PDF
certain critical accounting estimates and assumptions that affect the reported amounts of assets and
liabilities and income and expenses. It also requires Management to exercise its judgment in the process Islamic Development Bank
of applying the Bank’s accounting policies. Such estimates, assumptions and judgments are continually Financial Statements 1432H (2011)
evaluated and are based on historical experience and other factors, including obtaining professional https://www.isdb.org/sites/default/files/media/
advices and expectations of future events that are believed to be reasonable under the circumstances. documents/12-2018/IsDB-AR-Financial20%Statement-
1432H(2011).pdf

INDEPENDENT AUDITOR’S REPORT

Report on the Audit of the Financial Statements
Opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Bank as at 31 December 2018, and the results of the operations, its cash flows and changes
in members’ equity for the year then ended in accordance with the Financial Accounting Standards issued
by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).

35. STANDARDS ISSUED BUT NOT YET EFFECTIVE Islamic Development Bank
The following new financial accounting standards have been issued except for FAS 29 «sukuk issuances» Financial Statements and Independent Auditor’s Report For the
which is in the stage of exposure draft and is expected to be issued in near future. The Bank intends to year ended 31 December 2018
adopt these financial reporting standards when they become effective and is currently assessing the impact https://www.isdb.org/sites/default/files/media/
of these new financial accounting standards on its financial statements and systems documents/09-2019/IsDB20%OCR20%FS20%
(i) Financial Accounting Standard - 30 «Impairment and credit losses“ YE1_19406019(18).PDF
(ii) Financial Accounting Standard - 28 «Murabaha and other deferred payment sales»
This standard shall be effective on the financial statements of the Bank beginning on or after 1 January

AAOIFI Footprint Report 2020 95

No. Description / extract from source document(s) Reference(s)

[1] 2019. Early adoption of the standard is permitted. Islamic Development Bank
(iii) Financial Accounting Standard - 29 «Sukuk Issuances“ Financial Statements (2017)
This standard shall be applicable on the financial statements of the Bank for the periods beginning on or https://www.isdb.org/sites/default/files/media/
after 1 January 2019. documents/09-2019/IsDB20%OCR20%FS20%
YE1_19406020(17).PDF

Islamic Development Bank

Financial Statements 1432H (2011)
https://www.isdb.org/sites/default/files/media/
documents/12-2018/IsDB-AR-Financial20%Statement-
1432H(2011).pdf

[2] INDEPENDENT AUDITOR’S REPORT Islamic Development Bank

Basis for opinion Financial Statements and Independent Auditor’s Report For the
We conducted our audit in accordance with Auditing Standards for Islamic Financial Institutions issued year ended 31 December 2018
by AAOIFI and International Standards on Auditing («ISAs»). Our responsibilities under those standards https://www.isdb.org/sites/default/files/media/
are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section documents/09-2019/IsDB20%OCR20%FS20%
of our report. We are independent of the Bank in accordance with the AAOIFI’s Code of Ethics for YE1_19406019(18).PDF
Accountants and Auditors of Islamic Financial Institutions (AAOIFI Code), International Ethics Standards
Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) together with the ethical Islamic Development Bank
requirements that are relevant to our audit of the financial statements as prevailing in the local jurisdiction, Financial Statements (2017)
and we have fulfilled our other ethical responsibilities in accordance with these requirements and the https://www.isdb.org/sites/default/files/media/
AAOIFI and IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate documents/09-2019/IsDB20%OCR20%FS20%
to provide a basis for our opinion. YE1_19406020(17).PDF

Islamic Development Bank

Financial Statements 1432H (2011)
https://www.isdb.org/sites/default/files/media/
documents/12-2018/IsDB-AR-Financial20%Statement-
1432H(2011).pdf

96 AAOIFI Footprint Report 2020

 Hashemite Kingdom of Jordan
Last updated: 1 Oct 2019

Are AAOIFI standards Yes Jurisdiction, its role and mandate Central Bank of Jordan (CBJ) – Control
incorporated as law / and regulate the banking sector
regulation?
 
Does the jurisdiction Yes. It
implements (or plan to implements
implement) AAOIFI standards? AAOIFI Has the jurisdiction made public commitment to Yes
standards apply AAOIFI standards?

What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Regulator Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [2]
member • Financial accounting standards: Adopt [3]
(Jordan Central
• Governance standards: Adopt [2[&]4]
Bank)
• Auditing standards: Partial adoption
Has the jurisdiction made any modifications to No
Yes. AAOIFI any AAOIFI standards to suit its requirements?
Standards are
available in Are all or some financial institutions required or Yes
Arabic language permitted to apply AAOIFI standards?

Is there a central Shari’ah Yes [1] (JSC)

Does the jurisdiction allow dual reporting? Yes
board?

AAOIFI Footprint Report 2020 97

Hashemite Kingdom of Jordan
Last updated: 1 Oct 2019

Jurisdiction, its role and mandate Jordan Securities Commission –

Regulate, develop and monitor Jordan’s
capital market
 

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: N/A

Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
• Financial accounting standards: Adopt [5]
• Governance standards: N/A
• Auditing standards: Adopt [5]
No

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

98 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] Article 4A (Central Sharia Supervisory Commission) Jordan Securities Commission

Jordan Securities Commission, Islamic Finance Sukuk Law No. 30 for the year 2012 https://jsc.gov.jo/Links2/laws.aspx

[2] 2016/64 ‫التعديالت المعدلة للحاكمية المؤسسية للبنوك اإلسالمية رقم‬ Central Bank of Jordan
The Corporate Governance Instructions for Islamic Banks were issued No. (2015/61) dated 2015/5/12 and Amended Instructions of Corporate Governance for Islamic
amended instructions were issued for the Institutional Governance of Islamic Banks No. (2016/64) dated (Sharia
2016/9/25 Compliant) Banks issued No. (2016 /64) Dated 2016/9/25

The Board Overall Responsibilities https://www.sdc.com.jo/arabic/images/stories/pdf/corporate_

Article No. 8 u. 9: Ensure the adherence to the control criteria issued by Accounting and Auditing governance_banks.pdf
Organization for Islamic Financial Institutions (AAOIFI).
(Also extracted from the response to AAOIFI standards adoption
Board Committees survey questionnaire)
Article No. 10 b) 2: All the committee members must have educational qualifications with relevant practical
experience in the fields of accounting, finance, or any other similar fields or specialties of concern to the
Islamic banking business. In case of having no suitable experience regarding the Islamic banking activities,
they shall be included in suitable training programs in fields of accounting standards, auditing, Sharia
controls and standards issued by AAOIFI and Islamic Financial Services Board (IFSB).

Fit and Proper Criteria of Senior Executive Management

Article No. 14 f) 5: The experience mentioned in the previous point shall include at least two years of
experience in Islamic banking field. Otherwise, the member of the senior executive management shall be
subjected to a comprehensive qualifying training program, of no less than three months, in the fields of
Islamic banking, accounting and auditing standards, Sharia controls and standards issued by AAOIFI, and
standards issued by Islamic Financial Services Board (IFSB).

‫( تعميم الى البنوك االسالمية‬Circular to Islamic banks)

‫م‬2016/10/30 :‫هـ الموافق‬1438/1/29 :‫ التاريخ‬13875/1/10 :‫الرقم‬

‫( التعديل‬FAS 17)
‫م‬2008/11/17 :‫هـ الموافق‬1429/11/19 :‫ التاريخ‬12253/1/10 :‫الرقم‬

AAOIFI Footprint Report 2020 99

No. Description / extract from source document(s) Reference(s)

[3] Disclosure and Transparency Jordan Securities Commission

Article No. 25 c https://jsc.gov.jo/Links2/laws.aspx
The board shall make sure of the bank’s commitment to disclosures defined under the standards of
(AAOIFI) - provided that it shall be committed to disclosures defined under the international financial
reporting standards (IFRS) and international accounting standards (IAS) in case there are no specific
standards for Islamic financial institutions, Central Bank instructions, and other legislations of concern.
Also, it shall ensure that the executive management is aware of the changes on the standards of (AAOIFI)
and on International Financial Reporting Standards.

[4] 6 ‫باستثناء معيار التدقيق الشرعي الخارجي رقم‬ Central Bank of Jordan
With the exception of external Shari’ah audit standard No. 6. Amended Instructions of Corporate Governance for Islamic
(Sharia
Internal Shari’ah Audit Compliant) Banks issued No. (2016 /64) Dated 2016/9/25
Article No. 20 d ii
The board of directors shall ensure supporting the internal Sharia audit department with adequate https://www.sdc.com.jo/arabic/images/stories/pdf/corporate_
resources and the qualified personnel needed to manage Internal Sharia audit and offer them suitable governance_banks.pdf
training provided that the employees in the department shall have the following requirements as
minimum: (Also extracted from the response to AAOIFI standards adoption
i. An appropriate university degree along with knowledge of the origins of the Islamic financial dealings and survey questionnaire)
the terms of every contract and the reasons behind its being void.
ii. Experience and knowledge of standards issued by the (AAOIFI).

[5] Islamic Finance Sukuk Law No. 30 for the year 2012 Jordan Securities Commission
Article 13B https://jsc.gov.jo/Links2/laws.aspx

100 AAOIFI Footprint Report 2020

 Republic of Kazakhstan
Last updated: 24 Oct 2019

Are AAOIFI standards Yes [AFSA only] Jurisdiction, its role and mandate National Bank of Kazakhstan
incorporated as law / Central bank of Kazakhstan
regulation?  

Does the jurisdiction Yes, both NBK and

implements (or plan to AFSA implements Has the jurisdiction made public commitment to No
implement) AAOIFI standards? AAOIFI Shariah apply AAOIFI standards?
and Governance
standards Extent of application of AAOIFI standards? • Shari’ah standards: Local standards
/ regulations are based on AAOIFI
What is the membership Regulator standards [3]
profile of the regulating members (both • Financial accounting standards: Local
authority(ies) with AAOIFI? NBK and AFSA)[1] standards / regulations are based on
AAOIFI standards [3]
Yes, Shariah • Governance and auditing standards:
Standards are Do not adopt [3]
Are AAOIFI standards available in Has the jurisdiction made any modifications to No
translated / available in local Russian (one of any AAOIFI standards to suit its requirements?
language? the two official
Are all or some financial institutions required or Yes, partially [4]
languages)
permitted to apply AAOIFI standards?
Is there a central Shari’ah board? Yes, in AIFC [2]
Does the jurisdiction allow dual reporting? No

AAOIFI Footprint Report 2020 101

Republic of Kazakhstan
Last updated: 24 Oct 2019

Jurisdiction, its role and mandate Astana Financial Services Authority

(AFSA)—
independent regulator of the Astana
International Financial Centre (AIFC) 

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [5]

• Financial accounting standards: Partial
adoption [5]
• Governance standards: Adopt[5]
• Auditing standards: Partial adoption

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or Yes, partially
permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? No

102 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] National Bank of Kazakhstan https://nationalbank.kz/?docid=784&switch=english

Since December 2014 ,2, the NBK has been a member of AAOIFI
http://mfa.gov.kz/en/content-view/ledi-barbara-dzadz-
Astana Financial Services Authority (AFSA) rol-komiteta-po-regulirovaniu-finansovyh-uslug-v-rabote-
mezdunarodnogo-finansovogo-centra-astana

[2] AIFC
Clause 5.1 Guidance AIFC Islamic Finance Rules (IFR)
(2) An Islamic Financial Institution may use the services of a Centralised Shari’ah Supervisory Board (CSSB) AIFC Rules No. FR0013 of 2017
established for addressing the Islamic Finance Business activities in the AIFC and recognised by AFSA, for (with amendments as of 24 June 2019, which commence on 24
the purpose of complying with the provisions in this chapter and in this IFR Rules. June 2019)
http://afsa.kz/files/1a1ccbf5763e4972/IFR_v3_
National Bank of Kazakhstan FR05.05.2019_0013.pdf
In the jurisdiction of the NBK, a decentralized model operates:
Shari’ah Board at the level of Islamic financial organization (extract from the response to AAOIFI standards adoption survey
questionnaire from National Bank of Kazakhstan)
Pursuant to clause 2 of Article 2-52 of the Banking Law, the Shari’ah Board is an independent body
appointed by the general meeting of shareholders of an Islamic bank on the recommendation of the board
of directors.

Pursuant to clause 2 of Article 4-36 of the Law about Insurance Activities, the Shari’ah Board is an
independent body appointed by the general meeting of shareholders of an Islamic insurance (reinsurance)
company on the recommendation of the board of directors.

In accordance with clause 1 of Article 5-32 of the Law about Securities Market, the Shari’ah Board is
independent in decisions from the issuer of Islamic securities.

In accordance with clause 3 of Article 1-4 of the Law about Investment and Venture Funds, the investment
declaration of an Islamic investment fund must comply with the principles of Islamic finance and be
consistent with the Shari’ah Board.

Pursuant to clause 2 of Article 2-24 of the Law about Financial Leasing, the Shari’ah Board is an
independent body appointed by the general meeting of shareholders of the lessor on the recommendation
of the board of directors. External independent experts are determined by the board of directors of the
lessor.

AAOIFI Footprint Report 2020 103

No. Description / extract from source document(s) Reference(s)

[3] Law of the Republic Of Kazakhstan of February 2007 ,28 No. -234III ZRK Law of the Republic of Kazakhstan of February 2007 ,28 No.
About financial accounting and the financial reporting (The last edition from 2018-07-02) -234III ZRK
About financial accounting and the financial reporting (The last
Pursuant to clause 4 of Article 2 of the Law about Accounting and Financial Reporting financial edition from 2018-07-02)
organizations conduct accounting and financial reporting in accordance with international standards https://nationalbank.kz/?docid=783&switch=english
and regulatory legal acts of the National Bank of the Republic of Kazakhstan on accounting and financial
reporting. Special financial companies (SPV for securitization) and Islamic special financial companies (SPV
for issuing sukuk) conduct accounting and financial reporting in accordance with international standards.

The legislative framework

Legal basis for accounting in the Republic of Kazakhstan has been developed on the basis of standards of
the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in the framework of
general principles and foundations of IFRS.

[4] Islamic Leasing (extract from the response to AAOIFI standards adoption survey
Non-bank lessors are not regulated by the NBK. questionnaire from National Bank of Kazakhstan)
For non-bank lessor (Islamic leasing company) not prohibited from using AAOIFI governance standards.

[5] Clause 4.4. Responsibility for compliance with Shari’ah AIFC Islamic Finance Rules (IFR)
(b) every year, must prepare a report in accordance with the AAOIFI standards relating to preparing and AIFC Rules No. FR0013 of 2017
assessing compliance with Shari’ah; (with amendments as of 24 June 2019, which commence on 24
(c) must ensure that reviews to assess the Islamic Financial Institution’s compliance with Shari’ah are June 2019)
carried out in accordance with those AAOIFI standards; and https://afsa.aifc.kz/files/legals/131/file/ifr_v3_
Clause 5.8 Shari’ah reviews to be undertaken fr05.05.2019_0013.pdf
An Islamic Financial Institution must ensure that all Shari’ah reviews are undertaken by the SSB in
accordance with the AAOIFI Standards on Governance (GSIFI No 2).

Clause 5.9 Annual Shari’ah report

An Islamic Financial Institution must commission an annual report from the SSB which complies with the
AAOIFI Standards on Governance (GSIFI No 1).

Clause 5.11 Internal Shari’ah reviews

(2) An Islamic Financial Institution must perform the internal Shari’ah review in accordance with the AAOIFI
Standards on Governance (GSIFI No. 3).

104 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[5] Guidance
Clause 6.2
(6) The Islamic Window must ensure that the disclosures required by AAOIFI FAS 18 “Islamic Financial
Services offered by Conventional Financial Institutions” are made to each client with whom, or on whose
behalf, it conducts Islamic Financial Business.
Clause 1( 6.3)
Clause 2()1( 7.6)
Clause 7.7
Internal Shari’ah review (2)
Guidance
Clause 2( 8.2) (c)

5. Financial and operational risks Islamic Financial Business supplement form

Clause 5.5 https://www.afsa.kz/storage/files/1335c947f5504c91/
Supplement20%Islamic20%Business.pdf

AAOIFI Footprint Report 2020 105

 State of Kuwait
Last Updated: 1 Nov 2019

Are AAOIFI standards No Jurisdiction, its role and mandate Central Bank of Kuwait (CBK) - Regulator
incorporated as law / of Banking sector
regulation?  

Does the jurisdiction Yes (CMA intends Has the jurisdiction made public commitment to No
implements (or plan to to adopt AAOIFI apply AAOIFI standards?
implement) AAOIFI standards? standards)
Extent of application of AAOIFI standards? • Shari’ah standards: Has left it open for
the institutions to decide [2]
What is the membership CMA intends to • Financial accounting standards: Do not
profile of the regulating become a member. adopt [2]
authority(ies) with AAOIFI? Kuwait Association • Governance standards: Has developed
of Accountants local standards based on AAOIFI
& Auditors is a Shari’ah standards [2]
member Auditing standards: Do not adopt [2]

Are AAOIFI standards Yes. AAOIFI Has the jurisdiction made any modifications to No
translated / available in local standards are any AAOIFI standards to suit its requirements?
language? available in Arabic
language Are all or some financial institutions required or Yes, permitted for Shari’ah Standards
permitted to apply AAOIFI standards? only
Is there a central Shari’ah board? Yes [1]
Does the jurisdiction allow dual reporting? No

106 AAOIFI Footprint Report 2020

State of Kuwait
Last Updated: 1 Nov 2019
Jurisdiction, its role and mandate
Has the jurisdiction made public commitment to
apply AAOIFI standards?
Extent of application of AAOIFI standards?
Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or
permitted to apply AAOIFI standards?
Does the jurisdiction allow dual reporting?
AAOIFI Footprint Report 2020
Capital Markets Authority (CMA) -
regulatory authority of capital market
No
• Shari’ah Standards: Has left it open for
the institutions to decide [3]
• Financial accounting standards: Do not
adopt [3]
• Governance standards: Has developed
local standards based on AAOIFI Shari’ah
standards [3]
• Auditing standards: Do not adopt [3]
No
Yes
No
107
No. Description / extract from source document(s) Reference(s)

[1] Chapter Six: Boards and Committees of the Authority Capital Markets Authority
Article 4-6 Advisory Council for Sharia Supervision The Executive Bylaws
Module Two
1-4-6 Formation of the Advisory Council for Sharia Supervision Of Module Two: Capital Markets Authority https://www.cma.gov.kw/en/web/cma/book-for-by-
Sunday, 05 February 2017 By a resolution of the Board, an Advisory Council for Sharia Supervision shall be laws?articleId=571292&cmd=single
established and it shall report to the Board. The Council shall be the reference in all matters related to the
Authority’s resolutions in the Sharia compliant activities. https://www.cma.gov.kw/en/web/cma/book-for-by-laws

Although there is no official regulation yet for a Central Shariah Board (CSB) or a Central Shariah or
Advisory committee at the Central Bank of Kuwait (CBK), CBK has submitted a draft bill to create a CSB at Central Bank of Kuwait
CBK for the banking industry. https://www.globalethicalbanking.com/kuwaiti-islamic-banks-
show-resilient-asset-quality-strong-liquidity/

https://www.stalawfirm.com/en/news/view/kuwait-
central-cank-sharia-law.html?utm_source=Mondaq&utm_
medium=syndication&utm_campaign=View-Original

[2] ‫) «المبــادئ اإلرشــادية لنظــم‬IFSB( ‫وقــد تــم االسترشــاد بمــا صــدر مــن إرشــادات عــن مجلــس الخدمــات الماليــة اإلســامية‬ ‫تعليمات بشأن حوكمة الرقابة الشرعية في البنوك الكويتية اإلسالمية‬
‫ ومعاييــر الحوكمــة التــي‬،2009 ‫الضوابــط الشــرعية للمؤسســات التــي تقــدم خدمــات ماليــة إســامية» الصــادرة فــي ديســمبر‬ Instructions on Shari’a Supervisory Governance in Kuwaiti
‫) ومــا أصدرتــه بعــض البنــوك المركزيــة فــي‬AAOIFI( ‫أصدرتهــا هيئــة المحاســبة والمراجعــة للمؤسســات الماليــة اإلســامية‬ Islamic Banks
.‫الــدول العربيــة واالســامية مــن تعليمــات فــي هــذا الشــأن‬ https://www.cbk.gov.kw/ar/images/governance-islamic-
banks122719-_v20_tcm122719-11.pdf
Noting that the guidelines of the Islamic Financial Services Board (IFSB) as stipulated in the “Guiding
Principles of Sharia Governance Control Systems for Institutions Offering Financial Islamic Services”
published in December 2009, the governance standards issued by the Accounting and Auditing https://www.cbk.gov.kw/en/images/economic-
Organization for Islamic Financial Institutions (AAOIFI), and Central Banks of some Arabic and Islamic reports124076-2016-_v50_tcm124076-10.pdf
countries have been beneficial in this respect.

Instructions for the governance of Shari’ah supervision in Kuwaiti Islamic banks. The instructions were (Also extracted from the response to AAOIFI standards adoption
produced in the publications of AAOIFI in this field. survey questionnaire

108 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[3] As per article 9-2-2 of Module Five (Securities Activities and Registered Persons) of the Executive Bylaws of
Law No. 7 of 2010 as amended by Resolution No. 73 of 2018 (issued on 2018/6/3).
Article 9-2-2: The Licensed Person is responsible for specifying the Sharia Standards that the company
shall comply with, and shall commit to inform the Authority of the references of the implemented Sharia
Standards.

The Licensed Person shall also commit to providing the Authority, Internal Sharia Auditing Unit, and http://cma.gov.kw/en/web/cma/-bylaw-documents
External Sharia Auditing Office with the report of the Sharia Supervisory Board upon request; provided that
this report is prepared on a semiannual basis. (Extracted from the response to AAOIFI standards adoption
In the case of non-compliance by the Licensed Person with the Sharia Standards, it shall commit to include survey questionnaire)
in its periodical report the justifications for its noncompliance.”

Article 10-3 of Module Fifteen (Corporate Governance) of the Executive Bylaws of Law No. 7 of 2010
stipulates in clause No. 4: “Set integrated accounting system which keeps books, records and accounts
that reflect in detail and accurately the financial statements and income accounts, which enable keeping
the company’s assets and preparing financial statements in accordance with international accounting
standards approved by the Authority.”

Kindly refer to Article 2-2 “The Sharia Supervisory System for Persons Licensed to Operate in accordance
with Islamic Sharia” and its sub-articles in Module Five (Securities Activities and Registered Persons) of
the Executive Bylaws of Law No. 7 of 2010 and Article 5-3 “External Sharia Auditing Office” of the same
Module. In addition to Article 18-2 “Sharia Supervision” and its sub-articles in Module Thirteen (Collective
Investment Schemes) of the Executive Bylaws of Law No. 7 of 2010 in relation to Funds licensed to operate
in accordance with the provisions of Islamic Sharia.

Important Note: The CMA/CBK MOU could be found on this web page:
These regulations issued by the Capital Markets Authority (CMA) apply to Persons Licensed to operate http://cma.gov.kw/en/web/cma/moui
in accordance with Islamic Sharia (excluding banks as per the MOU signed between the Central Bank of
Kuwait and the CMA on 2018/1/17), and also apply to Funds licensed to operate in accordance with the (Extracted from the response to AAOIFI standards adoption
provisions of Islamic Sharia. survey questionnaire)

AAOIFI Footprint Report 2020 109

 Kyrgyz Republic
Last updated: 1 Oct 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
110 AAOIFI Footprint Report 2020
Yes Jurisdiction, its role and mandate
Yes. It implements Has the jurisdiction made public commitment to
AAOIFI standards apply AAOIFI standards?
Extent of application of AAOIFI standards?
Not a member
Yes (Russian) Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or
permitted to apply AAOIFI standards?
No
Does the jurisdiction allow dual reporting?
National Bank of Kyrgyz
Republic– Central bank of Kyrgyzstan
No
• Shari’ah standards: Adopt / has
developed local standards based on
AAOIFI Shari’ah standards [1]
• Financial accounting standards: Adopt [1]
• Governance standards: Adopt / has left it
open for the institutions to decide. [2] [3]
• Auditing standards: Adopt [4]
No
Yes
No
No. Description / extract from source document(s) Reference(s)

[1] Chapter 1. General Provisions REGULATION 

3. The financial statements of an Islamic bank shall objectively represent its financial position and comply on Requirements for the Financial Statements Formed by 
with the standards of the Accounting and Auditing Organization for Islamic Financial Institutions (herein- the Commercial Banks that Conduct Operations under the Prin-
after referred to as AAOIFI), and if there are no certain standards, a bank can use the IFRSs (International ciples of Islamic Banking and Finance 
Financial Reporting Standards) provided that they do not contradict the Shari’ah Standards approved by
the AAOIFI. Appendix to
Resolution No. 21/13 of  the National Bank of the 
Chapter 2. General Requirements for Financial Statements and Its Composition Kyrgyz Republic Board as of May 31, 2017 
15. Classification and disclosure of the items in the financial statements shall be maintained from period to Creation date: 2018-05-10
period, except for the cases when:  https://www.nbkr.kg/printver.jsp?item=103&lang=ENG&mate-
2) changes in presentation are required by the AAOIFI standards.  rial=86849
16. Comparative figures of the previous reporting year shall be given for each figure of accounting state-
ments, unless otherwise is permitted or required by the AAOIFI standards.
25. 3) if the control over the subsidiary is lost, the parent company shall disclose information on income
and expenses (if any) recognized in accordance with the AAOIFI standards, and if there are no certain
standards, a bank may use the IFRSs provided that they do not contradict the Sharia’h Standards approved
by the AAOIFI..
31. A parent company shall be exempted from presentation of consolidated financial statements if the par-
ent company located in the territory of the Kyrgyz Republic of this head company draws up and presents
consolidated financial statements in accordance with the NBKR requirements and the AAOIFI standards,
and if there are no certain standards, in accordance with the IFRSs provided that they do not contradict the
Sharia’h Standards approved by the AAOIFI.  
32. Investments in the subsidiaries, jointly controlled and associate entities shall be disclosed in the consol-
idated financial statements in accordance with the AAOIFI standards and, and if there are no certain stan-
dards, in accordance with the IFRSs provided that they do not contradict the Sharia’h Standards approved
by the AAOIFI.

Chapter 3. Statement of Financial Position 

35. An item of the assets shall not be subject to offset with an item of liabilities in the Statement of
financial position and, vise versa, except where it is required or permitted by the AAOIFI standards, with
disclosure of these facts in the notes. If there are no certain AAOIFI standards, the bank shall be entitled to
use the IFRSs provided that they do not contradict the Sharia’h Standards approved by the AAOIFI.

AAOIFI Footprint Report 2020 111

No. Description / extract from source document(s) Reference(s)

[1] Chapter 4. Statement of Comprehensive Income  REGULATION 

44. Items of income and expenses shall not be subject to offset, except the cases when:   on Requirements for the Financial Statements Formed by 
the AAOIFI standards allow this;  the Commercial Banks that Conduct Operations under the Prin-
65. The notes to the financial statements of an Islamic bank shall present the following information:   ciples of Islamic Banking and Finance 
4) sources of formation and use of the Zakat funds created in accordance with the AAOIFI standards during
the reporting period, specifying the calculation method and the recipients, if any.  Appendix to
Chapter 10. Statement of Financial Position as of the beginning of the Earliest Comparative Period   Resolution No. 21/13 of  the National Bank of the 
67. The statement of financial position at the beginning of the earliest comparative period shall be formed Kyrgyz Republic Board as of May 31, 2017 
if the bank applies the accounting policy on a retrospective basis or carries out retrospective recalculation Creation date: 2018-05-10
or reclassification of the items in its financial statements in accordance with the AAOIFI standards, and https://www.nbkr.kg/printver.jsp?item=103&lang=ENG&mate-
if there are no certain standards, in accordance with the IFRSs, provided that they do not contradict the rial=86849
Sharia’h Standards approved by the AAOIFI.  

Chapter 13. Final Provisions 

73. When publishing and implementing amendments and additions to the AAOIFI, they shall be applied by
the bank in addition to this Regulation.  REGULATION 
On operations carried out under the Principles  
SECTION III  of Islamic Banking and Finance  
Final Provisions  (Amendments and addenda are approved by the Resolutions
3.1. This provision can be supplemented with the list of operations that comply with the principles of of the NBKR Board No. 32/8 as of August 28, 2013, No. 7/2 as
Islamic Banking and Finance and are envisaged by the Sharia standards approved by the Accounting and of February 10, 2016, No. 49/8 as of December 21, 2016, No.
Auditing Organization for Islamic Financial Institutions by introducing the amendments.  21/10 as of May 31, 2017) 
https://www.nbkr.kg/contout.jsp?item=103&lang=ENG&mate-
Article 4. Islamic Principles of Banking Industry and Financing: rial=86842
“2. The Islamic principles of banking industry and financing are the principles and rules for implementa-
tion of banking operations and transactions in accordance with the standards of Shari’ah that have been LAW OF THE KYRGYZ REPUBLIC 
developed and approved by the international organizations that establish standards for the conduct of  No. 206, Bishkek city, dated December 16, 2016 
Islamic banking industry (Organization of accounting and audit for Islamic financial institutions, the Council On the National Bank of the Kyrgyz Republic, Banks and Banking
of Islamic Financial Services)”.[AAOIFI] Activity 
(Put into effect by the Law KR dated December 16, 2016, N 207) 
Regulation on operations carried out under the Principles of Islamic Banking and Finance is approved by   (As amended by the Laws of the Kyrgyz Republic  
Resolution No. 38/8 of the National  Bank of the Kyrgyz Republic Board  as of September 23, 2009   April 2, 2018 # 34, July 11, 2018 # 68, August 6, 2018 # 88, De-
cember 10, 2018 # 100)
(Also extracted from the response to AAOIFI standards adoption
survey questionnaire)

112 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[2] 3. 7) ensuring transparency of the bank’s activities in accordance with the standards of the Accounting and REGULATION 
Auditing Organization for Islamic Financial Institutions (AAOIFI) (and if there are no certain standards, the “On Corporate Governance in the Banks  
bank can use IFRS standards). of the Kyrgyz Republic that Conduct Operations Under the Prin-
ciples of Islamic Banking and Finance”  
 (amendments and additions approved by Resolutions of the
National Bank Board No.7/2 as of February 10, 2016, No.21/10
as of May 31,2017) 
https://www.nbkr.kg/searchout.jsp?item=103&materi-
al=86850&lang=ENG

[3] Chapter 17. Requirements to the Members of the Board of Directors and the Chairman of the Audit Com- REGULATION 
mittee, Risk Management Committee   on Licensing Bank Activities  
In addition, the chairman of the Audit Committee of an Islamic bank or a bank with an “Islamic window” (Chapter as amended by the Resolution of the NBKR Board
must additionally have knowledge of the principles of Islamic banking and finance, know the standards of No.2018-П-12/44-3 as of October 24, 2018) 
Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and submit a certificate or SECTION I. GENERAL PROVISIONS
a document confirming training completion. https://www.nbkr.kg/searchout.jsp?item=1468&materi-
al=91238&lang=ENG
145. 1) ..Moreover, the chief accountant of an Islamic bank or a bank with an “Islamic window” must addi-
tionally know the accounting standards of the Accounting and Auditing Organization for Islamic Financial
Institutions (AAOIFI) ..

[4] 2. Requirements to External Audit of the Banks  REGULATION 

5. The audit standards for the Islamic Financial Institutions developed by the Accounting and Auditing
Organization for Islamic Financial Institutions (AAOFI) shall be applied in the relations carried out in accor-
dance with the Principles of Islamic Banking and Finance
on Minimum Requirements to the External Audit of Banks and
Other Non-Banking Financial and Credit Institutions Licensed by
the National Bank of the Kyrgyz Republic,
Appendix to Resolution No. 2017-P-12/25-2-(RLA) of the Na-
tional Bank of the Kyrgyz Republic Board as of  June 15, 2017:
https://www.nbkr.kg/contout.jsp?item=103&lang=ENG&mate-
rial=86833

AAOIFI Footprint Report 2020 113

 Republic of Lebanon
Last Updated: 1 April 2020

Are AAOIFI standards No Jurisdiction, its role and mandate Banque du Liban (BDL) – Central Bank of
incorporated as law / Lebanon
regulation?  

Does the jurisdiction No. Follow as Has the jurisdiction made public commitment to No
implements (or plan to guidelines / apply AAOIFI standards?
implement) AAOIFI standards? reference
Extent of application of AAOIFI standards? • Shari’ah standards: Use as reference[1]
• Financial accounting standards: Use as
What is the membership Not a member reference [1]
profile of the regulating • Governance standards: Use as
authority(ies) with AAOIFI? reference [1]
• Auditing standards: Use as
reference[1]

Are AAOIFI standards Yes, available in Has the jurisdiction made any modifications to Yes [2]
translated / available in local Arabic, English any AAOIFI standards to suit its requirements?
language? and French
languages Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
Is there a central Shari’ah board? No Yes [3]
Does the jurisdiction allow dual reporting?

114 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] Regulator has prescribed AAOIFI Shari’ah standards as guidelines or reference materials, including as (Extracted from the response to AAOIFI standards adoption
supplementary guidance survey questionnaire)

[2] The regulations set by the jurisdiction uses AAOIFI standards as reference and in that sense we consider (Added by the contact person in the Islamic Banking Regulatory
them as modifications of AAOIFI standards. Committee at Banque Du Liban BDL)

[3] The jurisdiction allow dual reporting for Islamic Banks. The first reporting uses conventional banks financial (Added by the contact person in the Islamic Banking Regulatory
statements that incorporate International standards including IFRS9. The second reporting uses a special Committee at Banque Du Liban, BDL)
form of financial statements designed by BDL for Islamic Banks that includes many items adopted by
AAOIFI but it is not the exact form.

AAOIFI Footprint Report 2020 115

 State of Libya
Last Updated: 1 Oct 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
116 AAOIFI Footprint Report 2020
Yes Jurisdiction, its role and mandate Central Bank of Libya –
Regulator of banking sector
 
Yes Has the jurisdiction made public commitment to Yes
apply AAOIFI standards?
Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [1]
• Financial accounting standards: Adopt
Regulator member [1]
• Governance standards: Adopt [1]
• Auditing standards: Adopt [1]
Yes, available in Has the jurisdiction made any modifications to No
Arabic language any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
No
Does the jurisdiction allow dual reporting? No
‫‪No.‬‬ ‫)‪Description / extract from source document(s‬‬ ‫)‪Reference(s‬‬

‫]‪[1‬‬ ‫وبالنظــر لشــروع بعــض المصــارف التجاريــة فــي تقديــم هــذه المنتجــات عــن طريــق فتــح نوافــذ أو فــروع مصرفيــة ‪ ،‬فإنــه‬ ‫مصرف ليبيا المركزي‬
‫يتطلــب ضــرورة إتبــاع المصــارف األفضــل الممارســات المتوافقــة والمعاييــر المنظمــة لتقديــم وإدارة المنتجــات المصرفيــة‬ ‫اإلشاري‪:‬ا‪.‬ر‪.‬م‪.‬ن‪1055/‬‬
‫اإلســامية ‪ ،‬اســتنادًا إلــى المعاييــر والضوابــط الشــرعية للمؤسســات الماليــة اإلســامية الصــادرة عــن هيئــة المحاســبة‬
‫والمراجعــة للمؤسســات الماليــة اإلســامية (‪ ، )AAOIFI‬والمعاييــر الرقابيــة الصــادرة عــن مجلــس الخدمــات الماليــة اإلســامية‬ ‫منشور ا‪.‬ر‪.‬م‪.‬ن رقم ‪2010/9‬‬
‫(‪.)IFSB‬‬ ‫التاريق‪ 4 :‬رجب‬
‫الموافق‪ 16 :‬الصيف ‪1378‬و‪.‬ر(‪2010‬مسيحي)‬
‫‪Given that some commercial banks start offering these products by opening windows or branches of‬‬ ‫الموضــوع‪ :‬ضوابــط و أســس تقديــم المنتجــات المصرفيــة البديلــة‬
‫‪banks, it is required for banks to follow best practices that are compliant with the standards governing‬‬ ‫المتوافقــة وأحــكام الشــريعة اإلســامية ‪ ،‬فــي المصــارف التجاريــة فــي ليبيــا‬
‫‪the provision and management of Islamic banking products, based on the Islamic Shari’ah standards and‬‬
‫)‪regulations issued by the Accounting and Auditing Organization for Islamic Financial Institutions. (AAOIFI‬‬ ‫‪https://cbl.gov.ly/wp-content/uploads/04/2016/m2010-9.pdf‬‬
‫‪and the regulatory standards issued by the Islamic Financial Services Board (IFSB).‬‬

‫‪AAOIFI Footprint Report 2020‬‬ ‫‪117‬‬

 Malaysia
Last Updated: 1 Dec 2019

Are AAOIFI standards Yes (only Labuan Jurisdiction, its role and mandate Bank Negara Malaysia (BNM) -
incorporated as law / FSA) Central Bank of Malaysia – Banking and
regulation? Insurance sector regulator 

Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
No. Follow as Has the jurisdiction made public commitment to
guidelines / apply AAOIFI standards?
reference only
(except Labuan FSA) Extent of application of AAOIFI standards?
Not members
Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
No
Are all or some financial institutions required or
permitted to apply AAOIFI standards?
Yes (all 3 jurisdictions)[1]
Does the jurisdiction allow dual reporting?
No
• Shari’ah standards: Serve as reference
[2]
• Financial accounting standards: Serve
as reference [3]
• Governance standards: Serve as
reference [4]
• Auditing standards: Do not adopt
No
No. Islamic financial institutions (IFIs) are
not required to apply AAOIFI standards.
However, IFIs are not restricted to use
AAOIFI standards as reference
No

118 AAOIFI Footprint Report 2020

Malaysia
Last updated: 1 Dec 2019

Jurisdiction, its role and mandate  Securities Commission Malaysia (SC)–

Capital market regulator

Has the jurisdiction made public commitment to No

apply AAOIFI standards?

Extent of application of AAOIFI standards?
Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
• Shari’ah standards: Has left it open for
IFIs to decide / voluntary adoption [6]
• Financial accounting standards: Do not
adopt [7]
• Governance standards: Follow as
guidelines [8]
• Auditing standards: Do not adopt
No

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? No

AAOIFI Footprint Report 2020 119

Malaysia
Last updated: 1 Dec 2019

Jurisdiction, its role and mandate Labuan Financial Services Authority –

license and regulate entities operating
within Labuan IBFC

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Do not adopt

• Financial accounting standards: Adopt
[10]
• Governance standards: Do not adopt
• Auditing standards: Do not adopt

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

120 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] Bank Negara Malaysia https://www.bnm.gov.my/index.php?ch=en_about&pg=en_the-

Shariah Advisory Council (SAC) bank&ac=439&lang=en
The Shariah Advisory Council of Bank Negara Malaysia (SAC) was established in May 1997 as the
highest Shariah authority in Islamic finance in Malaysia. The SAC has been given the authority for the
ascertainment of Islamic law for the purposes of Islamic banking business, takaful business, Islamic
financial business, Islamic development financial business, or any other business, which is based on Shariah
principles and is supervised and regulated by Bank Negara Malaysia. 

Securities Commission Malaysia

Shariah Advisory Council https://www.sc.com.my/development/icm-v2/shariah-adviso-
In its effort to develop the Islamic capital market, the Commission established the Islamic Instrument Study ry-council
Group (IISG) in 1994 with a membership comprising Shariah consultants and corporate figures. The group
discussed and made decisions on issues related to the Islamic capital market in Malaysia.
Labuan FSA
Shariah Supervisory Council
The Shariah Supervisory Council (SSC) was set up in 2002 and comprises renowned Malaysian and https://www.labuanibfc.com/about-labuan-ibfc/the-regulator/
international Islamic finance scholars. The SSC reviews and ensures the compatibility of proposed financial consultative-bodies/shariah-supervisory-council
instruments with Shariah requirements. It also advises Labuan FSA on the development of Islamic
jurisprudence principles.

[2] In Malaysia, Bank Negara Malaysia (BNM) together with its Shariah Advisory Council (SAC), as the highest
authority in the ascertainment of Shariah rulings in Islamic finance, developed its own Shariah standards.
These Shari’ah standards are issued pursuant to the Islamic Financial Services Act 2013 (IFSA) which
ensures enforceability by the Bank.
In developing these Shari’ah standards, BNM considers AAOIFI Shariah standards as one of the references,
alongside with other international standards i.e. Islamic Financial Services Board and references to
Shari’ah classical and contemporary fatwa globally. This is to ensure that the Shariah requirements are
comprehensive, aligned with international practices and responsive to industry issues.
Shari’ah standards are issued based on legal provision under
Section 29 of Islamic Financial Services Act 2013 and available at
the BNM’s official website i.e. www.bnm.gov.my
(Extracted from the response to AAOIFI standards adoption
survey questionnaire)

[3] Since 2012, Malaysia has adopted accounting standards issued by the national standard setter, Malaysian
Accounting Standards Board (MASB) as required under the national legislations i.e. the Financial Reporting
Act 1967 and the Companies Act 1965. MASB adopts the International Financial Reporting Standards (IFRS)
standards as a basis in issuing the Malaysian Financial Reporting Standards (MFRS) for the purpose of
financial reporting standards in Malaysia. AAOIFI remains as one of the internal references on applicable
accounting standards for Shari’ah-compliant transactions.
MFRS is issued by MASB based on legal provisions under Section
26D of Financial Reporting Act 1967 and Section 55 of Companies
Act 2016 and available at the MASB’s official website i.e.
www.masb.org.my
(Extracted from the response to AAOIFI standards adoption
survey questionnaire)

AAOIFI Footprint Report 2020 121

No. Description / extract from source document(s) Reference(s)

[4] In Malaysia, Bank Negara Malaysia (BNM) is empowered by IFSA 2013 to specify standards relating to
Shariah governance and any other matter in relation to the business, affair and activity of the IFI for the
purposes of compliance with Shariah. In developing the Shari’ah governance framework, BNM considers
AAOIFI standards as one of the references, alongside with other international standards such as IFSB
standards on governance to ensure the standards are comprehensive, enforceable and aligned with
international practices in governance.
Shariah Governance Policy Document is issued based on Section
30 of IFSA 2013 and available at BNM’s official website i.e.
www.bnm.gov.my
(Extracted from the response to AAOIFI standards adoption
survey questionnaire)

[5] Malaysian Institute of Accountants (MIA) is empowered by the Accountants Act of 1967 to issue the MAQC is issued based on Section 6 of Accountants Act 1967 and
auditing and assurance standards in Malaysia namely Malaysian Approved Quality Control, Auditing, available at MIA’s official website i.e. www.mia.org.my
Review and Other Assurance (MAQC). MIA adopts International Auditing and Assurance Standards issued
by International Auditing and Assurance Standards Board to develop the MAQC.

[6] Securities Commission Malaysia (SC) published its own Shari’ah resolutions i.e. Resolutions of the Shari’ah For more information on the said resolutions, please visit SC’s
Advisory Council of the Securities Commission Malaysia. website: https://www.sc.com.my/development/islamic-capi-
tal-market/resolutions-of-the-sc-shariah-advisory-council
SC has left it open for the institutions to decide – and certain or all institutions have voluntarily adopted
the AAOIFI Shari’ah standards https://www.sc.com.my/api/documentms/download.ashx-
?id=2a428ec7-005e-438f-97e2-779e398deac6

http://www.bnm.gov.my/documents/SAC/SAC%20194th%20
Meeting%20Statement%20(Eng).pdf
(Also extracted from the response to AAOIFI standards adoption
survey questionnaire)

[7] Malaysian Financial Reporting Standards (MFRS) http://www.masb.org.my/pages.php?id=20

The Malaysian Accounting Standards Board (MASB) was established in 1997 under the Financial
Reporting Act 1997 (the FRA). The functions of the MASB as set out in Section 1(7) of the FRA shall be the
determination and issuance of accounting standards for the preparation of financial statements which are http://www.masb.org.my/pages.php?id=210
required to be prepared or lodged under any law administered by the following regulators: (a) SC; (b) Bank
Negara Malaysia (BNM); or (c) the Registrar of Companies.
 
As of April 2018, the Approved Accounting Standards issued by the MASB, and its applicability, are: https://www.pwc.com/my/en/services/assurance/mfrs.html
 the Malaysian Financial Reporting Standards (MFRSs), which are mandatory for entities other than private
entities. the Malaysian Private Entities Reporting Standard (MPERS), a framework developed for private
entities. A private entity that has not opted to apply MFRSs in their entirety shall apply the MPERS in their

122 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[7] entirety for financial statements with annual periods beginning on or after 1 January 2016. https://www.grantthornton.com.my/service/Audit-and-assur-
ance/mfrs/
The MASB supports the convergence of international financial reporting standards. As a consequence, the
standards for non-private entities, i.e. the MFRSs, are fully in compliance with the standards issued by the (Extracted from the response to AAOIFI standards adoption
International Accounting Standards Board (IASB), that is the International Financial Reporting Standards survey questionnaire)
(IFRSs).
 
Shariah compliant transactions and events shall be accounted for in accordance with MASB approved http://www.bnm.gov.my/guidelines/01_banking/04_pruden-
accounting standards, unless there is a Shari’ah prohibition. tial_stds/23_gps.pdf

[8] The regulations for financial institutions in Malaysia are under the purview of the SC and BNM, which https://www.sc.com.my/wp-content/uploads/eng/html/re-
include among others – sources/guidelines/lola/guidelines_lola_171108.pdf
Governance structure for the Shari’ah Advisors
Registration of Shari’ah Advisers Guidelines by SC Guidelines on the Governance of Shariah Committee for https://www.sc.com.my/wp-content/uploads/eng/html/re-
the Islamic Financial Institutions by BNM sources/guidelines/cis/170524_cis_unitrustfund.pdf
 
Governance relating to products of financial institutions
Examples – (Extracted from the response to AAOIFI standards adoption
Lodge and Launch Guidelines survey questionnaire)
 
Guidelines for Unit Trust
 
However, it is important to note that, in addition to complying with the minimum requirements
as prescribed by the regulations, financial institutions may adopt a higher governance practices as
recommended by global standard setters including AAOIFI.

[9] Regulator has adopted a different set of standards: https://www.mia.org.my/v2/downloads/ppt/auditing/publi-

International Standards on Auditing cations/2010/04/08/Presentation_slides_by_the_AOB_Execu-
 Under the Securities Commission Malaysia Act 1993, the Auditing Oversight Board (AOB) is given tive_Chairman.pdf
legislative authority to set auditing standards in relation to the audit of public interest entities. The AOB,
however, has delegated this responsibility to the Malaysia Institute of Accountants (MIA).
  https://www.mia.org.my/v2/
The Companies Act 1965 establishes that all public and private companies have a mandatory statutory
audit requirement regardless of their size, ownership structure or whether they are actively operating.
 

AAOIFI Footprint Report 2020 123

No. Description / extract from source document(s) Reference(s)

[9] Under the Accountants Act 1967, auditing standards are issued by MIA’s Auditing and Assurance Standards https://www.mia.org.my/v2/downloads/ppt/auditing/re-
Board (AASB). The AASB reviews standards and technical pronouncements issued by the International ports/2017/MIA_AASB_Annual_Report_2017.pdf
Auditing and Assurance Standards Board (IAASB) and adopts them as the Malaysian Approved Quality
Control, Auditing, Review, Other Assurance, and Related Services Pronouncements. The IAASB standards
are adopted as drafted, with minimal amendments for laws and regulations in Malaysia. As of February
2018, MIA has adopted International Standards on Auditing (ISAs) and International Standard on Quality (Extracted from the response to AAOIFI standards adoption
Control (ISQC) 1. survey questionnaire)

[10] CLARIFICATION NOTE FOR DIRECTIVE ON FINANCIAL REPORTING STANDARDS FOR LABUAN FINANCIAL https://www.labuanibfc.com/
INSTITUTIONS
https://bit.ly/34tWs1k
2.2 In this regard, Labuan financial institutions undertaking Shariah-compliant transactions may adopt the
accounting standards issued by AAOIFI for their Shariah-compliant transactions which are not dealt with by
the permitted accounting standards outlined in paragraph 3.1 of the Directive. The adoption of the AAOIFI
accounting standards would therefore complement the permitted accounting standards.

2.3 Labuan financial institutions are required to make appropriate and sufficient disclosures in their
financial statements on the Shariah-compliant transactions that have adopted the AAOIFI accounting
standards.

GUIDANCE NOTE ON ISSUANCE OF SUKUK WAKALA BI AL-ISTITHMAR IN LABUAN INTERNATIONAL https://www.labuanibfc.com/

BUSINESS AND FINANCIAL CENTRE
https://bit.ly/2Hsk3Hm
6.0 Characteristics of Sukuk Wakala Bi Al-Istithmar in Labuan IBFC

6.1.7 To ensure that the sukuk are not debt instruments and therefore tradable, at least %33 of the
underlying assets of the sukuk must be tangible assets (such as Ijara contracts, shares and sukuk)8 . This
is in line with the minimum percentage of tangible assets prescribed by the Accounting and Auditing
Organization for Islamic Financial Institutions (AAOIFI).

124 AAOIFI Footprint Report 2020

 Republic of Maldives
Last updated: 1 Feb 2020
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
Yes Jurisdiction, its role and mandate
Has the jurisdiction made public commitment to
Yes apply AAOIFI standards?
Extent of application of AAOIFI standards?
Yes (MMA)
No Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or
permitted to apply AAOIFI standards?
Yes (MMA & CMDA) Does the jurisdiction allow dual reporting?
AAOIFI Footprint Report 2020
Capital Market Development Authority
(CMDA) - Capital market regulator
Yes
• Shari’ah standards: Follow as guidelines
/ has left it open for the institutions to
decide – and certain or all institutions
have voluntarily adopted the AAOIFI
Shari’ah standards[1]
• Financial accounting standards: Has left
it open for the institutions to decide [2]
• Governance standards: Do not adopt[3]
• Auditing standards: Do not adopt
No
Yes
Yes
125
Republic of Maldives
Last updated: 1 Feb 2020

Jurisdiction, its role and mandate Maldives Monetary Authority (MMA)–

Central Bank / regulator of the financial
sector

Has the jurisdiction made public commitment to No

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Do not adopt

• Financial accounting standards: Do
not adopt
• Governance standards: Do not adopt
• Auditing standards: Do not adopt

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

126 AAOIFI Footprint Report 2020

Republic of Maldives
Last updated: 1 Feb 2020

Jurisdiction, its role and mandate Maldives Inland Revenue Authority

(MIRA)

Has the jurisdiction made public commitment Yes

to apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Do not adopt

• Financial accounting standards: Adopt
[4]
• Governance standards: Do not adopt
• Auditing standards: Adopt [5]

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required Yes

or permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

AAOIFI Footprint Report 2020 127

No. Description / extract from source document(s) Reference(s)

[1] The Sharī‘ah Council was established as the reference body and the advisor to the MMA on Sharī‘ah GUIDELINES FOR APPROVAL OF PRODUCTS BY THE SHARĪ‘AH
matters in October 2010 by the Board of Directors of the Authority COUNCIL OF MMA
http://www.mma.gov.mv/files/financialstability/bankingguide-
lines.pdf

About Capital Market Shariáh Advisory Council

The Capital Market Shariáh Advisory Council (CMSAC) acts in an advisory capacity to the CMDA Board of https://cmda.gov.mv/en/About-us/capital-market-shariah-advi-
Directors on matters concerning the development & regulation of the Islamic Capital Market. The CMSAC is sory-council-cmsac/
responsible for validating all Islamic Capital Market matters to ensure their compatibility with Shariáh.

All matters related to the Capital Market Shariáh Advisory Council is governed by the Regulation on Capital
Market Shariáh Advisory Council.

[2] Regulation on Issuance of Sukuk Securities (Extracted from the response to AAOIFI standards adoption
Approved Shari’ah Concepts and Principles for the Purpose of Structuring, Documenting and Trading of survey questionnaire)
Shari’ah Compliant Securities
Regulation on Shari’ah Screening of Equity Securities

[3] Accounting standards: Has left it open for institutions to decide. CMDA does not prescribe or has officially Capital Market Development Authority
adopted AAOIFI standards. However Institutions can apply AAOIFI standards where it is appropriate and Corporate Governance Code
explain in their disclosure reports any significant departure from IFRS in preparation and presentation of https://www.cmda.gov.mv/assets/Laws-and-Regulations/
financial statements. Apart from these, tax authority in Maldives does recognize AAOIFI standards as an Code-Coporate-Governance/Corporate-Governace-Code-
applicable set of standards for reporting performance. Jan-2014-English-Searchable.pdf

Currently applying International Accounting Standards and financial statements are prepared in line with (Extracted from the response to AAOIFI standards adoption
the International Financial Reporting Standards (IFRS) survey questionnaire)

[4] Ruling MALDIVES INLAND REVENUE AUTHORITY

4. For the purpose of section 8(c), international accounting standards (other than International Financial Malé, Republic of Maldives
Reporting standards) acceptable to the MIRA are: TAX RULING
(a) International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs); and https://www.mira.gov.mv/rulings/Tax%20Ruling%202012-
(b) Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Standards. B4%20(English).pdf

128 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[4] BUSINESS PROFIT TAX ASSESSMENT Instructions for Completing Business Profit Tax (BPT) Return
Following are the MIRA approved International Accounting Standards; (MIRA 304 Version 12.7
- IFRS; http://www.mira.gov.mv/forms/MIRA%20304%20Instruc-
- IFRS for SMEs; and tion%20v12%207%20(English).pdf
- AAOIFI Standards

[5] Auditing financial statements MALDIVES INLAND REVENUE AUTHORITY

17. All audits conducted for the purposes of the Act shall be in accordance with International Standards Malé, Republic of Maldives
on Auditing (ISA), and where relevant, International Standard on Assurance Engagements (ISAE) issued TAX RULING
by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of https://www.mira.gov.mv/TaxLegislation/tr-2018-b63-english.
Accountants (IFAC), or the auditing standards issued by the Accounting and Auditing Standards Board of pdf
the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) https://www.mira.gov.mv/TaxLegislation/Tax_Ruling_2015-B49_
(English).pdf

AAOIFI Footprint Report 2020 129

 Republic of Mauritius
Last updated: 1 Feb 2020
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
130 AAOIFI Footprint Report 2020
Yes [1] Jurisdiction, its role and mandate
Has the jurisdiction made public commitment to
Yes [1] apply AAOIFI standards?
Not a members
Extent of application of AAOIFI standards?
Has the jurisdiction made any modifications to
No
any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or
permitted to apply AAOIFI standards?
No
Does the jurisdiction allow dual reporting?
Bank of Mauritius (BOM) -- Central bank of
the Republic of Mauritius
Yes, The Mauritius Companies Act was
amended in 2017 to recognize AAOIFI stan-
dards as “International Accounting Stan-
dards” and Islamic financial institutions and
Islamic banks may adopt AAOIFI standards
instead of those issued by the International
Accounting Standards Board.
• Shari’ah standards: Adopt [2]
• Financial accounting standards: Adopt [2]
• Governance standards: Adopt [2]
• Auditing standards: Adopt [2]
No
Yes, all Islamic financial institutions are per-
mitted to apply AAOIFI standards. Islamic
banking institutions may adopt the AAOIFI
Standards if their adoption do not lead
them to contravene the Banking Act 2004 or
Guidelines issued thereunder.
Yes
No. Description / extract from source document(s) Reference(s)

[1] The Mauritius Companies Act was amended in 2017 to recognize AAOIFI standards as «International Ac- Response received from Bank of Mauritius for the country
counting Standards”.  Islamic financial institution and Islamic banks may adopt AAOIFI standards instead of profile.
those issued by the International Accounting Standards Board. In addition, the Bank of Mauritius Guideline
for Institutions conducting Islamic Banking Business (‘the Guideline’) allows Islamic banking institutions
(IBI) to adopt AAOIFI Standards when its adoption does not conflict with the Banking Act 2004 or Guide-
lines issued thereunder. 

AAOIFI standards can be adopted by Islamic banking institutions when their adoption does not conflict with
the Banking Act 2004.

The AAOIFI Standards are recognized as «International Accounting Standards» in the Mauritius Companies
Act since 2017.

[2] Guideline for Institutions Conducting Islamic Banking Business https://www.bom.mu/sites/default/files/guideline_for_in-

SECTION III - ACCOUNTING STANDARDS AND FINANCIAL REPORTING stitutions_conducting_islamic_banking_business_fi-
A. Disclosure of Information and Record Keeping nal_27.07.2018_1.pdf

20. The IBI may, in addition, take cognisance of the set of standards issued by the Accounting and Auditing
Organisation for Islamic Financial Institutions (AAOIFI) which is an international body responsible for
developing accounting, auditing, ethics, governance and Shari’ah’s standards for the Islamic banking and
finance industry, and adopt those standards if their adoption do not lead to the IBI being in breach with the
provisions of the Banking Act or any guideline issued thereunder. Adequate compliance disclosures should
also be included in the additional notes to the financial statement.

24. An IBI shall disclose obligations towards the payment of zakat as a business entity. Additionally, it
shall disclose the zakat obligations it is required to meet in pursuance of any authorisation given to it in
that respect by the shareholders or depositors. Zakat, as used in this guideline, is broadly based on the
terminology of the AAOIFI and is defined as a fixed annual obligation that is calculated by reference to net
assets, including cash holdings of the obligor. For an IBI which is operating an Islamic window, zakat shall be
determined on the net assets held by the window.
http://companies.govmu.org/English/Legislation/Documents/
The Companies Act 2001 amended%20acts290819/Companies%20Act%202001%20
2. Interpretation amended%20up%20to%20date%20(2).pdf
“International Accounting Standards” -
(a) means the International Accounting Standards issued by the International Accounting Standards Com-

AAOIFI Footprint Report 2020 131

No. Description / extract from source document(s) Reference(s)

[2] mittee, the International Financial Reporting Standards issued by the International Accounting Standards
Board, the Accounting Standards issued by the Accounting and Auditing Organization for Islamic Financial
Institutions and any Standards, by whatever name called, issued by these bodies or their successor bodies;
and

PART XIV - ACCOUNTING RECORDS AND AUDIT

Sub-Part C - Financial statements
211. Contents and form of financial statements
(6) Islamic financial institution and Islamic banks may adopt accounting standards issued by the Accounting
and Auditing Organization for Islamic Financial Institutions instead of those issued by the International
Accounting Standards Board.

Islamic Banking Bank of Mauritius

The guideline underscores the need for adherence to the various guidelines issued by the Bank apart from Annual Report on Banking Supervision 2017
setting out the minimum prerequisites for offering IFPs. https://www.bom.mu/sites/default/files/pdf/Supervision/Su-
pervision_Report_2007.pdf

132 AAOIFI Footprint Report 2020

  Federal Republic of Nigeria
Last updated: 1 Oct 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
Yes Jurisdiction, its role and mandate Central Bank of Nigeria (CBN) - Control
and administration of monetary and
financial sector policies
Yes. It implements Has the jurisdiction made public commitment to Yes
AAOIFI standards apply AAOIFI standards?
Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [2]
• Financial accounting standards: Adopt [3]
Not a member
• Governance standards: Partial
adoption[4]
• Auditing standards: Adopt [3]
Has the jurisdiction made any modifications to No
No any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
Yes [1] Does the jurisdiction allow dual reporting? Yes
AAOIFI Footprint Report 2020 133
 Federal Republic of Nigeria
Last updated: 1 Oct 2019

Jurisdiction, its role and mandate National Insurance Commission

(NAICOM) - administration, supervision,
regulation and control of insurance
business in Nigeria

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [5]

• Financial accounting standards: Adopt
[5]
• Governance standards: Do not adopt
• Auditing standards: Do not adopt

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

134 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] 1.3 o. Financial regulation Advisory council of Experts (FRACE) Guidelines on the Regulation and Supervision of Non-Interest
FRACE is the central advisory regulatory body set up by the Central Bank of Nigeria comprising of individ- Microfinance Banks in Nigeria
uals knowledgeable in the field of Islamic Commercial Jurisprudence to provide the following roles among https://www.cbn.gov.ng/out/2017/fprd/guidelines%20for%20
others: reg.%20and%20sup.%20of%20nimfb.pdf
Give expert opinion and assistance on non-interest banking and finance matters referred to it by the CBN.

[2] The Central Bank of Nigeria’s Central Shariah board called the ‘Financial Regulation Advisory Council of Ex- https://www.cbn.gov.ng/out/2015/fprd/frace%20cog.pdfCircu-
perts (FRACE)’ most often relies on the provisions of AAOIFI Shari’ah standards in reviewing and approving lar to all Non-Interest (Islamic) financial institutions,
of products and services presented by Islamic banks called Non-Interest Islamic Financial institutions (NIFIs) May 2015
- FRACE has directed that NIFIs should always attach Shari’ah approval and certification issued by their re-
spective Shariah board (called Advisory Committee of Experts-ACE) members. The format of the certificate https://www.cbn.gov.ng/out/2015/fprd/circular%20on%20
should be in line with provision of AAOIFI Shariah standard non-interest.pdf

(Extracted from the response to AAOIFI standards adoption survey questionnaire)

Clause 12.0 - Audit, Accounting and Disclosure Requirements

[3] All IIFS shall comply with relevant provisions of the circular issued by the CBN on disclosure requirement Guidelines for the Regulation and Supervision of Institutions
by financial institutions and other disclosure requirements contained in CAMA 1990 (amended) and BOFIA Offering Non-Interest Financial Services in Nigeria
1991 (as amended). In addition, they shall comply with the relevant standards on disclosure issued by https://www.cbn.gov.ng/Out/2011/pressrelease/gvd/Non-Inter-
standards setting organizations including the following: est%20Banking%20Guidelines%20June%2020%202011.pdf
• Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI);
• Islamic Financial Services Board (IFSB); and
• Nigerian Accounting Standards Board (NASB).

12.2 All IIFS shall comply with the Generally Accepted Accounting Principles (GAAP) codified in local stan-
dards issued by the NASB and the International Financial Reporting Standards (IFRS)/International Account-
ing Standards (IAS). For transactions, products and activities not covered by these standards, the relevant
provisions of the financial accounting and auditing standards issued by the AAOIFI shall apply.

7.2 b. ... however, for transactions, products and activities not covered by these standards, the relevant Guidelines on the Regulation and Supervision of Non-Interest
provisions of accounting and auditing issued by AAOIFI shall apply. Microfinance Banks in Nigeria
https://www.cbn.gov.ng/out/2017/fprd/guidelines%20for%20
reg.%20and%20sup.%20of%20nimfb.pdf

AAOIFI Footprint Report 2020 135

No. Description / extract from source document(s) Reference(s)

[3] Section 4: 19 (d) - NIFIs shall use International Financial Reporting Standards (IFRS) and AAIOFI Standards, Guidance Notes on Regulatory Capital for Non-Interest Financial
where applicable, to identify elements which fall under the definition of intangible assets. Institutions in Nigeria
https://www.cbn.gov.ng/Out/2019/BSD/Guidance%20
Notes%20on%20Regulatory%20Capital%20for%20NIFIs.pdf
12. Such policies and procedures shall also take into consideration compliance with the relevant accounting
standards (International Financial Reporting Standard (IFRS) and Accounting and Auditing Organization Guidance Notes on the Calculation of Capital Requirement for
for Islamic Financial Institutions (AAOIFI) and supervisory requirements as may be issued by the CBN from Market Risk for Non-Interest Financial Institutions in Nigeria -
time to time. Standardized Approach - March 2019
https://www.cbn.gov.ng/Out/2019/BSD/Guidance%20
Notes%20on%20%20the%20calculation%20of%20Market%20
Risk%20for%20NIFIs.pdf

[4] 10.2 The ACE shall also issue an annual report which complies with the Accounting and Auditing Organiza- Guidelines on Shariah Governance for Non-interest Financial
tion of Islamic Financial Institutions (AAOIFI) Governance Standard (No. 1) regarding the basic elements of Institutions in Nigeria
an ACE report. The NIFI shall also publish the ACE report in its annual financial report. https://www.cbn.gov.ng/out/2015/fprd/ace%20cog.pdf

10.7 b The ACE shall issue an annual report, which complies with the Accounting and Auditing Organization Guidelines on the Regulation and Supervision of Non-Interest
for Islamic Financial Institutions (AAOIFI) Governance standard (No. 1) regarding the basic element of an Microfinance Banks in Nigeria
ACE report… https://www.cbn.gov.ng/out/2017/fprd/guidelines%20for%20
reg.%20and%20sup.%20of%20nimfb.pdf

[5] 7.5 The Takaful-Insurance Operator is required to value assets and liabilities in line with the Accounting and Operational Guidelines 2013
Auditing Organization for Islamic Financial Institution (AAOIFI) standards. The Takaful-Insurance Operator Takaful-insurance Operators
shall ensure assets of the Takaful-Insurance fund are suitable to back the liabilities and absorb the risks of http://naicom.gov.ng/docs/guidelines/Approved%20Takaful%20
the Takaful-Insurance business. Guidelines.pdf

3.13 The Takaful-Insurance Operator has a responsibility to ensure the suitability of individuals selected
for membership of the ACE. ACE members must be fit and proper to perform their role in line with the
Commission and other local agency guidelines the Commission deems appropriate and in consideration of
international guidelines as issued by Islamic Financial Services Board (IFSB) and Accounting and Auditing
Organization for Islamic Financial Institutions (AAOIFI) guidelines.

136 AAOIFI Footprint Report 2020

 Sultanate of Oman
Last updated: 1 Oct 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
Yes Jurisdiction, its role and mandate Central Bank of Oman (CBO) -
 regulator of the banking and financial
services sector in the country
Yes. It implements Has the jurisdiction made public commitment to Yes
AAOIFI standards apply AAOIFI standards?
Extent of application of AAOIFI standards? • Shari’ah standards: Have left it open for
institutions to decide [2]
Regulator
• Financial accounting standards: Adopt[3]
member (CMA
only) • Governance standards: Adopt[3]
• Auditing standards: Adopt[3]
Has the jurisdiction made any modifications to No
Yes. AAOIFI any AAOIFI standards to suit its requirements?
standards are
available in Arabic Are all or some financial institutions required or Yes
language permitted to apply AAOIFI standards?
Yes [1] Does the jurisdiction allow dual reporting? Yes
AAOIFI Footprint Report 2020 137
Sultanate of Oman
Last updated: 1 Oct 2019

Jurisdiction, its role and mandate Capital Market Authority - Oman

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [4[ ]5]

• Financial accounting standards:
Adopt [4[ ]5]
• Governance standards: Follow as
guidelines [4[ ]5]
• Auditing standards: Adopt [4[ ]5]
Has the jurisdiction made any modifications to No
any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

138 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] Oman sets up Central Sharia Board in move to boost Islamic finance https://www.reuters.com/article/oman-islam-financing/oman-
sets-up-central-sharia-board-in-move-to-boost-islamic-finance-
idusl6n0s305j20141008

[2] Shari’ah standards adoption: left it open for institutions to decide (Extracted from the response to AAOIFI standards adoption
survey questionnaire)

[3] 1.2.1 Full-fledged Islamic banks in Oman shall follow Financial Accounting Standards (“FAS”) issued by the Central Bank of Oman
Accounting and Auditing Organization for Islamic Financial Institutions (“AAOIFI”). In requirements of AAO- Islamic Banking Regulatory Framework
IFI, for matters where no AAOIFI standards exist, the Licensees can use the relevant International Financial https://www.cbo.gov.om/sites/assets/Documents/English/Law-
Reporting Standards (“IFRS”) Regulations/IBRF.pdf

1.2.2 Islamic Windows / Islamic branches of foreign banks in Oman shall follow AAOIFI ‹s accounting and (Also extracted from the response to AAOIFI standards adoption
auditing standards. The parent conventional bank shall consolidate the financial statements according to survey questionnaire)
the IFRS. Disclosures with regard to consolidation shall be covered in the Notes to Accounts.

Clause 1.5.1.2, Clause 1.4.1, Clause 1..4.2.1, Clause 1.4.3.3, Central Bank of Oman
Islamic Banking Regulatory Framework
3.11 Books of accounts https://www.cbo.gov.om/sites/assets/Documents/English/Law-
3.11.3 Books of accounts must comply with the Financial Accounting Standards issued by the Accounting Regulations/IBRF.pdf
& Auditing Organisation for Islamic Financial Institutions (AAOIFI), and where no relevant AAOIFI standards
exist . with International Financial Reporting Standards (IFRS) / International Accounting Standards (IAS). (Also extracted from the response to AAOIFI standards adoption
Islamic Windows Islamic branches of foreign banks in Oman shall follow AAOIFI ‹s accounting and auditing survey questionnaire)
standards. The parent conventional bank shall consolidate the financial statements according to the IFRS.
Disclosures with regard to consolidation shall be covered in the Notes to Accounts.

In addition, please also see Clause 4.1.1, Clause 4.2.1.1, Clause 4.2.3, Clause, Clause 4.6.3.6

[4] (Muscat Securities Market (MSM) is the only stock exchange in the Sultanate of Oman). Capital Market Authority
Sharia compliant MSM index closed the year 2018 at 591.9 points a yearly decline by 17%. The Sharia Sultanate of Oman
compliant index comprises 15 companies and measures the performance of the shares of Sharia compliant Oman Annual Report 2018
companies in accordance with Sharia principles issued by the Accounting and Audit Organization for Islamic https://www.cma.gov.om/Home/AnnualReportFileDownlad/12
Financial Institutions. (AAOIFI) and the compliance is reviewed quarterly.

AAOIFI Footprint Report 2020 139

No. Description / extract from source document(s) Reference(s)

[5] Article (88): For preparation of published financial statements following must be complied:

(a) For presentation and disclosure of the published financial statements the Takaful company shall comply
with all the applicable International Accounting and Financial Reporting Standards, however for Shari’a
compliant activities AAOIFI standards shall be followed, that are adopted and approved by the CMA. Capital Market Authority
Sultanate of Oman
(c) The requirement of CMA’s laws and regulations shall prevail over the AAOIFI requirements in case of Draft Regulation for Takaful
any difference in accounting or reporting treatment.

Article (53): The responsibilities of the Shari’a Compliance officer shall be the followings:
(d) To ensure that Takaful company has properly adopted relevant AAOIFI Standards and other Standards
as approved by the CMA whereas in case of any contradiction with CMA’s laws and regulations, CMA’s
requirement shall prevail.

140 AAOIFI Footprint Report 2020

 Islamic Republic of Pakistan
Last updated: 1 Nov 2019
Are AAOIFI standards
incorporated as law / regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
Yes Jurisdiction, its role and mandate State Bank of Pakistan (SBP) - Regulator
of Banking sector
Yes. SBP in process Has the jurisdiction made public commitment to Yes in SBP’s Strategic Plan, Islamic
of implementing apply AAOIFI standards? Banking Industry of Pakistan 2014 - 2018
AAOIFI standards
with necessary • Shari’ah standards: Partial adoption [2]
amendments and Extent of application of AAOIFI standards? • Financial accounting standards: Partial
clarifications as per adoption [3]
requirements of local • Governance standards: Partial
Shariah compliance adoption[4]
environment. • Auditing standards: Developed
SBP is an “Associate standards / regulations based on / in
Member” while line with AAOIFI standards [5]
ICAP has “Observer
Member” status
Has the jurisdiction made any modifications to Yes, certain amendments have been
Yes. available in Urdu any AAOIFI standards to suit its requirements? made [6]
language [10]
Are all or some financial institutions required or
Yes. [7]
permitted to apply AAOIFI standards?
Yes (SBP and SECP)
Does the jurisdiction allow dual reporting? Yes
AAOIFI Footprint Report 2020 141
Islamic Republic of Pakistan
Last updated: 1 Nov 2019

Jurisdiction, its role and mandate Securities and Exchange Commission of

Pakistan (SECP) - Regulator of securities
market, Modaraba sector, Insurance /
Takaful sector, and NBFCs

Has the jurisdiction made public commitment to Yes, Press Release dated 15 February
apply AAOIFI standards? 2018 [8]

Extent of application of AAOIFI standards? • Shari’ah standards: Partial adoption [9]

• Financial accounting standards: Partial
adoption [11]
• Governance Standards: Partial adop-
tion [12]
• Auditing Standards: Do not adopt

Has the jurisdiction made any modifications to Yes

any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or Yes [9]
permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

142 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] Islamic Banking Strategy 2014 – 2018 prescribes adoption of AAOIFI Shariah Standards http://www.sbp.org.pk/departments/pdf/StrategicPlanPDF/
Strategy%20Paper-Final.pdf

[2] Following standards are adopted:

Standard No.3 – Default in Payment by a Debtor; Standard No.8 – Murabaha to the Purchase Orderer; Reference: January 12, 2010. SBP IBD Circular No. 01;
Standard No. 9 – Ijarah & Ijarah Muntahia Bittamleek; Standard No.13 – Mudarabah http://www.sbp.org.pk/ibd/2010/C1.htm

Standard No. 12 -- Sharikah (Musharakah) and Modern Corporations Reference: 8 April, 2013 SBP IBD Circular No 01 of 2013;
http://www.sbp.org.pk/ibd/2013/C1.htm

Standard No. 17 -- Investment Sukuk Reference: 15 July 2013 SBP IBD Circular No. 3 of 2013;
http://www.sbp.org.pk/ibd/2013/C3.htm

Standard No. 2 (Debit Card, Charge Card and Credit Card), Reference March 01, 2019 SBP IBD Circular No 01 of 2019
Standard No. 5 (Guarantees), http://www.sbp.org.pk/ibd/2019/C1.htm
Standard No. 14 (Documentary Credit),
Standard No. 18 (Possession (Qabd)),
Standard No. 24 (Syndicated Financing)
Standard No. 38 (Online Financial Dealings)

With a view to further strengthen Shariah compliance framework and harmonize the Shariah practices in IBD Circular No. 01 of 2020
Islamic banking industry, the AAOIFI Shariah Standards No. 19 (Loan (Qard)), No. 23 (Agency and the Act of January 3, 2020
an Uncommissioned Agent (Fodooli)), and No. 28 (Banking Services in Islamic Banks) have been adopted Adoption of ‹Accounting and Auditing Organization for Islamic
with immediate effect subject to clarifications/amendments as given in the attached Appendix – A. . Financial Institutions’ (AAOIFI) Shariah Standards

The adoption of the Standards is in addition to current regulations, other instructions and directives issued https://www.sbp.org.pk/ibd/2020/C1.htm
by SBP from time to time.
(please access this link for the details of the amendments
The failure to comply with these instructions may invoke penal action under the provisions of Banking https://www.sbp.org.pk/ibd/2020/C1-Annex-A.pdf )
Companies Ordinance 1962.

[3] Financial Accounting Standard (FAS) 1 Murabahah http://www.sbp.org.pk/ibd/2007/CL3.htm

Implementation of Financial Accounting Standard (FAS) 2 for Ijarah http://www.sbp.org.pk/ibd/2009/C1.htm

AAOIFI Footprint Report 2020 143

No. Description / extract from source document(s) Reference(s)

[4] Shari’ah Governance Framework for Islamic Banking Institutions (8. External Shari’ah Audit) http://www.sbp.org.pk/ibd/2018/C1-Annex-A.pdf

[5] Regulator has developed local standards / regulations based on / in line with AAOIFI auditing standards (Extracted from the response to AAOIFI standards adoption
survey questionnaire)

[6] Please refer to amendments as provided in respective circulars. http://www.sbp.org.pk/ibd/2019/C1-Annex-A.pdf

www.sbp.org.pk/ibd/2013/C3.htm

http://www.sbp.org.pk/ibd/2013/C1.htm

[7] SBP has defined the types of institution which may engage in Islamic banking. http://www.sbp.org.pk/bpd/2003/C1.htm

[8] The Securities and Exchange Commission of Pakistan (the Commission) is pleased to notify Shariah Standards https://www.secp.gov.pk/document/sro-241i-2017-notifica-
of Accounting and Auditing Organization of Islamic Financial Institutions (AAOIFI) namely; Shariah Standard tion-final-ifd/?wpdmdl=30651
No. 17 - Investment Sukuk (enclosed as Annexure-I), Shariah Standard No. 18- Possession (Qabd) (enclosed as
Annexure-II) and Shariah Standard No. 23 - Agency and the Act of an un-commissioned agent (Fodooli).

[9] SECP has formally adopted the following AAOIFI Shari’ah Standards: Reference: Notification of proposed adoption: SRO 1222 (I)
Standard No. 17 Investment Sukuk /2017 dated 29th November 2017;
Standard No. 18 Possession (Qabd) https://www.secp.gov.pk/document/copy-of-sro-1222-i-2017-
Standard No. 23 Agency and the Act of an un-commissioned agent (Fodooli) draft-shariah-standards-of-aaoifi-with-annexes/?wpdmdl=30028
Reference: Notification of adoption: via Press Release dated 16
February 2018;
https://www.secp.gov.pk/document/sro-241i-2017-notifica-
tion-final-ifd/?wpdmdl=30651

[10] AAOIFI launched its Shariah standards in Urdu. http://aaoifi.com/announcement/aaoifi-launches-its-shari-

ah-standards-urdu-translation-in-pakistan/?lang=en

[11] In Pakistan, we have developed local standards in line with AAOIFI Accounting standards. SECP notified https://www.secp.gov.pk/document/sro-241i-2017-notifica-
three Islamic AAOIFI Financial Accounting Standards (FAS) for adoption in Pakistan; FAS 1-Murabaha, FAS 2- tion-final-ifd/?wpdmdl=30651
Ijarah, and FAS 3-Profit and Loss Sharing on Deposits in the years 2005, 2007 and 2013, respectively. (Also extracted from the response to AAOIFI standards adoption
survey questionnaire)

144 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[12] SECP has notified Shariah Governance Regulations, 2018 covering the areas of Certification of Shariah https://www.secp.gov.pk/document/shariah-governance-regu-
compliant company/security, Shariah Screening criteria, Shariah Advisory, External Shariah Audit, Internal lations-2018/?wpdmdl=32676
Shariah Audit & Shariah compliance.

CHAPTER VII SHARIAH AUDIT

(4) The External Shariah Auditor shall assess compliance of a Shariah compliant company or company
issuing a Shariah compliant security, financial arrangements, contracts, and transactions with the Shariah
principles in light of the following: -
(c) Shariah Standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions
(AAOIFI), as adopted by the Commission, if any;

AAOIFI Footprint Report 2020 145

 State of Palestine (Palestinian authority)
Last updated: 1 Oct 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
146 AAOIFI Footprint Report 2020
Yes Jurisdiction, its role and mandate Palestine Monetary Authority (PMA) –
Supervisory authority of financial sector
Yes. It implements Has the jurisdiction made public commitment to Yes
AAOIFI standards apply AAOIFI standards?
Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [2]
• Financial accounting standards: Adopt
Regulator
[3]
member (PMA)
• Governance standards: Adopt [4]
• Auditing standards: Adopt [4]
Has the jurisdiction made any modifications to No
Yes. AAOIFI any AAOIFI standards to suit its requirements?
standards are
available in Arabic Are all or some financial institutions required or Yes
language permitted to apply AAOIFI standards?
Yes [1] Does the jurisdiction allow dual reporting? Yes
State of Palestine (Palestinian authority)
Last updated: 1 Oct 2019

Jurisdiction, its role and mandate Palestine Capital Market Authority

(PCMA) – Supervisory authority of
capital market

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [5]

• Financial accounting standards: Adopt
[5]
• Governance standards: Adopt [5]
• Auditing standards: Adopt [5]

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

AAOIFI Footprint Report 2020 147

No. Description / extract from source document(s) Reference(s)

[1] PMA Announces Establishment of High Commission of Shari’a Supervision http://www.pma.ps/Default.aspx?tabid=205&Arti-

cleID=1257&ArtMID=793&language=en-US
http://www.pma.ps/
https://bit.ly/3mpLqk4
http://www.pma.ps/
https://bit.ly/3os81hw

[2] See 10/5 (5) and 11/5 (2) http://www.pma.ps/Portals/1/Users/002/02/2/Legislation/In-

.‫) الصادرة للبنوك االسالمية والتي تنص على اعتماد المعايير الشرعية الصادرة عن ايوفي‬5/2013( ‫التعليمات رقم‬ structions/Banks/2013/instructions-5-2013.pdf
‫ميثاق عمل هيئة الرقابة الشرعية العليا والذي تبنى اعتماد المعايير الصادرة عن ايوفي‬
(https://www.dropbox.com/s/upz187vml03fd4v/instruc-
Instructions No. (5/2013) issued to Islamic banks, provides for the adoption of Sharia standards issued by tions-5-2013.pdf?dl=0)
AAOIFI.
The charter of the Supreme Sharia Supervisory Board, adopted the adoption of standards issued by AAOIFI (Also extracted from the response to AAOIFI standards adoption
survey questionnaire)

[3] See 9/5 and 11/5 number (3 http://www.pma.ps/Portals/1/Users/002/02/2/Legislation/In-

structions/Banks/2013/instructions-5-2013.pdf

(https://www.dropbox.com/s/upz187vml03fd4v/instruc-
tions-5-2013.pdf?dl=0)

(Also extracted from the response to AAOIFI standards adoption

survey questionnaire)

[4] See 11/5 http://www.pma.ps/Portals/1/Users/002/02/2/Legislation/In-

structions/Banks/2013/instructions-5-2013.pdf

(https://www.dropbox.com/s/upz187vml03fd4v/instruc-
tions-5-2013.pdf?dl=0)

(Also extracted from the response to AAOIFI standards adoption

survey questionnaire)

148 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[5] ،‫ ومعالــي رئيــس هيئــة ســوق رأس المــال الدكتــور نبيــل قســيس‬،‫أعلــن معالــي محافــظ ســلطة النقــد الســيد عــزام الشــوا‬ https://www.pcma.ps/Pages/newsPage.aspx?IDs=1097
‫ والــذي يأتــي فــي إطــار التعــاون المســتمر بيــن ســلطة النقــد وهيئــة‬،‫عــن إعــادة تشــكيل الهيئــة العليــا للرقابــة الشــرعية‬
‫ســوق رأس المــال لتطويــر منظومــة العمــل المالــي اإلســامي فــي فلســطين بمــا يتوافــق مــع أفضــل الممارســات الدوليــة‬
.)AAOIFI( ‫والمعاييــر الصــادرة عــن هيئــة المحاســبة والمراجعــة للمؤسســات الماليــة اإلســامية‬

His Excellency the Governor of the Palestinian Monetary Authority, Mr. Azzam Al-Shawa, and His Excellency
the Chairman of the Capital Market Authority, Dr. Nabil Kassis, announced the restructuring of the
Supreme Council for Sharia Supervision, which comes within the framework of continuous cooperation
between the Monetary Authority and the Capital Market Authority to develop the Islamic financial work
system in Palestine in line with International best practices and standards issued by the Accounting and
Auditing Organization for Islamic Financial Institutions (AAOIFI).

‫م أخـذت في االعتبـار‬31/12/2018 ‫البيانـات الماليـة وتقريـر مدقـق الحسـابات المسـتقل عـن العـشرة أشـهر المنتهيـة بتاريـخ‬. 3 https://www.pcma.ps/securitiesSector/Disclousures_Docs/Tam-
)»‫المعايـير المحاسـبية الصـادرة عـن هيئـة المحاسـبة والمراجعـة للمؤسسـات الماليـة اإلسـالمية «أيوفي‬ keen_FS_AnnualReport_21042019.pdf

3 The financial statements and the independent auditor’s report for the ten months ending on 31
December 2018, took into consideration the accounting standards issued by the Accounting and Auditing
Organization for Islamic Financial Institutions (AAOIFI).

AAOIFI Footprint Report 2020 149

 State of Qatar
Last updated: 1 Oct 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
150 AAOIFI Footprint Report 2020
Yes Jurisdiction, its role and mandate Qatar Central Bank (QCB) --
the central bank of State of Qatar
Has the jurisdiction made public commitment to Yes
Yes. It implements apply AAOIFI standards?
AAOIFI standards
Extent of application of AAOIFI standards? • Shari’ah standards: Has left it open for
the institutions to decide [2]
Regulator • Financial accounting standards: Adopt [3]
members (both • Governance standards: Partial adoption /
QCB and QFCRA) have developed local standards based on
AAOIFI accounting standards [2] [4]
• Auditing standards: Has left it open for
Yes. AAOIFI the institutions to decide [2]
standards are
available in Arabic Has the jurisdiction made any modifications to No
language any AAOIFI standards to suit its requirements?
No, but plans to Are all or some financial institutions required or Yes
set up a central permitted to apply AAOIFI standards?
Shari’ah committee
at QCB [1] Does the jurisdiction allow dual reporting? Yes
State of Qatar
Last updated: 1 Oct 2019
Jurisdiction, its role and mandate
Has the jurisdiction made public commitment to Yes
apply AAOIFI standards?
Extent of application of AAOIFI standards?
Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
Does the jurisdiction allow dual reporting?
AAOIFI Footprint Report 2020
Qatar Financial Centre Regulatory
Authority (QFCRA) - independent
regulator of the QFC, established
to authorise and regulate firms and
individuals conducting financial services
in or from the QFC
• Shari’ah standards: Has left it open for
the institutions to decide [5]
• Financial accounting standards: Adopt [6]
• Governance standards: Adopt [7]
• Auditing standards: Do not adopt [8]
No
Yes
151
No. Description / extract from source document(s) Reference(s)

[1] H.E. Sheikh Abdulla bin Saoud Al Thani, Governor, Qatar Central Bank (QCB): “The planned launch of a http://www.qcb.gov.qa/English/Publications/Speeches/H.E.%20
centralized sharia committee forms part of the broader, global approach to developing the Islamic financial the%20Governor/Documents/Oxford%20Business%20
services industry. In establishing such a framework, some key objectives will need to be considered. The Group%20-%20Qatar%20Central%20Bank-Sep%202018%20
committee should unify general sharia rules for each Islamic financial product to facilitate legal and regula- (003)e.pdf
tory supervision according to their legal structure and risk profile. This would help enhance the confidence
and stability of the market, as well as improve transparency, integrity and market compatibility among
Islamic banks.”
(Extracted from the response to AAOIFI standards adoption
[2] Not applicable
survey questionnaire) (QCB)
[3] Clause 2/2 Accounting Standards for Islamic Banks Part (VII) - Instructions of Supervision and Control
2/2/1 The Islamic banks should implement the accounting standards issued by the Accounting and Auditing Chapter Eight End of Year Financial Statements and Additional
Organization for Islamic Financial Institutions (AAOIFI), as relevant to the accounting policies and treat- Instructions
ments, http://www.qcb.gov.qa/English/Legislation/Instructions/Docu-
ments/BankInstructions/2013/07-08.pdf
Clause 2/3 Accounting Classification of Deposits at Banks (Islamic banks and Islamic branches of commer-
cial banks)

Clause 2/5/3 General Instructions

A-The Islamic banks should restrict to the International Financial Reporting Standards in respect of these
issues that are not covered by the AAOIFI standards for Islamic Financial Institutions, and without contra-
dicting the rules of the Islamic law (Sharia) or QCB instructions for the Islamic banks in this respect

Clause 2/5/2 Consolidated Financial Statements (The end of year financial statements)
C- Banks shall take into account notifying QCB of any effective changes or new standards issued by the
Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) or International Financial
Reporting Standards (IFRS) before making the required changes to the attached financial statements and
disclosures unless QCB has issued relevant instructions or updated the financial statements.

The instructions of Qatar Central Bank (QCB) obligate all conventional banks to prepare their financial
statements in accordance with International Financial Reporting Standards, and any new amendments and
issues thereon. The Islamic banks are also obligated to adopt the same standards where the guidelines of
Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) are not available.

The instructions in this section shall be applied by the conventional banks only, while Islamic banks should

152 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)
continue to apply the standards of AAOIFI in accordance with the instructions of QCB, pages (415-421) of Circular No.: 9/2017 To: All banks operating in Qatar Date: 09-
Instructions to Banks – September 2013, except for any issues not covered by AAOIFI’s standards, in which 02-2017
case IFRS’s will be adopted. http://www.qcb.gov.qa/sitelists/CircularsToBanks/Lists/Circu-
lars/Attachments/149/Circular

[4] ‫المراجعات الشرعية من قبل هيئة الرقابة الشرعية‬

Sharia reviews by the Sharia Supervisory Board
Clause 6.4.4
1. The company's Sharia Supervisory Board undertakes all Sharia reviews in accordance with the standards ‫التعليمـات التنفيذية لشركات التأمين‬
of Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI) Governance (GSIFI 2) ‫م‬2017 - ‫الطبعة األولى‬
‫مصرف قطر المركزي‬
2. The Sharia Supervisory Board prepares an annual report that adheres to the standards of the indicated
body. Executive Instructions for Insurance Companies
First Edition - 2017
‫المراجعات الشرعية الداخلية‬ Qatar Central Bank
Internal Sharia Reviews http://www.qcb.gov.qa/
Clause 6.4.5 (1)
The Takaful company must conduct internal Sharia reviews in accordance with the standards of the Account- https://bit.ly/2HvD6jv
ing and Auditing Organization for Islamic Financial Institutions (AAOIFI) on Governance (GSIFI No. 3).
The insurance company is committed to the fatwas, decisions, and instructions issued by
AAOIFI.
Clause 6.4.5 (2)
With regard to internal Shari’ah review, please refer to AAOIFI governance standard GSIFI 3.

[5] (Extracted from the response to AAOIFI standards adoption

Not applicable
survey questionnaire) (QFCRA)
[6] 2.1.6 Accounts and statements to use international standards QFC Regulatory Authority, Legislation, GENE Rulebook
(1) An Islamic banking business firm must prepare and keep its financial accounts and statements in accor- Islamic Banking Business Prudential Rules 2015 (IBANK)
dance with the accounting standards of AAOIFI or any other accounting standards approved in writing by Version No. 4 Effective: 28 March 2019
the Regulatory Authority. http://www.complinet.com/qfcra/display/display.html?r-
bid=1557&record_id=19942&element_id=11667&highlight=ac-
counting+standards#r19942
9.3.2 Accounting standards—Islamic financial institutions
An authorised firm that is an Islamic financial institution must prepare and maintain all financial accounts
and statements in accordance with the accounting standards of AAOIFI or any other accounting standards

AAOIFI Footprint Report 2020 153

No. Description / extract from source document(s) Reference(s)
approved in writing by the Regulatory Authority. QFC Regulatory Authority, Legislation, GENE Rulebook
Article 15 - Accounting Profit http://www.complinet.com/qfcra/display/display.html?r-
(b) accounts prepared in accordance with standards issued by the Accounting and Auditing Organisation for bid=1557&record_id=3934&element_id=3957&highlight=aao-
Islamic Financial Institutions (AAOIFI). ifi#r3934

COLL 5.6.1 Accounting Standards—All QFC Schemes Qatar Financial Centre Legislation > QFC Regulations > QFC Tax
(2) If the scheme is an Islamic fund, the operator must prepare and keep all financial accounts and state- Regulations > Part 3: Accounting Profit and Accounting Periods >
ments in accordance with the accounting standards of AAOIFI FAS 14.(3) If the operator of an umbrella Article 15 - Accounting Profit
scheme operates 1 or more sub schemes that are Islamic funds, it must prepare and keep all financial http://www.complinet.com/qfcra/display/display.html?r-
accounts and statements in accordance with IFRS, as supplemented by AAOIFI FAS 14. bid=1557&element_id=7125

Collective Investment Schemes Rules 2010 (COLL) > COLL Sched-

ule 3 Prospectus Content—QFC Qualified Investor Schemes >
COLL S3.3 Islamic Funds
http://www.complinet.com/qfcra/display/display.html?r-
bid=1557&element_id=7475
(Also extracted from the response to AAOIFI standards adoption
survey questionnaire) (QFCRA)

[7] 12.1.12 3. The review must be carried out, in accordance with the AAOIFI standards relating to Shari’a QFC Regulatory Authority, Legislation, IBANK Rulebook, ISFI
governance. Rulebook
http://www.complinet.com/qfcra/display/display.html?r-
bid=1557&record_id=18827&element_id=10969&highlight=in-
ternal+shari%27a+reviews#r18827
(Also extracted from the response to AAOIFI standards adoption
survey questionnaire) (QFCRA)

[8] 9.5.1. An authorised firm that is a QFC entity, or a branch required to do so by the Regulatory Authority, GENE 9.5.1 Assurance engagements and reports
must ensure that its auditor:
(a) conducts an audit of the firm’s annual financial statements; and http://www.complinet.com/qfcra/display/display.html?r-
(b) produces an audit report in accordance with the relevant standards published by the International bid=1557&element_id=4
Auditing and Assurance Standards Board (IAASB), as applicable to listed or public interest entities.

154 AAOIFI Footprint Report 2020

 Russian Federation
Last updated: 1 Aug 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
No Jurisdiction, its role and mandate Bank of Russia - Central Bank of the Russian
Federation 
Yes. It plans to
implement the Has the jurisdiction made public commitment to No
AAOIFI standards apply AAOIFI standards?
Not a member Extent of application of AAOIFI standards? • Shari’ah standards: Voluntary adoption [1]
• Financial accounting standards: Voluntary
adoption [2]
• Governance standards: Do not adopt
Yes • Auditing standards: Do not adopt
Has the jurisdiction made any modifications to No
any AAOIFI standards to suit its requirements?
No Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
Does the jurisdiction allow dual reporting? No
AAOIFI Footprint Report 2020 155
No. Description / extract from source document(s) Reference(s)

[1] Some institutions use AAOIFI Shari’ah standards as a reference. Shari’ah standards were translated in to the (Extracted from the response to AAOIFI standards adoption
Russian language and this contributed to spreading them in Russia and CIS. survey questionnaire)

[2] AAOIFI accounting standards are less implemented in the Russian Federation. The accounting system that (Extracted from the response to AAOIFI standards adoption
is widely used here is not IFRS or GAAP, it is local Russian accounting standards. survey questionnaire)
Institutions that are working in halal sector or the financial institutions which see potential in introducing
Shari’ah-compliant products could be the focus of spreading Shari’ah standards in the Russian Federation.
The Russian Center of Islamic Economics and finance is working on translation of Accounting standards to
the Russian language now.

156 AAOIFI Footprint Report 2020

 Kingdom of Saudi Arabia
Last updated: 1 April 2020
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
No Jurisdiction, its role and mandate Saudi Arabian Monetary Authority
(SAMA) – Central Bank of the Kingdom
of Saudi Arabia
No Has the jurisdiction made public commitment to No
apply AAOIFI standards?
Extent of application of AAOIFI standards? • Shari’ah standards: Do not adopt [1]
SAMA and CMA • Financial accounting standards: Has
are regulatory adopted different set of standards – and
members hence does not allow adoption of AAOIFI
standards [2]
• Governance standards: Do not adopt [3]
Yes, AAOIFI
standards are • Auditing standards: Do not adopt [4]
available in Arabic Has the jurisdiction made any modifications to No
any AAOIFI standards to suit its requirements?
No Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
Does the jurisdiction allow dual reporting? No
AAOIFI Footprint Report 2020 157
Kingdom of Saudi Arabia
Last updated: 1 April 2020

Jurisdiction, its role and mandate Capital Market Authority (CMA) –

Regulator of Capital markets in the
Kingdom of Saudi Arabia

Has the jurisdiction made public commitment to No

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Do not adopt [5]

• Financial accounting standards: Do not
adopt [6]
• Governance standards: Do not adopt [7]
• Auditing standards: Do not adopt [8]

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? No

158 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] .‫تقوم المؤسسات المالية بتعيين لجان شرعية توافق على المنتجات المالية المتوافقة مع الشريعة‬ (Extracted from the response to AAOIFI standards adoption
Financial institutions appoint Sharia committees that approve Sharia-compliant financial products survey questionnaire)

[2] .‫) للمؤسسات المالية التي تشرف عليها‬IFRS( ‫تبنت المؤسسة معايير التقارير المالية الدولية‬ (Extracted from the response to AAOIFI standards adoption
SAMA has adopted the International Financial Reporting Standards (IFRS) for financial institutions it survey questionnaire)
supervises.

[3] ‫يتم تطبيق مبادئ الحوكمة والمعايير ذات العالقة بالحوكمة الصادرة عن لجنة بازل لإلشراف البنكي ومجلس االستقرار‬ (Extracted from the response to AAOIFI standards adoption
.‫المالي باإلضافة إلى األخذ باالعتبار أفضل الممارسات الدولية‬ survey questionnaire)
The principles of governance and standards related to governance issued by the Basel Committee for
Banking Supervision (BCBS) and the Financial Stability Board (FSB) are applied in addition to taking into
account international best practices.

[4] )IAASB( ‫تبنت الهيئة السعودية للمحاسبين القانونيين المعايير الصادرة عن المجلس الدولي لمعايير المراجعة‬ (Extracted from the response to AAOIFI standards adoption
.‫علما أن مؤسسة النقد ليست الجهة الرقابية فيما يتعلق بمعايير التدقيق‬
ً ،‫للمحاسبين القانونيين‬ survey questionnaire)
The Saudi Organization for Certified Public Accountants (SOCPA) has adopted the standards issued by
the International Auditing and Assurance Standards Board (IAASB) for Certified Public Accountants. It is
important to mention that these standards are not udder SAMA supervision.

[5] .‫الجهة المختصة بتنظيم المنتجات التمويلية هي مؤسسة النقد العربي السعودي‬ (Extracted from the response to AAOIFI standards adoption
‫ من الالئحة التنفيذية لنظام مراقبة شركات التمويل على إلزام «شركة التمويل الحصول على خطاب‬23 ‫تنص المادة‬ survey questionnaire
‫من المؤسسة يتضمن عدم ممانعتها قبل طرح أي منتجات تمويلية جديدة أو تعديل أي منتجات تمويلية قائمة موجهة‬
.»‫لألفراد أو المستفيدين من التمويل متناهي الصغر‬
The competent authority in regulating financing products is the Saudi Arabian Monetary Authority.
Article 23 of the Implementing Regulations of the Finance Companies Control Law stipulates that “the
Finance Company shall obtain from SAMA a not-objection letter prior to the launch of any financing
products or amendment of any existing products directed to individuals or beneficiaries of microfinance”.

[6] ‫الجهة المختصة بدراسة معايير المحاسبة للتوصية بإمكانية تبنيها في المملكة هي الهيئة السعودية للمحاسبين‬ extracted from the response to AAOIFI standards adoption
.‫القانونيين‬ survey questionnaire)

AAOIFI Footprint Report 2020 159

No. Description / extract from source document(s) Reference(s)

‫ الفقرة (د) من قواعد طرح األوراق المالية وااللتزامات المستمرة بأنه «يجب على المصدر إعداد قوائمه المالية‬64 ‫نصت المادة‬
.»‫والسنوية ومراجعتها وفقً ا لمعايير المحاسبة والمراجعة المعتمدة من الهيئة السعودية للمحاسبين القانونيين‬
The authority responsible for studying the accounting standards for recommendation of possible adoption
in KSA is the Saudi Organization for Certified Public Accountants (SOCPA).
Article 64, Paragraph (d) of the Rules for Offering Securities and Continuing Obligations stipulates that “the
issuer must prepare and review its financial and annual statements in accordance with the accounting and
auditing standards approved by the Saudi Organization for Certified Public Accountants.”

[7] .‫ ويجدر الذكر بوجود عدد من اللجان الشرعية في عدد من المصارف‬،‫ أقر مجلس هيئة السوق المالية الئحة حوكمة الشركات‬- extracted from the response to AAOIFI standards adoption
The Board of the Capital Market Authority approved the Corporate Governance Regulations, and it is worth survey questionnaire)
noting that there are a number of Sharia committees in a number of banks

[8] .‫الجهة المختصة بدراسة معايير المراجعة للتوصية بإمكانية تبنيها في المملكة هي الهيئة السعودية للمحاسبين القانونيين‬ extracted from the response to AAOIFI standards adoption
‫ الفقرة (د) من قواعد طرح األوراق المالية وااللتزامات المستمرة بأنه «يجب على المصدر إعداد قوائمه المالية‬64 ‫نصت المادة‬ survey questionnaire)
.»‫والسنوية ومراجعتها وفقً ا لمعايير المحاسبة والمراجعة المعتمدة من الهيئة السعودية للمحاسبين القانونيين‬
The authority responsible for studying the accounting standards for recommendation of possible adoption
in KSA is the Saudi Organization for Certified Public Accountants. Financial institutions appoint Sharia
committees that approve Sharia-compliant financial products.
Article 64, Paragraph (d) of the Rules for Offering Securities and Continuing Obligations stipulates that «the
issuer must prepare and review its financial and annual statements in accordance with the accounting and
auditing standards approved by the Saudi Organization for Certified Public Accountants.»

‫قد يكون من المناسب التواصل مع المستشارين الشرعيين للهيئة السعودية للمحاسبين القانونيين في مجال دراسة‬ (Extracted from the response to AAOIFI standards adoption
‫معايير المحاسبة والمراجعة الدولية وذلك لتباحث في مدى مالئمة المعايير الدولية للتسجيل والعرض واالفصاح عن منتجات‬ survey questionnaire)
.‫المؤسسات المالية اإلسالمية‬
It may be appropriate to communicate with the Sharia Advisers of the Saudi Organization for Certified
Public Accountants in the field of studying international accounting and auditing standards in order to
discuss the appropriateness of international standards for registration, presentation and disclosure of the
Islamic financial institutions products.

160 AAOIFI Footprint Report 2020

 Republic of Seychelles
Last updated: 1 Oct 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
No Jurisdiction, its role and mandate Central Bank of Seychelles - Regulatory
authority for financial institutions
No Has the jurisdiction made public commitment to No
apply AAOIFI standards?
Extent of application of AAOIFI standards? • Shari’ah standards: Do not adopt [1]
Not a member
• Financial accounting standards: Do not
adopt [2]
• Governance standards: Do not adopt [1]
• Auditing standards: Do not adopt [1]
Yes, AAOIFI
standards are
available in Has the jurisdiction made any modifications to No
English and any AAOIFI standards to suit its requirements?
French languages
Are all or some financial institutions required or No
permitted to apply AAOIFI standards?
No
Does the jurisdiction allow dual reporting? No
AAOIFI Footprint Report 2020 161
No. Description / extract from source document(s) Reference(s)

[1] Central Bank has not taken a position yet in regards to adoption of AAOIFI Shari’ah or Governance (Extracted from the response to AAOIFI standards adoption
standards. survey questionnaire)

Central Bank, with other key stakeholders, is currently in the process of adopting a national strategy
for Islamic banking and finance. Part of the recommendations is for the relevant authorities to become
members of AAOIFI. Following adoption of this, the authorities will be better placed to endorse some of
the standards issued by AAOIFI for the domestic market.

[2] Central Bank has not taken a position yet in regards to adoption of AAOIFI Accounting standards. However, (Extracted from the response to AAOIFI standards adoption
currently the law allows financial institutions to prepare financial statements in accordance with an survey questionnaire)
internationally recognized financial reporting framework

Refer to section 35 of the Financial Intuitions Act, 2004 as amended, which states that at the expiration
of each calendar year every foreign financial institution in respect of all business transacted by or through
its branches in Seychelles, shall prepare, with reference to that year, in accordance with an internationally
recognized financial reporting framework, a balance sheet as of the last working day of that year and a
profit and loss account and cash flow statement in respect of that year.

162 AAOIFI Footprint Report 2020

 Republic of Singapore
Last updated: 1 Aug 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
No Jurisdiction, its role and mandate Monetray Authority of Singapore
(MAS) - Central bank and the integrated
financial regulator
No. It idoes not Has the jurisdiction made public commitment to No
implement the apply AAOIFI standards?
AAOIFI standards
Extent of application of AAOIFI standards? • Shari’ah standards: Voluntarily adoption,
Not a member MAS does not regulate on Shariah
matters.
• Financial accounting standards: Do not
adopt [1]
• Governance standards: Do not adopt [2]
Yes (English) • Auditing standards: Do not adopt
(official)
Has the jurisdiction made any modifications to No
any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or No
permitted to apply AAOIFI standards?
No
Does the jurisdiction allow dual reporting? No
AAOIFI Footprint Report 2020 163
No. Description / extract from source document(s) Reference(s)

[1] All banks are required to comply with the Singapore Financial Reporting Standards (SFRS), which are largely https://www.3ecpa.com.sg/resources/corporate-compliance-re-
aligned to the International Accounting Standards (IAS). quirement/singapore-financial-reporting-standards/

https://isca.org.sg/tkc/fr/financial-reporting-standards/singa-
pore/

https://www.guidemesingapore.com/business-guides/taxa-
tion-and-accounting/accounting-standards/singapore-account-
ing-standards

[2] Banks incorporated in Singapore are required to comply with Banking (Corporate Governance) Regulations https://www.mas.gov.sg/regulation/codes/code-of-corpo-
2005. Banks which are listed in Singapore are additionally required to comply with the Code of Corporate rate-governance
Governance issued by MAS.

164 AAOIFI Footprint Report 2020

 Republic of the Sudan
Last updated: 1 Jan 2020
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
Yes Jurisdiction, its role and mandate Central Bank of Sudan
Yes. It implements Has the jurisdiction made public commitment to Yes
AAOIFI standards apply AAOIFI standards?
Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [1]
Not a member
• Financial accounting standards: Adopt [2]
• Governance standards: Adopt [3]
• Auditing standards: Adopt [4]
Yes. The AAOIFI
Standards are
available in Arabic Has the jurisdiction made any modifications to No
language any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
Yes
Does the jurisdiction allow dual reporting? Yes
AAOIFI Footprint Report 2020 165
Republic of the Sudan
Last updated: 1 Jan 2020

Jurisdiction, its role and mandate Khartoum Stock Exchange (KSE)

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Partial adoption [5]

• Financial accounting standards: Follow
as guidelines [6]
• Governance standards: Follow as
guidelines [6]
• Auditing standards: Voluntary adoption
[6]

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

166 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[1] Regulation governing the Business of Financial Leasing Institutions “Lil-Ijara” (2004) https://cbos.gov.sd/sites/default/files/Leasing.pdf

PART TWO Business of Financial Leasing Institution

11. Financial leasing institutions must abide by Shari’a Standard No. (9) issued by the Accounting and
Auditing Organization for Islamic Financial Institutions (AAOIFI).

PART FOUR General Provisions

27. Accounts are prepared in accordance with the standards of the Accounting and Auditing Organization
for Islamic Financial Institutions (AAOIFI) and the standards of the International Accounting Standards (IAS)
in the issues not covered by the standards of AAOIFI.

[2] 2006 ‫سياسات بنك السودان المركزي لعام‬ https://cbos.gov.sd/sites/default/files/policies_2006_2.pdf

Clause 3 ‫أ‬

Raise the efficiency of the control systems to comply with the International Accounting Standards
(IAS), the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and https://cbos.gov.sd/
completion of the implementation of the Financial Sector Assessment Program (FSAP). https://bit.ly/35zKe6P

‫الضوابط الرقابية لصناديق االستثمار‬: 2012/10 ‫منشور رقم‬

‫يقوم المصرف بالعرض واإلفصاح عن الصناديق التي يديرها في قوائمه المالية وفقًا لمعيار هيئة المحاسبة والمراجعة‬
.)AAOIFI( ‫للمؤسسات المالية االسالمية‬

8. The bank shall display and disclose the funds it manages in its financial statements in accordance with
the standard of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

[3] Accounting treatments Page 402 https://cbos.gov.sd/sites/default/files/chapter_08_09_0.pdf

Article 8, paragraph 2 of the Banking regulation Act of the Central Bank of Sudan to standardize the local
practice followed by banks… apply standards issued by accounting and Auditing Organization for Islamic
Financial Institutions (AAOIFI) based on our publication (2008/1)

[4] C. External Shari’ah auditor must rely on its work on structured terms and conditions: https://cbos.gov.sd/sites/default/files/chapter_03_09_0.pdf
Accounting and auditing profession abide by international standards for financial reports, standards issued
by Accounting and Auditing organization for Islamic Financial Institutions (AAOIFI) or any other standard
approved by the Central Bank of Sudan.

AAOIFI Footprint Report 2020 167

No. Description / extract from source document(s) Reference(s)

[5] Article 8 of Khartoum Stock Exchange Law (the market shall be compelling while doing his duties and all http://tpsudan.gov.sd/
transactions by Islamic Sharia law). https://bit.ly/31Fg7tu

[6] Article 5 (4) of Khartoum Stock Exchange Law (the market shall be compelling to control of financial http://tpsudan.gov.sd/
markets regulatory authority of Sudan). https://bit.ly/31Fg7tu

168 AAOIFI Footprint Report 2020

 Syrian Arab Republic
Last updated: 1 Nov 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
Yes Jurisdiction, its role and mandate Central Bank of Syria -
the central bank of the Syrian Arab
Republic
Yes. It implements Has the jurisdiction made public commitment to Yes
AAOIFI standards apply AAOIFI standards?
Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [1]
Regulator
member • Financial accounting standards: Adopt
[2]
• Governance Standards: Adopt [3]
• Auditing Standards: Adopt [2]
Yes. The AAOIFI
Standards are
available in Arabic Has the jurisdiction made any modifications to No
language any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
No
Does the jurisdiction allow dual reporting? Yes
AAOIFI Footprint Report 2020 169
No. Description / extract from source document(s) Reference(s)

[1] ‫ لجنة التدقيق‬:‫المادة التاسعة‬ ‫مصرف سورية المركزي‬

‫ تشكيل اللجنة ودورية اجتماعاتها‬-‫ب‬ ‫دليل الحوكمة لدى المصارف اإلسالمية العاملة في الجمهورية العربية‬
‫يجب على أعضاء اللجنة فهم أحكام ومبادئ الشريعة اإلسالمية ذات العالقة وتطبيقاتهـا علـى المنتجات والخدمات‬- 4 ‫السورية الجمهورية العربية السورية مجلس النقد والتسليف‬
‫ ويجب أن يكون لديهم إلمام بالمعايير الصادرة عن هيئة المحاسبة والمراجعة للمؤسسات المالية‬،‫التي يقدمها المصرف‬
،‫أو الخبرة العملية في مجال الرقابة الشرعية‬/‫ ويفضل أن يكون أحد أعضاء اللجنـة من ذوي المؤهالت العلمية و‬،‫اإلسالمية‬ http://f.cb.gov.sy/f976a31d1cc9bdd910469b0639ceac199f0d8c
‫ هيئة الرقابة الشرعية للمصرف اإلدارة‬1 ‫ وللجنة االستعانة بخبرات شرعية خارجية بعد موافقة مجلس‬، ‫من غير أعضـاء‬ 13de0987e3.pdf

‫ صالحيات ومهام اللجنة‬-‫ت‬ Central Bank of Syria

‫تقوم اللجنة بالتأكد من االلتزام بأحكام ومبادئ الشريعة اإلسالمية ومراجعة مدى االلتزام بالقوانين واألنظمة ومدى‬- 9 Islamic Banks Governance Guide Operating in the Syrian Arab
‫ والتأكد من مدى االلتـزام بمعـايير المحاسبة الصادرة عن هيئة المحاسبة‬،‫التقيد بسياسات المصرف ونظامه الداخلي‬ Republic
‫والمراجعة للمؤسسات المالية اإلسالمية والمعايير الدوليـة للتقارير المالية فيما لم تغطه معايير الهيئة وبما ال يتعارض‬ Monetary and Credit Board
‫ الصادرة عن هيئة المحاسبة والمراجعة للمؤسسات المالية‬،‫مع أحكام ومبادئ الشريعة اإلسالمية والمعايير الشرعية‬
.‫ التـي يتم اعتمادها من قبل مجلس النقد والتسليف‬،‫اإلسالمية‬

Article 9: Audit Committee

B - Formation of the Committee and the periodicity of its meetings
4 - The members of the Committee must understand the provisions and principles of Islamic Sharia and
related applications products and services offered by the bank, and must have knowledge of the standards
issued by Accounting and Auditing Organization for Islamic Financial Institutions, preferably one of the
committee members
Non-members with academic qualifications and / or practical experience in the field of Shari’a Supervision
The Committee may seek the use of external Shariah expertise after the approval of the Board of Shari’a
Supervisory Board of the Bank Administration

C - the powers and functions of the Committee

9. The Committee shall ensure compliance with the provisions and principles of Islamic Sharia and review
the extent of compliance with the laws
Regulations and compliance with the Bank’s policies and by-laws, and ensuring compliance with standards
of Accounting issued by the Accounting and Auditing Organization for Islamic Financial Institutions and
International Standards. Financial reports shall not be covered by the Authority’s standards and shall
not be contrary to the provisions and principles of Islamic Sharia. The Shari’a Standards issued by the
Accounting and Auditing Organization for Islamic Financial Institutions. It is approved by the Monetary and
Credit Board.

170 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[2] :‫ نبين ما يلي‬، / 9 / ‫ بخصوص المرحلة التمهيدية لتطبيق معيار التقارير المالية الدولية رقم‬10 / 8 / 2017 ‫الموقوفة بتاريخ‬ ‫مصرف سورية المركزي‬
31 / 12 / 2017 ‫ يتوجب على كافة المصارف العاملة االلتزام بإدراج االفصاحات المرفقة ضمن البيانات المالية الموقوفة بتاريخ‬- 1 16 / 1928 / ‫ ص‬:‫الرقم‬
‫ضمن االيضاح الخاص بالسياسات المحاسبية الهامة ضمن فقرة « المعايير والتفسيرات الصادرة عن المعايير الدولية وغير نافذة‬ 2018 / 3 /14 :‫تاريخ‬
‫التطبيق « للمصارف التقليدية وضمن فقرة « معايير المحاسبة والمراجعة والحوكمة واألخالقيات الصادرة عن هيئة المحاسبة‬ ‫تعميم‬
‫والمراجعة للمؤسسات المالية اإلسالمية غير نافذة التطبيق « إن االفصاحات‬ ‫إلى كافة المصارفها الخاصة العاملة في الجمهورية العربية السورية‬

Suspended on 10/10/2017 Concerning the preliminary stage of the application of IFRS 9, we indicate the fol- http://f.cb.gov.sy/299c49c55e0157d92d79ed0dbb69cfb1268ba
lowing: 1 - All operating banks are obliged to include the accompanying disclosures in the financial statements 62b5b9952d0.pdf
suspended on 31/12/2017 in the accounting policies statement. The disclosures are important in the paragraph
“Standards and Interpretations Issued by International Standards and Not Applicable” for Conventional Banks Central Bank of Syria
and within “Accounting, Auditing, Governance and Ethics Standards issued by the Accounting and Auditing Orga- Circular dated 2018/3/14
nization for Islamic Financial Institutions”. To all its private banks operating in the Syrian Arab Republic

:‫رئيس الجمهورية بناء على أحكام الدستور يرسم ما يلي‬

١/ ‫المادة‬ ٢٠٠٥ ‫ للعام‬٣٥ ‫المرسوم التشريعي رقم‬
‫ المتعلقة بتقديم‬٢٠٠٢ ‫ لعام‬٢٣ ‫ من القانون رقم‬١٠٧ ‫ و‬١٠٦ ‫ و‬١٠٥ ‫ تخضع المصارف اإلسالمية إلى االلتزامات المحددة في المواد‬-‫د‬ http://f.cb.gov.sy/18362b15c3b2995a3e1cd9870c6d8bb68ab69
‫البيانات المالية إلى مصرف سورية المرآزي والتي يمكن تعديلها بموافقة المصرف المرآزي لتتوافق مع معايير المحاسبة الصادرة‬ 3719f6b12b7.pdf
.‫عن هيئة المحاسبة والمراجعة للمؤسسات المالية اإلسالمية‬
http://www.scbdi.com/
Based on the provisions of the Constitution draws the following: https://bit.ly/2TxoId7
Article 1
(D) Islamic banks shall be subject to the obligations specified in Articles 105, 106 and 107 of the Law
No. 23 of 2002 relating to the submission of financial statements to the Central Bank of Syria, which may be
amended With the approval of the Central Bank to comply with the accounting standards issued by the Account-
ing and Auditing Organization Islamic Financial Institutions.

Notes to the interim condensed consolidated financial statements as of 30 September 2019 Legislative Decree No. 35 of 2005
Basis of preparation and accounting policies President of the Republic
Changes in accounting policies
The accounting policies adopted in the preparation of these interim condensed financial statements are consis-
tent with those used in the preparation of these interim condensed financial statements

Annual financial statements for the year ended 31 December 2018 http://www.scfms.sy/files/docs/ar_doc_2969.pdf
Early adoption of IFRS 30 “Impairment, credit losses and overburdened commitments” Sham Bank SAOG
The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) issued FAS 30 in November
related to impairment, credit losses and overburdened commitments. The application of this standard is
mandatory.

AAOIFI Footprint Report 2020 171

No. Description / extract from source document(s) Reference(s)

[3] It was decided to early adopt the standard on the date of financial beginning on or after 1 January 2020, while
allowing for early application
The decision of the Accounting and Auditing Board at its session No. 1 of 2018.

‫ لجنة الحوكمة‬:‫المادة الثانية عشرة‬ ‫مصرف سورية المركزي‬

‫ تشكيل اللجنة ودورية اجتماعاتها‬-‫ب‬ ‫دليل الحوكمة لدى المصارف اإلسالمية العاملة في الجمهورية العربية‬
‫ يجب على أعضاء اللجنة فهم أحكام ومبادئ الشريعة اإلسالمية ذات العالقة وتطبيقاتها علـى المنتجات والخدمات التي‬-‫ب‬ ‫ مجلس النقد والتسليف‬- ‫السورية‬
‫ ويجب أن يكون لديهم إلمام بالمعـايير الصـادرة عن هيئة المحاسبة والمراجعة للمؤسسات المالية اإلسالمية‬،‫يقدمها المصرف‬ http://f.cb.gov.sy/f976a31d1cc9bdd910469b0639ceac199f0d8c-
‫أو‬/‫ ويفضل أن يكون أحد أعضاء اللجنة من ذوي المؤهالت العلميـة و‬،‫وتلـك الصـادرة عـن مجلـس الخدمات المالية اإلسالمية‬ 13de0987e3.pdf
‫ من غير أعضاء هيئـة الرقابـة الشـرعية‬،‫الخبرة العملية في مجال الرقابة الشرعية‬
Central Bank of Syria
‫ االلتزام بأحكام ومبادئ الشريعة اإلسالمية‬:‫المادة العشرون‬
Islamic Banks Governance Guide Operating in the Syrian Arab
‫االلتزام بمعايير الضبط الصادرة عن هيئة المحاسبة والمراجعة للمؤسسـات الماليـة اإلسـالمية وتحديدا فيما يتعلق بمكونات‬- 7
Republic
.‫نظام الرقابة الشرعية الداخلية‬
Monetary and Credit Board
‫ الشفافية الشفافية واإلفصاح واإلفصاح‬:‫الباب الرابع‬
‫ أحكام عامة‬:‫المادة الحادية والعشرون‬
‫ ووفق ما تمليه المعايير الصادرة عن هيئة المحاسبة‬،‫يقوم المصرف بعملية اإلفصاح حسب القوانين واألنظمة النافذة‬- 1
‫ في الموضوعات التي ال تغطيها معايير الهيئة‬IFRS ‫والمراجعة للمؤسسات المالية اإلسالمية والمعايير الدولية للتقـارير الماليـة‬
.‫وبما ال يتعارض مـع أحكـام الشـريعة اإلسالمية‬

Article 12: Governance Committee

B - Formation of the Committee and the periodicity of its meetings
B - The members of the Committee must understand the provisions and principles of the Islamic Sharia and
its application to
The products and services provided by the Bank and must be familiar with the standards issued
by the Accounting and Auditing Organization for Islamic Financial Institutions and those issued by the Board
Islamic financial services, preferably one of the members of the Committee with scientific qualifications
And / or practical experience in Shari’a supervision, other than members of the Shari’a Supervisory
Board

Article 20: Compliance with the provisions and principles of Islamic law
7 - Compliance with the standards of control issued by the Accounting and Auditing Organization for Islamic
financial institutions specifically with respect to the components of the internal Sharia control system.

172 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[3] Part Four: Transparency, disclosure and disclosure

Article 21: General Provisions
1. The Bank shall conduct the disclosure process in accordance with the laws and regulations in force and in
accordance with the dictated standards
For the Accounting and Auditing Organization for Islamic Financial Institutions and International Financial
Reporting Standards (IFRS) in matters that are not covered by the standards of the Authority and do not
conflict with the provisions of Islamic Sharia.

‫(أ) تقسم الثاني‬ ‫ الخاص بالتأجير التمويلي‬/ ٨٨ / ‫المرسوم التشريعي رقم‬

‫المعالجة الضريبية والمحاسبية‬ http://www.scbdi.com/
‫ (أ) تخضع شرآات التأجير التمويلي التي تؤسس وفق أحكام هذا المرسوم التشريعي وعملياتها لقواعد ومعايير‬١٣ ‫المادة‬ https://bit.ly/2G3zWmM
‫ (ب) تخضع شرآات اإلجارة اإلسالمية التي تؤسس وفق أحكام هذا المرسوم التشريعي لمعايير المحاسبة‬.‫المحاسبة الدولية‬
.‫اإلسالمية الصادرة عن هيئة المحاسبة والمراجعة للمؤسسات المالية اإلسالمية‬
Legislative Decree No. / 88 / on financial leasing
(B) Islamic leasing companies established in accordance with the provisions of this Legislative Decree are
subject to the standards of Islamic accounting issued by the Accounting and Auditing Organization for
Islamic Financial Institutions.

‫اإلجراءات التي قام يها البنك لتطبيق المعيار‬

‫اإلجراءات التي قام بها البنك لتطبيق المعيار‬
: ‫الحوكمة‬
http://scfms.sy/files/docs/ar_doc_2968.pdf
‫م ن الصادر عن مجلس النقد والتسليف القاض بالزام المصارف اإلسالمية بتطبيق‬/0 ‫ صدر القرار رقم‬٢٠١٩/٢/٢ ‫ وبتاريخ‬-
‫ وذلك بما ال يخالف أحكام الشريعة اإلسالمية وفيما لم تغطه معايير المحاسبة‬9 ‫معيار التقارير المالية الدولية رقم‬
‫والمراجعة للمؤسسات المالية اإلسالمية الصادرة عن هيئة المحاسبة و المراجعة للمؤسسات المالية اإلسالمية وال سيما‬
‫ وإنهاء العمل بقرار مجلس النقد‬6 ‫ المتعلق باحتساب الخسائر النامجة عن انخفاض القيمة‬١٠ ‫المعيار المحاسبي رقم‬
‫ و تعديالته‬2٠19 ‫ لعام‬0 ‫ب‬/‫ن‬.‫م‬/197 ‫والتسليف‬

Governance:
- On 2 February 2019, the Council of Monetary and Credit Council issued Resolution No. (0) of which
obliged Islamic banks to apply the reporting standard.
IFRS 9, which is contrary to the provisions of Islamic Shari’a and not covered by the accounting and auditing
standards of Islamic financial institutions issued
On behalf of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), in
particular IAS 01, relating to the calculation of losses incurred
On the decrease in value 6 and termination of the Board of Monetary and Credit Council resolution 197 /
M / B 0 for the year 2019 and amendments.

AAOIFI Footprint Report 2020 173

 Republic of Tajikistan
Last updated: 1 Feb 2020
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
174 AAOIFI Footprint Report 2020
Yes Jurisdiction, its role and mandate National Bank of Tajikistan(NBT)
- Regulator of banking sector
Has the jurisdiction made public commitment to Yes
Yes. It implements apply AAOIFI standards?
AAOIFI standards
Extent of application of AAOIFI standards? • Shari’ah standards: Follow as guidelines/
has developed local standards based on
Not a member AAOIFI Shari’ah Standards [1]
• Financial accounting standards: Partial
adoption [2]
• Governance standards: Follow as
guidelines/has developed local standards
based on AAOIFI Shari’ah Standards [3]
Not available in
• Auditing standards: Do not adopt [4]
Tajik but Russian
translation is Has the jurisdiction made any modifications to No
available any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
No
Does the jurisdiction allow dual reporting? Yes
No. Description / extract from source document(s) Reference(s)

[1] Implementation of Islamic banking in the Republic of Tajikistan https://nbt.tj/tj/islamic_banking/

It should be noted that the activity of an Islamic finance institutions is unique and their regulations and
supervision must be carried out in accordance with the principles of Islamic financing, including standards (Also extracted from the response to AAOIFI standards adoption
of the Islamic Financial Service Board (IFSB) and the Accounting and Auditing Organization for Islamic survey questionnaire)
Financial Institutions (AAOIFI).

National Bank of Tajikistan is developing most of the local standards/regulations on Islamic banking princi-
ples based on AAOIFI Shari’ah standards.

NBT regulatory framework of the Islamic banking

Instruction № 227 «On treasury operations in the National Bank of Tajikistan and financial institutions»
Instruction № 224 «On operations carried out in accordance with the principles of Islamic financing in
Islamic credit institutions»
Instruction №171 «On opening, re-issuance and closing of bank accounts by financial institutions in the
Republic of Tajikistan»
Instruction № 175 «On the maximum rates of open currency positions and the procedure for their calcula-
tion for financial institutions»
Instruction №236 “On Mandatory Reserves of Islamic Credit Institutions on Islamic Deposits and Other
Similar Obligations”
Instruction №238 «On the procedure for regulating the activities of Islamic credit institutions»
Procedure for conversion of a conventional credit Institution into an Islamic credit Institution
Procedure for establishing the Committee on Islamic Financing Services, authorities and requirements for
its members
Procedure for conducting a qualifying certification of candidates for the position of executives of a credit
institution and an Islamic credit Institutions
Procedure for establishment of structural subdivisions by financial credit institutions and their branches
Procedure for maintaining investment accounts of individuals and legal entities
Chart of accounts for Islamic credit institutions
On the requirements of standard contracts concluded in accordance with the principles of Islamic finance

[2] National Bank of Tajikistan is developing Shari’ah accounting standards based on some AAOIFI’s standards. https://nbt.tj/tj/news/448573/

(Also extracted from the response to AAOIFI standards adoption

survey questionnaire)

AAOIFI Footprint Report 2020 175

No. Description / extract from source document(s) Reference(s)

[3] National bank of Tajikistan is developing most of local standards / regulations on Islamic banking principles https://nbt.tj/tj/news/448573/
based on AAOIFI Shari’ah standards.
Ex: NBT standard on operations carrying out according to Islamic principles of finance # 224 (Also extracted from the response to AAOIFI standards adoption
survey questionnaire)

[4] NBT is drafting instruction and procedure on audit. https://nbt.tj/tj/news/448573/

From our perspective AAOIFI standards need some mechanism to be introduced all over the world. It (Also extracted from the response to AAOIFI standards adoption
should be translated into major language of the world and should be updated. survey questionnaire)

176 AAOIFI Footprint Report 2020

 Republic of Tunisia
Last updated: 1 Nov 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
Yes Jurisdiction, its role and mandate
Yes. It implements Has the jurisdiction made public commitment to
AAOIFI standards apply AAOIFI standards?
Extent of application of AAOIFI standards?
Not a member
Yes (Arabic and
French)
Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or
permitted to apply AAOIFI standards?
No
Does the jurisdiction allow dual reporting?
AAOIFI Footprint Report 2020
Banque Centrale de Tunisie – Control
and regulate the financial sector
Yes
• Shari’ah standards: Adopt [1]
• Financial accounting standards: Adopt [1]
• Governance standards: Adopt [1]
• Auditing standards: Adopt [1]
No
Yes
Yes
177
No. Description / extract from source document(s) Reference(s)

[1] Titre IV: Dispositions générales https://www.bct.gov.tn/bct/siteprod/documents/Cir_2019_08_

Article 19 : Les banques et les établissements financiers sont tenus, en ce qui concerne les contrats et les fr.pdf
opérations bancaires islamiques, à se conformer aux standards internationaux adoptés en matière d’opéra- CIRCULAIRE AUX BANQUES ET AUX ETABLISSEMENTS FINAN-
tions bancaires islamiques et en particulier les normes de l'Organisation de Comptabilité et d'Audit des 6 CIERS N° 9102-08 (Tunis, le 14 Octobre 2019)
Institutions Financières Islamiques AAOIFI, et ce, dans la mesure où ces normes ne contredisent pas les
dispositions légales et règlementaires en vigueur.

Title IV: General Provisions

Article 19: Banks and financial institutions are required, in respect of Islamic banking contacts and opera-
tions, to comply with international standards adopted in Islamic banking and in particular the standards of
the Accounting and Auditing Organization for Islamic Financial Institutions AAOIFI, to the extent that these
standards do not contradict the legal and regulatory provisions in force.

178 AAOIFI Footprint Report 2020

  Republic of Turkey 
Last updated: 31 Dec 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
Yes Jurisdiction, its role and mandate The Banking Regulation and Supervision
Authority (BRSA) – banking sector
regulator
Yes Has the jurisdiction made public commitment to Yes
apply AAOIFI standards?
Extent of application of AAOIFI standards? • Shari’ah standards: Voluntary adoption [2]
Regulator
• Financial accounting standards: Adopt [3]
member
• Governance standards: Voluntary adoption
[4]
Yes • Auditing standards: Adopt [5]
Has the jurisdiction made any modifications to Yes [6]
any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
Yes [1]
Does the jurisdiction allow dual reporting? No
AAOIFI Footprint Report 2020 179
 Republic of Turkey 
Last updated: 31 Dec 2019

Jurisdiction, its role and mandate Capital Markets Board of Turkey (CMB)
(Sermaye Piyasasi Kurulu) –regulatory
and supervisory authority for securities
markets in Turkey

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Voluntary adoption [7]

• Financial accounting standards: Adopt [7]
• Governance standards: Voluntary adoption
[7]
• Auditing standards: Adopt [7]

Has the jurisdiction made any modifications to Yes [6]

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? No

180 AAOIFI Footprint Report 2020

 Republic of Turkey 
Last updated: 31 Dec 2019

Jurisdiction, its role and mandate Central Bank of Turkey – responsible for
monetary and exchange rate policies

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Voluntary adoption [8]

• Financial accounting standards: Adopt [8]
• Governance standards: Voluntary
adoption [8]
• Auditing standards: Adopt [8]

Has the jurisdiction made any modifications to Yes [6]

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? No

AAOIFI Footprint Report 2020 181

No. Description / extract from source document(s) Reference(s)

[1] Decision No. 7736 BRSA Board Decision dated 22.2.2018

Banking Regulation and Supervision Authority (BRSA) formed TKBB Advisory Board on 22.2.2018 with a
view to strengthen participation banking industry in Turkey. TKBB Advisory Board

“Participation banks should comply with the decisions taken by the Board” https://tkbbdanismakurulu.org.tr/wp-content/
uploads/2018/09/BDDK-Kurul-Karari.pdf

[2] BRSA as a legal authority in Turkey, do not mandate AAOIFI Shari’ah standards on participation banks. (Extracted from the response to AAOIFI standards adoption
However, some AAOIFI standards are considered in the regulation studies on participation banking. And survey questionnaire)
participation banks may also voluntarily adopt the AAOIFI Shari’ah standards.

[3] In Turkey, Accounting and Auditing Standards Authority of Turkey (KGK) (Public Oversight, Accounting and https://www.bddk.org.tr/ContentBddk/dokuman/
Auditing Standards Authority) designates accounting standards taking into account of IFRS. BRSA requires mevzuat_0129.pdf
banks to implementation of KGK accounting standards in accordance with Banking Law No.5411 article 37.
https://www.kgk.gov.tr/DynamicContentDetail/9201/Faizsiz-
SECTION FOUR Finans-Muhasebe-Standartlar%C4%B1-(FFMS)
Financial Reporting
Accounting and reporting system http://kgk.gov.tr/Portalv2Uploads/files/PDF%20linkleri/
Article 37- Banks shall, in line with the principles and procedures to be established by the Board Tan%C4%B1t%C4%B1m/Public_Oversight_Authority_EN.pdf
upon consulting the associations of institutions and the Turkish Accounting Standards Board taking
into consideration international standards, ensure uniformity in their accounting systems; correctly http://www.bulentsenver.com/BAF351/BankingLaw_
record all their transactions; and timely and correctly prepare their financial reports in a style and Turkey_5411.pdf
format that will meet the requirements of providing information, that is clear reliable and comparable
and that is suitable for auditing, analysis and interpretation. https://www.kgk.gov.tr/
https://bit.ly/2TsYsAU
In order to introduce other Interest-Free Finance Accounting Standards published by AAOIFI to our
legislation, 1 Interest-Free Finance Accounting Guide and 11 Interest-Free Finance Accounting Standards
were published in the Official Gazette dated September 6, 2019 and numbered 30880.

(Also extracted from the response to AAOIFI standards adoption

survey questionnaire)

Board Decisions on Interest-Free Finance Accounting Standards were Published in the Official Gazette KGK (Public Oversight, Accounting and Auditing Standards
dated May 21, 2019 and numbered 30780. Authority)

182 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[3] “However, in accordance with measure 221 included in the 2019 Annual Presidency Program, the task https://www.kgk.gov.tr/
of “introducing international standards published in the field of interest-free finance to our legislation” https://bit.ly/3kxt1RB
was assigned to our Authority and within this scope, 28 accounting, 6 auditing and 1 ethical standards
published by AAOIFI were introduced to our legislation in 2019. is aimed to be gained.”

In this context, 1 Conceptual Framework, 1 Interest Free Financial Accounting Guide and 18 Interest Free https://www.kgk.gov.tr/
Financial Accounting Standards were published in the Official Gazette prepared by our Institution in order https://bit.ly/35E5eJw
to introduce the Islamic Financial Accounting Standards published by the Islamic Finance Institutions
Accounting and Auditing Organization (AAOIFI) to our legislation.
In addition, within the scope of the efforts to introduce other Islamic Finance Accounting Standards
published by AAOIFI into our legislation, the draft texts related to the Standards listed below are available
for public opinion on our website.

In this context, 1 Ethical Rules and 6 Interest-free Financial Auditing Standards prepared by our Agency https://www.kgk.gov.tr/
and 6 Interest-free Financial Auditing Standards were published in the Official Gazette and brought into https://bit.ly/3mm6HLq
our legislation in order to bring the Islamic Financial Control Standards (FFDS) published by AAOIFI to our
legislation.

[4] BRSA as a legal authority in Turkey, do not mandate AAOIFI Governance standards on participation banks. Official Gazette – Board’s Decisions dated 14 December 2019
However, in the process of preparing and amending legislation BRSA considered AAOIFI GSIFI No 8. In
addition, it is considered that relevant AAOIFI standards are taken into account during the preparation of (Also extracted from the response to AAOIFI standards adoption
Shari’ah governance regulations. survey questionnaire)

KGK recommends / applies AAOIFI code of Ethics for Islamic finance professionals
Karar No. 75935942-050.01.04 – [01/310],

[5] KGK applies AAOIFI auditing standards Official Gazette – Board’s Decisions dated 14 December 2019
Karar No. 75935942-050.01.04 – [01/311],
Karar No. 75935942-050.01.04 – [01/312],
Karar No. 75935942-050.01.04 – [01/313],
Karar No. 75935942-050.01.04 – [01/314],
Karar No. 75935942-050.01.04 – [01/314]

[6] KGK makes certain minimal revisions while it translates AAOIFI standards to suit local industry (Extracted from the response to AAOIFI standards adoption
terminologies. survey questionnaire)

AAOIFI Footprint Report 2020 183

No. Description / extract from source document(s) Reference(s)

[7] Capital Markets Board of Turkey (Sermaye Piyasasi Kurulu) COMMUNIQUÉ ON PRINCIPLES OF FINANCIAL REPORTING IN
SECOND PART Financial Reports CAPITAL MARKETS (II-14.1) (Promulgated in the Official Gazette
Standards Applicable on Preparation of Financial Statements: ARTICLE 5 – (1) Entities will prepare their edition 28676 on 13/6/2013)
financial statements on the basis of TMS/TFRS issued and published by KGK. http://www.cmb.gov.tr/SiteApps/Teblig/File/477

KGK (Public Oversight, Accounting and Auditing Standards Authority)

Board Decisions on Interest-Free Finance Accounting Standards were Published in the Official Gazette
dated May 21, 2019 and numbered 30780. https://www.kgk.gov.tr/
“However, in accordance with measure 221 included in the 2019 Annual Presidency Program, the task https://bit.ly/3ky83lH
of “introducing international standards published in the field of interest-free finance to our legislation”
was assigned to our Authority and within this scope, 28 accounting, 6 auditing and 1 ethical standards
published by AAOIFI were introduced to our legislation in 2019 is aimed to be gained.”

[8] Central Bank of Turkey - Türkiye Cumhuriyet Merkez Bankasi (TCMB) https://www.tcmb.gov.tr/
https://bit.ly/2HEkz4p
DÖVİZ POZİSYONUNU ETKİLEYEN İŞLEMLERİN TÜRKİYE CUMHURİYET MERKEZ BANKASI TARAFINDAN
İZLENMESİNE İLİŞKİN USUL VE ESASLAR HAKKINDA YÖNETMELİK
KGK (Public Oversight, Accounting and Auditing Standards Authority)
f) Finansal raporlama çerçevesi: Bildirimle yükümlü olan firmanın, 19/12/2012 tarihli
ve 2012/4213 sayılı Bakanlar Kurulu Kararı ile yürürlüğe konulan Karar uyarınca bağımsız https://www.kgk.gov.tr/
denetime tabi olması durumunda KGK düzenlemelerine göre uyguladığı Türkiye Finansal https://bit.ly/3oDmFTs
Raporlama Standartlarını veya Büyük ve Orta Boy İşletmeler için Finansal Raporlama
Standardını, bunlar dışındaki firmalar için ise Büyük ve Orta Boy İşletmeler için Finansal https://www.kgk.gov.tr/
Raporlama Standardını, https://bit.ly/3kqK6wF

f) Financial reporting framework: The firm responsible for notification, dated 19/12/2012
and in accordance with the Decree enforced by the Council of Ministers Decision no 2012/4213 https://www.kgk.gov.tr/
case to be subject to supervision arrangements applied by Turkey in accordance with the Financial KGK https://bit.ly/3kvwPmz
Reporting Standards or Financial Reporting for Large and Medium Businesses Standard for companies
other than these, Financial for Large and Medium Enterprises Reporting Standard

184 AAOIFI Footprint Report 2020

  United Arab Emirates
Last updated: 1 Nov 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
Yes Jurisdiction, its role and mandate Central Bank of the UAE - Regulator of
banking sector in the UAE
Yes
Has the jurisdiction made public commitment to N/A
apply AAOIFI standards?
Regulator Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [2]
member (SCA • Financial accounting standards: Do not adopt
only)
• Governance standards: Do not adopt
• Auditing standards: Do not adopt
Yes, AAOIFI
standards are
available in Arabic Has the jurisdiction made any modifications to No
language any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or Yes (Shari’ah standards only)
permitted to apply AAOIFI standards?
Yes (CBUAE) [1]
Does the jurisdiction allow dual reporting? No
AAOIFI Footprint Report 2020 185
 United Arab Emirates
Last updated: 1 Nov 2019
Jurisdiction, its role and mandate
Has the jurisdiction made public commitment to
apply AAOIFI standards?
Extent of application of AAOIFI standards?
Has the jurisdiction made any modifications to
any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or
permitted to apply AAOIFI standards?
Does the jurisdiction allow dual reporting?
186 AAOIFI Footprint Report 2020
Securities and Commodities Authority -
Regulator of capital markets in the UAE
Yes
• Shari’ah standards: Guidance/ working
towards making local standards based on
AAOIFI standards [3]
• Financial accounting standards: Adopt as
guidelines [3]
• Governance standards: Do not adopt
• Auditing standards: Do not adopt
No
Yes
No
 United Arab Emirates
Last updated: 1 Nov 2019

Jurisdiction, its role and mandate Insurance Authority -

Regulator the insurance sector in the
UAE

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [4]

• Financial accounting standards: Adopt [4]
• Governance standards: Adopt [4]
• Auditing standards: Adopt [4]

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

AAOIFI Footprint Report 2020 187

 United Arab Emirates
Last updated: 1 Nov 2019

Jurisdiction, its role and mandate Dubai Financial Services Authority

(DFSA) -
Independent regulator of financial
services conducted in or from the DIFC

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [5]

• Financial accounting standards: Adopt [5]
• Governance standards: Adopt [5]
• Auditing standards: Adopt [5]

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

188 AAOIFI Footprint Report 2020

 United Arab Emirates
Last updated: 1 Nov 2019

Jurisdiction, its role and mandate Abu Dhabi Global Market (ADGM) -
Independent regulator of financial
services conducted in or from the ADGM

Has the jurisdiction made public commitment to Yes

apply AAOIFI standards?

Extent of application of AAOIFI standards? • Shari’ah standards: Adopt partially [6]

• Financial accounting standards: Adopt
• Governance standards: Adopt partially [7]
• Auditing standards: Do not adopt

Has the jurisdiction made any modifications to No

any AAOIFI standards to suit its requirements?

Are all or some financial institutions required or Yes

permitted to apply AAOIFI standards?

Does the jurisdiction allow dual reporting? Yes

AAOIFI Footprint Report 2020 189

No. Description / extract from source document(s) Reference(s)

[1] The Higher Sharia Authority (HSA) for financial and banking activities is the Central Shariah Board at the https://www.centralbank.ae/sites/default/files/2018-10/Press-
Central Bank of the UAE. Realse16042018_English.pdf

[2] The Higher Sharia Authority at the Central Bank held its first meeting of the year 2019: Central Bank of the UAE
His Eminence Sheikh Dr. Ahmed Abdul-Aziz Al-Haddad started the meeting by highlighting the https://www.centralbank.ae/sites/default/files/2019-01/1st%20
achievements of the HSA in 2018 particularly the adoption of the Sharia standards of the Accounting and Higher%20Sharia%20Meeting%20for%202019-%2027Jan2019.
Auditing Organization for Islamic Financial Institutions (AAOIFI) and the adoption of best practices in the pdf
Islamic Sharia governance for Islamic Financial Institutions (IFIs).
Annual Report - Central Bank of the UAE 2018
Chapter 6. Regulatory Development and Banking Supervision https://www.centralbank.ae/sites/default/files/2019-05/Cen-
The Higher Shari’ah Authority tral%20Bank%20-%20Annual%20Report%20-%202018.pdf
I. Ascertainment of Shari’ah Compliance: One of the key outcomes of HSA’s work is the adoption of Shari’ah
standards issued by Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) as the
minimum requirement for Shari’ah compliance.

[3] Obligations relating to the Offering or Issuance of Islamic Securities Decision of the Chairman of the SCA
Article (3) Board of Directors No. (20 /R.M) of 2018
II. In addition to the provisions of Clause I above, the Foreign Issuer wishing to offer Islamic Securities
within the State shall provide the Authority with the following: https://www.sca.gov.ae/
3.A statement on any conflict between the International Financial Reporting Standards (IFRS) and the https://bit.ly/35GBSdQ
standards of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in case the
Foreign Issuer pledges to abide by these standards pursuant to the laws of the country of issue.

Post Offer/Issue Obligations

Article (4)
3.The Shariah opinion issued by the Shariah Supervisory Committee upon the offering or issuing of the
Islamic Security approving its structure, all contracts and documents thereof, how such Sharia opinion was
reached, the Sharia evidence in support thereof, documentation of the procedures of issue thereof, cases
where the Islamic Security breaches the Shariah standards of the AAOIFI and the grounds of breach (if any),
and whether the Shariah opinion was issued by the consensus of all or the majority of members of the
Shariah Supervisory Committee, while stating the dissenting opinion and reasons thereof in case the
opinion is issued by the majority of members.
The Authority is currently working on implementing the Islamic capital market strategy, issuing new (Also extracted from the response to AAOIFI standards adoption
regulations and updating some existing systems that will use Shari’ah standards in accounting, governance survey questionnaire)
and auditing (based on AAOIFI standards).

190 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[4] Section (7) Regulations Pertinent to Accounting policies to be adopted and the necessary forms needed to Insurance Authority
prepare and present reports and financial statements – Takaful United Arab Emirates
Article (4) – Surplus/Deficit Allocation Board of Directors’ Decision Number (26) of 2014 Pertinent to
5. The Company must establish a policy for determining the surplus or deficit arising from its operations. Financial Regulations for Takaful Insurance Companies
The policy must determine the basis of distributing the surplus or deficit among the participants and the https://ia.gov.ae/en/Documents/Financial%20Regulations%20
shareholders and the method of transferring between the participants and shareholders. The policy devel- for%20Takaful%20Insurance%20Companies.pdf
oped must consider the relevant International Islamic Standards connected to the AAOIFI (Accounting and
Auditing Of Islamic Financial Institutions) Board including the accounting standard of ‛Disclosure of Bases
for Determining and Allocating Surplus or Deficit in Islamic Insurance Companies’.

Appendix 1
Financial Statement Forms
Notes to the Financial Statements 1. Disclosure over the financial statements is made in compliance with
the AAOIFI (Accounting and Auditing Of Islamic Financial Institutions) Board in accordance with Interna-
tional Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB)
and its interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC),
and according to the templates identified by the Authority.

Addendum to Accounting policies to be adopted and the necessary forms needed to prepare reports and http://ia.gov.ae/en/Documents/Takaful%20Accounting%20Poli-
financial statements and presentations - Takaful cies%20Regulations.pdf
2. Significant Accounting Policies
2.1 Basis of Preparation of Financial Statements
The financial statements have been prepared in accordance with Financial Accounting Standards issued by
the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) to the extent that these (Also extracted from the response to AAOIFI standards adoption
are compatible with International Financial Reporting Standards (IFRS). survey questionnaire)

[5] Prudential Regulation The DFSA’s Islamic Finance Regulatory Regime

Islamic firms must in general follow the AAOIFI accounting standards. https://www.dfsa.ae/en/What-We-Do/Authorisation/Islamic-Fi-
nance-Regulatory-Regime

We offer world-class regulation based on international best practice and experience. So we will always look THE DFSA’S APPROACH TO REGULATING ISLAMIC FINANCE IN
at the relevant international standards, which for Islamic finance are those of the Islamic Financial Services THE DIFC
Board (IFSB) and the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). https://www.dfsa.ae/

This means that any firm that claims to be Islamic must have a Shari’a Supervisory Board (SSB) made up

AAOIFI Footprint Report 2020 191

No. Description / extract from source document(s) Reference(s)

[5] of competent scholars. It must have systems and controls to implement the SSB’s rulings, and must have
annual Shari’a reviews and audits, following AAOIFI standards.

We have also implemented a set of disclosures specific to Islamic finance, in addition to those about the
SSB. For example, a Takaful company has to disclose the basis on which any surplus in the Takaful fund will
be shared; a bank managing a PSIA must disclose how profit is allocated between the bank and the client.
Again, these disclosures largely follow standards from the IFSB and AAOIFI.

We apply internationally accepted standards and principles; in Islamic finance those of the Accounting and Islamic Finance
Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board https://www.dfsa.ae/en/What-We-Do/Authorisation/Islamic-Fi-
(IFSB) nance

Rule 7.2.3 DFSA Islamic Finance Rules ChecklistIslamic Finance Rules for all
c. iii Where applicable, the disclosures required by Shari’a standards published from time to time by AAOIFI Securities checklist
in respect of Investment Sukuk. https://www.dfsa.ae/Documents/Checklists-2016/17032016_
IFR-Module7.docx

[6] 7.2 Contents of a Prospectus for Islamic Securities Financial Services Regulatory Authority
7.2.1 Where the relevant Securities are held out as being in accordance with Shari’a, the Prospectus Islamic Finance Rules (IFR)
relating to those Securities must include:
(d) in the case of issuance of Sukuk: http://adgm.complinet.com/net_file_store/new_rulebooks/i/f/
(ii) where applicable, the disclosures required by the Shari’a Standards published from time to time by IFR_VER03_210218.pdf
AAOIFI in respect of investment Sukuk; and

[7] 3.6 Shari’a reviews Financial Services Regulatory Authority

3.6.1 An Authorised Person must ensure that all Shari’a reviews are undertaken by the Shari’a Islamic Finance Rules (IFR)
Supervisory Board in accordance with AAOIFI GSIFI No 2. http://adgm.complinet.com/net_file_store/new_rulebooks/i/f/
3.7.2 An Islamic Financial Institution must perform the internal Shari’a review in accordance with IFR_VER03_210218.pdf
AAOIFI GSIFI No. 3.
3.7.3 An Authorised Person which operates an Islamic Window must, to the extent possible,
perform the internal Shari’a review in accordance with AAOIFI GSIFI No. 3 and must document
the manner in which it will conduct that part of the internal Shari’a review that is not
conducted in accordance with AAOIFI GSIFI No. 3.

192 AAOIFI Footprint Report 2020

No. Description / extract from source document(s) Reference(s)

[7] 3.7.4 Guidance Islamic Financial Business Supplement for Financial

For the purposes of assessing competency of personnel or departments which Services Permission
perform the internal Shari’a review, an Authorised Person should consult AAOIFI GSIFI
No. 3 paragraphs 9 to 16 inclusive. https://www.adgm.com/
6.3 External Shari’a reviews and periodic reports https://bit.ly/3ml1pzR
6.3.1 A Fund Manager of a Domestic Fund that is a Public Fund, other than a Fund relying on the
exemption in IFR 6.2.1(c), must ensure that all Shari’a reviews of the Fund are undertaken by
the Shari’a Supervisory Board in accordance with AAOIFI GSIFI No 2.
6.3.2 (a) In the case of a Domestic Fund that is a Public Fund other than a Fund relying on the
exemptions in IFR 6.2.1(c), the Fund Manager must commission an interim and an
annual report relating to the Fund operations from the Shari’a Supervisory Board
which complies with AAOIFI GSIFI No 1.
6.4 Internal Shari’a review
6.4.1 (b) The Fund Manager must perform the internal Shari’a review in accordance with
AAOIFI GSIFI No. 3.

4 Risks – financial and operational

4.5 Your firm must ensure that all Shari’a reviews are undertaken by the Shari’a Supervisory Board in
accordance with AAOIFI SIFI No. 2.9 Describe how you will organise and implement these periodic
internal and external Shari’a reviews. Mention who will be responsible for carrying out these
reviews and who will be responsible for implementing any action points:

AAOIFI Footprint Report 2020 193

 BCEAO
Last updated: 1 Aug 2019
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
194 AAOIFI Footprint Report 2020
No Jurisdiction, its role and mandate Banque Centrale Des Etats de L’afrique
de L’ouest (BCEAO) - (Central Bank of
West African States)*
Yes. It plans to
implement AAOIFI Has the jurisdiction made public commitment to No
standards [1] apply AAOIFI standards?
Not a member Extent of application of AAOIFI standards? • Shari’ah standards: Planning to implement [1]
• Financial accounting standards: Planning to
implement [1]
• Governance standards: Planning to implement
[1]
Yes. The AAOIFI
• Auditing standards: Planning to implement [1]
Shari’ah are
available in French Has the jurisdiction made any modifications to No
language any AAOIFI standards to suit its requirements?
Are all or some financial institutions required or No
permitted to apply AAOIFI standards?
No
Does the jurisdiction allow dual reporting? No
* It is the common institution of the member States of the West African Monetary Union (WAMU) comprising the Republics of Côte
d’Ivoire, Benin, Burkina Faso, Mali, Niger, Mauritania, Senegal (headquarters) and Togo.
No. Description / extract from source document(s) Reference(s)

[1] BCEAO is conducting work towards the adoption of AAOIFI auditing standards for Islamic financial (Extracted from the response to AAOIFI standards adoption
institutions. survey questionnaire)

Islamic banking standards are being developed in the WAEMU area. The banking regulation, especially the
prudential and the accounting frameworks, are being supplemented and/or revised to take into account
the specific aspects of Islamic banking, according to international standards like those of AAOIFI.

The first guidelines provided by BCEAO are related to :

the regulatory procedure a financial institution should follow to offer Islamic products to their clients ;
the characteristics of the Islamic products and operations authorised in the area.

AAOIFI Footprint Report 2020 195

 Republic of Yemen
Last updated: 1 Feb 2020
Are AAOIFI standards
incorporated as law /
regulation?
Does the jurisdiction
implements (or plan to
implement) AAOIFI standards?
What is the membership
profile of the regulating
authority(ies) with AAOIFI?
Are AAOIFI standards
translated / available in local
language?
Is there a central Shari’ah board?
196 AAOIFI Footprint Report 2020
Yes Jurisdiction, its role and mandate Central Bank of Yemen - Central bank of
the Republic of Yemen
Yes
Has the jurisdiction made public commitment to Yes
apply AAOIFI standards?
Not a member Extent of application of AAOIFI standards? • Shari’ah standards: Adopt [1]
• Financial accounting standards: Adopt [2]
• Governance standards: Adopt [1]
• Auditing standards: Adopt [1]
Yes. AAOIFI
Shari’ah, accounting
and governance Has the jurisdiction made any modifications to No
standards are avail- any AAOIFI standards to suit its requirements?
able in Arabic
Are all or some financial institutions required or Yes
permitted to apply AAOIFI standards?
No
Does the jurisdiction allow dual reporting? Yes
No. Description / extract from source document(s) Reference(s)

[1] Section VII: Other Requirements Guidelines for Governance of Banks in the Republic of Yemen.
Additional Requirements for Governance of Islamic Banks
I. Board of Directors http://centralbank.gov.ye/App_upload/GuideLinesforGovBanks.
In addition to the responsibilities of the Board of Directors referred to in Section I, the Board of Directors of pdf
Islamic Banks has the following responsibilities:
10. In general compliance with the standards issued by the Accounting and Auditing Organization for http://centralbank.gov.ye/App_Upload/BGG2013.pdf
Islamic Financial Institutions (AAOIFI), and in particular, with respect to the components of Internal Shari’ah
Auditing.

II. Board of Directors Subcommittees:

A. Audit Committee (AC):
2.6 To ascertain compliance with the provisions and principles of Islamic Shariah and review the extent of
compliance with the laws and regulations and the extent of implementation of the policies of the IB and of
the
implementation of the internal procedures of the IB; ascertain the compliance with the accounting stan-
dards of AAOIFI and international standards for financial reports (ISFR), for which there is no coverage by
AAOIFI of such matters, and so as not to conflict with the provisions and principles of Islamic Shariah.

B. Governance Committee (GC)

1. Formation of GC:
The members of the GC should understand the relevant provisions and principles of Islamic Shariah and
the application thereof on the products and services provided by the IB; they should also have a knowledge
of the standards set by AAOIFI the (and those issued by the International Standards for Financial Reports.
It is preferred that one of the GC members is academically qualified and practically experienced in Shariah
Control, other than Members of the Shariah Control Board (SCB) of the Bank; the GC may seek the assis-
tance of external Shariah expertise after approval of the Board of Directors hereof.

III. Internal Control and Supervision Environment

B. Internal Shariah Audit
6. The internal Shariah auditors should comply with the ethical charter of Accountants and External
Auditors for Islamic Financial Institutions, which is issued by the Accounting and Auditing Organization for
Islamic Financial
Institutions (AAOIFI).

AAOIFI Footprint Report 2020 197

No. Description / extract from source document(s) Reference(s)

[1] C. External Auditors (If available External Shariah Auditor)
3. The External Auditor should carry out the audits in accordance with AAOIFI standards, and international
and local standards should be referred to in matters that are not covered by the mentioned standards,
provided that the international standards of the audit are not in conflict with the provisions and principles
of Islamic Shariah.
Guidelines for Governance of Banks in the Republic of Yemen.
http://centralbank.gov.ye/App_upload/GuideLinesforGovBanks.
pdf

[2] IV. Transparency and Disclosure
Banks should comply with disclosure rules according to the effective applicable laws and the instructions
of the CBY and as consistent with the standards issued by AAOIFI and the International Financial Reporting
Standards IFRS, with respect to the matters not covered by the standards set forth by AAOIFI and so as not
to conflict with provisions issued by the Islamic Financial Services Institutions Board (IFSI).
Guidelines for Governance of Banks in the Republic of Yemen.
http://centralbank.gov.ye/App_upload/GuideLinesforGovBanks.
pdf

198 AAOIFI Footprint Report 2020

Appendices

AAOIFI Footprint Report 2020 199

Appendix A - AAOIFI standards and technical pronouncements in issue as of 31 August 2020

Category # Name of the AAOIFI standard / technical pronouncement

F inancial Accounting
1 Conceptual Framework for Financial Reporting by Islamic Financial Institutions*
Statements

F inancial Accounting
Standards (FAS)
2 FAS 1 “General Presentation and Disclosure in the Financial Statements of Islamic Banks and Financial Institutions”
3 FAS 3 “Mudaraba Financing”
4 FAS 4 “Musharaka Financing”
5 FAS 7 “Salam and Parallel Salam”
6 FAS 8 “Ijarah and Ijarah Muntahia Bittamleek”
7 FAS 9 “Zakah”
8 FAS 10 “Istisna’a and Parallel Istisna’a”
9 FAS 12 “General Presentation and Disclosure in the Financial Statements of Islamic Insurance Companies”
10 FAS 13 “Disclosure of Bases for Determining and Allocating Surplus or Deficit in Islamic Insurance Companies”
11 FAS 14 “Investment Funds”
12 FAS 15 “Provisions and Reserves in Islamic Insurance Companies”
13 FAS 16 “Foreign Currency Transactions and Foreign Operations”
14 FAS 18 “Islamic Financial Services Offered by Conventional Financial Institutions”
15 FAS 19 “Contributions in Islamic Insurance Companies”
16 FAS 21 “Disclosure on Transfer of Assets”

17 FAS 22 “Segment Reporting”

200 AAOIFI Footprint Report 2020

 18 FAS 23 “Consolidation”

19 FAS 24 “Investments in Associates”

20 FAS 25 “Investment in Sukuk, Shares and Similar Instruments*”

21 FAS 26 “Investment in Real Estate*”

22 FAS 27 “Investment Accounts*”

23 FAS 28 “Murabaha and other deferred payment sales”

24 FAS 30 “Impairment, Credit Losses and Onerous Commitments”

25 FAS 31 “Investment Agency (Al-Wakala Bi Al-Istithmar)”

26 FAS 32 “Ijarah”

27 FAS 33 “Investments in Sukuk, Shares and Similar Instruments”

28 FAS 34 “Financial Reporting for Sukuk-holders”

29 FAS 35 “Risk Reserves”

Guidance Notes 30 Guidance Note on First Time Adoption of AAOIFI Accounting Standards by an Islamic Financial Institution

AAB statement 31 AAB statement on accounting implications of the impact of COVID-19 pandemic

Auditing 32 ASIFI 1 “Objective and Principles of Auditing”

33 ASIFI 2 “Auditor’s Report”

34 ASIFI 3 “Terms of Audit Engagement”

35 ASIFI 4 “Testing for Compliance with Shari’a Rules and Principles by an External Auditor by External Auditor”

AAOIFI Footprint Report 2020 201

Auditing (Contd.) 36 ASIFI 5 “Auditor’s Responsibility to Consider Fraud and Error in an Audit of Financial Statements”

37 ASIFI 6 “External Shari’ah Audit”

 uidance Notes
G 38 Guidance Note (GN) No. 01 “Communication of key audit matters in the independent auditor’s report”
(auditing)
39 Guidance Note (GN) No. 02 Auditor’s Report

Governance 40 GSIFI 1 “Shari’a Supervisory Board: Appointment, Composition and Report”

41 GSIFI 2 “Shari’a Review”

42 GSIFI 3 “Internal Shari’a Review”

43 GSIFI 4 “Audit and Governance Committee for Islamic Financial Institutions”

44 GSIFI 5 “Independence of Shari’a Supervisory Board”

45 GSIFI 6 “ Statement on Governance Principles for Islamic Financial Institutions”

46 GSIFI 7 “Corporate Social Responsibility, Conduct and Disclosure for Islamic Financial Institutions”

47 GSIFI 8 “Central Shari’ah Board”

48 GSIFI 9 “Shari’ah Compliance Function”

49 GSIFI 10 “Shari’ah Compliance and Fiduciary Ratings for Islamic Financial Institutions”

50 GSIFI 11 “Internal Shari’ah Audit”

51 GSIFI 12 “Sukuk Governance”

 GEB statement on application of AAOIFI governance, ethics and auditing standards in view of the impact of COVID-19
A
AGEB statement 52
pandemic

202 AAOIFI Footprint Report 2020

Codes of Ethics 53 Code of Ethics for Islamic Finance Professionals

54 Code of Ethics for Accountants and Auditors of Islamic Financial Institutions

55 Code of Ethics for the Employees of Islamic Financial Institutions

AAOIFI Footprint Report 2020 203

Shari’ah Standards 56 SS 1 “Trading in Currencies”

57 SS 2 “Debit Card, Charge Card and Credit Card”

58 SS 3 “Procrastinating Debtor”

59 SS 4 “Settlement of Debt by Set-Off”

60 SS 5 “Guarantees”

61 SS 6 “Conversion of a Conventional Bank to an Islamic Bank”

62 SS 7 “Hawalah”

63 SS 8 “Murabahah”

64 SS 9 “Ijarah and Ijarah Muntahia Bittamleek”

65 SS 10 “Salam and Parallel Salam”

66 SS 11 “Istisna’a and Parallel Istisna’a”

67 SS 12 “Sharikah (Musharakah) and Modern Corporations”

68 SS 13 “Mudarabah”

69 SS 14 “Documentary Credit”

70 SS 15 “Jua’lah”

71 SS 16 “Commercial Papers”

72 SS 17 “Investment Sukuk”

73 SS 18 “Possession (Qabd)”

204 AAOIFI Footprint Report 2020

74 SS 19 “Loan (Qard)”

75 SS 20 “Commodities in Organised Markets”

76 SS 21 “Financial Papers (Shares and Bonds)”

77 SS 22 “Concession Contracts”

78 SS 23 “Agency”

79 SS 24 “Syndicated Financing”

80 SS 25 “Combination of Contracts”

81 SS 26 “Islamic Insurance”

82 SS 27 “Indices”

83 SS 28 “Banking Services”

84 SS 29 “Stipulations and Ethics of Fatwa in the Institutional Framework”

85 SS 30 “Monetization (Tawarruq)”

86 SS 31 “Controls on Gharar in Financial Transactions”

87 SS 32 “Arbitration”

88 SS 34 “Hiring of Persons”

89 SS 35 “Zakah”

90 SS 36 “Impact of Contingent Incidents on Commitments”

91 SS 37 “Credit Agreement”

AAOIFI Footprint Report 2020 205

 92 SS 38 “Online Financial Dealings”

93 SS 39 “Mortgage and its Contemporary Applications”

94 SS 40 “Distribution of Profit in Mudarabah-based Investments Accounts”

95 SS 41 “Islamic Reinsurance”

96 SS 42 “Financial Rights and How They Are Exercised and Transferred”

97 SS 43 “Insolvency”

98 SS 44 “Obtaining and Deploying Liquidity”

99 SS 45 “Protection of Capital and Investments”

100 SS 46 “Al-Wakalah Bi Al-Istithmar (Investment Agency)”

101 SS 47 “Rules for Calculating Profit in Financial Transactions”

102 SS 48 “Options to Terminate Due to Breach of Trust (Trust-Based Options)”

103 SS 49 “Unilateral and Bilateral Promise”

104 SS 50 “Irrigation Partnership (Musaqat)”

105 SS 51 “Options to Revoke Contracts Due to Incomplete Performance”

106 SS 52 “Options to Reconsider (Cooling-Off Options, Either-Or Options, and Options to Revoke Due to Non-Payment)”

107 SS 53 “Arboun (Earnest Money)”

108 SS 54 “Revocation of Contracts by Exercise of a Cooling-Off Option”

109 SS 55 “Competitions and Prizes”

206 AAOIFI Footprint Report 2020

110 SS 56 “Guarantee of Investment Manager”

111 SS 57 “Gold and its Trading Parameters in Shari’ah“

112 SS 58 “Repurchase Agreement”

113 SS 59 “Sale of Debt”

114 SS 60 “Waqf”

AAOIFI Footprint Report 2020 207

Appendix B - AAOIFI members as of 31 August 2020

# Founding-member institutions Country of incorporation

1 Al Baraka Banking Group Bahrain, Kingdom of

2 Al Rajhi Bank Saudi Arabia, Kingdom of

3 Islamic Development Bank Saudi Arabia, Kingdom of

4 Kuwait Finance House Kuwait, State of

5 Al Bukhary Foundation Malaysia

6 Dar Al-Maal Al Islami Trust Switzerland

# Regulatory and Supervisory authorities Country of incorporation

7 Central Bank of Djibouti Djibouti, Republic of

8 Securities & Exchange Organization of Iran Iran, Islamic Republic of

9 Central Bank of Iraq Iraq, Republic of

10 Central Bank of Jordan Jordan, Hashemite Kingdom of

11 Insurance Commission (Jordan) Jordan, Hashemite Kingdom of

12 Astana Financial Services Authority Kazakhstan, Republic of

13 National Bank of the Republic of Kazakhstan Kazakhstan, Republic of

14 Capital Markets Authority (Kuwait) Kuwait, State of

208 AAOIFI Footprint Report 2020

# Regulatory and Supervisory authorities Country of incorporation
15 Central Bank of Libya Libya

16 Central Bank of Mauritania Mauritania, Islamic Republic of

17 Bank Al Maghrib Morocco, Kingdom of

18 Capital Market Authority (Oman) Oman, Sultanate of

19 State Bank of Pakistan Pakistan, Islamic Republic of

20 Palestine Monetary Authority Palestine (Palestinian Authority)

21 Qatar Central Bank Qatar, State of

22 Qatar Financial Centre Regulatory Authority Qatar, State of

23 Maldives Monetary Authority Republic of Maldives

24 Capital Market Authority (KSA) Saudi Arabia, Kingdom of

25 Saudi Arabian Monetary Authority (SAMA) Saudi Arabia, Kingdom of

26 Central Bank of Syria Syrian Arab Republic

27 Banking Regulation & Supervision Agency Turkey, Republic of

28 Dubai Financial Conduct Authority United Arab Emirates

29 Dubai Financial Markets United Arab Emirates

30 Securities and Commodities Authority United Arab Emirates

31 Standard Chartered Bank (UAE) United Arab Emirates

AAOIFI Footprint Report 2020 209

# Other semi-regulatory / international bodies Country of incorporation
32 General Council for Islamic Banks and Financial Institutions (CIBAFI) Bahrain, Kingdom of

33 Iraqi Association of Certified Accountant Iraq, Republic of

34 Kuwait Association of Accountants & Auditors Kuwait, State of

35 The Institute of Chartered Accountants of Pakistan Pakistan, Islamic Republic of

T he Islamic Corporation for the Insurance of Investment and Export Credit
36 Saudi Arabia, Kingdom of
(ICIEC)

210 AAOIFI Footprint Report 2020

 # Associate members Country of incorporation
37 National Bonds Corporation United Arab Emirates

38 Islamic Bank of Afghanistan Afghanistan, Islamic Republic of

39 Al Salam Bank Algeria Algeria, People’s Democratic Republic of

40 Banque Al-Baraka D’Algerie Algeria, People’s Democratic Republic of

41 ABC Islamic Bank Bahrain, Kingdom of

42 Al Salam Bank Bahrain, Kingdom of

43 Bahrain Development Bank Bahrain, Kingdom of

44 Bahrain Islamic Bank Bahrain, Kingdom of

45 Bank Alkhair BSC Bahrain, Kingdom of

46 BDO Jawad Habib Bahrain, Kingdom of

47 Citi Islamic Investment Bank Bahrain, Kingdom of

48 Deloitte Bahrain, Kingdom of

49 Ernst & Young - Bahrain Bahrain, Kingdom of

50 First Energy Bank B.S.C Bahrain, Kingdom of

51 GFH Financial Group Bahrain, Kingdom of

52 Global Banking Corporation BSC (c) Bahrain, Kingdom of

53 Gulf International Bank Bahrain, Kingdom of

AAOIFI Footprint Report 2020 211

 # Associate members Country of incorporation
54 Ibdar Capital BSC Bahrain, Kingdom of

55 Khaleeji Commercial Bank Bahrain, Kingdom of

56 KPMG Fakhro - Bahrain Bahrain, Kingdom of

57 Kuwait Finance House - Bahrain Bahrain, Kingdom of

58 PricewaterhouseCoopers ME Limited Bahrain, Kingdom of

59 Solidarity Bahrain B.S.C Bahrain, Kingdom of

60 Tharawat Investment House Bahrain, Kingdom of

61 Venture Capital Bank Bahrain, Kingdom of

62 Bank Asia Limited Bangladesh, People’s Republic of

63 Islami Bank Bangladesh Limited Bangladesh, People’s Republic of

64 The City Bank Limited Bangladesh, People’s Republic of

65 Bank Islam Brunei Darussalam Brunei Darussalam

66 East Africa Bank Djibouti, Republic of

67 Salaam African Bank Djibouti, Republic of

68 Al Baraka Bank Egypt Egypt, Arab Republic of

69 Faisal Islamic Bank of Egypt Egypt, Arab Republic of

70 Taqwaa Advisory and Shariah Investment India, Republic of

212 AAOIFI Footprint Report 2020

 # Associate members Country of incorporation
71 Al Janoob Islamic Bank for Investment & Finance Iraq, Republic of

72 Al Rajhi Bank (Jordan) Jordan, Hashemite Kingdom of

73 ICS Financial Systems Ltd. Jordan, Hashemite Kingdom of

74 Islamic International Arab Bank Jordan, Hashemite Kingdom of

75 Jordan Islamic Bank Jordan, Hashemite Kingdom of

76 The Islamic Insurance Company PLC Jordan, Hashemite Kingdom of

77 First Community Bank Kenya, Republic of

78 Ahli United Bank Kuwait, State of

79 Boubyan Bank Kuwait, State of

80 International Turnkey Systems Group Kuwait, State of

81 Kuwait International Bank (KSC) Kuwait, State of

82 Warba Bank Kuwait, State of

83 ECO Islamic Bank Kyrgyz Republic

84 Blom Development Bank Lebanon, Republic of

85 BML Istisharat S.A.L. Lebanon, Republic of

86 Path Solutions Lebanon, Republic of

87 Alyossr Takaful Insurance Libya

AAOIFI Footprint Report 2020 213

 # Associate members Country of incorporation
88 Jumhouria Bank Libya

89 Bank Islam Malaysia Berhad Malaysia

90 Bank Muamalat Malaysia Malaysia

91 International Shariah Research (ISRA) Malaysia

92 Bank Nizwa Oman, Sultanate of

93 Meethaq Islamic Banking – Bank Muscat Oman, Sultanate of

94 Meezan Bank Limited Pakistan, Islamic Republic of

95 Arab Islamic Bank Palestine (Palestinian Authority)

96 Palestine Islamic Bank Palestine (Palestinian Authority)

97 Barwa Bank Qatar, State of

98 First Finance Company Qatar, State of

99 Qatar Finance House Qatar, State of

100 Qatar First Bank Qatar, State of

101 Qatar International Islamic Bank Qatar, State of

102 Qatar Islamic Bank Qatar, State of

103 Alinma Bank Saudi Arabia, Kingdom of

104 Bank Al Bilad Saudi Arabia, Kingdom of

214 AAOIFI Footprint Report 2020

 # Associate members Country of incorporation
105 Bank Al Jazira Saudi Arabia, Kingdom of

106 Banque Saudi Fransi Saudi Arabia, Kingdom of

107 Bidaya Home Finance Saudi Arabia, Kingdom of

108 Future Investment Management L.L.C. Saudi Arabia, Kingdom of

109 Islamic Corporation for the Development of the Private Sector Saudi Arabia, Kingdom of

110 The National Commercial Bank Saudi Arabia, Kingdom of

111 The Saudi British Bank Saudi Arabia, Kingdom of

112 Watan First Institute Saudi Arabia, Kingdom of

113 Al Baraka Bank Limited South Africa

114 Oasis Crescent Capital Pty Ltd South Africa

115 Amana Bank PLC Sri Lanka, Democratic Socialist Republic of

116 Al Nile Bank Sudan, Republic of the

117 Bank of Khartoum Sudan, Republic of the

118 Faisal Islamic Bank - Sudan Sudan, Republic of the

119 Omdurman National Bank Sudan, Republic of the

120 Sudanese French Bank Sudan, Republic of the

121 Tadamon Islamic Bank Sudan, Republic of the

AAOIFI Footprint Report 2020 215

 # Associate members Country of incorporation
122 Amana Bank Limited Tanzania, United Republic of

123 Banque Zitouna Tunisia, Republic of

124 Al Baraka Turk Participation Bank Turkey, Republic of

125 Kuveyt Turk Participation Bank Turkey, Republic of

126 Qinvest LLC Turkey, Republic of

127 Ziraat Katilim Bankasi A.S. Turkey, Republic of

128 Turkiye Finans Katilm Bankasi Anonim Turkey, Republic of

129 Abu Dhabi Islamic Bank United Arab Emirates

130 AIG American International Group United Arab Emirates

131 Ajman Bank PJSC United Arab Emirates

132 Al Hilal Bank United Arab Emirates

133 Allen & Overy LLP United Arab Emirates

134 Clifford Chance LLP United Arab Emirates

135 Dubai Islamic Bank United Arab Emirates

136 Emirates Islamic Bank United Arab Emirates

137 HSBC Amanah United Arab Emirates

138 Noor Islamic Bank PJSC United Arab Emirates

216 AAOIFI Footprint Report 2020

 # Associate members Country of incorporation
139 Tiybr Payments United Arab Emirates

140 Eiger Trading Advisors Ltd United Kingdom

141 Khalij Islamic United Kingdom

142 Latham & Watkins United Kingdom

143 Saturna Capital United States of America

144 UIF Corporation United States of America

145 AlKuraimi Islamic Bank Yemen, Republic of

AAOIFI Footprint Report 2020 217

Appendix C - AAOIFI organizational structure

General Assembly

Nominations Committee

Audit and Governance Committee Board of Trustees Technical Boards

Executive Committee

General Secretariat

AAOIFI Shari’ah Board AAOIFI Accounting Board AAOIFI Governance and

(ASB) (AAB) Ethics Board (AGEB)

218 AAOIFI Footprint Report 2020

Appendix D - AAOIFI standards adoption survey questionnaire

Survey Guidelines

Please provide responses that most accurately describe your jurisdiction’s level of adoption of AAOIFI
standards with respect to Islamic financial institutions within your jurisdiction.

Kindly submit the completed questionnaire and send via email to AAOIFI Secretariat to Mr. Syed
Siddiq Ahmed (ssiddiq@aaoifi.com) or via fax +973-1725 4496.

AAOIFI highly values your response and appreciates your time and effort in responding to this short
survey.

1. Please indicate which AAOIFI standards and/or pronouncements your jurisdiction/institution applies
and to what extent.
AAOIFI STANDARDS ADOPTION SURVEY

Questionnaire a. AAOIFI Shari'ah standards

Please tick mark
Level of adoption
as appropriate
1. Regulator has adopted all AAOIFI Shari'ah standards
2. Regulator has adopted certain, but not all, AAOIFI Shari'ah standards
3. Regulator has prescribed AAOIFI Shari'ah standards as guidelines or reference materials,
including as supplementary guidance
4. Regulator has developed local standards / regulations based on / in line with AAOIFI
 Shari'ah standards
AAOIFI Secretariat
5. Regulator has adopted a different set of standards – and hence does not allow adoption of
AAOIFI standards
6. Regulator has left it open for the institutions to decide – and certain or all institutions have
voluntarily adopted the AAOIFI Shari'ah standards
7. Regulator has left it open for the institutions to decide – and there is no evidence that
certain or all institutions have voluntarily adopted the AAOIFI Shari'ah standards
8. No comment
INSTITUTION NAME:
Please provide reference to the law/regulation/documentation, if any.
COUNTRY:
JURISDICTION:
NAME OF CONTACT PERSON:
PHONE:
EMAIL:
INSTITUTION’S NATURE OF OPERATIONS:
b. AAOIFI Accounting standards
Please tick mark
Level of adoption
as appropriate
1. Regulator has adopted all AAOIFI accounting standards
2. Regulator has adopted certain, but not all, AAOIFI accounting standards
Objective of the survey 3. Regulator has prescribed AAOIFI accounting standards as guidelines or reference
materials, including as supplementary guidance
The aim of this short survey is to update AAOIFI’s records with regard to the level of adoption of 4. Regulator has developed local standards / regulations based on / in line with AAOIFI
AAOIFI standards in various countries and jurisdictions. This will help AAOIFI to better align itself to accounting standards
the requirements of its present and future stakeholders. 5. Regulator has adopted a different set of standards – and hence does not allow adoption of
AAOIFI accounting standards

ϭ Ϯ
 

AAOIFI Footprint Report 2020 219

Appendix D - AAOIFI standards adoption survey questionnaire (Contd.)

6. Regulator has left it open for the institutions to decide – and certain or all institutions have
voluntarily adopted the AAOIFI accounting standards
7. Regulator has left it open for the institutions to decide – and there is no evidence that
certain or all institutions have voluntarily adopted the AAOIFI accounting standards
8. No comment

Please provide reference to the law/regulation/documentation, if any.

2. Please provide any other relevant information on AAOIFI standards from your perspective.
c. AAOIFI Governance standards
Please tick mark
Level of adoption
as appropriate
1. Regulator has adopted all AAOIFI governance standards
2. Regulator has adopted certain, but not all, AAOIFI governance standards
3. Regulator has prescribed AAOIFI governance standards as guidelines or reference
materials, including as supplementary guidance
4. Regulator has developed local standards / regulations based on / in line with AAOIFI
governance standards
5. Regulator has adopted a different set of standards – and hence does not allow adoption of
AAOIFI governance standards
6. Regulator has left it open for the institutions to decide – and certain or all institutions have
voluntarily adopted the AAOIFI governance standards
7. Regulator has left it open for the institutions to decide – and there is no evidence that
certain or all institutions have voluntarily adopted the AAOIFI governance standards
8. No comment

Please provide reference to the law/regulation/documentation, if any.

- End of questionnaire-

d. AAOIFI Auditing standards Thank you.

Please tick mark

Level of adoption
as appropriate
1. Regulator has adopted all AAOIFI auditing standards For more information on AAOIFI please visit www.aaoifi.com
2. Regulator has adopted certain, but not all, AAOIFI auditing standards
3. Regulator has prescribed AAOIFI auditing standards as guidelines or reference materials,
including as supplementary guidance
4. Regulator has developed local standards / regulations based on / in line with AAOIFI
auditing standards
5. Regulator has adopted a different set of standards – and hence does not allow adoption of
AAOIFI auditing standards
6. Regulator has left it open for the institutions to decide – and certain or all institutions have
voluntarily adopted the AAOIFI auditing standards
7. Regulator has left it open for the institutions to decide – and there is no evidence that
certain or all institutions have voluntarily adopted the AAOIFI auditing standards
8. No comment

Please provide reference to the law/regulation/documentation, if any.

ϯ ϰ
 

220 AAOIFI Footprint Report 2020

Appendix E - AAOIFI standards publications

1387 1388

AAOIFI Footprint Report 2020 221

Appendix F - AAOIFI other publications

222 AAOIFI Footprint Report 2020

AAOIFI Footprint Report 2020 223
AAOIFI Footprint Report 2020 225
 Contact us

Offie 1001, 10th Floor, Al Nakheel Tower, Building 1074, Road 3622 Seef District 436,
KINGDOM OF BAHRAIN
Tel : +973 17 244 496
Fax : +973 17 250 194
Email : info@aaoifi.com

www.aaoifi.com

Supported by

www.jerseyfinance.je