ACCA, KPMG undertake expert discussions on Islamic finance

The Association of Chartered Certified Accountants (ACCA) and KPMG are hosting the second in a series of high-level roundtable discussions in Dubai on May 5.

These discussions aim to answer critical questions on the growing issue of how the financial reporting of Islamic finance can be harmonised and made more consistent internationally.

The event will bring together experts from the fields of accounting standard-setting, auditing, regulation, Islamic banking and ratings agencies. The first event in the series was held in Malaysia last October and the next will be held in London, this demand reflects the growing international interest in the subject.

Aziz Tayyebi, the ACCA’s Head of International Development who is also an expert in Islamic finance, said: “Islamic Financial Institutions (IFIs) are being set up in various countries including South Korea and Ireland and conventional multinational firms are also increasingly offering Shariah-compliant products. This is why we need a platform such as this, with some of the leading stakeholders in international Islamic finance, to address some fundamental questions around the topic of Islamic finance.” Some of the questions that will be under consideration by the expert panel in Dubai will include

· Should the objectives of the financial reporting of Islamic financial transactions be different from those of mainstream financial reporting?

· Should Islamic Finance use distinct Islamic accounting principles to provide a faithful representation of the nature of these transactions?

· Do non-financial institutions that use Islamic finance products have different accounting issues to IFIs?

Samer Hijazi, KPMG Audit Director and an expert in Islamic finance, noted: “As the Islamic finance sector matures and becomes increasingly mainstream, greater synergy of practices and transparency of institutions that sell Shariah-compliant products will become critical.”

Muhammad Tariq, KPMG’s Head of Islamic Finance in the UAE, added:“It is timely to review the current financial reporting practices across the globe and to address the issues which might prevent a consistent internationalised approach, with all the benefits that we have seen in the development of IFRS”.

Guests for the roundtable which is to be held at the Emirates Tower Hotel in Dubai, will include Wayne Upton, director of international activities, IASB, MNCs, global and local banks.

Together these distinguished panellists will not only discuss the wider issues related to harmonising financial reporting practices for Islamic finance, there will also be some specific questions addressed at the forum, aimed at the compatibility of IFRS with Islamic Finance practices:

· Does the prohibition of taking part in interest-based transactions influence the increasing use of discount rates for measuring the market value of financial instruments?

· Are concepts such as ‘control’, ‘risks and rewards’ and ‘rights and obligations’ – essential in determining accounting treatment under IFRS?

· Are the treatments of various types of profit-sharing investment accounts under IFRS consistent with the Shari’a basis for those transactions?

The ACCA is the global body for professional accountants. It aims to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.

KPMG is one of the best-known names in business. Its global network of member firms provides audit, tax, and advisory services to local, national, and multinational organisations.
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source : khaleej times

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The Accounting and Auditing Organization for Islamic Financial Institutions

0018-0608-0407-5304_tnThe Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is an Islamic international autonomous non-for-profit corporate body that prepares accounting, auditing, governance, ethics and Shari’a standards for Islamic financial institutions and the industry. Professional qualification programs (notably CIPA, the Shari’a Adviser and Auditor “CSAA”, and the corporate compliance program) are presented now by AAOIFI in its efforts to enhance the industry’s human resources base and governance structures.

AAOIFI was established in accordance with the Agreement of Association which was signed by Islamic financial institutions on 1 Safar, 1410H corresponding to 26 February, 1990 in Algiers. Then, it was registered on 11 Ramadan 1411 corresponding to 27 March, 1991 in the State of Bahrain.

As an independent international organization, AAOIFI is supported by institutional members (155 members from 40 countries, so far) including central banks, Islamic financial institutions, and other participants from the international Islamic banking and finance industry, worldwide.

AAOIFI has gained assuring support for the implementation of its standards, which are now adopted in the Kingdom of Bahrain, Dubai International Financial Centre, Jordan, Lebanon, Qatar, Sudan and Syria. The relevant authorities in Australia, Indonesia, Malaysia, Pakistan, Kingdom of Saudi Arabia, and South Africa have issued guidelines that are based on AAOIFI’s standards and pronouncements.