Financial reporting of Islamic banks in Bangladesh: basis of regulatory compliance (original) (raw)
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The prime focus of this paper is to review the financial reporting system (FRS) of the Islamic Banks, awareness of the selected respondents regarding the major components of FRS and examining the applicability of the attributes of a good FRS in the selected organizations, identifying the major financial reports and statements sent to user groups and thereby assessing the actual practices of FRS in the Islamic Banks under Islamic Shari " ah. The study is the outcome of mainly primary data. The primary data were collected from a total number of 70 practicing accountants employed in 7 Islamic Banks operating in Bangladesh. Most of the objectives have been identified by the respondents as the very much important objectives. The overall finding of this study depicts the deep concern of the respondents regarding the practice of FRS in the selected Islamic organizations.
Evaluation of Financial Reporting System in Islamic Banks in Bangladesh
The main research issues of the study are: importance of the principles of Islamic ethics, necessity of the objectives of financial reporting system (FRS) from Islamic perspective, awareness of the selected respondents regarding the major components of FRS and examining the applicability of the attributes of a good FRS in the selected organizations, identifying the major financial reports and statements sent to user groups and thereby assessing the actual practices of FRS in the Islamic Banks under Islamic Shari'ah. The study is the outcome of mainly primary data. The primary data were collected from a total number of 70 practicing accountants employed in all Islamic Banks operating in Bangladesh. The main research findings of the study are: i) the principles of Islamic ethics viz. and Morality have been very much importance as opined by the respondents. A number of objectives of FRS as identified by relevant authors have been i) to assist shareholders in evaluating the financial conditions, ii) to assist management group in taking managerial decesions, iii) to ensure truth and fairness in financial information system, iv) to assist users in economic investment decisions, v) information about entity's discharge of social reponsibilities, 1 Md. Jahirul Haque,
International Journal of Economics, Business and Accounting Research (IJEBAR)
Compliance with financial reporting guidelines/standards promulgated by Regulatory Bodies has become a crucial issue of the day after a series of corporate debacles over a few years. Regulators, professional bodies and researchers throughout the world have expressed their concern about the need for improved accounting pronouncements and compliance for providing better information than previously required for the preparation and presentation of corporate financial reporting. The present study primarily focuses on the reporting disclosure levels and compliance with Bangladesh Bank (BB) Guidelines, Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Accounting Standard, Bangladesh/International Financial Reporting Standard (B/IFRS) and Securities and Exchange Commission (SEC) Rules of Islamic Financial Institutions in Bangladesh. Annual reports of (08) eight Islamic banks in Bangladesh have been examined for the year ending 2015. The results showed that the...
SSRN Electronic Journal
The purpose of this study is to comparatively analyze adoption and implementation of International Financial Reporting Standards (IFRS) in banking sector of Bangladesh both traditional and Islamic banking. The study employs literature based method which is a kind of qualitative research approach. Using exploratory analysis the study identifies and compares adoption and application scenarios of IFRS in traditional and Islamic banking sector as well as identifies major benefits and problems in adoption and application of IFRS in both sector. This study concludes that the adoption and application scenarios of IFRS in banking sector is satisfactory level and adoption of IFRS offered various benefits but a complete implementation of IFRS by Islamic banks have been proven to genuinely violate the shariah principles. Therefore a separate accounting framework for Islamic products and transactions is required. As the existence of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is still relevant and essential for the development of Islamic financial institutions. However continuous dialogue and consultation between International Accounting Standards Board (IASB) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is needed to harmonize and minimize the difference between two frameworks. This study expected to benefits the accounting standards setting bodies and the interested parties as an input for them to make decision whether all standards provided by IFRS is applicable for Islamic Financial Institutions(IFIs) or not. Key Words: IFRS, AAOIFI, IASB, IFIs.
2020
Islamic banking is a system of banking that avoids receipt and payment of interest in its transactions and conducts its operations in accordance with Shariah principles to achieve the objectives of Islamic economy. The main objective of this review paper is to compare the level of disclosure of information by the Islamic Banking sector in Bangladesh. Multiple linear regression techniques will be used to test the hypotheses under study. The findings of this review paper is the supervisory authorities should recognize the need to set up a regulatory framework that, while consistent with Islamic precepts, would be pragmatic and flexible enough to meet internationally-accepted prudential and supervisory requirements. Effective prudential supervision of Islamic Banks in their home countries is important to foster integration between Islamic and conventional banking systems.
Islamic banking companies in Bangladesh mandatorily required following different rules, regulations, ordinance, guidelines in accounting and reporting practices but AAOIFI standards are not mandatory for them. But as Islamic organizations, they are supposed to comply with AAOIFI standards. The objective of this study is to reveal the level of Compliance of AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) guidelines regarding General Presentation and Disclosure in the Financial Statements of Islamic Banks listed in Bangladesh. The study considered the annual report of 7 listed Islamic banking companies of 2011. The study found that these banks comply on an average 44.68 percent (90.71 items of 203) of AAOIFI Guidelines regarding General Presentation and Disclosure in the Financial Statements. Standard deviation of total compliance score is 3.14 indicate that there is very poor difference among the Islamic banks in this regard. The study recommended increasing the level of compliance to make their report more informative and to inform their stakeholder that they are doing their business complying the rules and regulation of regulatory bodies.
Financial Reporting Of Islamic Bank In The Light Of Shariah: A Conceptual Framework
Journal of Fatwa Management and Research
This paper intent to examine the function of the financial reporting, in enhancing the Shariah compliance of the Islamic financial transactions and the role of the Shariah committee in the Islamic bank in giving the assurance of Shariah compliance of the financial reporting. These would enhance the integration of the financial reporting of the Islamic bank and Shariah compliance. However, how Shariah compliance is conveyed in financial reporting received scant attentions in academia. This study uses literature as the study method. This is a conceptual paper describing the link between financial reporting on the Islamic financial transactions and Shariah compliance. The conclusion of this study shows that the knowledge in finance and accounting and experience of the Shariah committee enhances the financial reporting to be aligned with the Shariah. Therefore, it could increase the confidence of the stakeholders. As such, this study might be of interest to top management in Isla...
The study examines the compliance levels of 17 private commercial banks, which operate Islamic banking in Bangladesh, with Shariah governance system of AAOIFI to understand their Shariah non-compliance risk management status. The results show that none of the Islamic banks in Bangladesh are full-compliant with Shariah governance system of the AAOIFI because none of them has audit and governance committee at board level. The average of Shariah compliance levels of the full-fledged Islamic banks is highest but it is medium and lowest against the banks, which operate Islamic banking through some Islamic bank branches and windows, respectively. However, the banks conduct Shariah audit and inspections by the Shariah Supervisory Committees (SSCs). Some limitations of the SSC have been observed. These are: some banks formed the SSC with both outsiders and insiders, but appointment of insiders is a complete deviation from the AAOIFI standards. Reports of the SSC have not been presented in a uniform way which creates confusion among the stakeholders regarding information. Though disclosure of doubtful income indicates operational efficiency of Shariah based banks, some reports of the SSC did not mention the amount of doubtful income at all. It has been hypothesised that if there is more compliance with Shariah so there shall be higher growth of Islamic banking. The study therefore suggests that the Shariah compliance levels should be increased by all banks. Moreover uniformity and transparency should be ensured in the reports of the SSCs. All of these shall not only help to mitigate Shariah non-compliance risk but also re-enforce the growth and company efficiency of the Islamic banks Bangladesh.
Conformity Level of AAOIFI Accounting Standards by Six Islamic Banks of Bangladesh
The International Journal of Excellence in Islamic Banking and Finance, 2015
In response to this global rise in Islamic financial organism and banking, the need for setting up a common standard for the accounting function in Islamic Banks, became an unuttered need. Addressing this need, in the year 1991, the global institute for setting accounting standards for Islamic financial institutes, Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has been established in Bahrain. This study tries to find out the conformity level of the Islamic Banks in Bangladesh with these standards. This study analyses the annual reports of six Islamic banks from Bangladesh of the year 2012. The Reports are collected from the Banks' website sources. It is found that these six banks conform with the AAOIFI standards by 53.79% on average in financial statements. A 2.79 standard deviation in case of total conformity refers to the low level of difference among these banks in case of disclosure. This study suggests that it is highly of importance for the banks to increase the level of conformity of the AAOIFI standards to ensure the stakeholders about their sincerity and determination to comply with Islamic Shari'ah. Analysis of AAOFI standard compliance is relatively new in Bangladesh. This research study may provide some new insights into the existing Islamic literature.