Author(s): Mohammad Haroun Sharairi, Amer Qasim, Ghaleb A. El Refae
This paper intended to explore the development and expansion of the Islamic accounting standards developed by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). It also identifies the implementation and challenges of adoption these standards by the Islamic financial institutions. Data was collected for this purpose through examination of documents and conducting interviews with some key players involved in the preparation of Islamic accounting standards. This paper found that there is limited knowledge of Islamic accounting standards by Islamic financial institutions and the accounting standards included a political component indicating that those regulating the systems of accounting protected their interests to the possible disadvantage of accounting and financial report users. This led to the suggestion that accounting staff in Islamic financial institutions will require more training sessions which will involve a major expenditure to be incurred to adopt AAOIFI accounting standards.