Accounting for Contemporary Islamic Financial Transactions under the guideline of Islamic Law

Abstract

Purpose: The objective of this study is to overview the contemporary Islamic financial transactions
regarding accounting within the limits of Islamic law. This study also describes at what extent the
Accounting and auditing organization for Islamic Financial Institutions (AAOIFI) standards are fully
applicable in Islamic banks.
Methodology: This study gives the view point of several accounting bodies, but mainly focus on AAOIFI
standards. Whereas, the AAOIFI's recorded procedure in the first place goals to make set up in
contemporary accounting thought, test them against Shariah guideline, recognize those that are solid with
Shariah and reject those that are definitely not according to them.
Findings: The overall results indicate with these remarks that all AAOIFI standards are not fully
implemented in Islamic financial institutions as per guideline of AAOIFI due to several reasons for
instance; central bank restrictions, government policies and issues regarding geographical locations.
Originality of work: This paper explains the importance of Islamic accounting standards for Islamic
financial institution through Islamic law. Moreover, this study also describes to what extent Islamic
accounting standards are implemented in trade and commerce side of Islamic banks