Accounting And Auditing Organization For Islamic Financial Instititions
The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), formerly known as Financial Accounting Organization for Islamic Banks and Financial Institutions, 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. AAOIFI was registered on 11 Ramadan 1411H corresponding to 27 March, 1991 in the State of Bahrain as an international autonomous non-profit making corporate body.Standardization and harmonization of international Islamic finance practices and financial reporting in accordance to Shari’ah.
AAOIFI, within the Islamic Shari’ah rules and principles, has the following objectives:
to Develop accounting, auditing, governance and ethical thought relating to the activities of Islamic financial institutions taking into consideration the international standards and practices which comply with Islamic Shari’ah rules;
to Disseminate the accounting, auditing, governance and ethical thought relating to the activities of Islamic financial institutions and its application through training seminars, publication of periodical newsletters, preparation of reports, research and through other means;
(A) Harmonize the accounting policies and procedures adopted by Islamic financial institutions through the preparation and issuance of accounting standards and the interpretations of the same to the said institutions.
(B) Improve the quality and uniformity of auditing and governance practices relating to Islamic financial institutions through the preparation and issuance of auditing and governance standards and the interpretation of the same to the said institutions.
(C) Promote good ethical practices relating to Islamic financial institutions through the preparation and issuance of codes of ethics to these institutions.
4. Achieve conformity or similarity -to the extent possible- in concepts and applications among the Shari’ah supervisory boards of Islamic financial institutions to avoid contradiction and inconsistency between the fatwas and the applications by these institutions, with a view to activate the role of the Shari’ah supervisory boards of Islamic financial institutions and central banks through the preparation, issuance and interpretations of Shari’ah standards and Shari’ah rules for investment, financing and insurance.
5. To approach the concerned regulatory bodies, Islamic financial institutions, other financial institutions that offer Islamic financial services, and accounting and auditing firms in order to implement the standards, as well as the statements and guidelines that are published by AAOIFI.
6. To offer educational and training programs, including professional development programs on accounting, auditing, ethics, governance, Shari’ah, and other related areas, so as to promote knowledge on, and to encourage greater professionalism in, Islamic banking and finance. Training, examination and certification shall be carried out by AAOIFI itself and/or in coordination with other institutions.
7. To carry out other activities, including certification of compliance of AAOIFI’s standards, so as to gain wider awareness and acceptance of AAOIFI’s standards on accounting, auditing, ethics, governance, and Shari’ah.
AAOIFI carries out these objectives in accordance with the precepts of Islamic Shari’ah which represents a comprehensive system for all aspects of life, in conformity with the environment in which Islamic financial institutions have developed. This activity is intended both to enhance the confidence of users of the financial statements of Islamic financial institutions in the information that is produced about these institutions, and to encourage these users to invest or deposit their funds in Islamic financial institutions and to use their services.