SET UP PANEL TO STUDY USE OF IFRS FOR ISLAMIC FINANCE

A committee should be set up to study whether the International Financial Reporting Standards (IFRS) could also be used for Islamic finance.

Malaysian Institute of Accountants (MIA) president, Nik Mohd Hasyudeen Yusoff, said the proposed committee could identify gaps between the IFRS and the characteristics of Islamic finance and share them with the International Accounting Standards Board (IASB).

"The consolidation of resources between standard-setting bodies and those of the education and research institutions can further enhance the understanding of the proposal," he said at the International Centre for Education in Islamic Finance (INCEIF) intellectual discourse series here today.

He said Malaysia could play a role in further facilitating this suggestion and influence the acceptance of the values and principles promoted by Islamic finance into the IFRS.

"Malaysia should position itself as one of the key stakeholders in the IASB when dealing with Islamic finance matters," he said.

IASB is the developer of the IFRS, a single set of high quality and internationally-recognised financial reporting standards, mandatory for all domestic entities in 85 countries and encouraged in 113 countries.

It was recently reported that the proponents of the IFRS would hold talks with Islamic finance authorities to modify the existing system to accommodate the Islamic financial services industry.

He said as one of the leaders in Islamic banking and finance in the world, Malaysia should take the opportunity to be involved to ensure proper standards were adopted.

Nik Mohd said the IFRS concept and operational model demonstrated the ability of syariah-compliant structures to co-exist with the conventional framework.

He is one of the three speakers at the INCEIF series.

They discussed the issues of the applicability of the IFRS on Islamic financial institutions.

Nik Mohd also talked on efforts by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) to develop an alternative set of financial reporting standards to accommodate the needs of the Islamic financial services industry.

To date, the AAOIFI standards merely cover the standards and transactions which IFRS does not.

However, IASB's refusal to recognise the AAOIFI standards has resulted in Islamic financial institutions in countries such as Bahrain, which adopted the latter's standard, having to have their financial statements qualified by auditors who are affiliated to IASB. -- BERNAMA

Link: http://malaysia.news.yahoo.com/bnm/20090522/tbs-standard-islamic-ceeeaba.html