Zakat

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

KULIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES

BACHELOR OF ACCOUNTING

ACC 4562

ACCOUNTING, AUDITING AND GOVERNANCE FOR ISLAMIC FINANCIAL INSTITUTIONS

SECTION 1

SUMMARY REPORT

International Accounting Harmonization, Banking Regulation, and Islamic Banks

PREPARED BY:

MOHAMAD MUAZ BIN RAMLI 0820813

RABIQ’ MURADI BIN DJAMALULLAIL 0833531

`UMAR BASHIR BIN A.AZIZ 0824265

The article of Rifaat Ahmed Abdel Karim titled “International Accounting Harmonization, Banking Regulation, and Islamic Banks” basically tells about the harmonization between the commercial bank and Islamic bank, whether is it realistic to see it happen and the possibility to harmonized between those two different system.

Rifaat in his article firstly characterized and differentiate between the commercial bank and Islamic bank. He explained that the commercial bank basically rely on IASB for their standards and regulations in presenting and accounting their information. While Islamic bank established AAOIFI which to assists the accounting and presentation of Islamic banking and to support the uniqueness characteristic of Islamic banking and finance.

Rifaat claimed that during in 1990’s the commercial bank separate and made a firewall between commercial banking and investment banking due to the risk and conflict of interest and reinforced based on conservatism and cartelization. While the Islamic banking is a universal banking and have their own special characteristic and uniqueness to compare with the conventional banking which it main characteristic is not complying with the interest and prohibition gambling and uncertainty.

The problem is there are a lot of approaches used by different Islamic bank in different countries. These can be lead to noncomparable of financial statement because of different approach applied by them. These include promulgating Islamic banking acts to regulate Islamic banks, subjecting to existing fiduciary laws, and...