Accounting Auditing Organisation for Islamic Financial Institutions AAOIFI

Accounting & Auditing Organisation for Islamic Financial Institutions (AAOIFI) Islamic Finance Systems: Synergies with Conventional Finance Systems 1 st French Islamic Finance Forum Paris, France December 2007

Islamic Finance Systems Components of Islamic finance systems include … Primary Financial Intermediation Islamic Insurance Market Islamic Capital Market Zakah and Awqaf Institutions

Islamic Finance Systems Primary Financial Intermediation Islamic Capital Market • Islamic banks and financial institutions. • Sukuk / Islamic bonds market. • Islamic money market. • Islamic equity market. • Islamic foreign exchange market. Islamic Insurance Market • Takaful / Islamic insurance. • Re-takaful / Islamic reinsurance. Zakah & Awqaf Institutions • Zakah – wealth purification & distribution. • Awqaf – Islamic endowment.

Synergies with Conventional Finance Systems Islamic finance complements conventional finance … Islamic finance allows greater financial Inclusion Islamic finance mechanisms are structurally appropriate for economic development Islamic finance facilitates equitable wealth creation and distribution Ultimately, Islamic finance promotes economic and social harmony

Roles of AAOIFI • AAOIFI is the independent organisation responsible formulation and issuance of international Islamic finance standards on: - Shari’a, - Accounting, - Auditing, - Ethics, and - Governance.

Roles of AAOIFI • AAOIFI is supported by more than 165 institutional members from more than 30 countries. • Members include: - Central banks and regulatory authorities, - Islamic and conventional financial institutions, - Accounting and auditing professions, - Legal professions, and - Other institutions in international Islamic finance industry.

AAOIFI Standards issued: Standards are: • 30 Shari’a standards. Ø Mandatory in 9 jurisdictions, and • 25 accounting standards. • 5 auditing standards. • 2 codes of ethics. Ø Adopted as basis of national standards and guidelines in all other leading jurisdictions that practice Islamic finance. • 6 governance standards. All in all, AAOIFI standards are followed by all Islamic financial institutions across the world.

AAOIFI Standards • AAOIFI is reviewing the existing standards and formulating a number of new standards. • Adoption of standards is also supported through AAOIFI’s professional development programs: - Certified Shari’a Adviser and Auditor (CSAA), and - Certified Islamic Professional Accountant (CIPA).

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