The number of Islamic financial institutions (IFIs) that complied with the International Financial Reporting Standards in 2016 has increased by 2% since 2014, according to a study released by the Asian-Oceanian Standard-Setters Group (AOSSG).
However, 52% of IFIs still don't use IFRS but apply local GAAP (33%), the accounting standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) (17%), or do not specify the accounting standards or law complied with in their financial statements (2%).
The IFIs in the study continued to apply a variety of financial reporting frameworks. As a result, the differing recognition and measurement bases impede users’ ability to meaningfully compare the financial statements.
“Further efforts must be made to engage with relevant standard-setters and regulators to persuade them of the merits of IFRS compliance. This is all the more important when there may be indications that affected entities in those jurisdictions would prefer IFRS over other frameworks,” concludes the study.