A study of compliance with AAOIFI accounting standards by Islamic banks in Bahrain
Journal of Islamic Accounting and Business Research
ISSN: 1759-0817
Article publication date: 21 September 2012
Abstract
Purpose
The purpose of this paper is to provide an extension of a previous study by the author into compliance by Islamic banks in Bahrain with accounting standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
Design/methodology/approach
A number of compliance indexes are constructed to better understand compliance by the sample banks. The use of multiple indexes addresses methodological shortcomings identified in the previous study.
Findings
Compliance is found to be higher for some Islamic issues than for others. In a relative sense, compliance is found to be similar to that for the region with standards issued by the International Accounting Standards Board.
Research limitations/implications
The sample is limited to Islamic financial institutions in Bahrain. This is necessitated by the lack of adaptation elsewhere. The relatively high compliance found in Bahrain suggests broader adoption would be successful and would contribute to the overall regulation of the Islamic financial sector.
Originality/value
The AAOIFI has existed for over 20 years, but little empirical research had been conducted into compliance with the standards developed by this body. This paper, along with the previous study by the author, helps address this gap.
Keywords
Citation
Vinnicombe, T. (2012), "A study of compliance with AAOIFI accounting standards by Islamic banks in Bahrain", Journal of Islamic Accounting and Business Research, Vol. 3 No. 2, pp. 78-98. https://doi.org/10.1108/17590811211265902
Publisher
:Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited