Accounting News

Monday, April 30, 2012
Shakeup at AAOIFI

Khaled Al Fakih is the new secretary-general of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). He is proposing some great changes for the organization that oversees the accounting standards for Islamic financial assets. These assets are currently at $1.3 trillion and growing at 150% per year.

Fakih is interested in reforming how standards are established. Currently that is done by a group of Islamic scholars. There is conflict of interest in the current system because the scholars are often paid up to $1,000 per hour from the same institutions who have business before the group.

There is a great deal of resistance to Fakih's plans. While many people support the changes to more transparency and accountability, there are entrenched parties who benefit from the current system. The plan is to release several draft proposals over the next year to get widespread support.

While accountants is the United States are focused on IRFS and if the IRS will adopt the standard there is still a substantial amount of money that will not be covered even if it is adopted. It would be useful if there could be an international standard for all financing but with the challenges that the come up between just the US and Europe it might be a dream for another century.

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