Ernst & Young takes part in the AAOIFI
Manama, 5 December 2012: Ernst & Young participated in the Accounting and Auditing organization for Islamic Financial Institutions (AAOIFI) – World Bank Annual Conference on Islamic Banking and Finance. The conference was attended by more than 300 industry leaders from over 30 countries, who gathered to chart the future of Islamic finance. The event featured numerous speakers and panellists who discussed the current challenges in Islamic finance and banking.
Essa Al Jowder, Office Managing Partner, Bahrain, Ernst & Young said: “The Islamic banking and finance industry has shown healthy growth despite the global financial crisis and the lull after it. This supports the bullish sentiment of consumers and stakeholders in the Islamic banking and finance sector. Last year alone, we have seen numerous Sukuk issuances by financial institutions, underlining the tremendous potential of Islamic finance industry.”
Imtiaz Ibrahim, Senior Director, Ernst & Young Bahrain chaired the session on New development in accounting standards for Islamic finance. He said: “The present and future of Islamic finance and banking industry are very promising. Islamic financial institutions are offering various deposit products on the basis of Wakala and Mudaraba, which are reliable sources of Shari’a compliant income for depositors and provides continuous liquidity stream to such institutions.”
”The Sukuk market is also flourishing and, recently, the market has seen complex and sophisticated Sukuk structures being introduced by several financial institutions across the GCC. AAOIFI is fully cognisant of this transformation and has therefore been taking measures to update or introduce new accounting standards. AAOIFI is currently developing Sukuk standards and revising investment accounts and takaful standards which will result in the harmonisation of accounting and financial reporting between IFRS and AAOIFI standards” Imitiaz added.
Sohaib Umer, Executive Manager, Ernst & Young Bahrain focused on the key risk facing Islamic finance industry - the Shari'a risk. He said :”The risk of losing the trust of the general public in the Shari'a compliance of Islamic banks could potentially pose ea major threat to the industry and should not be ignored by the stakeholders. Regulators need to monitor the composition and working of Shari'a Supervisory Boards more actively and adopt leading global practices in this regard. Also, Shari'a scholars themselves should come up with a voluntary code of conduct to address issues like eligibility criteria, remuneration, conflict of interest and related topics.”