• Subithabhanu Mohd Hussan School of Graduate Studies, International Centre for Education in Islamic Finance, Lorong Universiti A, 59100 Kuala Lumpur.
  • Maliah Sulaiman Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia, Jalan Gombak, 53100 Kuala Lumpur.



This article continues the on-going debate on what would be the more relevant accounting standards for Islamic banks. It addresses this important issue by first examining the differences between IFRSs and FASs in light of their objectives, scope, and suitability for adoption by Islamic banks in reporting their sharī‘ah-compliant transactions. Specifically, the study approaches the issue from the ethics of reporting, that is on the possibility of misreporting leading to sharī‘ah non-compliance. Most importantly, in reviewing selected standards of IFRSs and FASs, the study finds that the over-emphasis on ‘comparability’ may potentially lead to misreporting.  Thus, it views sharī‘ah a compliance from a broader perspective instead of only limiting it to the execution of underlying transactions. Finally, it calls for collaboration between the International Accounting Standards Board (IASB) and the Accounting and Auditing Organization of Islamic Financial Institutions (AAOIFI).


Abdul Rahman, R.A. “Ethics in Accounting Education: Contribution of the Islamic Principle of Maslahah.” IIUM Journal of Economics and Management 11, no.1 (2003): 1–18.

Al-Zuḥailī, W. Financial Transactions in Islamic Jurisprudence Vol. 1. Translated by M.A. El-Gamal, revised by M.S. Eissa. Damascus: Dar al-Fikr al-Mouaser, 2001.

Azmi, M.F. “The Effect of Shariah Principles on Accounting Methods for Islamic Banks.” Paper presented at the World Congress of Accountants, Kuala Lumpur, Malaysia, 20 November 2010.

Francis, J.R. “After Virtue? Accounting as a Moral and Discursive Practice.” Accounting, Auditing and Accountability Journal 3, no. 3 (1990): 5-17.

Grais, W., and M. Pellegrini. “Corporate Governance and Stakeholders’ Financial Interests in Institutions Offering Islamic Financial Services.” World Bank Policy Research Working Paper 4053 (2006).

Ibrahim, S.H.M. “IFRS vs AAOIFI: The Clash of Standards?” Munich Personal RePEc Archive (MPRA) Paper 12539 (2007).

Kamali, M.H. “A Shari‘ah Analysis of Issues in Islamic Leasing.” Journal of King Abdulaziz University: Islamic Economics 20, no. 1 (2007): 3–22.

Lewis, M.K. “Islam and Accounting.” Accounting Forum 25, no. 2 (2001): 103–27.

Mohammed, N.F., F.M. Fahmi and A.E. Ahmad. “The Influence of AAOIFI Accounting Standards in Reporting Islamic Financial Institutions in Malaysia.” Procedia Economics and Finance 31 (2015): 418-24.

Mohd. Shariff, R.A., and A.R. Abdul Rahman. “An Exploratory Study of Ijarah Accounting Practices in Malaysian Financial Institutions.” International Journal of Islamic Financial Services 5, no. 3 (2003): 1-15.

Ramanna, K., and E. Sletten. “Why Do Countries Adopt International Financial Reporting Standards?” Harvard Business School Accounting & Management Unit Working Paper 09-102 (2009).

Sarea, A.M. “Accounting Treatment of Zakah: Additional Evidence from AAOIFI.” Journal of Islamic Banking and Finance 1, no. 1 (2013): 23–8.

______, and M.M. Hanefah. “Adoption of AAOIFI Accounting Standards by Islamic Banks of Bahrain.” Journal of Financial Reporting & Accounting 11, no. 2 (2013): 131-42.

Security Commision. “Islamic Capital Market Fact Finding Report.” Malaysia: OICV-IOSCO, 2004.

Shafii, Z., and N. Zakaria. “Adoption of International Financial Reporting Standards and International Accounting Standards in Islamic Financial Institutions from the Practitioners’ Viewpoint.” Middle-East Journal of Scientific Research in Contemporary Islamic Finance and Wealth Management 13, no. 1 (2013): 42-9.

______, A. Shaharuddin, B.S. Sairally, M.F.A. Khir, L. Hussain, and M.S.M. Zuki. “An Appraisal of the Principles Underlying International Financial Reporting Standards: A Shariah Perspective.” ISRA Research Paper 54 (2013).

Steffensen, J. “Islamic Finance: Sources of Growth and Prospects for Global Development: An Interview with Daud Vicary Abdullah.” The National Bureau of Asian Research, 7 November 2013.

Ullah, M.H. “Compliance of AAOIFI Guidelines in General Presentation and Disclosure in the Financial Statements of Islamic Banks in Bangladesh.” International Journal of Social Science Research 1, no. 2 (2013): 111-23.

Zeff, S.A. “‘Political’ Lobbying on Proposed Standards: A Challenge to the IASB.” Accounting Horizons 16, no. 1 (2002): 43-54.




How to Cite

Mohd Hussan, S., & Sulaiman, M. (2016). BETWEEN INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSS) AND FINANCIAL ACCOUNTING STANDARDS (FASS): THE DEBATE CONTINUES. International Journal of Economics, Management and Accounting, 24(1), 107–123.