Islamic finance reporting needs consistency, says report

ISLAMIC FINANCE reporting requirements need more harmonisation and consistency, according to a report by KPMG and ACCA.

Guidance is needed on applying international financial reporting standards (IFRS) when accounting for some Islamic financial products. Further help is needed to deal with the reporting to stakeholders of information on an entity’s Sharia-compliant operations.

The calls follow a series of KPMG and ACCA roundtable discussions, which included representatives of Islamic finance experts, bankers and other finance professionals.

Samer Hijazi, a director in KPMG’s financial services audit practice, and co-author of the report, said: “The Islamic finance industry has reached a new stage of maturity. It has a wider variety of customers and stakeholders and a presence in more countries around the world than ever before. As the IASB seeks to establish IFRS as a single high-quality set of global financial reporting standards, now is the right time to consider how Islamic finance fits into this global framework.

“Greater comparability and consistency in financial reporting will benefit not only the IFIs but also the international banks which offer Islamic financial services around the world.”

The report also flags up that Islamic finance institutes need to conduct further outreach and education, particularly with the investor community, while providers of professional qualifications should look into the relevance of Islamic finance to their syllabuses and the members.