هماهنگ سازی حسابداری بین المللی، مقررات بانکی و بانک های اسلامی

Islamic banks perform both commercial and investment banking services but do not establish firewalls to separate these two services legally, financially, and managerially. Unlike conventional commercial banks, Islamic banks are prohibited from charging or paying of interest. Instead, Islamic banks offer profit-sharing investment accounts, such that investors' return depends on the return on the assets financed by the investors' funds. Supervisory authorities in countries in which Islamic banks operate have taken various approaches to regulate Islamic banking. Such variations appear to have resulted in Islamic banks adopting different accounting treatments for investment accounts, although most of the countries in which Islamic banks operate either look directly to international accounting standards as their national standards or develop national standards based primarily on international accounting standards. This rendered the financial statements of Islamic banks noncomparable. It also implies that the calls for worldwide adherence to international accounting standards to achieve harmonization in financial reporting, regardless of cultural differences that affect the way in which business transactions are carried out (in substance as well as in form), should not go unchallenged. The paper also casts light on the need to implement the accounting standards promulgated by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), because these standards specifically cater for the unique characteristics of the contracts that govern the operations of Islamic banks.

Over the last 15 years there has been increasing interest in enhancing the harmonization of accounting and financial reporting by banks. For example, as part of its harmonization program, the European Union issued in 1986 the Council Directive which contains regulations on the layout of bank balance sheets and profit and loss accounts.1 The International Accounting Standards Committee (IASC) also issued International Accounting Standard (IAS) No. 30: Disclosures in the Financial Statements of Banks and Similar Financial Institutions (1990) and IAS No. 32: Financial Instruments: Disclosure and Presentation (1995). And more recently, the Basle Committee on Banking Supervision, 1998a and Basle Committee on Banking Supervision, 1998b and the United Nations (1996b) issued studies that attempt to enhance transparency and comparability in banks. It is argued that the need for international accounting harmonization should be met by an international accounting organization (Carsberg, 1998). Transnational institutions (e.g., World Bank, United Nations, European Union, Organization of Economic Cooperation and Development, and the Basle Committee) support the IASC as the only plausible world harmonizer of accounting (Nobes, 1996). Furthermore, the IASC is working with the International Organization of Securities Commissions (IOSCO) to bring about the possibility that companies with stock market listings in many countries can satisfy all the regulatory requirements with one set of accounting standards, IASC standards. The IASC is also working with the Basle Committee on an exposure draft that deals with accounting for financial assets and financial liabilities. This covers, among other things, important matters relating to banks, e.g., how to deal with impaired loans, how to report borrowings, and how to account for the effect of transactions undertaken to hedge risks. The recent global economic crisis also seems to have renewed support to the need for a lingua franca of financial reporting, thereby giving further endorsement to the work of the IASC as a vehicle for achieving international harmonization of financial reporting. For example, it is reported that the Group of Seven leading industrial nations (G7) “will expect nations to work towards a common accounting practice, which is obviously likely to work towards companies adopting a common accounting standards.”2 Furthermore, the World Bank and the International Monetary Fund (IMF) could probably put more pressure on regulators by tying their loans to use of IASs. It is also reported that the World Bank and IMF agreed with the Big Five accounting firms that IASs and International Standards on Auditing “are the standards that should be used by financial institutions in those countries to accomplish the World Bank and IMF objectives of fostering economic stability.”3 The World Bank would also like to see the Big Five accounting firms stop putting their names to accounts drawn up under local standards that do not meet international reporting standards.4 These efforts tend to fall in line with the IASC's aim in the longer term to develop “a single set of high-quality accounting standards for all listed and other economically significant business enterprises around the world” (IASC, 1998b).5 International accounting harmonization may be defined6 and 7 as “the process of bringing international accounting standards into some sort of agreement so that the financial statements from different countries are prepared according to a common set of principles of measurement and disclosure” (Haskins, Ferris, & Selling, 1996, p. 29). It is also argued that harmonization “(often equated with the adoption of IAS) … implies that accounting is a transaction-specific activity and, therefore, the relationships among transactions, events, and systems are universal in their application without regard to geographic, temporal, or systematic differences” (Larson & Kenny, 1996, p. 5–6). Hence, according to some (e.g., Briston & Wallace, 1990 and Wyatt, 1991), harmonization implies that accounting standards can be the same worldwide. This view is supported by international standard-setters who argue that “I have never been convinced that cultural or economic differences from country to country justify different accounting for similar business activities in large organizations. Reasonable people, accepting the desirability of harmonization, should be able to agree eventually on common solutions” (Carsberg, 1995, p. 4). Wyatt (1992, p. 40) also claims that “the accounting issues in the international arena are not fundamentally different from those in national arenas.” However, the above view of harmonization is challenged on the grounds that “the movement towards international harmonization, whose principles should eventually lead to a certain uniformity in accounting standards, comes into conflict with a number of objectives of financial statements and, more fundamentally, with the economic, social and cultural contexts of different accounting systems, and even with some manifestations of national sovereignty” (Hoarau, 1995, p. 220). Such a concern is shared by others who are of the opinion that “financial reporting and its regulation may have multiple purposes reflecting each country's social, cultural and political environment… Thus the original idea of harmonization as moving towards uniformity in accounting standards across countries may not be achieved as long as social, cultural and political differences exist across countries” (Hussein, 1996, p. 95). Hamid, Graig, and Clark (1993, p. 146) lend support to the cultural influence on the international harmonization of accounting. They argue that “religion in general and Islam in particular have the potential to extend [sic] a profound cultural influence in the quest for the international harmonization of accounting.” This point is developed further later in the paper. The accounting firms have also voiced their concern on the issue of harmonization. It is claimed that “the harmonization of international accounting standards…is a worthy objective, but a choice has to be made between the advantages of harmonized standards and its disadvantages. Users should be particularly wary of cases where the same terminology in different countries actually represents very different characteristics” (Price Waterhouse, 1990, p. 15). Goeltz (1991, pp. 85, 86) goes further and argues that “full harmonization of international accounting standards is probably neither practical nor truly valuable… A well developed global capital market exists already. It has evolved without uniform accounting standards.” In addition to the above, a study by the United Nations (1996a) outlines differences in national accounting practices and the related obstacles to harmonization. The study suggests that some differences are caused by unique historical events, some by forces external to a country and some by different purposes for financial reporting. The latter is described as the most fundamental of the causes of differences (see also Nobes, 1996). Islamic banks are ethically funded organizations that are established in various parts of the world, particularly in the Middle East. It is generally believed that Islamic banking started to take off in the aftermath of the boom in the oil prices in 1973–1974 Moore, 1997 and Wilson, 1997. So far, in Iran, Sudan and, to some extent, Pakistan the whole banking system has been transformed to comply with Islamic Shari'a.8 The growth of this industry has been remarkable. It is reported that in 1996 the total assets of the 166 Islamic financial institutions reached US$137 billion.9 Islam does not recognize the separation between spiritual and temporal affairs, and considers commerce as a matter of morality and is subject to the precepts of the Shari'a.10 Hence, Islamic banks, like other Islamic business organizations, are established with the mandate to carry out their transactions in strict compliance with Islamic Shari'a rules and principles. The business of Islamic banks, therefore, is driven by Shari'a approved contracts. Such an approach to business has implications for the validity of applying the concept of ‘economic substance over legal form’ in accounting for the economic transactions undertaken by Islamic banks. According to Gambling and Karim (1991, p. 103) “the conceptual framework of accounting currently applied in the West finds its justification in a dichotomy between business morality and private morality. As such, it cannot be (unquestioningly) implemented in other societies which have revealed doctrines and morals that govern all social, economic and political aspects of life.” Indeed, Western accounting rules are presented as technical, not ethical rules (Karim, 1996a). Hence, in the context of Islamic banks, if accounting information is to give a faithful representation of the economic transactions or events that it purports to represent, it is necessary that they are accounted for and presented in accordance with the substance as well as form of Shari'a contracts that govern these transactions or events. For example, murabaha is not an ‘in-substance’ purchase finance by a loan, and ijarah muntahia bittamleek is not an ‘in-substance’ capital lease.11 In 1990, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), a private standard setting body, was established by Islamic banks and other interested parties to prepare and promulgate accounting, (and recently) auditing and governance standards based on the Shari'a precepts for Islamic financial institutions. Karim (1990) claims that Islamic banks have taken the initiative to self-regulate their financial reporting for fear that the regulatory bodies in the countries in which they operate may otherwise intervene and mandate the accounting policies of Islamic banks. AAOIFI's pronouncements are intended to serve Islamic banks in the various countries in which they operate. However, like the IASC, AAOIFI has no power to enforce its standards. Karim (1990) suggests that since Islamic banks mainly operate in government-driven economies, AAOIFI might find that the only way to implement its promulgated standards fully was by depending on the cooperation of the national banking regulators. This paper examines the impact of the religion of Islam on the international efforts to harmonize accounting and financial reporting. Whilst earlier efforts (e.g., Hamid et al., 1993) endeavored from a conceptual perspective to argue for the influence of the religion of Islam on international harmonization of accounting, their work did not relate to IASs nor to the accounting practices of Islamic banks. The paper argues that the structure and processes of Islamic banks do not readily fit in with those of conventional universal banking, which combines both commercial and investment businesses. This seems to have resulted in supervisory bodies adopting different approaches to regulate Islamic banking. Such variations in the regulation of Islamic banking appear in turn to have resulted in Islamic banks adopting different accounting treatments for the same transaction, although most of the countries in which these banks operate either look directly to IASs as their national standards or develop national standards based primarily on IASs.12 This rendered the financial statements of Islamic banks noncomparable, thereby departing from the concept of comparability which is considered in the IASC (1989)Framework for the Preparation and Presentation of Financial Statements as one of the four principal qualitative characteristics that make the information provided in the financial statements useful for users. This implies that the calls for worldwide adherence to IASs to achieve harmonization in financial reporting regardless of cultural differences should not go unchallenged. Rather, Islamic banks should be asked to implement AAOIFI's standards, as is currently the case in some countries. This would render the financial statements of these banks comparable because AAOIFI's standards are specifically developed to cater for the unique characteristics of the Shari'a contracts that govern the Islamic banks' financial instruments. The remainder of this paper is organized as follows: • A brief account of commercial and investment banking. • An overview of the characteristics of Islamic banks and discusses investment accounts, which represent one of the unique financial instruments that are used by Islamic banks in their mobilization of funds. • An examination of the approaches pursued by supervisory authorities to regulate Islamic banking. • A discussion of the different accounting treatments of investment accounts adopted by Islamic banks prior to compliance with the pronouncements of AAOIFI. • Concluding remarks.

Islamic banks are established with a mandate to adhere to Islamic Shari'a rules and principles in all their transactions. The majority of Islamic banks perform both commercial and investment banking services. However, unlike conventional commercial and investment banks, Islamic banks do not establish firewalls to separate legally, financially, and managerially these two services. Rather, the majority of Islamic banks commingle their own funds with those of IAHs, invest both funds under the bank's management in the same investment portfolio, and report these investments and their results in the bank's balance sheet and income statement. Supervisory authorities in countries in which Islamic banks operate have taken various approaches to regulate Islamic banking. These include promulgating Islamic banking acts to regulate Islamic banks, subjecting Islamic banks to existing fiduciary laws, and regulating Islamic banks by the laws that govern all banks. The paper suggests that the perspective adopted by the supervisory authorities to regulate Islamic banking tended to influence the accounting treatment of investment accounts adopted by Islamic banks, although most of the countries in which these banks operate either look directly to IASs as their national standards or develop national standards based primarily on IASs. This has rendered the financial statements of Islamic banks noncomparable. The above implies that the calls to use IASs as a vehicle to achieving international harmonization of financial reporting must not go unchallenged, so far as Islamic banks are concerned. Rather, the case of Islamic banks casts light on the need to develop and implement accounting standards that specifically cater for the unique characteristics of the contracts that govern the operations of these banks. In fact, Islamic banks have gone a long way towards achieving this objective. In 1990, AAOIFI was established to prepare and promulgate accounting, (and recently) auditing and governance standards. To date, AAOIFI has issued 14 accounting standards, including two statements that represent a conceptual framework that guides the preparation of its standards. In addition to market pressures for compliance coming from international credit rating agencies, the supervisory authorities in both Sudan and Bahrain have required Islamic financial institutions to comply with AAOIFI's standards. Efforts are underway in other countries (e.g., Malaysia, Qatar) that may result in adherence to standards based primarily on AAOIFI's standards. Some Islamic banks (e.g., Bank Islam Berhad Malaysia, Islamic Development Bank) have also started to voluntarily use AAOIFI's accounting standards to prepare their financial statements. However, there seem to be several factors that have contributed to the low implementation of AAOIFI's standards in the countries in which Islamic banks operate. These include, among others, the lack of appreciation by the relevant agencies that are responsible for enforcing accounting standards of the benefits that can be gained by implementing AAOIFI's standards, namely (a) rendering the financial statements of Islamic banks comparable and transparent; and (b) providing relevant and reliable information to users of financial statements of Islamic banks. This would require AAOIFI to exert more efforts to have its standards recognized by an increasing number of countries. The broad acceptance for AAOIFI's standards will tend to challenge the call for worldwide adherence to IASs to achieve international harmonization in financial reporting regardless of cultural differences. They also raise the issue of what collaborative relationship could productively be established between specialized regulatory bodies such as AAOIFI, and “general purpose” regulatory bodies such as the IASC, IOSCO, and the Basle Committee on Banking Supervision.