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Factors influencing compliance level with AAOIFI financial accounting standards by Islamic banks

Author

Listed:
  • Yosra Mnif Sellami
  • Marwa Tahari

Abstract

Purpose - The purpose of this paper is to investigate the compliance level of Islamic banks with disclosure accounting standards in some Middle East and North African countries, and most importantly to analyse the factors associated with compliance. Design/methodology/approach - This study uses a self-constructed checklist of 203 items to measure the compliance of 38 Islamic banks with disclosure accounting standards during the 2011-2013 period. A multivariate regression analysis is used to determine significant factors influencing the extent of this compliance. Findings - The results show a wide variation in compliance levels among the disclosure accounting standards and reveal that compliance is positively related to the listing status, the existence of an audit committee, the bank’s age and the country of domicile. Research limitations/implications - This study analyses the compliance level with only disclosure accounting standards. It remains to future research to examine compliance with all Accounting and Auditing Organization for Islamic Financial Institutions’ Financial Accounting Standards (AAOIFI FAS). Moreover, the explanatory power of the model remains modest. This connotes the existence of omitted variables that could be explored in future research. Practical implications - The research contributes to the international financial accounting literature about the banking industry. The results are relevant for researchers, accounting professionals, stakeholders, standard-setters and regulatory bodies that are concerned with Islamic banks’ disclosures. Originality/value - Although AAOIFI was established since 1991, very few empirical studies about compliance with the FAS have been undertaken. To the authors’ knowledge, there are no studies that investigated the determinants of compliance level with AAOIFI FAS. Then, this study concentrates on disclosure accounting standards (FAS 1 and FAS 5) with a high risk of non-compliance.

Suggested Citation

  • Yosra Mnif Sellami & Marwa Tahari, 2017. "Factors influencing compliance level with AAOIFI financial accounting standards by Islamic banks," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 18(1), pages 137-159, February.
    • Handle: RePEc:eme:jaarpp:jaar-01-2015-0005
    DOI: 10.1108/JAAR-01-2015-0005
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    Citations

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    Cited by:

    1. Moufida Ben Saâda & Yosra Gafsi, 2020. "Does disclosure of internal control system of credit risk improve banks’ performance? Evidence from Tunisian listed banks," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 6(04), pages 1-27, February.
    2. Morshed Amer & Széles Zsuzsanna, 2020. "Explore the Lessee Accounting Treatment When Utilizing the Islamic Financial Leasing: A Comparative Analysis of IFRS and AAIOFI Accounting Standards for the Financial Leasing," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 8(1), pages 69-78, October.
    3. Mochamad Fadhil Abdullah & Mukhtar Lutfi & Muhammad Wahyuddin Abdullah, 2023. "A Combination of Audit Opinion and Sharia Compliance in Increasing Zakat (Charitable Alms) Donor Trust in the National Zakat Agency (BAZNAS) Makassar, Indonesia," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(10), pages 1981-1993, October.
    4. MNIF, Yosra & TAHARI, Marwa, 2022. "Audit committee characteristics and compliance by Islamic banks with AAOIFI accounting standards," Advances in accounting, Elsevier, vol. 57(C).
    5. Yosra Mnif & Imen Slimi, 2023. "Former auditors on the audit committee and earnings management: Evidence from African banks," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 2383-2420, June.
    6. Niclas Hellman & Jordi Carenys & Soledad Moya Gutierrez, 2018. "Introducing More IFRS Principles of Disclosure – Will the Poor Disclosers Improve?," Accounting in Europe, Taylor & Francis Journals, vol. 15(2), pages 242-321, May.

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