Financial Reporting for Islamic Financial Institutions

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Islamic finance (Capital Markets, Banking and Insurance) has emerged from a niche financial market to the mainstream of finance. The geographic market, clientele served, products base and volume of funds have grown significantly. Furthermore, the players have increased and now include not only pure Islamic institutions but also hybrid players (the conventional bank with Islamic Finance windows). Therefore, not understanding the unique risks of the Islamic Finance model (risk-sharing and risk pooling) can cause a failure of the model igniting a financial crisis with a ripple effect on the Islamic faith. Hence, managing these unique risks is extremely important. This book would explore the subject of corporate risk management in the context of Islamic Financial Institutions, which are run on the Islamic legal and economic system, which prohibits Riba (interest), avoids Gharar (uncertainty), avoids Maysir (gambling or excessive speculation). 

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This book is an attempt to answer a question in most people’s mind, especially who read financial statements prepared by Islamic Financial Institutions, is which financial reporting standards are these financial standards based on?  The author presents the view is that the financial reporting for any business should be based on International Financial Reporting Standards (IFRS) or the appropriate national reporting standards if the Country it is incorporated in follows National Standards (it is a no special consideration being an Islamic Financial Institutions), then the reporting should comply with the National Companies Act and Banking or Financial Services Act requirements, then only should the reporting being accordance with Accounting and Auditing Organisation for Islamic Financial Institution (AAOIF) or Islamic Financial Services Board (IFSB) The reason behind this is the foundation of Islamic finance is the ethical values on which it is based on, which would not allow it to violate national laws. The guiding maxim being “hub ul watan minal imaan” loosely translated as “love of one’s country is part of faith”

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I believe that, there is need to have a common framework for accounting and financial reporting for Islamic Financial Institution’s (IFI’s) to demonstrate to the common users of general purpose financial statements that the entities they are associated with comply, in form and in substance, with the principles and rules of the Islamic Sharia (“Jurisprudence”) in their financial and other transactions and also comply with the financial reporting requirements of the jurisdiction in which it operates in this would include International Financial Reporting Standards, national regulators like Capital Markets Authorities and Central Banks and (National) Company’s Act requirements. I would would however, would urge the International Accounting Standards Board to come up with an IFRS on Islamic Finance, which would give minimum presentation and disclosure guidelines and standardised formats of reports, which are specific to Islamic Finance concepts. 

Risk Management for Islamic Financial Institutions
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Published by Mohamed Ebrahim, MBA, CeMap, MLIBF, MCSI

Mohamed Ebrahim Mohamed is an author of books related to Islamic Finance, Financial Reporting, Accountancy, and related topics. Mohamed, is currently based in Birmingham, West Midlands, England, United Kingdom and is a Co-founder, CEO and Director of a Start-up Everest Fin Edu Tech Limited. He utilises his training and experience of over 25 years to find funding solutions for individuals, businesses and property buyers, investors and developers especially for the SME'S. Mohamed, is a Senior Partner with Ace Associates LLP - Certified Public Accountants & CEO of Ace Financial Advisory Limited, he is a CPA Kenya and holds an MBA from The University of Manchester (UK) and B.A (Hons) from Manchester Metropolitan University, He has worked for over 25 years with firms in Kenya -Ernst & Young – Assurance Advisory Business Service & Tax Service lines, PKF Kenya Audit Senior, and Devani –Devani & Co. United Arab Emirates -Group Financial Controller - Credo Investments FZE. Canada – Mc Tavish & Co. CPA’s. A member Institute of Directors (Kenya) and Non-Executive Directors Association (UK). He served on the ICPAK Coast Branch, Executive Council as Secretary and CPD Convener (2013-15) and from May 2016 to May 2018. Vice-Chair May 2018 to June 2020. He was commended by ICPAK in June 2015 for his services to the Accounting profession by ICPAK. Furthermore, Mohamed Ebrahim was awarded a Fellowship of the Institute of Certified Public Accountants of Kenya on.11th December 2020. Educational & Professional details. Mohamed speaks English, Gujerati, Hindi, Urdu, Swahili. Born in an Indian immigrant family from Gujerat India, settled on the Swahili Coast of East Africa for four (4) generations, Bachelor of Arts (Hons) – Sustainable Performance Management Manchester Metropolitan University Master of Business Administration The University of Manchester – Manchester Business School Certified Islamic Finance Executive (CIFE) Advanced. Certified Islamic Finance Executive in Islamic Accounting Ethica Institute of Islamic Finance, Dubai, UAE. ACMA, CGMA, Member, Chartered Institute of Management Accountants and Association of International Certified Professional Accountants, registered as a CIMA Member in Practice. CPA, Practicing member Institute of Certified Public Accountants of Kenya FCFIP, Fellow Member -International Institute of Certified Forensic Investigation Professionals FCT, Fellow Member, Fellow Chartered Treasurer FFA – Fellow of the Institute of Financial Accountants MCIArb - Chartered Institute of Arbitrators, Full Member. MCSI: Member, Chartered Institute of Securities & Investments Institute of Internal Auditors - Member Currently, a Doctoral Student at the Edinburgh Business School, completed the Coursework stage, working on the doctoral thesis Interim Award - Post Graduate Certificate in Business Research methods Short Courses and MOOC’s • The World Bank Group's MOOC on Financing for Development. • Financial Markets an online non-credit course authorized by Yale University, facilitator being Professor Robert Shiller – 2013 recipient of Nobel Prize in Economic sciences • Principles of Valuation: Time Value of Money authorized by University of Michigan • Islamic Financial & Capital Markets -101 - & Structure and Trading of Sukuk102 – by Islamic Research and Training Institute • Islamic Finance & Banking 101 & 102 – Islamic Modes of Finance - by Islamic Research and Training Institute • University Teaching MOOC on Coursera by Hong Kong University. • Oxford Brookes University Business School – Online mentoring Course • ICPAK - Training of Trainers PRESENTATIONS AND PUBLICATIONS Professional Conference paper IICFIP 2014 Global Conference “Creating a Business Culture based on ethics” MBA Dissertation Risk Management in Islamic Financial Institutions Publications in Professional Journals The Accountant – Journal of the Institute of Certified Public Accountants of Kenya • Tax Reforms 1 – Time for a Flat Tax system in Kenya – February- March 2012 issue • Tax Reforms 2 – Specific Tax Simplification Reforms – April –May 2012 Issue • Risk Management in Islamic Financial Institutions – December-January 2013 issue Africa Islamic Finance Report (Volume 1 no, 2)- April- June 2016 • A case for Islamic Sharia Compliant Real Estate Investment Trust (Islamic REITS) in Kenya Others Islamic Home Financing

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