Accounting Standards of Islamic Financial Institutions: Analysis of the Balance Sheet Structure.

Markfield Institute of Higher Education Dr. Seif I. Tag El-Din, October, 2004

I. Introduction The need for accounting records as means for trust building is emphasi ed in the !uran" #...$e%er get bored &ith recording it, ho&e%er small or large, up to its maturit' date, for this is seen b' (llah as closer to )ustice, more supporti%e to testimon', and more resol%ing to doubt ..*+al-,a-ara" 2 .2/. This %erse relates primaril' to the recording of deferred transactions, but it still hints for the li0elihood of recording spot transactions though it &as uncommon in the earlier stages "#..e1cept &hen it is spot trade carried out amongst 'oursel%es, then 'ou are not to blame for not recoding it* +ibid/. In this manner the !uranic %erse pro%ides for the fair recording of both deferred and spot transaction, &hich is all &hat accounting is about. ,an0ing success, in general, depends upon the e1tent of public trust placed in the financial strength of indi%idual ban0s, most particularl' the trust of depositors and in%estors. In addition to the paramount importance of financial strength, trust in Islamic ban0s relates also to the e1tent of adherence to Shariah, &hich is the identit' card of Islamic ban0s. Therefore the ma)or source of public confidence in Islamic ban0ing financial statements is the -ualit' of information issued to the in%esting public about ban0s2 abilit' to achie%e both financial and Shariah-related ob)ecti%es. 3rohibition of interest in financial dealings is the primar' reason &h' Islamic financial accounting methods and principles ha%e to be carefull' distinguished from their con%entional counterparts, but there are %arious other issues and fine details &hich ma0e up for the case of Islamic financial accounting standards.

1/ Sco!e of lecture:
Due to space and time constraints, &e shall focus in this lecture on the follo&ing topics" 4. 2. 6. 4. 5e' concept of an Islamic ,an0 - mainl' as an accounting bac0ground. Ob)ecti%es of financial accounting for Islamic financial institutions ,asic assumptions and criteria for Islamic accounting The prescribed general la' out of the balance sheet in Islamic ban0s.

(ccounting standards for the %arious Islamic modes of financing are be'ond the scope of this brief presentation. The present lecture is based on the Accounting and Auditing Standards for Islamic Financial Institutions , 4778, published b' ((OI9I +the (ccounting and (uditing Organi ation for Islamic 9inancial Institutions/. Since its

establishment in 4774, the ,ahrain-based ((OI9I has been catering its ad%isor' ser%ices as the professional bod' responsible to de%elop suitable accounting and auditing standards for Islamic ban0s. (dditional help can be obtained from other references listed at the end. 9or a better appreciation of accounting issues, it is appropriate to highlight the basic financing and in%estment structure of a t'pical Islamic ban0 as adopted b' the accounting standards.

I. "ey conce!t of an Islamic #ank

(s a financial intermediar', the basic mechanism of the Islamic ban0 is to accept deposits from surplus persons on the liabilit' side and offer financing on the assets side to the deficit persons, apart from ancillar' income-generating ser%ices &hich do not concern us in this lecture. The idea is to acti%ate this mechanism on acceptable Islamic modes &hich preclude pa'ment or receipt of interest and conform to the )urist rules of Shariah. 9ormal definitions of accounting elements &ill be pro%ided later, as our intention here is onl' to highlight the basic mechanism. . 1/1 Assets $ %ia#ilities Sides. (ssets include ph'sical and financial items in addition to a broad range of Islamic financings" :urabaha, I)ara, Istisnaa, Salam, :udarabah and :ushara0ah. It &ill be assumed in this course that the reader is familiar &ith these modes of financing. The liabilities side of an Islamic ban0 consist of t&o main categories" ;liabilities2 &hich are the guaranteed claims o%er the assets, including among other things the usual interest-free current and sa%ing accounts, and the ;non-guaranteed claims o%er the assets2, including in%estment accounts based on the profit-and-loss sharing principle +3<S/ and o&ners2 e-uit'. The 3<S in%estment is the Islamic ban02s alternati%e of the interest-based term deposits &hich utili es the principles of :udarabah and :ushara0ah. In&estment structure: 9or the purpose of the accounting standards Of Islamic financial institutions, t&o ma)or categories of in%estment acti%ities are defined" 'nrestricted in&estment accounts and their e(ui&alents " These are funds recei%ed b' the Islamic ban0 from in%estors, &hereb' the Islamic ban0 is held free to in%est those funds &ithout prior restrictions, including the mi1ing of these funds &ith the ban02s o&n in%estment. In this case, rules of unrestricted :udarabah are adopted. The term ;e-ui%alent2 accounts is used in the standards to allo& for similar in%estments li0e unrestricted participating bonds issued b' Islamic ban0s at face %alue and share in the ban02s profits. )estricted in&estments and their e(ui&alents: The ban0 acts onl' as manager agent or non-participating :udarib = it is not authori ed to mi1 its o&n funds &ith those of in%estors &ithout prior permission of the in%estors. >ence, the rules of restricted :udarabah are adopted here.

Fiduciary ser&ice for funds de&oted for social !ur!oses: The financial statements of Islamic ban0 must also reflect its functions as possible agent of ?a0ah pa'ment, manager of charitable funds and !ard 9und. The abo%e structure, in%estment pattern and uni-ue religious features ha%e pro%en to reflect far reaching implications as regards the preparation and presentation of financial statements of Islamic ban0s. The accounting treatment of different Islamic

modes of financing &ill e%o0e %arious issues of recognition, measurement and disclosure &hich &ill be considered briefl' in this lecture. Similar accounting issues arise &ith respect to the treatment and presentation of the abo%e t&o 0inds of in%estment.

1/ *om!ara#ility +ith con&entional #anks

(part from its uni-ue characteristics, Islamic accounting shares &ith their con%entional counterparts the same processes of recognition, measurement and recording of transactions and fair presentation of rights and obligation, but the cru1 of the matter is ho& to appl' these concepts to Islamic financing and in%estment instruments. @ecognition of ensuing rights and obligations must appl' to a gi%en period of time tracing all changes of consummated transactions that ma' ha%e ta0en place. :easurement is the -uantification of financial effects of consummated transactions and the impact of other e%ents during the same period of time. The recording process in intended to offer a lucid classification scheme of financial effects, together &ith other e%ents, in order to sho& the results of the entit'2s operations and changes in its financial positions including cash flo&. 3eriodic reports are, then, prepared and issued b' the entities to disclose their financial records during a gi%en period of time. It is interesting to see ho& the processes of recognition, measurement and recoding of rights and obligations are handled from the %ie&point of Islamic (ccounting standards. Information so reported is intended to assist in%estors in ta0ing the right decisions &ith respect to their future dealings &ith the entit' in -uestion. It also assists the entit'2s o&n management to e%aluate its performance and la' future plans for the entit'2s acti%ities and financial ser%ices. Ao%ernmental agencies in :uslim countries should benefit a great deal from such reported information in the process of super%ising the ban0ing and financial sector and e%aluating ta1 policies. Ao%ernmental regulator' re-uirements for con%entional financial institutions are also shared b' Islamic entities, li0e the basic pro%ision of ha%ing ade-uate ban0ing capital to pro%ide safet' for depositors2 mone'. Ai%en the pro%ision of ade-uate capital, success of Islamic ban0s depends on compliance &ith Shariah as &ell as the financial competence to reali e rates of return commensurate to in%estment ris0s assumed.

II. ,#-ecti&es of financial accounting

To achie%e the desired success, accounting standards for Islamic ban0s should be de%eloped consistentl' in relation to the uni-ue ob)ecti%es of financial accounting for Islamic ban0s and institutions. It is for this reason, as &ell as the need to ensure consistenc' among all present and future accounting standards that the Islamic ob)ecti%es ha%e to be clearl' specified. The setting of clear ob)ecti%es for financial accounting of Islamic ban0s and institutions, as opposed to their con%entional counterparts, &ill also assist Islamic ban0s, in the absence of accepted accounting standards to ma0e sensible )udgements for choice among alternati%e accounting treatments. The ob)ecti%es of financial accounting determine the t'pe and nature of information &hich should be included in the financial reports in order to assist users of these reports in ma0ing sound decisions. Ao%ernment2s agencies, generall', ha%e the po&er to directl' obtain the t'pe of information that best ser%es their needs. This lea%es

e1ternal users of information limited to the common information contained in the Islamic ban0s financial reports, namel'" e-uit' holders, holders of in%estment accounts, current and sa%ing account holders, other depositors, other dealers &ith Islamic ban0s, ?a0ah agencies and regulator' agencies. On this basis, the ob)ecti%es of financial accounting for Islamic ban0s and institutions are to achie%e the follo&ing" 4. Determine the rights and obligations of all interested parties, including rights and obligations resulting from incomplete transactions and other e%ents, in accordance &ith the principles of Shariah and its concepts of fairness, clarit' and business ethics. 2. Subscribe to the safeguarding of Islamic ban0s2 assets, rights of Islamic ban0s and rights of others in an ade-uate manner. 6. Subscribe to the enhancement of management and Islamic ban0s2 producti%e capabilities, and encourage compliance &ith the established goals and policies, and abo%e all Islamic Shariah, in all transactions and e%ents. 4. 3ro%ide through financial reports useful information to report users, and thus enable them to ma0e legitimate decisions in their dealings &ith Islamic ban0s. On the other hand, the ob)ecti%e of financial reports is to pro%ide the follo&ing 0inds of information" 4. Information about the Islamic ban02s compliance &ith Shariah and its ob)ecti%es. (nd, if the ban0 is partl' engaged in prohibited dealings, information about the separation of such dealings and ho& to dispose of them. 2. 9inancial information assisting users to e%aluate the ade-uac' of the Islamic ban02s capital, ris0s inherent in in%estment, and degree of li-uidit' for meeting the outstanding obligations. 6. Information about cash flo&s, their timing, and associated ris0s. This &ill help users e%aluate an Islamic ban02s abilit' to generate sufficient di%idend income for e-uit' and profits for in%estment holders. 4. Information to assist in the assessment of ?a0ah on Islamic ban0s2 funds and the targets of its dispersal. B. Information to assist in e%aluating the Islamic ban0s2 discharge of its fiduciar' responsibilit', to safeguard funds and in%est them at reasonable rates of return. This includes information about in%estment rates of returns on the ban02s in%estments and the rates of return accruing to e-uit' and in%estment holders.

III. Basic assum!tions and criteria for financial accounting: ./1 Assum!tions Accounting unit: (s per @esolution $o. CBD48, 8th Session of the 9i-h (cadem', Eeddah, 7-44 :a', 4772, it is possible in Islamic )urisprudence to form a limited liabilit' compan'. This pro%ision allo&s for the treatment of the Islamic ban0 as a separate accounting unit from its o&ners.

,n/going concern: In the absence of persuasi%e e%idence to the contrar', financial accounting assumes the continuation of an entit' as an on-going concern. This has %er' important conse-uences to Islamic ban0s as there is no percei%able time hori on of assets li-uidation or in%estment termination in case of e-uit' o&ners and o&ners of unrestricted in%estment accounts or their e-ui%alents. Fontrar' to the case of traditional mudarabah and mushara0ah contracts, there is no specific time &hen the actual results of unrestricted in%estments &ould be 0no&n. This point &ill ha%e significant implications for the issue of measurement. 0eriodicity: <ife of the Islamic ban0 should be bro0en into reporting periods to prepare financial reports that pro%ide information to interested parties about the performance of the ban0. $aturall', in a rapidl' changing financial en%ironment, end users &ould al&a's see0 to update their information about the ban0ing s'stem. Sta#ility of !urchasing !o+er: 9inancial accounting uses monetar' units as a common denominator to e1press basic elements of financial statements. >o&e%er, the use of monetar' units is sub)ect to inflationar' and deflationar' pressures &hich ma' significantl' affect its purchasing po&er. Get, for the purpose of the current accounting standards such effects are completel' ignored.

./ 1ualitati&e *riteria of accounting information

'sefulness: Hsefulness of accounting information must be e%aluated in relation to the ob)ecti%es of presenting financial statements &hich are focused on ma0ing their e1ternal users ma0e the best out of them. To be useful accounting information must target the interest of e1ternal users, &hich entails another set of criteria as belo&. )ele&ance: ( close relationship must e1ist bet&een the financial accounting information and the purpose for &hich this information is pro%ided. (ccounting information is rele%ant if it helps the main users of financial statements to e%aluate the potential outcomes of maintaining, or establishing, relationships the given Islamic ban0, rather than assisting in%estors to choose from alternati%e options. To be rele%ant, accounting information must satisf' three main -ualities. o Predictive value ma0es it possible for users to asses the potential outcome of a current or a ne& relationship &ith the ban0. o Feedback value assists users to chec0 the accurac' of their prior predictions, sa', about net income. o Timeliness means information is onl' useful at the time &hen it is needed. Optimal fre-uenc' of reporting and minimal lag bet&een successi%e reports are therefore important criteria for useful accounting information )elia#ility: This is the -ualit' &hich permits users to depend on the reported information &ith confidence, but reliabilit' does not mean absolute accurac'. It means that based on all the specific circumstances surrounding a particular transaction or e%ent, the method chosen to measureDdisclose its effects

produces information that reflects the substance of the e%ent or transaction. The pro%ision of estimates D)udgements in accounting appl'ing methods is not inconsistent &ith Shariah. :ost particularl', reliabilit' should satisf' the follo&ing properties of representational faithfulness, objectivity and neutrality. *om!ara#ility: Hsefulness of accounting information is enhanced b' comparabilit' of ban02s performance o%er time. This propert' re-uires the adoption of similar methods of measurementD disclosure in relation to similar e%ents. *onsistency: ,an0s should stic0 as much as possible to the same measurementDdisclosure methods from one period to another, unless there is genuine call for change +e.g changing depreciation measurement/. In this case, the ne& change and its effect should be appropriatel' disclosed. 'nderstanda#ility: (ccounting information is targeted to common users not to accountants. The nature of information, the &a' it is presented and the technical bac0ground of e1ternal users are important factors in the preparation of understandable information. Hse of simple classification tools, clear information headings, )u1taposition of data and statement of net results &hich users &ant to 0no&, &ould contribute to better understandabilit'.

./. 0re!aration and !resentation criteria:

Materiality: (n item is regarded material = -ualitati%el' or -uantitati%el' - if its omission non-disclosure or misstatement &ill result in distortion of the information being presented in the financial statements and thereb', misguidance of users. In deciding &hether an item is material, its nature and relati%e amount must be ta0en into account. o Qualitative materiality refers to the nature of gi%en transactions or e%ents &hether it is usualDunusual, e1pectedDune1pected, Shariah compliantDnoncompliant, etc. o Quantitative materiality refers to the relati%e amount of an item as for compared &ith normal e1pectations, or relati%e to an appropriate base. *ost of information: Information is a costl' economic resource. Therefore, a process of costDbenefit anal'sis must underlie the decision to choose the rele%ant information for financial reporting. Ade(uate disclosure: ,asic information about the ban0 must be disclosed, as &ell as currenc' used, and accounting policies adopted. :ore generall', financial statements, notes accompan'ing them, and an' additional presentations should contain all material information necessar' to ma0e them useful to end users. ptimum aggregation and !ritten descriptions"clarifications are t&o important considerations" o >ighl' aggregated data conceals useful detail, and highl' detailed data can be side-trac0ing and confusing. Optimal aggregation is the middle course &hich must be adopted. o >eading captions and amounts must be supplemented information just enough to clarif' their meanings. Supplementar' notes to financial statement are an e1ample.

./2 Accounting recognition $ measurement

Accounting recognition" refers to the timel' recording of the basic elements of financial statements as the' ta0e effect, &hich is the reason &h' a clear definition of accounting elements must precede their recognition. It is &orth noting that recognition relates to accounting flo!s rather than stocks since the stoc0s &ill, then, be automaticall' recogni ed. This issue is particularl' crucial as regards recognition of assets ac-uired under %arious Islamic modes of financing, profitDloss in%estment accounts, and funds ++e.g &hen should :urabaha profit, or :udarabah capital, be recogni ed I &hen should in%estment profit be recognised, and ho& is it measuredI/. The rules go%erning recognition and measurement must be appreciated b' reference to Shariah rules. Accounting measurement" refers to the determination of the amounts at &hich accounting elements should be recogni ed. :easurement of accounting flo&s re-uires the matching of incomings &ith the corresponding outgoings, separatel', for each independent account during a gi%en period of time, e.g the matching of re%enues and gains &ith e1penses and losses to get the ban02s net income for a gi%en period of time. Measura#le attri#utes: :easurable attributes of an asset or a liabilit' fall broadl' into t&o categories" cash e#uivalent value and historical cost. The latter stands for the cash %alue e1pected to be reali ed as of the current date if an asset is sold for cash in the normal course of business. The formers stands for the asset2s fair %alue at the date of its ac-uisition including amounts incurred to ma0e it usable or read' for disposition. These t&o attributes in%o0e significant implications as regards measurement of assets ac-uired under %arious modes of financing. The' also relate to the issue of re%aluation of unrestricted in%estment accounts and restricted in%estment accounts.

./3 the Issue of )e&aluation

:easurement attributes, as defined abo%e, pro%ide for the possibilit' of adopting cash e#uivalent value b' the Islamic ban0 both as a )oint in%estor in the unrestricted in%estment accounts and as a manager as in the restricted in%estment accounts. 4ustice consideration: In general, the %alue the holder of an in%estment account e1pects to reali e from his funds is considerabl' dependent upon the cash e#uivalent %alue he e1pects to reali e if in%estments &ere re-%alued, or sold, as of the current date. Get, the results of in%estments do not occur at a gi%en point of time. @ather, such results are earned o%er the life time of the in%estments e%en though the ultimate results &ill become certain onl' at the time &hen the in%estments are li-uidated. >o&e%er, if in%estments &ere to be measured at historical costs, recognition of in%estment results &ill onl' ta0e place at the time of in%estment li-uidation. This point arouses a strong consideration of )ustice bet&een holders of in%estments accounts since the' are allo&ed to subscribe or &ithdra& their in%estments at different times during the period of the contract. In case of unrestricted in%estment accounts, )ustice has to be obser%ed, not onl' bet&een holders of unrestricted in%estments, but also bet&een them as a group and the e-uit' o&ners of the ban0 as a group. )e&aluation of assets/lia#ilities: :easurement of cash e-ui%alents e1pected to be reali ed or paid re-uires periodic re%aluation of assets liabilities and restricted

in%estments. >o&e%er, the currentl' adopted standard is that #historical cost shall be the basis used in measuring and recording the assets at the time of ac#uisition thereof*. $onetheless, it is permissible to do the re%aluation for the purpose of presenting supplemental information &hich ma' rele%ant for an e1isting or a potential holder of an in%estment account. ,ased on the abo%e assumptions and criteria, the general la'out of financial statements can no& be considered. Islamic financial statements share the same broad
classification of con%entional financial statements as representations of stocks and flo!s. The stoc0 concept is t'pical of the balance sheet &hich pro%ides a summar' of the financial position of an entit' at a gi%en point of time. In addition to the balance sheet, the income statement pro%ides a summar' of the inflo& and outflo&s during a gi%en period of time, as it is measured on accrual basis. The latter is particularl' rele%ant for assessing the operating efficienc' of the entit', but not the sate of cash li-uidit'. It is for this reason that a cash-basis statement is needed to complement the flo& concept of financial statements as opposed to the stoc0 concept.

The set of financial statements of Islamic financial institutions consist of the follo&ing" 9inancial statements reflecting the Islamic ,an02s function as an in%estor and its rights and obligation regardless of the ob)ecti%e of in%estment &hether it is profit oriented or sociall' oriented. Such financial statements include" o o o o ,alance Sheet +Statement of financial position/ Statement of income Statement of cash flo& Statement of retained earning or statement of changes in o&ners2 e-uit'.

( financial statement reflecting changes in restricted in%estments managed b' the Islamic ban0 for the benefit of others, &hether based on :udarabah contract or agenc' contract 9inancial statements reflecting the Islamic ban02s role as a fiduciar' of funds made a%ailable for social purposes &hen such ser%ices are pro%ided through separate funds" o Statement of sources and uses of ?a0ah and Fharit' fund o Statement of sources and uses of funds in the -ard fund.

I5. 6eneral lay out of Balance Sheet: 7isclosure: The date of the statement must be disclosed. The statement
should include the Islamic ban02s assets, liabilities, e-uit' of unrestricted in%estment account holders and its e-ui%alents, and its o&ners2 e-uit'. (ssets and liabilities should be combined into groupings in accordance of their nature, and in order of their relati%e li-uidit', but the con%entional di%ision into current and fi$ed groups is not recommended. (ssets should not be set-off against liabilities unless there is a religious or legal right and an actual

e1pectation of set-off +e.g deferred profits in :urabaha shall be set-off against :urabaha recei%ables/. Separate totals for assets, liabilities, unrestricted in%estment accounts and their e-ui%alents, and o&ners2 e-uit' must be pro%ided. Other considerations of disclosure &ill be added to their respecti%e items belo&.

7efinitions: The follo&ing definitions relate to the broad items of the

statement of financial position. Assets: (n assert is an' measurable thing that is capable to generate cash flo&s or other economic benefits in the future, indi%iduall' or in combination &ith other assets, of &hich the Islamic ban0 has ac-uired the right to hold, use or dispose of, as a result of past transactions or e%ents. 7isclosure of assets: The follo&ing brea0do&n of assets should be disclosed either on the face of the financial statement of financial position or the notes to financial statements" 4. 2. 6. 4. B. C. 8. Fash and cash e-ui%alent @ecei%ables + :urabaha, Salam, Istisnaa/ In%estment securities :udarabah in%estment :ushara0ah in%estment In%estment in other entities In%entories +including goods purchased for :urabaha prior to consummation of :urabaha agreement .. In%estment in real estate 7. (ssets ac-uired for leasing 40. Other in%estments +disclosure of their t'pes/ 44. 9i1ed assets +disclosure of depreciation for significant asset t'pes / 42. Other assets +disclosure of significant t'pes/. %ia#ilities: ( liabilit' is an' measurable present ban02s obligation to another party to transfer assets, e1tend the use of an asset, or pro%ide ser%ices to that part' in the future as a result of past transactions or e%ents. The Islamic ban02s obligation must not be a reciprocal to an obligation of the other part' to the ban0. 7isclosure of lia#ilities: The statement of financial position or its note should disclose the follo&ing liabilities" 4. Furrent accounts, sa%ing accounts and other accounts &ith separate disclosure of each categor' 2. Deposits of other ban0s 6. Salam 3a'able 4. Istisnaa 3a'able B. Declared but undistributed profits C. ?a0ah and ta1es pa'able 8. Other accounts pa'able E(uity of unrestricted in&estment account holders and their e(ui&alents: (t the date of the statement of financial position, e-uit' of unrestricted

in%estment account holders +and their e-ui%alents/ refers to the amount of original funds recei%ed minus &ithdra&als or transfers to other accounts plusDminus shares in profitsDlosses. ,ecause the' are based on unrestricted :udarabah, unrestricted in%estment accounts and their e-ui%alents are treated as elements of the financial position. It is note&orth' that e-uit' of unrestricted in%estment account holders and their e-ui%alents is not considered a liabilit' since there is no obligation on the ban0 to guarantee original principals e1cept in cases of pro%en neglect. <i0e&ise, e-uit' of unrestricted in%estment account holders and their e-ui%alents is not considered part of o&nership e-uit' because the' do no en)o' %oting right or entitlement to profits generated from the use of the ban02s current accounts. 7isclosure of unrestricted in&estment accounts/e(ui&alents: The method used to allocate in%estment profitDloss bet&een the ban0 and the unrestricted in%estment account holders and their e-ui%alents should be disclosed, &hether the ban0 acts as :udarib or agent, should be disclosed. Separate disclosures of assets )ointl' financed b' the Islamic ban0 and unrestricted in%estment account holders and those e1clusi%el' financed b' the ban0 should be pro%ided in supplementar' notes. ,+ners8 e(uity: It is the amount remaining at the date of the statement of financial position, from the Islamic ban02s assets after deducting the ban02s liabilities, e-uit' of unrestricted in%estments and their e-ui%alents and prohibited earnings if an'. 7isclosure of o+ners8 e(uity: See statement of changes in o&ners2 e-uit'

@E9E@E$FES" ((OI9I +(ccounting and (uditing Organi ation for Islamic 9inancial Institutions/, Accounting and Auditing Standards for Islamic Financial Institutions, :anama, ,ahrain, 4778. JJJJJJJJJJJAccounting Auditing and %overnance Standards for Islamic Financial Institutions, :anama, ,ahrain, 2002 (hmed, Eltigani (bdul-adir, Accounting Postulates and Principles from an Islamic Perspectives, @e%ie& of Islamic Economics, Kol. 6 , $o.2, 4774, pp44.. ,ah)att, :uhammed 9., To!ards Standards for &eligious Audit in Islamic 'anks, @e%ie& of Islamic Economics, Kol. 6 , $o.2, 4774, (rabic section, 4C0. Fhapra, Hmar and (hmed, >abib, (orporate %overnance in Islamic Financial Institutions, Islamic De%elopment ,an0, I@TI, 2002 >amoud, Sami, Standards of Profit Accounting in Islamic 'anks , Islamic Economics Studies, +(rabic/Kol. 6, $o. 2, 477C, pp .6-442. 5han, :. (amnullah , (ontemporary Accounting Practices and Islamic 'anking, @e%ie& of Islamic Economics, Kol. 6, $o. 4, 4774, pp B4-C4

5han, (bdul Eabbar, (omment on Paper )contemporary accounting practices and Islamic banking* by +,A, -han, @e%ie& of Islamic Economics, Kol. 6, $o. 2, 4774, 27-60. 5han, :. 9ahim, Time .alue of +oney and /iscounting, @e%ie& of Islamic Economics, Kol. 4, $o. 2, 4774 pp6B-B4 5ahf, :un ir, Time .alue of +oney and /iscounting in Islamic Perspective0 &evisited, @e%ie& of Islamic Economics, Kol. 6, $o. 2, 4774 JJJJJJJJJJJJProfit /istribution in Islamic 'anks, Islamic Economic Studies, Kol. 6, $o. 2, 477C, pp446-468. Hmar, :uhammed (bdul >alim, Shariah, 1conomic and Accounting Frame!ork of 'ay2Al3Salam in the 4ight of (ontemporary Application , Islamic De%elopment ,an0, I@TI, Eeddah, 5S(, . 477B. Tag El-Din, 'alance Sheet Analysis 0 (ase Study of Faysal 'ank3'ahrain , presented in #Intensi%e Orientation Seminars on Islamic Economics, ,an0ing L 9inance*, Islamic 9oundation , ID, and <oughborough Hni%ersit', 26- 28 Sep. 4777.

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