Fair value as a method of valuation in Islamic accounting of banks

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Fair value as a method of valuation in Islamic accounting of banks

Journal Title: Zeszyty Teoretyczne Rachunkowości - Year 2019, Vol 2019, Issue 102

Abstract

The main aim of this article is to verify the applicability of fair value in financial statements prepared in accordance with the standards of The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The research hypothesis is that as a result of the significant influence of cultural conditions of Islamic accounting, the degree of application of the fair value concept is small. In order to achieve the objectives of the study and verify the research hypothesis, methods of studying the subject literature and legal acts, including AAOIFI and inductive reasoning were used. Furthermore, a study was conducted of financial statements published by selected Sharia compliant banks, with headquarters in Great Britain And Saudi Arabia - published for the period from 2015 to 2017. The analysis of financial statements of Islamic banks along with the review of the literature on cultural conditions and Islamic ac-counting allows us to formulate conclusion that the assumptions of Sharia law significantly limit the appli-cation of the fair value concept. The specific nature of the socio-cultural environment of Muslim countries influences the objectives of accounting and the methods of their implementation through measurement systems. The concept of fair value measurement is the subject of discussion in the environment related to Islamic accounting. The fact that accounting principles are determined by Sharia law makes the problem even more complex.<br/><br/>

Authors and Affiliations

Anna Ciecholewska, Marta Sikorska

Keywords

EP ID EP599748
DOI 10.5604/01.3001.0013.2448
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