AAOIFI

AAOIFI stands for Accounting and Auditing Organization for Islamic Financial Institutions. It is an international non-profit standard-setting body focused on Islamic financial institutions, headquartered in Manama, Bahrain. Its mandate is to standardize accounting, auditing, governance, and Shariah compliance for Islamic financial institutions worldwide.

It was established in 1991 by a coalition of central banks, regulators and leading Islamic financial institutions to create common standards for financial reporting and Shariah compliance. It issues standards and guidance for Shariah-compliant banking, takaful (Islamic insurance), and related financial products, aiming to enhance transparency, reliability, and comparability of financial statements.

AAOIFI issues standards across accounting, auditing, governance and Shariah. The standards address financial reporting, asset valuation, disclosure, and the governance and Shariah supervisory processes that oversee institutions’ compliance. The organization also publishes guidance, manuals and technical bulletins to support implementation.

AAOIFI’s governance framework includes a Board of Trustees and a Sharia Supervisory Board, composed of recognized scholars. Standards are developed through committees, public commentary, and expert review; adoption by jurisdictions is voluntary but widely implemented in many Islamic financial markets.

The standards are widely used by Islamic banks and takaful operators and are referenced by regulators in several countries. They contribute to standardization of Shariah compliance and financial reporting in Islamic finance, though adoption varies and some regulators align their national standards with AAOIFI while others adapt portions to local practice. There are ongoing debates about differences with other accounting standards and among different schools of Shariah interpretation.