Accounting regulatory issues on investments in Islamic bonds

Investments on Islamic bonds (sukuk) give rise to a number of accounting and reporting issues related to recognition, measurement and disclosure. Proper development of the Islamic financial market requires a well regulated Islamic financial industry. The need for Islamic accounting that deals with Islamic financial instruments has prompted AAOIFI to introduce Financial Accounting Standard No.17 on investments in securities. Islamic accounting standards must be codified to ensure that they are meeting Shari‘a requirements. Even while meeting these requirements, Islamic accounting must be adapted so that it stays relevant. The examination of AAOIFI FAS 17 shows that AAOIFI has been pragmatic in its approach by considering both requirements when developing its standard.