Standard setting for the financial reporting of religious business organisations: the case of Islamic banks

At this point in time, the standard practice within Islamic finance houses is for each firm to maintain a shari`a board as part of the corporation. Each institution's board helps shape its policies and its practices in order to ensure that there is no breach of Islamic law. There are fears within Islamic banks that their own shari`a boards might at some later date come to oppose accounting methods now in use by the firm. This fear is arguably the driving force behind a move by a number of Islamic financial institutions to establish a standardized policy-setting board for the entire field to make oversight policy relating to financial accounting and reporting. There is uncertainty as to whether, in the future, shari`a boards will be the enforcing agency of the accounting policies they helped initially shape.