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The global insurance industry has implemented International Financial Reporting Standards (IFRS) 17 insurance contracts effective from January 1, 2023. The Islamic insurance (Takaful) industry would find itself at a crossroads if IFRS 17 should also be adopted for Takaful contracts. This paper aims to explore the process of IFRS 17 adoption for Takaful contracts in Malaysia and the implementation of the standard in the early adoption year.

Applying a qualitative approach, this study uses a literature review search and interviews to analyze deeper into the adoption process in Malaysia. Using institutional work, this paper analyses the process timeline, the actors and their roles and actions in the adoption process. The authors interviewed 12 informants from different backgrounds comprising the national standard setters, preparers and the IFRS 17 consultants.

The adoption process of IFRS 17 in Malaysia is an interplay between the accounting standard setter, the government and the industry associations who are the major actors in the process. These actors have different roles and contributions, but they work together to accomplish a single vision, adopting IFRS 17 for all. There is an interplay between actors to disrupt the accounting practice and involved in creating various institutional work to ensure the concerns of Takaful practitioners are well addressed. This research also found that the companies faced significant challenges in applying the standard in the early months of implementation.

This paper contributes to the literature by providing an explanation and examples of the IFRS adoption for Shariah transactions. The story of Malaysia can become a case study for other countries that are still deciding on adopting IFRS 17, especially for the Islamic insurance industry.

The story of Malaysia can become a case study for other countries that are still deciding on adopting IFRS 17, especially for the Islamic insurance industry.

This paper contributes to the literature on the debate of the application of IFRS to Shariah transactions by using institutional work theory as a framework.

This research study aims to examine the effect of the compliance with the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards on the performance of Islamic banks.

The sample consists of 628 bank-year observations from eight countries that adopt the AAOIFI standards during the period 2009–2020.

The findings reveal a significant positive relationship between the overall compliance level with AAOIFI standards and the two performance measures in Islamic banks.

The findings are useful for various groups of preparers and users of Islamic banks’ annual reports, such as academics and researchers, accountants, management of Islamic banks and national and international organizations.

This research provides new empirical evidence on the effect of compliance with AAOIFI standards (accounting and governance) on Islamic banks performance. In addition, the findings reveal that the examination of compliance level should not be restricted to an overall compliance index that contains all the AAOIFI standards, but should rather take into consideration the different types of these standards (accounting and governance).

This conceptual paper aims to delineate a comprehensive blueprint for the integration of environmental, social and governance (ESG) principles within the framework of Takaful operations, guided by the principles of Maqasid al-Shariah. The primary purpose is to establish a robust foundation for the sustainable transformation of Takaful, aligning it with ethical finance and Islamic values.

Using a theoretical research approach, this study delves into the multifaceted dimensions of ESG principles and the principles of Maqasid al-Shariah within the context of Takaful operations. The 17 SDGs/ESG principles and Maqasid al-Shariah are integrated to give a thorough framework for comprehending the disclosure index from western and Islamic ethical viewpoints. The research critically analyses current literature, scholarly works and authoritative sources, drawing inspiration from established approaches. Qualitative content analysis examines and compiles pertinent ideas, and the expert validates the disclosure index. It identifies key convergence, compatibility and divergence points between ESG principles and Maqasid al-Shariah to construct a comprehensive framework for Maqasid-driven ESG integration in Takaful.

The paper presents a well-defined blueprint for Maqasid-driven ESG integration in Takaful, revealing substantial areas of alignment between the two frameworks. This alignment is particularly pronounced in protecting life, religion, intellect, lineage and wealth. The blueprint underscores the potential of harmonising ESG principles with the principles of Maqasid al-Shariah, providing Takaful operators with a roadmap for enhancing their ethical credibility, societal impact and environmental stewardship.

The blueprint outlined in this study opens new avenues for research at the intersection of Islamic ethics, responsible finance and sustainable development and signals the necessity of developing a standardised disclosure index. This index will serve as a vital tool for Takaful operators to transparently communicate their commitment to ethical and sustainable practices, facilitating a deeper understanding of Maqasid-driven ESG integration and bolstering transparency for all stakeholders. Further research into this disclosure index’s practical implementation, empirical validation and strategic implications is encouraged to advance responsible finance within the Takaful industry.

The proposed blueprint provides Takaful operators with a practical guide to align their operations with both ethical finance and Islamic principles. Embracing the principles of responsible governance, societal welfare and environmental sustainability, Takaful operators can enhance their product offerings, attract socially conscious stakeholders and contribute positively to both financial and ethical objectives.

Integrating Maqasid-driven ESG principles in Takaful signifies a commitment to broader social well-being. Through initiatives aimed at safeguarding life, religion, intellect, lineage and wealth, Takaful operators can play a pivotal role in fostering social cohesion, empowering communities and actively contributing to sustainable development goals.

This conceptual paper contributes to the field by presenting a unique blueprint for integrating ESG principles within Takaful operations, guided by Maqasid al-Shariah. The novelty of this approach lies in its holistic perspective on ethical finance, aligning Islamic values with contemporary global ethical imperatives. The blueprint offered here represents an original framework for responsible Takaful practices that resonate with evolving ethical standards and the enduring principles of Islamic finance.

The purpose of this paper is to examine and compare the trend of intellectual capital disclosures (ICD) of Islamic banks under the International Financial Reporting Standards (IFRS) and Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) regimes over a seven-year period (2012–2018).

A self-developed checklist was developed to measure the extent of ICD practices of Islamic banks in both regimes.

The results revealed a moderate increase in ICD practices over the period of the study. However, there is no significant difference in ICD between the two financial reporting regimes i.e. IFRS and AAOIFI-based banks. In fact, most of the IFRS-based banks have better ICD than AAOIFI-based banks throughout the analysis period. This study contributed to the ICD literature by introducing Shariah capital as a new category of information to disclose besides the common disclosure on human capital, relational and structural related information by the Islamic banks.

It is important for Islamic banks to distinguish themselves from conventional banks and ICD can be a conduit to show their uniqueness. The introduction of Shariah capital in this study reflects the main objective of Islamic bank’s existence, and it should become an important element in ICD. In fact, some form of guidelines or policy by regulating agencies could facilitate the ICD by Islamic banks and reflect the truth about their ability to capitalize on Intellectual capital and disclose about these practices to their stakeholders.

The introduction of Shariah capital as a new component to the existing components (i.e. human capital, structural capital and relational capital) of intellectual capital brings a new perspective to the research on ICD of Islamic banks. This paper further contributes to the scarce evidence of ICD of Islamic banks globally.

This paper aims to investigate the zakat disclosure of Islamic banks at the global level. It is important for depositors and shareholders of Islamic banks to know whether the bank is paying zakat on their behalf or not. Additionally, disclosing the calculation method used is also necessary to eliminate uncertainties resulting from ambiguous reporting that can mislead the stakeholders. This issue becomes more obvious when considering that depositors and shareholders may have different accounts with different Islamic banks, which makes it quite confusing to have multiple ways of zakat calculation or different approaches on who is the party that pays it. This study analyzes the current practices across 13 countries and recommends best practices.

The objective of the paper objective is achieved through analyzing the annual reports of 34 Islamic banks in 13 countries for the years 2014 and 2019. It further quantifies the zakat disclosure by constructing a zakat disclosure index. This index considers the disclosure of four major constituents covering the amount and the responsibility for payment, the calculation method, the involvement of the Shariah board and the zakat duty on investment account holders. For further robustness, this study is further supported by content analysis measures using the zakat word count in annual reports.

The results indicate a major issue in zakat disclosure. The overall average of disclosure index is low. Most of the banks disclose limited information about zakat, such as the amount and the responsibility for payment, in their annual reports. Less than 40% of the examined banks disclose information about the role of the Shariah board in zakat calculation, and a very limited number of banks (9%) are found to disclose enough details about the zakat calculation method. Furthermore, none of the examined banks mentions the zakat due for the investment accounts. Overall, zakat disclosure of most of the banks, whether following Accounting and Auditing Organization for Islamic Financial Institutions or otherwise, are found to be not up to the expected best practices.

Among the limitations of this study is the sole dependence on annual reports of Islamic banks without considering other means that banks might be using to communicate zakat-related matters to stakeholders. Examples of such means include a website, social media and other direct or indirect marketing materials. Additionally, the results of this study shall not be overgeneralized regarding differences between countries because the sample does not include all Islamic banks in the selected country. Future research may use the proposed zakat disclosure index on a country-specific data sample.

The findings have significant implications as they raise a serious concern regarding the sufficiency of the Islamic banks’ disclosure about a core area of their responsibility, that is, the zakat. The index developed can be a tentative measure of zakat disclosure transparency pending further review. The result further suggests looking at the composition of members of Shariah boards to include at least one member with a sound accounting background. Zakat is a religious duty; therefore, a perceived lack of transparency on the amount, method of calculation and how the zakat is paid may affect the future injection of capital into Islamic banks.

An important contribution of this paper lies in the fact that the collected data is not provided in any available database. Rather, it is manually captured from the individual annual reports of reviewed Islamic banks. Further, this paper proposes an index to measure the zakat disclosure at bank and country levels.

The purpose of this study is to investigate the impact of Shariah Advisory Board (SAB), Audit committee (AC) and board of directors (BD) characteristics on the performance of Islamic banks (IBs) in the MENA region.

The paper employs a quantitative approach, utilizing both ordinary least squares (OLS) regression and panel data analysis (random effects models) to examine the relationship between corporate governance variables and the performance of IBs. The sample consists of 50 IBs from 10 countries, spanning a seven-year period (2010–2016), with the exclusion of the Covid-19 pandemic period. To ensure the robustness of the results, various sensitivity tests were conducted, including pooled regression OLS and subsample analysis based on adhering to the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards.

The study's findings suggest that the size of the SAB and the membership of at least one member of the SAB on the AAOIFI have a notable adverse effect on the performance of IBs. On the other hand, the AC independence has a positive influence on bank performance. However, there was no significant impact observed for AC size, meeting frequency and BD characteristics on bank performance. The research also revealed nuanced relationships between governance variables and bank performance when analyzing the sample based on AAOIFI adoption. Among banks not adhering to AAOIFI standards, SAB size and CEO duality negatively affected return on assets, while AC independence positively impacted it. For AAOIFI-compliant banks, AC independence significantly improved bank performance, whereas AC meetings exhibited a negative effect. Furthermore, there were no significant relationships observed for return on equity among banks not adhering to AAOIFI standards, whereas AAOIFI-compliant banks experienced positive impacts from AC independence. These results offer valuable insights into the intricate connection between governance attributes and bank performance, particularly in the context of AAOIFI standards adoption.

The study's findings have important practical implications for various stakeholders in the Islamic banking industry. For bank practitioners and management, the study highlights the significance of enhancing the independence of AC to improve decision-making and risk management, leading to better bank performance. Moreover, careful selection of SAB members can mitigate potential negative effects on performance. Policymakers may consider promoting AAOIFI standards to shape the relationship between governance and bank performance. Investors can use the insights to make informed decisions, and banks with stronger governance may attract more investments.

Through quantitative analysis and AAOIFI-based sample division, this study adds to the growing literature on corporate governance and the performance of IBs by examining the impact of multiple corporate governance variables on the performance of IBs in the MENA region. To provide a theoretical basis for this relationship, three theories, namely agency, stewardship and stakeholder theories, are employed and discussed.

This study aims to evaluate Islamic bank compliance with the accounting and auditing organisation for Islamic financial institutions (AAOIFI), assess the impact of multiple accounting standards in Islamic banking, examine the need for private accounting standards and assess international financial reporting standards (IFRS) compatibility with Islamic banking and analyse financial leasing accounting in Islamic banking compared to IFRS 16.

A combination of comparative theoretical analysis, physical examination, and semi-structured interviews has been used as a research methodology. These methods are interconnected and complement each other to provide a comprehensive approach to address the research questions.

Islamic banks in various countries show varying compliance with AAOIFI accounting standards. Some fully comply, while others adopt a hybrid approach combining AAOIFI and IFRS. Differences in accounting treatments can result in conflicts, asset inflation and financial statement discrepancies. Challenges and criticisms faced by AAOIFI standards include violating the matching principle and lacking faithful representation. Collaboration among academics, standards-setting bodies and organisers is crucial for guiding the reporting of Islamic financial statements.

The research identifies gaps in implementing Islamic accounting standards and proposes strategies to enhance compliance, improve performance and increase transparency in Islamic financial institutions. It highlights the importance of a harmonised and universally accepted accounting framework for Islamic banking, considering the compatibility between IFRS and Islamic principles.

Social implications have arisen regarding the global acceptance of Islamic finance, which leads to an increase in socially Islamic finance exchange.

This research examines the consequences of using multiple accounting standards in the Islamic banking industry and discusses the need for private accounting standards and compatibility with IFRS.

The study aims to investigate the Shari’ah governance quality effectiveness, at the bank and national levels, on the value relevance of Islamic banks’ (IBs’) earning per share and book value per share.

Quantitative analyses are conducted using a panel of 40 listed IBs from 12 countries during 2012–2019. Data were retrieved from the Refinitiv Eikon database and banks’ annual reports.

The findings suggest that Shari’ah supervisory boards’ attributes negatively influence the value relevance of accounting information while the internal procedures positively impact it. The results also provide evidence of a complementary effect between Shari’ah governance mechanisms at the bank and national levels on the value relevance of accounting information.

IBs’ boards and managers need to be more aware of the role of Shari’ah governance and its impact on value relevance. The observed complementarity between Shari’ah governance systems at the bank and national levels may incite regulators to include comprehensive Shari’ah governance regulations in their best practices. Strengthening collaboration between regulators and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is also required to create an enabling environment for investors to rely on the AAOIFI accounting standards in their investment decision-making process.

Existing studies tend to ignore the effectiveness of Shari’ah governance quality at the bank level on value relevance. There is a similar lack of empirical research on the effectiveness of the centralized Shari’ah governance scheme on accounting issues.

This paper aims to examine the development of Islamic accounting education and discuss the main challenges facing this specific type of accounting education in the United Arab Emirates (UAE).

The paper uses institutional theory to analyze the development of Islamic accounting education in the UAE. The collection of information in this study is based on secondary data available from published sources and websites.

This study identifies three types of institutional pressures. First, coercive pressures that were directed by the government, the UAE's Central Bank and other professional bodies [e.g. Accounting and Auditing Organization of Islamic Financial Institutions (AAOIFI)] involved in the Islamic banking industry have contributed to the development of Islamic accounting education in the UAE. Second, mimetic pressures exerted by other countries that have already established Islamic accounting training and programs (e.g. Indonesia, Iran, Kingdom of Saudi Arabia and Pakistan) have incentivized the UAE business schools to implement Islamic accounting training and programs to meet Emirati Islamic banking industry expectations. Third, normative pressures are exerted by Big 4 auditors who have an active position as faculty members, influencing status in AAOIFI and a dominant position in the Islamic banking industry’s audit market. The paper also discusses the main challenges facing Islamic accounting education in this country.

This paper contributes to accounting literature in general and accounting education literature in particular in the following two ways. First, this study applies an institutional analysis to Islamic accounting education in the UAE to gain more understanding about the current status of the development of Islamic accounting education in the UAE. Second, by identifying the factors that may constrain the development of Islamic accounting education in the UAE, this study provides recommendations to financial and higher education authorities to undertake proactive actions to position the UAE as a leading center in Islamic accounting education and training.

The purpose of this paper is to engage in a systematic examination of previous scholarship on the relationship between Sharia governance (SG), which is represented by the Sharia Supervisory Board (SSB), and the Internal Sharia Review (ISR), to determine whether the ISR can minimize financing risk in Islamic banking.

The literature search consisted of two steps: a randomized and systematic literature review. The methodology adopted in this article is a systematic literature review.

To reduce the risk of financing in Islamic banking, SG must be implemented optimally by making rules regarding the role of the SSB in supervising customer financing. In addition, it is a necessary to establish an entity that assists the SSB in the implementation of SG, namely, the ISR section, but there is still very little research on the role of the SSB and ISR in minimizing financing risk.

Establishing an ISR to assist the SSB in carrying out its duties has direct practical implications for Islamic banking: minimizing financing risks and compliance with Islamic Sharia principles. In addition, new rules regarding the role of SSBs and the ISR in reducing credit risk include monitoring customers to ensure that they fulfill their financing commitments on time. This new form of regulation and review can be used as a reference by the Otoritas Jasa Keuangan or Finance Service Authority to create new policies or regulations regarding SG, especially in Indonesia.

Subsequent research may introduce other more relevant variables, such as empirically testing the competence, independence or integrity of SSB and the ISR team as it attempts to minimize the risk of financing in Islamic banks. In addition, further research is expected to examine whether the SSB or the ISR team has a positive or negative influence on the risk of financing Islamic banks with secondary data.