Accounting Conceptual Frameworks: Masb vs. Aaoifi

15 Pages Posted: 20 Jan 2017

See all articles by Zulkarnain Muhamad Sori

Zulkarnain Muhamad Sori

INCEIF, The Global University of Islamic Finance

Date Written: January 01, 2017


This paper aims to present comparison of conceptual frameworks issued by the Malaysian Accounting Standards Board (MASB) (fully converge to the standards issued by the International Accounting Standards Board) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The research is motivated by the introduction of accounting standards by the AAOIFI in the 1990s to fulfil the financial reporting needs of Islamic finance industry. This is stem from the fact that the Islamic financial institutions offer products and services that are complied with Shariah principles which the fundamental objective is significantly differ than their conventional counterpart. Some scholars proposed that these different breed of organizations require different sets of accounting standards to serve their user’s unique financial information needs. However, only limited number of countries accepted and make the application of the AAOIFI accounting standards mandatory for their Islamic financial institutions. On the other hand, more than 120 countries set out that Islamic financial institutions (IFIs) in their countries to use accounting standards issued by the IFRS. The key different of both conceptual framework lies on their objective financial reporting. The objective of financial reporting for MASB is to provide useful financial information for existing and potential investors, lenders and other creditors. The AAOIFI divided the objective of financial reporting into two, namely, objective of financial accounting and objective of financial reports. Consistent with Shariah requirements, the objective of financial reporting focus on determining of rights and obligations of all interested parties, to ensure all activities are in compliance with Shariah principles and to provide useful financial information to all stakeholders of Islamic financial institutions. Further analysis reveals that most of accounting principles outlined in the conceptual framework of the MASB are replicated in the AAOIFI’s conceptual framework. The AAOIFI add further principles which is associated with Shariah requirements. In the Malaysian Islamic finance industry perspective, though the regulator requires the IFIs to apply the IFRS, the Bank Negara Malaysia (i.e. Central Bank) issued relevant regulations as a guide for IFIs financial reporting and to close the gap.

Keywords: Accounting Conceptual Framework, MASB, AAOIFI, Islamic Accounting, Islamic Finance

JEL Classification: M4, M41, M42

Suggested Citation

Muhamad Sori, Zulkarnain, Accounting Conceptual Frameworks: Masb vs. Aaoifi (January 01, 2017). Available at SSRN: or

Zulkarnain Muhamad Sori (Contact Author)

INCEIF, The Global University of Islamic Finance ( email )

Lorong Universiti A
Kuala Lumpur, Kuala Lumpur 59100
+60376514173 (Phone)
8 (Fax)


Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
PlumX Metrics