Year: 2024
Type: article
Abstract: This study explores the level of Sharia compliance in the financial reporting practices of Islamic banks, with a focus on the presentation, transparency, and ethical accountability reflected in their annual financial statements. Using a qualitative content analysis approach, the research examines selected Islamic banks across various jurisdictions, evaluating their adherence to Sharia principles based on disclosures related to zakat, prohibited income, Islamic financial contracts, and the roles of Sharia Supervisory Boards (SSBs). The findings indicate a wide disparity in compliance levels, with institutions in countries that enforce Sharia-based accounting standards such as those issued by AAOIFI demonstrating stronger compliance than those in dual or conventional regulatory environments. Common strengths include the recognition of Sharia contracts and the existence of SSBs, while weaknesses are often found in the insufficient reporting of zakat, purification of non-halal income, and lack of ethical and social disclosures. The study identifies key influencing factors such as governance quality, regulatory enforcement, institutional commitment, and the application of standardized accounting frameworks. It concludes that enhancing Sharia compliance in financial reporting is essential for strengthening stakeholder trust, ensuring religious legitimacy, and advancing the credibility of the Islamic finance industry.
Source: Seriat Ekonomisi
DOI: 10.35335/87eyr984
Authors: Rayyan Nashit, Nadia Tasnim
Institution: International Islamic University Chittagong
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W4411367760