Compliance of AAOIFI Guidelines in General Presentation and Disclosure in

the Financial Statements of Islamic Banks in Bangladesh

1. Introduction
The term Islamic banking has been using by most of the banks in
Bangladesh. But in this country there are seven listed Islamic banks. For
regulating their activities and disclosure there is no separate regulatory
authority. Islamic banks activities are diferent from the activities from those
of conventional banks. For this Islamic banks need to disclose some
information which are not reuired to disclose by conventional banks. Islamic
banks should follow the guidelines of international !uthority of Islamic Banks.
!!"IFI is a regulatory authority for Islamic banks. This study is conducting to
#nd the level of compliance with general presentation and disclosure in the
#nancial statements of Islamic banks in Bangladesh reuired by !!"IFI
Financial !ccounting standard $. %ome disclosure regarding to &akat' (uard'
Interest should have to inform by Islamic banks because these make Islamic
banks diference from conventional banks. This study aim to #nd the level of
)ompliance of !!"IFI *uidelines in *eneral +resentation and ,isclosure in
the Financial %tatements of Islamic Banks in Bangladesh because there was
no signi#cant study on )ompliance of !!"IFI *uidelines in *eneral
+resentation and ,isclosure in the Financial %tatements of Islamic Banks in
Bangladesh.
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
2. Literature Review:
Sarea (2012), in his research on .The /evel of )ompliance with !!"IFI
!ccounting %tandards0 1vidence from Bahrain2 evaluated perceptions
concerning the level of compliance with !!"IFI !ccounting standards. In this
research he found that 345 of the respondents agree with the !!"IFI
accounting standards with high level of compliance' while only 45 of the
respondents agree with moderate level of compliance with the !!"IFI
accounting standards and $6 5 of the respondents agree with low level of
compliance with the !!"IFI accounting standards.
Al-Baluchi (2006), in his thesis on .The Impact of !!"IFI %tandards and
"ther Bank )haracteristics on the /evel of 7oluntary ,isclosure in the !nnual
8eports of Islamic Banks2 evaluated a sample of 9: banks from $: banks in
Bahrain' ;< banks in %udan' ; banks in (atar' ; banks in =ordan to e>tend
the knowledge to the overall level of disclosure in the annual report of
Islamic banks' to assess whether there is a relationship between the
implementation of !!"IFI standards and the level of voluntary disclosure in
the annual reports of Islamic banks' to assess whether there is a relationship
between certain bank characteristics and the level of voluntary disclosure in
the annual reports of Islamic banks' to identify areas of concern for future
research in the #eld of #nancial reporting in Islamic banks. ?e found thatthe
level of voluntary disclosure increased after the implementation of !!"IFI
standards. The level of voluntary disclosure among Islamic banks in %udan
were less than Islamic banks operating in Bahrain' (atar and =ordan.
Irahi! et al., (2006), in their study on .!/T18@!TI71 ,I%)/"%A81 B
+18F"8C!@)1 C1!%A81% F"8 I%/!CI) B!@D%2 1valuated Bank Islam
Calaysia Berhad EBICBF and Bahrain Islamic Bank EBIBF to evaluate how they
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
conduct their business and the measures used in order to ensure that all the
activities are in line with the reuirements of Shari+ah. !!"IFI is the Islamic
!ccounting %tandard for the Islamic Financial Institution. Thus' the Islamic
Bank should comply with it although it is not reuired by law. In Bahrain
however' the !!"IFI standard is mandatory for Islamic Financial Institution.
Therefore' BIB in its accounting policy has stated that its #nancial statements
are prepared in accordance with the !!"IFI. @evertheless' the BIB also
followed the International !ccounting %tandard for the harmoniGation
practices purposes that might not be in line with the Islamic principles. "n
the other hand' since the !!"IFI standards are not mandatory in Calaysia'
BICB did not fully adopt it as the main accounting standard. BICB in its
report only stated two of the principles are in accordance with !!"IFI which
represented $45 of the total principle.
"araha#, (2002), in his research on T?1 ,I%)/"%A81 "F I%/!CI) 7!/A1%
H !@@A!/ 81+"8T T?1 !@!/I%I% "F B!@D CA!C!/!T I@,"@1%I!J% !@@A!/
81+"8T analyGed eightannual reports of Bank Cuamalat Indonesia EBCIF to
compare with conventional accounting disclosure reuirement and !!"IFI
reuirements to compare between those two standards. ?e #ned that
disclosure reuirement of !!"IFI KL.95 and BCI 39.<5 of speci#c Islamic
informational items over total informational items.
"o$$ain (2010), in his study on .Financial %tatements of Banks under
Islamic %hari2ah0 %tatus of 8egulatory )ompliance2 evaluated all of Islamic
banks are listed on stock market. The paper tries to identify the regulatory
reuirements in preparing the #nancial statements EF%sF of banks under
Islamic %hari2ah and tries to show the compliance status of these banks with
legislations. )onsidering provisions of diferent laws and regulations the
reuirements have been classi#ed into four categories' i.e.' refereeing the
legislation as complied' disclosure in the face of #nancial statements'
disclosure of information in the notes as a part of #nancial statements and
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
other reuirements. ?e found that the average compliance rate is 33.$$5
considering all reuired aspects of #nancial statements.
Salah, (2011), in his study on Islamic Finance0 The Impact of the !!"IFI
8esolution on 1uityMBased %ukuk %tructures he e>plores the developments
in the Islamic #nancial market in regard to euityMbased sukuk structures' the
sukuk alMmudarabah in particular. It shows how a 8esolution of the
!ccounting and !uditing "rganiGation for Islamic Financial Institutions
E!!"IFIF has inNuenced the legal structural features of euityMbased sukuk
structures and discusses recent attempts to issue euityMbased sukuk
structures that are in line with the !!"IFI 8esolution.
%utawaa and "ewaid& (2010), in their research on ',isclosure /evel and
)ompliance with IF8%s0 !n 1mpirical Investigation of Duwaiti )ompanies2
evaluated :3 companies from all Duwaiti companies listed on the Duwait
%tock 1>change ED%1F to identifying the overall level of compliance in the
;66< annual reports of Duwait listed companies with the I!%sOIF8%s
disclosure reuirements and e>amining whether compliance level varies
depending on company siGe' leverage' liuidity' pro#tability' industry type'
type of auditor' and company age. ! checklist of $6$ disclosure items
representing I%! $' I%! $6' I%! $:' I%! $<' I%! $3' I%! ;$' I%! ;9' I%! ;:' I%!
;L' I%! ;3' I%! 9;' and I%! 9: was prepared for this purpose.
They found that large companies are comply more with the I!% disclosure
reuirements than small companies.
Ah!ed, (han and "o$$ain (2011), in their research on .8eporting
+ractice of !ccounting ,isclosure on )hanges in /isted )ompanies of
Bangladesh2 evaluated $6 years annual report from $KKK to ;663 of 3 8eal
1state' 3 +lantation' 3 Industrial goods' 4 )onsumer goods' ;
TradingOservices' ; Cining' ;Finance and ; )onstruction companies. ?e #ned
that ten companies reported two year and fourMyear changes along the study
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
period' which is ;L.<95. "n the other hand' eight companies reported threeM
year accounting changes E;$.<;5F. Four companies disclosed #veMyear
accounting changes E$6.3$5F and two reported si>Myear changes E4.:$5F.
"nly one company reported one' seven' and eight year changes E;.L65F.
Findings show that none of the selected companies did report any changes.
This clearly shows that at least once in ten years companies change their
accounting policy.
"o$$ain and Ba$er (2011), in their research on .)ompliance of I!%M960 !
)ase %tudy on the %pecialiGed Banks of Bangladesh2 evaluated : specialiGed
banks or @*"s to#nd out the degree of compliance of the standard by the
banks and to #nd out the deviation from the standard. Their analysis shows
that of the four banks and of the total $; reuirements' B%B complied with <
reuirements E465F' B%8% L reuirements E435F and Both of BDB and 8DAB
4 reuirements E:;5F each.
"a$an, et al., (201)), in their study on )orporate *overnance and
Financial ,isclosures0 Bangladesh +erspective they evaluated Four stratums
ETe>tile' +harmaceuticals' )ement' Food B !lliedF and #ve companies from
each stratum had been selected purposively. They draft check list of twoM
hundred items were used to measure a company disclosure score. They
observed that e>ternal auditor' pro#tability and multi listing are signi#cantly
associated with disclosures level. The coePcient of e>ternal auditor'
pro#tability and multi listing are statistically signi#cant at 4 percent level.
The board independence' board siGe' dominant personality' institutional
ownership' general public' leverage' assets siGe' and number of shareholders
are not statistically signi#cant even at $6 percent level.
"o$$ain, (200*), in the study on The 1>tent of ,isclosure in !nnual
8eports of Banking )ompanies0 The )ase of India he evaluated all banking
companies listed on the Bombay %tock 1>change EB%1F and the @ational
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
%tock 1>change E@%1F to determine the e>tent of both mandatory and
voluntary disclosure by listed banking companies in India.For this $3: items
were selected of which $6$ mandatory and 3$ were voluntary. The study #nd
that on average' banks publish <65 of the total disclosure of which 335 are
mandatory and ;45 are voluntary items.
). +,ective$ o- the Stud&
The main obQective of the study is evaluates the compliance of !!"IFI
guidelines regarding general presentation and disclosure in the #nancial
statements of Islamic banks and #nancial institutions. The speci#c obQectives
of the study are0
!F To determine the reuirements of !!"IFI guidelines regarding general
disclosure in the #nancial statements for Islamic Banks and #nancial
institutions.
BF To determine the level of compliance of !!"IFI guidelines regarding
general presentation and disclosure in the #nancial statements of
Islamic banks.
)F To determine the items not complied by Islamic banks in Bangladesh
reuired by !!"IFI.
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
,F To #nd out the reasons of nonMcompliance of the guidelines by the
sample banks.
.. %ethodolo/& o- the $tud&
!s it is a study on disclosure level' the main source of information is the
secondary data provided in the annual report. To measure the e>tent of
,isclosure level in Islamic banks of Bangladesh L annual reports of listed
Islamic banking companies in Bangladesh have been analyGed. !nnual
8eport is a common and popular means of communication to stake holders
E*uthrie and +arker' $KK6R %ingh and !huQa' $K39' !dams' ;66:R 8ahman'
;66<F.
..1 Selection o- $a!#le$
There are seven Islamic banks listed in the stock e>changes in Bangladesh.
!ll the seven listed Islamic banking companies were taken as the sample for
the study' that is' the sample covered $665 population of the #eld. The
Islamic banks under study are as given below0
Sa!#le
0o.
0a!e o- I$la!ic Ban1$ 2ear o-
Incor#oration
Sa!#le-1 Islami Bank Bangladesh /imited 13*)
Sa!#le-2 !lM!rafah Islami Bank /imited 1334
Sa!#le-) %ocial Islami Bank /imited 1334
Sa!#le-. 1>port Import Bank of Bangladesh
/imited
1333
Sa!#le-4 %hahQalal Islami Bank /imited 2001
Sa!#le-6 I)B Islami Bank /imited 13*5
Sa!#le-5 6ir$t Securit& I$la!i an1
Li!ited
1333
..2 7hoice o- the #eriod
The most recent #scal years of disclosure have been chosen for the updated
information. The #scal year of ;6$$ has been selected to review the items
disclosed in the #nancial statements in the annual report of the banks.
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
..) 8ool$ o- anal&$i$
%tatistical tools like average' percentage' standard deviation' coMvariance
etc. were used to analyGe data. ! software named %+%% also used for
calculation.
.... 7ontent Anal&$i$
This paper e>amines general presentation and disclosure in the #nancial
statements of ;6$$ of L listed Islamic banks in Bangladesh. Ander $9
headings ;69 items of disclosure were considered in evaluating the !nnual
reports. Carking all banks with 6 or $' $ number for comply $ item and 6 for
not comply. Then calculate heading wise mean and standard deviation. !lso
calculate the mean' standard deviation' coMvariance of total and provide
comment according to result.
4. +verview on AA+I6I
The !ccounting and !uditing "rganiGation for Islamic Financial Institutions
E!!"IFIF is an Islamic international autonomous nonMforMpro#t corporate body
that prepares accounting' auditing' governance' ethics and %hariJa standards
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
for Islamic #nancial institutions and the industry. +rofessional uali#cation
programs Enotably )I+!' the %hari2a !dviser and !uditor S)%!!S' and the
corporate compliance programF are presented now by !!"IFI in its eforts to
enhance the industry2s human resources base and governance structures.
!!"IFI was established in accordance with the !greement of !ssociation
which was signed by Islamic #nancial institutions on $ %afar' $:$6?
corresponding to ;< February' $KK6 in !lgiers. Then' it was registered on $$
8amadan $:$$ corresponding to ;L Carch' $KK$ in the %tate of Bahrain.
!s an independent international organiGation' !!"IFI is supported by
institutional members E;66 members from :4 countries' so farF including
central banks' Islamic #nancial institutions' and other participants from the
international Islamic banking and #nance industry' worldwide.
!!"IFI has gained assuring support for the implementation of its standards'
which are now adopted in the Dingdom of Bahrain' ,ubai International
Financial )entre' =ordan' /ebanon' (atar' %udan and %yria. The relevant
authorities in !ustralia' Indonesia' Calaysia' +akistan' Dingdom of %audi
!rabia' and %outh !frica have issued guidelines that are based on !!"IFI2s
standards and pronouncements.
4.1. AA+I6I Standard$
Total of 33 standards issued by !!"IFI0
IF :3 %hari2a standards.
IIF ;< accounting standards.
IIIF 4 auditing standards.
I7F L governance standards.
7F ; codes of ethics.
7IF In addition' new standards are being developed and e>isting
standards reviewed.
4.2. AA+I6I $tructure
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
!F

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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
4.).+,ective$ o- AA+I6I
BF To develop accounting and auditing thoughts relevant to Islamic #nancial
institutions.
)F To disseminate accounting and auditing thoughts relevant to Islamic #nancial
institutions and its applications through training' seminars' publication of
periodical newsletters' carrying out and commissioning of research and other
means.
,F To prepare' promulgate and interpret accounting and auditing standards for
Islamic #nancial institutions.
1F To review and amend accounting and auditing standards for Islamic #nancial
institutions.
!!"IFI carries out these obQectives in accordance with the precepts of Islamic
%hari2a which represents a comprehensive system for all aspects of life' in
conformity with the environment in which Islamic #nancial institutions have
developed. This activity is intended both to enhance the con#dence of users of the
#nancial statements of Islamic #nancial institutions in the information that is
produced about these institutions' and to encourage these users to invest or
deposit their funds in Islamic #nancial institutions and to use their services.
4... AA+I6I %e!er$ 7riteria
Cembership criteria vary among institutionsM Qoined or willing to Qoin !!"IFI.
?owever' founding members stand apart' being the Islamic #nancial institutions
which are signatories to the agreement establishing the organiGation in $K3K.
Those members are0 the Islamic ,evelopment Bank E%audi !rabiaF www.isdb.org' !l
Baraka Banking *roupM !B*M EBahrainF www.abg.bh' ,ar !l Cal !l Islami
E%witGerlandF' !l 8aQhi Banking and Investment )orporation E%audi !rabiaF' Duwait
Finance ?ouse EDuwaitF www.kfh.com and Bukhari )apital ECalaysiaF.
!ssociate members are those Islamic #nancial institutions and companies that
comply with Islamic %hariJa precepts and principles in their operations and
transactions. In addition' Islamic Fih academies and institutions that have
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
corporate entities have their say in this class.
!!"IFIJs membership base is not limited to founding and associate members.
Cembers representing regulatory and supervisory authorities M central banks'
monetary agencies' and suchlikeM form a distinct category' playing vital role by
supervising Islamic #nancial institutions and their contribution towards the
economy at large.
The last class of membership is observer members. Those members include
organiGations and associations responsible for regulating the accounting and
auditing profession andOor those responsible for preparing accounting and auditing
standards. +racticing certi#ed accounting and auditing #rms that have interest in
the accounting and auditing practices of Islamic #nancial institutions are among
observers as well. The list goes further by admitting #nancial institutions engaged
in #nancial activities of Islamic #nancial institutions EIslamic banking windows' for
instanceF. Asers of #nancial statements of Islamic #nancial institutionsM both
individuals and corporateM belong to the category' as well' and their observing role
canJt be underestimated.
%upporting members' #nally' comprise of users of #nancial statements of Islamic
#nancial institutionsM individuals and corporate' in addition to local and
international #nancial institutions that already have or intend to have relations with
Islamic #nancial institutionsJ products.
4.4. 7erti9ed I$la!ic :ro-e$$ional Accountant$ (7I:A)
!!"IFI also provide training for )erti#ed Islamic +rofessional !ccountants
E)I+!F. )I+! program covers technical subQects that are essential to
accountancy for international Islamic banks and #nancial institutions'
including0
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
!F !!"IFI2s %hariJa standards on Islamic #nance products and practices'
and %hari2a basis for those standards.
BF !ccounting concepts and principles for international Islamic #nance.
)F (ualitative characteristics of accounting information for international
Islamic #nance.
,F !!"IFI2s accounting standards on #nancial reporting for the
international Islamic #nance industry.
1F !!"IFI2s %hariJa standards on Islamic #nance products and practices'
and %hari2a basis for those standards.
FF !!"IFI2s *overnance standards on %hari2a compliance and review
processes.
6. +verview on Sa!#le I$la!ic Ban1$
Islamic Banks are those banks who conduct its business on the shari2ah
principles of Cudaraba' Cusharaka' BiaMCurabaha' BiaMCuaQQal' and ?ire
+urchase under %hirkatul Celk' BiaM%alam' and BiaMasM%arf etc. Islamic Banks
do not do the business of Interest. Islamic Banks collect cash and invest it on
the principle of pro#t sharing.
6.1. I$la!i Ban1 Ban/lade$h Li!ited (IBBL)
IBB/ was established as a +ublic limited Banking )ompany in Bangladesh on
the $9th Carch $K39 as the #rst interest free %hari2a based %cheduled
Salamul Karim Talukder !atric "o#$ B%&'(&)*
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
)ommercial Bank in the %outh 1ast !sia. It start operation on 96
th
Carch'
$K39. The bank conduct its business by ;<< branches' $; Gonal oPces and
the head oPce. The bank conducts its business on the shari2ah principles of
Cudaraba' Cusharaka' BaiMCurabaha' BiaMCuaQQal' and ?ire +urchase under
%hirkatul Celk' BiaM%alam' and BiaMasM%arf etc. There is a %hari2a supervisory
committee in the bank who ensures that the activities of the bank are being
conducted on the principle of Islam. $; member %hariTa supervisory
committee consists of prominent %hari2s scholars' reputed Bankers'
renowned lawyers and eminent 1conomists. The bank is managed by $3
member Board of ,irectors elected by the shareholders It is listed with
,haka %tock 1>change /td. and )hittagong %tock 1>change /td. !uthoriGed
)apital of the Bank is Tk. ;6'666.66 Cillion EU ;46.:L CillionF and +aidMup
)apital is Tk. $;'46K.<: Cillion EU $4<.<< CillionF having <6'96; shareholders
as on 9$st ,ecember ;6$;. The bank2s subsidiary are Islami Bank %ecurities
/imited and Islami Bank )apital Canagement /imited.
6.2. I7B I$la!i Ban1 Li!ited (I7BIBL)
I)B Islamic Bank /imited is the new legal name of former The "riental
/imited. The Bank has been incorporated on !pril' $K3L as a public limited
company under the )ompanies !ct' $K$9 to undertake and carry out all
kinds of banking' #nancial and business activities' transactions and
operations in strict compliance with the principles of Islamic /aw E%hari2ahF
relating to business activities in particular avoiding usury in credit and sales
transactions and any practice which amounts to usury. )erti#cate for
commencement of business has been issued to the bank on !pril' 96' $K3L.
The Bank has been authoriGed by the Bangladesh Bank to carry on the
banking business in Bangladesh with efect from Cay :' $K3L. ?owever'
actual banking operations commenced on Cay ;6' $K3L. Bangladesh bank
took control of the management on $K
th
=une ;66< removing the managing
director of the bank and also dissolving the board of directors. Bangladesh
Bank appointed )hairman and managing director carried out the
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
management of the day to day afairs of the Bank since such takeover. The
authoriGed capital of the bank is Tk.$4' 666.66 million and the paid up capital
of the bank now stands at Taka <'<:L.6;9 million. The bank is managed by a
4Mmember board of ,irects elected by the %hareholders. The dayMtoMday
afairs of the bank are managed by an 1>ecutive )ouncil of 4 ,irectors. /ike
other Islamic banks' it has a 4M%hariTah )ouncil which gives decision to
perform activities according to %hari2ah.
6.). Al-Ara-ah I$la!i Ban1 Li!ited (AIBL)
!lM!rafah Islami Bank /imited was incorporated in Bangladesh on =une $3'
$KK4 and started operation from %eptember ;L' $KK4. The bank is having an
!uthoriGed capital of Tk. $6'666 million and paid up capital of Tk. 4'3K9.9L
million at the end of ,ecember 9$st' ;6$$. The shares of the bank hold by
4:';<Lshareholders. The Bank conducts its business on the principles of
Cusharaka' BaiMCurabaha' BaiMCuaGGal and ?ire +urchase transactions
approved by Bangladesh Bank. The Bank provides a comprehensive range of
#nancial services including commercial banking' consumer banking' trade
#nance and other related custody and clearing services to the customers
following the provisions of Bank )ompanies !ct' $KK$' Bangladesh Bank2s
directives and the principles of Islamic %hari2ah. There is a %hari2ah
%upervisory )ommittee in the bank who maintains constant vigilance to
ensure that the activities of the bank are being conducted on the percepts of
Islam. The %hari2ah %upervisory )ommittee of L members consists of
prominent Alema' reputed Bankers' renowned /awyers and eminent
1conomists.The bank is managed by ;$Mmember Board of ,irectors. !lM
!rafah Islami Bank /td. "pened 3K as 9$
st
,ecember' ;6$$ branches all
within the country. !lM!rafah Islami Bank /td. owned 4$.L45 shares of !IB/
)apital Carket %ervices /td. a subsidiary company of !lM!rafah Islami Bank
/imited. !IB/ )apital Carket %ervices /td. incorporated in Bangladesh on ;6
%eptember ;6$6 as a +ublic /imited )ompany. !IB/ )apital Canagement /td.
Is another subsidiary company of !lM!rafah Islami Bank /imited. The
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Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
company has been incorporated in ;6$; under the companies act $KK: as a
private limited company by shares.
6... Shah,alal I$la!i Ban1 Li!ited (S";IBL)
The %hahQalal Islami Bank /imited was established as a +ublic /imited
)ompany EBanking )ompanyF as on the $st day of !pril ;66$ under the
)ompanies !ct $KK: as interest free Islamic %hari2ah based commercial bank
and commenced its operation on the $6th day of Cay ;66$ with the
permission of Bangladesh Bank. The authoriGed capital of the bank is Tk.
<'666.66 million and paidMup capital is Tk. Tk. :':4;.<<million. +resently the
Bank is operating its business through head oPce having L9 branches' 6<
Esi>F %C1 centers' $4 E#fteenF !TC booths and $'<;: employees all over
Bangladesh as on 9$
st
,ecember' ;6$$. It has ;9Hmember Board of ,irectors
and a KMmember %hariTah council consists of %hariTah scholars' lawyers and
e>pert in the #nance and economic #elds who has been maintaining the
%hariTah of the activities of the bank. The Bank has also a subsidiary
company named .%hahQalal Islami Bank %ecurities /imited2 and an "fMshore
Banking Anit. %hahQalal Islami Bank /imited hold 3K.:K5 shares of %hahQalal
Islami Bank %ecurities /imited. The Bank is listed with both the %tock
1>changes of the country' i.e. ,haka %tock 1>change /imited and )hittagong
%tock 1>change /imited.
6.4. Social I$la!i Ban1 Li!ited (SIBL)
The %")I!/ I%/!CI B!@D /T, E%IB/F' a secondMgeneration bank' operating
since ;; @ovember' $KK4 based on %hari2ah +rinciples' has now 3< branches
all over the country with two subsidiary companies M %IB/ %ecurities /td. B
%IB/ Investment /td. Targeting poverty' %")I!/ I%/!CI B!@D /T,. The
authoriGed share capital of the bank is Taka $6'666.66 million at the end of
,ecember ;6$$ the +aidMup capital of the bank stood at Taka <'9K9.K;
million. The bank is managed by an $3Mmember Board of ,irectors and the
bank has also a KMmember %hariTah )ouncil consisting of Fuuah' Islamic
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - $<
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
1conomist and lawyer. The )ouncil gives decision on Islamic issues which are
generally followed in the bank. By ,ecember ;6$6 %ocial Islami Bank has
opened <: branches where $';4; employees are working.
6.6. <=I% Ban1 o- Ban/lade$h Li!ited (<=I%)
1>port Import Bank of Bangladesh /imited was established in the year $KKK.
This Bank starts functioning from 9rd !ugust' $KKK with its name as Bengal
1>port Import Bank /imited. "n $<th @ovember $KKK' it was renamed as
1>port Import Bank of Bangladesh /imited with Cr. !lamgir Dabir as the
Founder !dvisor and Cr. Cohammad /akiot Allah as the Founder Canaging
,irector respectively. The authoriGed capital of the bank is Tk. ;'666.66 )rore
and paidMup capital is K';;9.4< Cillion on 9$
st
,ecember' ;6$$. 1VIC bank
has ;:Mmember Board of ,irectors and an $$Mmember %hari2ah supervisory
committee headed by the Dhatib of @ational CosueMBaitul Cukarram
supervising and maintaining the %hariTah compliance of the bank.
6.5. 6ir$t Securit& I$la!i Ban1 Li!ited (6SIBL)
First %ecurity Islami Bank /imited EF%IB/F was incorporated in Bangladesh on
;K !ugust $KKK as a banking company under )ompanies !ct $KK: to carry
on banking business. It obtained permission from Bangladesh Bank on ;;
%eptember $KKK to commence its business. The Bank went for public issue
on ;6 =uly ;663 and its shares are listed with ,haka %tock 1>change E,%1F
and )hittagong %tock 1>change E)%1F. The authoriGed of the bank at the end
of 9$
st
,ecember' ;6$6 are Tk. :'<66 million and the paid up capital is Tk.
9':66.9; million. F%IB/ has $4Hmember Board of ,irectors and a 4Mmember
%hariTah council consists of %hariTah scholars' lawyers and e>pert in the
#nance and economic #elds who has been maintaining the %hariTah of the
activities of the bank. !ll kinds of commercial banking services are provided
by the Bank to the customers following the principles of Islamic %hari2ah' the
provisions of the Bank )ompany !ct $KK$ and Bangladesh Bank2s
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - $L
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
directives.+resently the Bank carries banking activities through its 3:
branches in the country as at ,ecember 9$' ;6$$. The Bank converted its
banking operation into Islamic Banking based on Islamic %hari2ah from
traditional banking operation on 6$ =anuary ;66K after obtaining approval
from honorable ?igh )ourt' Cinistry of Finance and Bangladesh Bank. First
%ecurity Islami Bank /td. holds 4$5 shares of First %ecurity Islami )apital B
Investment /td.
5. 6indin/$ and Anal&$i$ o- the Stud&
5.1 >eneral :rovi$ion
*eneral +rovision on general presentation and disclosure in the #nancial
statements reuire a complete set of statements which include seven
statements' notes reuire for these statements' how to present these
statements and speci#c form and classi#cation used therein to ensure clear
and adeuate information presentation for users of these statements.
8ale 0o. 1: Showin/ >eneral :rovi$ion o- >eneral :re$entation and
?i$clo$ure in the 6inancial State!ent$ re@uire in AA+I6I 6inancial
Accountin/ Standard 1.
>eneral
#rovi$ion$
8ot
al
IBB
L
I7BI
BL
AIB
L
S";I
BL
SIB
L
<=I
%
6SI
BL
%ea
n
S
?
6re@uenc& $: $$ $$ $$ $$ $$ $$ $$ $$ 6
A $66
5
L3.4
L
L3.4
L
L3.4
L
L3.4
L
L3.4
L
L3.4
L
L3.4
L
L3.4
L
Source: +wn anal&$i$ a$ed on annual re#ort$ o- I$la!ic Ban1$
In *eneral +rovision ongeneral presentation and disclosure in the #nancial
statements all Islamic Banks in Bangladesh comply L3.4L percent. @one of
these banks keep the following statements0 $F ! statement of changes in
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - $3
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
restricted investment' ;F ! statement of sources and uses of funds in the
&akah and charity fund' 9F ! statement of sources and uses of funds in the
(ard fund. These statements are reuired for informing their users that the
bank is following Islamic rules in doing its business.
5.2 >eneral ?i$clo$ure
*eneral disclosure in the #nancial statements reuire the disclosure of
information about the bank' its activity' shari2ah board' its subsidiaries and
aPliates' policies use for disclosing' efect of changes in the policies'
investment mode etc. The obQective of general disclosure is to ensure that
the statements are providing enough information about itself' its activities
and its policies.
8ale 0o. 2: Showin/ >eneral di$clo$ure in the 9nancial $tate!ent$
re@uire in AA+I6I 6inancial Accountin/ Standard 1.
>eneral
di$clo$ure in
the 9nancial
$tate!ent$
8ot
al
IB
BL
I7BI
BL
AI
BL
S";I
BL
SI
BL
<=I
%
6SI
BL
%ea
n
S?
6re@uenc& 46 ;: ;9 $K ;9 ;; ;< ;; ;;.L
$
;.$
:
A $66
5
:3 :< 93 :< :: 4; :: :4.:
;
Source: +wn anal&$i$ a$ed on annual re#ort$ o- I$la!ic Ban1$
In *eneral disclosure in the #nancial statements IBB/' I)BIB/' !IB/' %?=IB/'
%IB/' 1VIC' and F%IB/ respectively comply :3' :<' 93' :<' ::' 4; and ::
percent. !ll of these Islamic banks on average :4.:; percent comply with
general disclosure in the #nancial statements. %tandard ,eviation is ;.$:. In
Bangladesh' noneof these banks comply with following0 $F the name of
bank2s subsidiaries whose #nancial statements are not consolidated and the
reason for e>cluding their #nancial statements from the consolidated
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - $K
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
#nancial statement of the bank' ;F The bank2s responsibility toward &akah'
9F The accounting policies that represent a choice among acceptable
alternative' :F The accounting policies which are not consistent with the
concept of #nancial accounting for Islamic banks' 4F The accounting policies
adopted for recognition and determination of doubtful receivable and the
policies of writing of debts' <F The use of historical cost as a basis of
determining euity of owners of unrestrictedOrestricted investment accounts
and their euivalent if revaluation is not mandatory' LF Cethod of disclosing
of signi#cant accounting policies' 3F ,isclosure of any unusual supervisory
restriction imposed by any regulatory that are authoriGed by charter' KF
,isclose the amount and nature of earning that have been realiGed from
source or by means which are not permitted by %hari2a' $6F ,isclose how it
intends to dispose of assets generated by prohibited earning' $$F !
customer' including another bank or a #nancial institution without
customer2s name' $;F ,isclosure of concentration of sources of unrestricted
investment accounts and their euivalent and other accounts' $9F )hanges
in the maturity or conversion periods should be disclosed' $:F ,isclosure of
compensating balance' $4F ,isclosure of risk associated with assets and
liabilities which are denominated in foreign currency' $<F ,isclosure of
restricted assets or assets pledge as security' $LF The efect of the change
on net income for the current period and prior periods presented for a
comparative purpose and on the retained earnings as at the beginning of the
#rst period presented for comparative purposes' $3F ,escription of changes'
its efect and its Qusti#cation' $KF ,escription of changes in nonMroutine
accounting estimate' the reason thereof its efect' ;6F The efect of change
on net income or pro#ts ElossesF from restricted investments for the current
period' ;$F @ature of the error and the prior period efected by the error' ;;F
The efect of the error correction on the net income or pro#ts ElossesF from
restricted investment for the period and ;9F Cethod used to allocate
investment pro#ts ElossesF between unrestricted account holders and bank.
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - ;6
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
These nonMcompliance may show the weakness of nonMcompliance with
Islamic banking system.
5.) ?i$clo$ure in State!ent o- 6inancial :o$ition
%tatement of Financial +osition is prepared to disclose full #nancial position
by providing information about assets' liabilities' euities. !!"IFI classi#ed
assets' liabilities and euities to present with adding essential Islamic values
to its users. These disclosures represent banks investment sector wise which
ensure bank is pro#t oriented or interest oriented.
8ale 0o. ): Showin/ ?i$clo$ure in State!ent o- 6inancial :o$ition
re@uire in AA+I6I 6inancial Accountin/ Standard 1.
State!ent o-
6inancial
:o$ition
8ot
al
IB
BL
I7BI
BL
AI
BL
S";I
BL
SI
BL
<=I
%
6SI
BL
%ea
n
S
?
6re@uenc& ;; $9 $; $9 $; $; $; $; $;.;
K
.
:K
A $66
5
4K.
$
4:.< 4K.
$
4:.< 4:.
<
4:.
<
4:.
<
44.3
<
Source: +wn anal&$i$ a$ed on annual re#ort$ o- I$la!ic Ban1$
In %tatement of Financial +osition IBB/' I)BIB/' !IB/' %?=IB/' %IB/' 1VIC' and
F%IB/ respectively comply 4K.$' 4:.<' 4K.$' 4:.<' 4:.<' 4:.< and 4:.<
percent. These banks !verage comply with $;.;K E44.3< percentF items of ;;
items and standard deviation is 6.:K. @one of these sample banks comply
with following0 $F ,isclosure should be made of the net realiGable value of an
asset if such value is less than the asset2s recorded value. ;F ,isclosure for
change in the provision for doubtful accounts receivable' 9F ,isclosure
should be made in the statement of #nancial position or note for the deposit
of other banks' %alam payable' Istisna payable' :F ,isclosure should be made
in the statement of #nancial position or note for the &akat and ta>es
payable' 4F Anrestricted investment accounts and their euivalent should be
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - ;$
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
disclose separately between liabilities and owner2s euity' <F ! consolidated
statement should disclose the minority interest as a separate item between
unrestricted investment accounts and owner2s euity and LF 8ight' condition
and obligation of each type of unrestricted investment accounts should be
shown.
5.. ?i$clo$ure in Inco!e $tate!ent
Income statement reuire in !!"IFI Financial !ccounting %tandard $
represent the pro#t or loss with source of income and nature of e>penses.
From this statement users can identify the level of ?alal or ?aram because
all revenue and e>penses are disclose nature and source wise.
8ale 0o. .: Showin/ ?i$clo$ure in Inco!e $tate!ent re@uire in
AA+I6I 6inancial Accountin/ Standard 1.
Inco!e
$tate!ent
8ot
al
IB
BL
I7BI
BL
AI
BL
S";I
BL
SI
BL
<=I
%
6SI
BL
%ea
n
S
?
6re@uenc& ;6 3 < L < L K $$ L.L$ $.
3
A $66
5
:6 96 94 96 94 :4 44 9L.3
4
Source: +wn anal&$i$ a$ed on annual re#ort$ o- I$la!ic Ban1$
In income statement IBB/' I)BIB/' !IB/' %?=IB/' %IB/' 1VIC' and F%IB/
respectively comply 94' 96' 94' 96' 94' :4 and 44 percent. These banks on
!verage comply with L.L$ E9L.34 percentF items of ;6 items and standard
deviation is $.3. !ll of these sample Islamic banks don not comply with
following0 $F %hare of unrestricted investment account holders in income
ElossF from investment before bank2s share as Cudarib' ;F Islamic bank2s
share in income ElossF from investment' 9F The Islamic bank2s share in
unrestricted investment income as a Cudarib' :F The Islamic bank2s share in
restricted investment pro#ts as a Cudarib' 4F The Islamic bank2s #>ed fee as
an investment agent for restricted investments' <F @et income ElossF before
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - ;;
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
&akah and ta>es' LF &akat and ta> to be separately disclose and 3F Islamic
banks share in unrestricted investment income and share of unrestricted
investment accounts.
5.4 ?i$clo$ure in State!ent o- ca$h Bow$
)ash Nows statement discloses the cash inNows and outNows. !ccording to
!!"IFI*eneral +resentation and ,isclosure in the Financial %tatements cash
Nows should be disclose activity group wise and also disclose those
transection which do not result in cash to inform about banks involvement
activities.
8ale 0o. 4: Showin/ ?i$clo$ure in State!ent o- ca$h Bow$ re@uire
in AA+I6I 6inancial Accountin/ Standard 1.
State!ent o-
ca$h Bow$
8ot
al
IB
BL
I7BI
BL
AI
BL
S";I
BL
SI
BL
<=I
%
6SI
BL
%ea
n
S
?
6re@uenc& 4 : : : : : : : : 6
A $66
5
36 36 36 36 36 36 36 36
Source: +wn anal&$i$ a$ed on annual re#ort$ o- I$la!ic Ban1$
In %tatement of cash Nows IBB/' I)BIB/' !IB/' %?=IB/' %IB/' 1VIC' and F%IB/
comply 36percent. These banks !verage comply with : E36 percentF items of
4 items and standard deviation is 6. !ll of these sample Islamic banks don
not comply with Transections and other transfer that do not result in cash
receiveOpayment should be disclose.
5.6 ?i$clo$ure in State!ent o- 7han/e$ in +wnerC$ <@uit&
The purpose of %tatement of )hanges in "wner2s 1uity to disclose the
euity' distribution against euity' retained earnings etc. to inform the level
of owners2 euity.
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - ;9
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
8ale 0o. 6: Showin/ ?i$clo$ure in State!ent o- 7han/e$ in +wnerC$
<@uit& re@uire in AA+I6I 6inancial Accountin/ Standard 1.
State!ent o-
7han/e$ in
+wnerC$ <@uit&
8ot
al
IB
BL
I7BI
BL
AI
BL
S";I
BL
SI
BL
<=I
%
6SI
BL
%ea
n
S
?
6re@uenc& < < < < < < < < < 6
A $66
5
$6
6
$66 $6
6
$66 $6
6
$66 $66 $66
Source: +wn anal&$i$ a$ed on annual re#ort$ o- I$la!ic Ban1$
In %tatement of )hanges in "wner2s 1uity all of the Islamic banks in
Bangladesh comply $66 percent which are reuired in !!"IFI Financial
!ccounting %tandard $. These banks !verage comply with < E$66 percentF
items of < items and standard deviation is 6. Islamic banks in Bangladesh do
not keep the %tatement of )hanges in 8estricted Investments' %tatement of
%ources of Ases of Funds in the &akah and )harity Fund' %tatement of %ources and
Ases of Funds in the (ard Fund' Treatment of )hanges in !ccounting +olicies and
Treatment of )hanges in nonMrouting !ccounting estimates which are reuire in
!!"IFI Financial !ccounting %tandard. This statement speci#cally discloses
information about some Islamic term compliance. Banks in Bangladesh
should to disclose these statements to ensure they are doing their business
in the way of Islam.
5.5 0on-co!#liance 7la$$e$
@one of these Islamic banks comply with disclosure in %tatement of changes
in restricted investments' statement of sources and uses of funds in the
&akah and charity fund' statement of sources and uses of funds in the (ard
fund' treatment of changes in accounting policies' treatment of changes in
nonMroutine accounting estimates.
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - ;:
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
5.* 6or!at$ o- 6inancial State!ent$
!!"IFI suggest some formats as guideline for preparing #nancial statements
to disclose general information of Islamic banks activities and position. These
formats disclose all information with Islamic rules.
8ale 0o. 5: Showin/ 6or!at$ o- 6inancial State!ent$ re@uire in
AA+I6I 6inancial Accountin/ Standard 1.
6or!at$ o-
6inancial
State!ent$
8ot
al
IB
BL
I7BI
BL
AI
BL
S";I
BL
SIB
L
<=I
%
6SI
BL
%e
an
S
?
6re@uenc& L ; ; ; ; ; ; ; ; 6
A $66
5
;3.
<
;3.< ;3.
<
;3.< ;3.
<
;3.
<
;3.
<
;3.
<
Source: +wn anal&$i$ a$ed on annual re#ort$ o- I$la!ic Ban1$
!ll Islamic banks in Bangladesh comply ;3.< percent formats for disclosing in
the Financial %tatements. These banks !verage comply with ; E;3.< percentF
items of L items and standard deviation is 6. These Islamic banks don not
follow the following formats0 $F Format of the statement #nancial position' ;F
Format of the income statement' 9F Format of the statement of changes in
restricted investments' :F Format of the statement of sources and uses of the
&akah and charity funds and 4F Format of the statement of sources and uses
of (ard funds.
5.3 0ote$ to the 6inancial State!ent$
@otes #nancial statements are reuire to enrich the #nancial statements.
@otes mean detail of those which are shortly presented in the statements.
@otes serve suPcient information to the users of the statements.
8ale 0o. *: Showin/ 0ote$ to the 6inancial State!ent$ re@uire in
AA+I6I 6inancial Accountin/ Standard 1.
0ote$ to the 8ot IB I7BI AI S";I SI <=I 6SI %ea S?
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - ;4
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
6inancial
State!ent$
al BL BL BL BL BL % BL n
6re@uenc& :4 ;L ;3 ;4 ;4 ;: ;: ;9 ;4.$
:
9.L
$
A $66
5
<6 <;.; 44.
<
44.< 49.
9
49.
9
4$.
$
44.<
3
Source: +wn anal&$i$ a$ed on annual re#ort$ o- I$la!ic Ban1$
,isclose of @otes to #nancial statements by IBB/' I)BIB/' !IB/' %?=IB/' %IB/'
1VIC' and F%IB/ respectively comply <6' <;.;' 44.<' 44.<' 49.9' 49.9 and
4$.$. These banks !verage comply with ;4.$: E44.<3 percentF items of :4
items and standard deviation is 9.L$. @one of these banks provides notes for
Gakat treatment' Gakat base' sales receivable' participations' inventories'
assets reuire for lease' Istisna contract' share of unrestricted investment in
income' )oncentration of sources of unrestricted investment accounts' 1arning
and e>penditures prohibited by %hari2a' )ompensating balance' 8estricted
assets or assets pledge as security' 1stimated cash euivalent value of assets
and liabilities compared to historical cost' 8ights obligations and conditions
related to unrestricted investment and their euivalent' 8elations between the
bank and holders of restricted investments account as a Cudarib or an agent
and 8eciprocal and nonMreciprocal transaction which do not reuire payment or
receipt of cash. The bank which do not have sales receivable' participations'
inventories' assets reuire for lease' Istisna contract how it is doing business
in the way of shari2ah.
5.10 8otal >eneral ?i$clo$ure
*eneral disclosure in #nancial statements reuired in !!"IFI Financial
!ccounting %tandard $ provides guideline to Islamic banks for disclosing their
general information to the users. Total ;69 items of general disclosure in
#nancial statements reuired in !!"IFI consider for checking. These items
can reNect the total scenario of the bank including its #nancial position'
income and e>penses and transaction acceptability in Islam.
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - ;<
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
8ale 0o. 3: Showin/ 8otal >eneral ?i$clo$ure in 6inancial
State!ent$ re@uired in AA+I6I 6inancial Accountin/ Standard 1.
Ban1$ 8otal
?i$clo$ure
8otal ?i$clo$ure
(In A)
IBBL K4 :<.36
I7BIBL K; :4.9;
AIBL 3L :;.3<
S";IBL 33 :9.94
SIBL 33 :9.94
<=I% K: :<.9$
6SIB K$ ::.39
%ean K6.L$ ::.<3
S? 9.$4
7o-
Dariance
9.:L5
Source: +wn anal&$i$ a$ed on annual re#ort$ o- I$la!ic Ban1$
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - ;L
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
%ample Islamic banks total average disclosed K6.L$ items of ;69 on their
general disclosure of ;6$$ which is only :<.<3 percent. %tandard deviation of
their total disclosure is 9.$4' and coMvariance is 9.:L percent. ?ighest <3.36
percent of disclosure items disclosed by IBB/ and second highest <3.9$
percent of disclosure items disclosed by 1VIC. /owest <;.3< percent of
disclosure items disclosed by !IB/.
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - ;3
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
*. Su!!ar& o- the 6indin/$ o- the Stud&
$. Islamic Banks in Bangladesh comply on an average ::.<3 EK6.L$ items
of ;69 itemsF percent with !!"IFI general presentation and disclosure
in the #nancial statements. %tandard deviation of disclosure in #nancial
statement of Islamic banks is 9.$4.
;. Islamic Banks in Bangladesh on an average comply with L3.4L percent
of general provision on general presentation and disclosure in the
#nancial statements.
9. Islamic banks in Bangladesh on average comply with :4.:; percent of
general disclosure in the #nancial statements. 1VIC bank complied the
highest 4; percent and !IB/ the lowest 93 percent.
:. The %ample Islamic banks on average comply with 44.3< percent of the
disclosures of the statement of #nancial position. IBB/ and !IB/
complied the highest 4K.$ percent and the other sample Islamic banks
complied the lowest 4:.< percent.
4. These Islamic banks on average comply with 9L.34 percent of the
disclosures of income statement. F%IB/ complied the highest 44
percent and I)BIB/ and %?=IB/ the lowest 96 percent.
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - ;K
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
<. !ll Islamic Banks in Bangladesh comply with 36 percent of the
disclosures in statement of cash Nows reuired by !!"IFI.
L. !ll of these Islamic Banks comply with $66 percent of disclosures in
statement of changes in owner2s euity.
3. !ll of the Islamic Banks comply with ;3.< percent of the formats of
statements reuired by !!"IFI.
K. The Islamic banks comply with on average 44.<3 percent of notes to
the #nancial statements. I)BIB/ complied the highest <;.; percent and
F%IB/ the lowest 4$.$ percent.
$6. The sample Islamic banks highest comply with $66 percent of the
disclosures in statement of changes in owner2s euity and then 36
percent of disclosure in statement of cash Nows and L3.4L percent of
*eneral +rovision. These Islamic banks comply with the lowest 6
percent of the disclosures in %tatement of changes in restricted
investments' %tatement of %ources and Ases of Funds in the &akah and
)harity Fund' %tatement of %ources and Ases of Funds in the (ard
Fund' Treatment of changes in accounting policies' Treatment of
changes in nonMroutine accounting estimates.
$$. The %ample Islamic banks do not comply with statement of
changes in restricted investment' statement of sources and uses of
funds in the &akah and charity fund and statement of sources and uses
of funds in the (ard fund.
$;. The sample Islamic banks comply with L3.4L percent of *eneral
+rovision of *eneral +resentation and ,isclosure in the Financial
%tatements' :4.:; percent of *eneral disclosure in the #nancial
statements' 44.3< percent of the disclosures in %tatement of Financial
+osition' 9L.34 percent of the disclosures in income statement' 36
percent of the disclosures in %tatement of cash Nows' $66 percent of
the disclosures in %tatement of )hanges in "wner2s 1uity' ;3.<
percent of Formats of Financial %tatements' 44.<3 percent of notes to
Financial %tatements.
$9. !nd #nally' the Islamic Banks do not comply with the %tatement of
)hanges in 8estricted Investments' %tatement of %ources of Ases of Funds in
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - 96
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
the &akah and )harity Fund' %tatement of %ources and Ases of Funds in the
(ard Fund' Treatment of )hanges in !ccounting +olicies and Treatment of
)hanges in nonMrouting !ccounting estimates.
3. Reco!!endation$ o- the Stud&
The following recommendations are provided to the related parties0
A) /evel of disclosure should be increased in general presentation and
disclosure in the Financial %tatements.
B) Islamic Banks should follow the formats of Financial %tatements
suggested by !!"IFI to make the disclosure statements clear' easy
and enrich in information.
C) Islamic Banks should provide more information reuired by !!"IFI and
Islamic %hari2a.
D) %tatement of %ources of Ases of Funds in the &akah and )harity Fund'
%tatement of %ources and Ases of Funds in the (ard Fund should be disclosed
because &akat and (uard system reNect whether the bank are doing
business in the way of %hari2a or not.
E) Islamic Banks are not allowed to do business with interest that2s why they
should have to provide notes or in statement regarding Istisna payable' sales
receivable' prohibited earning etc. to clarify about their involvement in
activities which are allowed by %hari2a or not.
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - 9$
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
F) %ources and nature of income and e>penditure should be cleared in the
income statement to ensure their income and e>penditure are done
according to %hari2a.
G) &akat base and to whom Gakat is paid should be cleared with providing
statement because in Islam Gakat cannot paid to anyone.
H) Treatment of changed should be disclose if there is no change they
should have provide note that they don2t have any changes.
Though disclosure of &akat' (uard treatment is not mandatory in Bangladesh
according to B%!. But it is mandatory for all Islamic Banks because they have
to comply with Islamic rules #rst.
10. I!#lication$ o- the Stud&
!F !!"IFI can be bene#ted getting information about compliance of the
guidelines for *eneral +resentation and ,isclosure in the Financial
%tatements by the Islamic Banks in Bangladesh.
BF The study is e>pected to be bene#cial for the Islamic Banks in
Bangladesh to know which information they do not disclose and need
to disclose according to !!"IFI *eneral +resentation and ,isclosure in
the Financial %tatements to ensure their customer that how much they
are following the guideline of !!"IFI which ensure #nancial institution2s
Islamic system compliance of doing business. They also can know that
how much they comply with the guideline with the Islamic Financial
regulatory authority !!"IFI.
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - 9;
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
)F %takeholder of the Islamic Banks in Bangladesh may get information
about the level of compliance with *eneral +resentation and ,isclosure
in the Financial %tatements of !!"IFI.
,F The general readers also may know how much of the Islamic Banks in
Bangladesh complied with the *uideline of *eneral +resentation and
,isclosure in the Financial %tatements of !!"IFI.
1F The researchers can get guideline for conducting research regarding
level of compliance of !!"IFI guidelines.
11. ?irection$ to 6urther Stud&
!F )ompliance of !!"IFI *uidelines by other Islamic Financial Institutions
like Insurance )ompanies in Bangladesh.
BF )ompliance of !!"IFI *uidelines by Islamic Banks considering annual
report for more than one year.
)F )omparative study on )ompliance of !!"IFI *uidelines by Islamic
Banks of diferent countries.
,F )ompliance of other !!"IFI guidelines by Islamic Banks in Bangladesh.
1F )ompliance of IF%B guidelines by Islamic Financial Institutions in
Bangladesh.
FF )ompliance of !!"FI %hari2ah guidelines by Islamic Banks in
Bangladesh.
12. Li!itation$ o- the Stud&
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - 99
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
$. The study is conducted in two month which is to short time for this
study.
;. The study considers only the Islamic Banking sector.
9. The study investigated annual report of the Islamic Banking )ompanies
in Bangladesh.
:. !nnual reports have been investigated only for one year.
4. The study is performed on only !!"IFI *uidelines in *eneral
+resentation and ,isclosure in the Financial %tatements.
<. The study does not consider Foreign Islamic Bank in Bangladesh.
1). 7onclu$ion
Islamic banking is rapidly growing in Bangladesh. For this reason compliance
with Islamic Financial Institutions regulatory authority2s standard is being
subQect to investigated among Islamic bank to know they are doing all of
their activities according to the provision of %hari2a or not. !!"IFI provide
guideline for doing business and they published standards for disclosure of
#nancial statements. This paper tries to #nd the level of compliance with
general presentation and disclosure in the #nancial statements which are
reuired by !!"IFI by Islamic Banks in Bangladesh. Islamic Banks should
have to follow the disclosing standards of !!"IFI though it is not mandatory
for Islamic banks in Bangladesh but important for informing their related
party about their activities. This paper can help to these banks to know what
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - 9:
Compliance of AAOIFI Guidelines in General Presentation and Disclosure in
the Financial Statements of Islamic Banks in Bangladesh
information they should have to disclose. Cost of the items these banks do
not disclose because these items are not reuired by regulatory !uthority in
Bangladesh.
Salamul Karim Talukder !atric "o#$ B%&'(&)*
+age - 94