This article review the concern related to the progress and implementation of the

accounting standards in Islamic Financial Institutions. By reviewing the issue, the article finds
that IFIs have developed quickly worldwide and cultivate secular goals. The establishment of the
Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in 1991 is
one of the significance marks in the development of IFIs. However, this standard appears to have
a lack of cooperation from national regulators in many countries.

Encouraging economic prosperity as a basis of social stability where people live with
upright values and religious faith is one the main essential role that Islamic Institutions should
do. This urges the need for the IFIs to provide the great feature of financial statements since
Muslim society believes them to follow the principles of Shari ah. Islamic accounting standards
generate two separate matters, which are; preparers ought to have some assistance in making
their financial statements as their transactions differ from the conventional banking system and
the second issue is regarding to the Muslim accountants that working in numerous organizations
and whether the accounting treatments given in the IFRSs are consistent with the principles of
Shari ah. But, an Islamic conceptual framework can guide the development of accounting
standards for IFIs and the need for Islamic accounting standards is unnecessary as it leads to
redundancy of work. In addition, MASB has the view that approved accounting standards adhere
to the principles of Shari ah and therefore, they can be used in reporting financial standards.

Moreover, due to too many Western banks has also entered into the market, it has
contributes to an abundant challenge for the development of Islamic accounting standards. Now,
it is gotten to be almost unfeasible to have Islamic accounting standards living in its
distinctiveness as there are only very few issues of divergence which can be catered for by
including IFI guidelines under IFRS. In addition, the differences between the products offered by
IFIs and the conventional banks can be reconciled with the help of professional judgment.

In our opinion, what is important in IFIs is to have Islamic conceptual framework for all
Muslims accountants to have as a guidelines to do their work in preparing financial statements
and it is unnecessary to have a new set of Islamic accounting standards. This is because of the
IFRS requirements have already provide the needs for accounting for such instruments in IFIs.
Moreover, it may lead to the state of confusions for accounting practitioners if using another
standard that are almost similar.