Adoption of AAOIFI accounting standards by Islamic banks of Bahrain

Abstract

Purpose

The objective of this paper is to determine the level of compliance with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) accounting standards by Islamic banks of Bahrain.

Design/methodology/approach

The paper is based on diffusion of innovation theory whereby the perceived relative advantage, compatibility, complexity, trialability and observability factors are expected to influence the level of compliance with AAOIFI accounting standards.

Findings

The findings indicate that Islamic banks of Bahrain are in full convergence with AAOIFI accounting standards.

Research limitations/implications

This research, just like many other studies, faces data limitations. Sample size employed for this study contains only the accountants in Islamic banks of Bahrain.

Originality/value

The results of this paper are expected to serve as a guide to the regulatory bodies and the setter of accounting standards for Islamic financial institutions (IFIs).

Citation

Mohammed Sarea, A. and Mohd Hanefah, M. (2013), "Adoption of AAOIFI accounting standards by Islamic banks of Bahrain", Journal of Financial Reporting and Accounting, Vol. 11 No. 2, pp. 131-142. https://doi.org/10.1108/JFRA-07-2012-0031