AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions)

Definition of "AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions)"

A private sector standard setting body, based in Bahrain, with the aim of producing international accounting standards within the shari‘ah framework for Islamic banks and financial institutions. Within the organization, there is a Financial Accounting Standards Board consisting of 22 voluntary members representing Islamic banks, users of financial statements of these banks, practicing accountants, academics, shari‘ah scholars and regulatory bodies. The Board is assisted by a shari‘ah committee, which reviews proposed pronouncements and advises the Board on their compliance with the Islamic precepts. There is an Executive Committee for Planning and Follow-up, which recommends priorities to the Board and draws up its agenda. The Supervisory Committee of the organization consists of 17 voluntary members and has the responsibility, besides oversight, to raise funds for the organization. The AAOIFI follows an extensive due process of eight phases which governs the production of its standards.