AAOIFI certifies Path Solutions' iMAL

SUKUKNET:13 November 2008 Path Solutions marks yet another major milestone in its rapid progress. For the 1st time in history, the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) has certified a universal banking solutions' firm.

The certification ceremony took place at the "AAOIFI and World Bank Annual Conference on Islamic Banking and Finance", on November 10th in the Kingdom of Bahrain in the presence of H.E. Sh. Ahmed bin Mohammed Al-Khalifa, Minister of Finance of Bahrain, H.E. Rasheed Mohammed Al Maraj, Governor of the Central Bank of Bahrain and eminent Sharia scholars and senior representatives of the industry.

The certificate was handed to Path Solutions by H.E. Sh. Ebrahim Bin Khalifa Al Khalifa, The Chairman of the Board of Trustees of AAOIFI and Minister of Housing and Dr. Mohamad Nedal Al Chaar, the Secretary General of AAOIFI.
AAOIFI ascertained Path Solutions, the leading provider of software solutions to the Islamic finance industry and its iMAL flagship software to be fully compliant with its standards and Sharia rules and principles.

"The AAOIFI Certification covers the iMAL modules, business processes, contracts, Islamic accounting principles, implications and behavior" said Dr. Mohamad Nedal Al Chaar, AAOIFI's Secretary General, who added: "iMAL has been thoroughly reviewed and has proven it truly deserves to be certified".

Path Solutions' President, Naji Moukadam ed: "Becoming the 1st banking software solutions' provider to be certified by AAOIFI is a quantum leap for both the information technology industry and Path Solutions. As the pioneer in automating Islamic finance, Path in line with its corporate strategy, is fully committed to providing the Islamic finance institutions with true Islamic software solutions developed in compliance with the Sharia rules with no work around. Our partners using iMAL software now have the assurance of having licensed a true Islamic finance solution".&&

Path Solutions' focus and primary objective is to always enhance its products and services; as AAOIFI scholars evolve and find new interpretations in the different Sharia rules and principles so will Path's commitment in developing new products and services to support a new era in Islamic finance.

Islamic bond market 'wrecked' by critical remarks

Arabianbusiness:Debates over how sharia-compliant Islamic bonds really are have "wrecked" the sukuk market, causing issues to fall to $14 billion this year from up to $50 billion last year, a leading expert said on Tuesday.

"The statements that were made by our sharia chairman about the sharia compliance of sukuk wrecked the market," said Mohamad Nedal Alchaar, secretary-general of the Accounting and Auditing Organization for Islamic Financial Institutions.
Sheikh Muhammad Taqi Usmani, chairman of the board of scholars at Bahrain-based AAOIFI, roiled Islamic bond markets in November 2007 when he told newswire Reuters that about 85 percent of sukuk did not comply with Islamic law because of repurchase agreements.

Most Gulf Islamic bonds have been sold with a repurchase undertaking -- a promise that the borrower will pay back their face value at maturity, or in the event of default, mirroring the structure of a conventional bond.

A promise to pay back capital violates the principle of risk- and profit-sharing on which such bonds should be based, Usmani said.

"The market was halted, and still... we have not completely cleared ourselves from the negative consequences," Alchaar said.

Lack of standardisation has been repeatedly highlighted by the Islamic finance industry as one of its key constraints. Islamic law is open to interpretation, leading to variations in banking and financial practices across the industry.

Contacted by Reuters, Usmani declined to comment on Alchaar's remarks on Tuesday.

Usmani said in June most Islamic bonds should be treated as equity instruments, marking a shift for Muslims seeking fixed-income returns.

Bond sales have almost dried up in the second half of this year as the global credit squeeze has raised borrowing costs, prompting many Gulf borrowers to shelve sukuk sales as banks become more reluctant to lend.

Alchaar told a conference in Dubai that only $14 billion worth of sukuk had been issued so far this year, compared with $40-50 billion last year.

Speaking to Reuters, Alchaar said he expected next year's sukuk issuance to be "way more than this year", without elaborating.

Sukuk are designed to comply with an Islamic ban on the receipt of interest. Instead, returns are derived from underlying physical assets, such as property.

Accounting standard for Islamic firms revised

TradeArabia:Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has revised its accounting standard on investment.

The revision relates to accounting treatment for unrealised losses resulting from re-measurements at fair value of Islamic financial institutions' available-for-sale investments in sukuk and shares.

With the revision, those unrealised losses shall be recognised in the institutions' statement of financial position under investment fair value reserve regardless of the balance of such reserves.

The revision has been approved by AAOIFI's Accounting and Auditing Standards Board after deliberations with central banks and regulatory authorities, Islamic financial institutions, accounting and auditing firms, and other participants of the international Islamic finance industry.

Dr Mohamad Nedal Alchaar, secretary general of AAOIFI remarked that the revision would place the international Islamic finance industry in a stronger position to deal with the current global financial environment.

'The revision also reflects AAOIFI's ability to work closely with major stakeholders of the industry and to react timely to market development.

'We will continue to review our standards to ensure that they remain supportive of the industry without compromising the overriding principles of accounting and Shari'a,' said Dr Mohamad Nedal Alchaar, the Secretary – General of AAOIFI.

AAOIFI is the international organisation responsible for development and issuance of standards on accounting, auditing, ethics, governance, and Shari’a.

It has issued a total of 68 standards covering the whole range of Islamic finance practices that are accepted globally.

The standards are used in all the leading jurisdictions that offer Islamic finance including Bahrain, Dubai International Finance Centre, Kuwait, Lebanon, Malaysia, Pakistan, Qatar, Saudi Arabia, Sudan, Syria, and United Arab Emirates.

It is supported by over 190 institutional members comprising central banks and monetary authorities, financial institutions, accounting and auditing firms, and other Islamic finance service providers, from over 40 countries.

In order to promote wider adoption and technical application of the standards, AAOIFI offers professional development programs such as the Certified Shari'a Adviser and Auditor (CSAA) and Certified Islamic Professional Accountant (CIPA) as well as contract certification program.

Accounting firm wins top award

MANAMA: Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has won a major Islamic finance award.

It was awarded the prestigious Award for Continuing Contribution in Promoting Islamic Finance at the International Islamic Finance Forum.

AAOIFI secretary general Dr Mohamad Nedal Alchaar received the award at the awards gala lunch in Dubai.

He said that the award is a testimony of AAOIFI's significant achievement in formulating international Islamic standards that have introduced greater harmonisation of Islamic finance practices and transparency in financial reports of Islamic financial institutions.

AAOIFI is the international organisation responsible for development and issuance of standards on accounting, auditing, ethics, governance, and Sharia. It has issued a total of 68 standards covering the whole range of Islamic finance practices that are accepted globally.

The standards are used in all the leading jurisdictions that offer Islamic finance including Bahrain, Dubai International Finance Centre, Kuwait, Lebanon, Malaysia, Pakistan, Qatar, Saudi Arabia, Sudan, Syria, and the UAE.

"The advantages and benefits of Islamic finance are embedded in the Sharia principles for Islamic finance," Mr Alchaar said.

"AAOIFI standards ensure Islamic financial institutions comply to Sharia and facilitate their product development processes," he added.

AAOIFI welcomes BMB Islamic as an associate member

BMB Islamic, one of the world's leading Sharia structuring and Islamic finance advisory firms, directed by a team of award-winning Sharia advisors is proud to announce the recent appointment of membership to the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).

Secretary General of AAOIFI, Dr Mohammed Nedal Al Chaar stated, 'We welcome BMB Islamic as an associate member of AAOIFI and appreciate their commitment to expand the frontiers of the Islamic finance industry through a continuous process of innovation built on sound and agreed upon Sharia principles. In addition, we look forward to cooperating closely with BMB Islamic in our endeavours on formulation of Islamic finance standards and development of the industry.'

The outstanding BMB Islamic team is led by the eminent Dr Humayon Dar, a leading Sharia technician and Islamic finance expert who has championed the cause of Islamic banking and finance in academia, the banking and finance industry, and different faith-based groups.

He commented, 'AAOIFI's services to the Islamic finance industry are numerous and growing. As an organisation combining financial and technological sophistication with Sharia authenticity through innovation, BMB Islamic has always wanted to work with AAOIFI. Our formal association with AAOIFI is bound to contribute to the good work being done by AAOIFI to standardise Islamic banking and finance practices.'

BMB Islamic works closely with a number of leading Sharia scholars who also sit on the Sharia Supervisory Board of AAOIFI. One such scholar, Dr Mohd Daud Bakar, considered to be the most prominent Sharia scholar in the Far East by industry analysts, commented, 'I am indeed delighted to know that BMB Islamic has joined hands with AAOIFI.

What pleases me even further is that this association has taken place at a time when BMB Islamic is heavily engaged in expanding the reach of Islamic finance industry to areas unearthed so far. Association with AAOIFI shall certainly prove useful in keeping the innovative endeavours of BMB Islamic in line with well-established and industry leading AAOIFI standards.'

Sheikh Hussain Hamid Hassan, Chairman of the Sharia Advisory Board of BMB Islamic affirmed, 'I am very pleased to learn that BMB Islamic is now an associate member of AAOIFI. With the impressive track record of Islamic financial innovation from the BMB Islamic team of experts and a long standing industry building trail of AAOIFI, I very strongly hope that this will help BMB Islamic to achieve its novel objectives in an even more efficient and refined manner.

Also, by being on AAOIFI membership platform, this will provide an opportunity to BMB Islamic and other members to work hand-in-hand and serve the cause of industry.'