Format of Statement of Profit or Loss

Statement of Profit or Loss

Format of Statement of Financial Position suggested by AAOIFI

Format of Statement of Financial Position suggested by AAOIFI

5.0 CONCLUSIONS

Current study examines the conformity of Malaysian IFIs with regards to AAOIFI disclosure requirements. The overal results are SOFP 70.3% compliance, SOPL 45.6% compliance, SOCIE 95% compliance, SOCF 100% compliance. It can be concluded Malaysian IFIs are complying the requirements of AAOIFI even though they are only using AAOIFI standards as one of guidelines in preparation and presentation of their financial statements.

There are two recommendations to see the harmonisation between AAOIFI financial statements and MFRS financial statements. First, Malaysian Accounting Standards Board can consider to amend the disclosure requirement of (1) changes in restricted investment and (2) sources and uses of charity fund, from notes to the financial statement to a financial statement status like SOFP and SOPL. Alternatively, Malaysian Accounting Standards Board allows the IFIs to voluntarily disclose changes in restricted investment and sources and uses of charity funds as financial statements.

Second, Malaysian representative in AAOIFI could suggest the inclusion of items currently disclosed in MFRS format but not required by AAOIFI format to be included in AAOIFI format.

Last but not least, future study should look at a more detailed requirements of AAOIFI and MFRS to find way for harmonisation of AAOIFI and MFRS in future.

4.17 KUWAIT FINANCE HOUSE

Kuwait Finance House (Malaysia) Berhad (KFH Malaysia) was established on 8 May 2005. It is the first foreign Islamic bank that was granted a licence under the Islamic Banking Act (Malaysia) 1983. As of 2015 its paid up capital stood at RM1,425,272,000. It offers a complete range of Shariah-based financial products and services under Corporate and Investment, Commercial, and Retail and Consumer Banking as well as Treasury and International Business.

Table 4.17: Level of compliance to MFRS and AAOIFI standards

No.	Financial statement	Conformity
1.	Statement on adoption of AAOIFI	Nil
2.	Statement on adoption of MFRS	100%
3.	Statement of financial position	70.0%
4.	Statement of profit or loss	66.7%
5.	Statement of changes in equity	95%
6.	Statement of cash flow	100%
7.	Statement of sources and uses of charity fund	Yes (notes)
8.	Statement of restricted investment	No

In term of financial reporting, it adopts fully the requirements made by Malaysian Financial Reporting Standards (MFRS) and adheres the AAOIFI at the above levels. The bank complies with MFRS and also conforms to AAOIFI in presentation of SOFP (70%), SOPL (66.7%), SOCIE (95%) and SCF (100%). It does not either present SSUCF and SORI as financial statement but show SSUCF in notes to financial statement.

4.16 ALRAJHI BANKING AND INVESTMENT CORPORATION

Its operations in Malaysia was established in 2006. As of 2015 it has a paid up capital of RM1,000,000,000 in Ordinary shares. It has 24 branches throughout Malaysia and it services range from personal, business as well as affluence.

In term of financial reporting, it adopts fully the requirements made by Malaysian Financial Reporting Standards (MFRS) and adheres the AAOIFI at the following levels:

Table 4.16: Level of compliance to MFRS and AAOIFI standards

No.	Financial statement	Conformity
1.	Statement on adoption of AAOIFI	Nil
2.	Statement on adoption of MFRS	100%
3.	Statement of financial position	75.0%
4.	Statement of profit or loss	38.9%
5.	Statement of changes in equity	95%
6.	Statement of cash flow	100%
7.	Statement of sources and uses of charity fund	No
8.	Statement of restricted investment	No

The bank complies with MFRS and also conforms to AAOIFI in presentation of SOFP (75%), SOPL (38.5%), SOCIE (95%) and SCF (100%). It does not either present SSUCF and SORI as financial statement or show in notes to financial statement.

4.15 OCBC AL-AMIN MALAYSIA BERHAD

OCBC Al-Amin (Malaysia) Berhad was established on 8 May 2005. As of 2015 its paid up capital stood at RM165,000,000. It offers a complete range of Shariah-based financial products and services under Corporate and Investment, Commercial, and Retail and Consumer Banking as well as Treasury and International Business.

In term of financial reporting, it adopts fully the requirements made by Malaysian Financial Reporting Standards (MFRS) and adheres the AAOIFI at the following levels:

Table 4.15: Level of compliance to MFRS and AAOIFI standards

No.	Financial statement	Conformity
1.	Statement on adoption of AAOIFI	Nil
2.	Statement on adoption of MFRS	100%
3.	Statement of financial position	65.0%
4.	Statement of profit or loss	50.0%
5.	Statement of changes in equity	95%
6.	Statement of cash flow	100%
7.	Statement of sources and uses of charity fund	Yes (notes)
8.	Statement of restricted investment	No

It adopts fully the requirements made by Malaysian Financial Reporting Standards (MFRS) and adheres the requirements of AAOIFI at certain levels. Its SOFP complies 65% whereas SOPL 50% to AAOIFI. SOCIE is at 95% whereas SCF is at 100%. SSUCF and SORI are not presented as financial statement but SSUCF is shown in the notes to financial statements.

4.14 ALKHAIR INTERNATIONAL ISLAMIC BANK BERHAD

Al-Khair International Islamic Bank was established in 2007. It is the first foreign Islamic Bank in Malaysia licensed to conduct a full range of non-Malaysian Ringgit banking activities under the Malaysia International Islamic Financial Centre (MIFC) initiative. Its paid up capital as of 2015 is RM86,487,610 and its services comprise of treasury, deposits and murabahah.

Table 4.14: Level of compliance to MFRS and AAOIFI standards

No.	Financial statement	Conformity
1.	Statement on adoption of AAOIFI	Nil
2.	Statement on adoption of MFRS	100%
3.	Statement of financial position	60.0%
4.	Statement of profit or loss	33.3%
5.	Statement of changes in equity	95%
6.	Statement of cash flow	100%
7.	Statement of sources and uses of charity fund	No
8.	Statement of restricted investment	No

In term of financial reporting, the bank adopts fully the requirements made by Malaysian Financial Reporting Standards (MFRS) and adheres the requirements of AAOIFI at certain levels. Its SOFP complies 60% whereas SOPL 33.3% to AAOIFI. SOCIE is at 95% whereas SCF is at 100%. SSUCF and SORI are not presented as financial statement or shown in the notes to financial statements.

4.13 ALLIANCE ISLAMIC BANK MALAYSIA BERHAD

Alliance Islamic Bank was incorporated in June 2007 and commenced its operations in 2008. It has so far 8 branches in Malaysia. As of 2015 it has a paid up ordinary share capital of RM300,000,000. It offers Islamic financial products such Bai' Bithaman Ajil, Al-Ijarah Thumma Al-Bai’, Qardhul Hassan, Bai' Al-Inah, Bai' Al-Dayn and Tawarruq.

Table 4.13: Level of compliance to MFRS and AAOIFI standards

No.	Financial statement	Conformity
1.	Statement on adoption of AAOIFI	Nil
2.	Statement on adoption of MFRS	100%
3.	Statement of financial position	70.0%
4.	Statement of profit or loss	38.9%
5.	Statement of changes in equity	95%
6.	Statement of cash flow	100%
7.	Statement of sources and uses of charity fund	No
8.	Statement of restricted investment	No

In term of financial reporting, the bank adopts fully the requirements made by Malaysian Financial Reporting Standards (MFRS) and adheres the requirements of AAOIFI at certain levels. Its SOFP complies 70% whereas SOPL 38.9% to AAOIFI. SOCIE is at 95% whereas SCF is at 100%. SSUCF and SORI are not presented as financial statement or shown in the notes to financial statements.