MALAYSIAN SUKUK: ISSUES IN ACCOUNTING STANDARD

Abstract

There is a high demand and need for developing alternatives to
the traditional debt market, which are acceptable to Islamic law
as bonds play a major role in the economy in raising capital. The
main objective of this paper is to examine the contemporary
accounting regulatory issues on investment in Islamic bonds or
Sukuk in Malaysia. Sukuk can be based on various Islamic
contracts, namely Mudarabah, Murabahah, Musharakah, and
Ijarah. Due to the growth in the Islamic financial market, namely
the Islamic bonds, as well as the growing interest in Islamic banking
and insurance, the need for specific accounting requirements that
can accommodate these contracts is imperative. This paper is based
on the rationale that for the Islamic financial market to prosper, it
requires well regulated Islamic financial instruments, as well as
appropriate accounting standards and guidelines in recording
these instruments. Therefore, a well regulated Islamic financial
market requires sound accounting and reporting standards for
Islamic financial instruments that meet the requirements of Shari‘ah
as well as being practical. In addition, this paper also highlights
issues raised concerning the accounting practices in Islamic bonds
investments.