The Federal Government has begun moves to incorporate Islamic finance accounting and auditing standards into Nigeria’s financial reporting framework, in a bid to boost transparency, expand financial inclusion and strengthen the country’s position as a hub for non-interest finance in Africa.
The initiative was announced by the Financial Reporting Council of Nigeria at a stakeholders’ engagement on integrating Islamic finance standards into the Nigerian Financial Reporting Framework, held on Wednesday at the Abuja Continental Hotel.
The PUNCH reports that the Accounting and Auditing Organisation for Islamic Financial Institutions is a Bahrain-based international standard-setting body founded in 1991 to develop accounting, auditing, governance, ethics and Shari’ah standards for Islamic financial institutions.
AAOIFI standards are tailored to the unique nature of non-interest financial transactions such as profit-and-loss sharing, asset-backed financing, sukuk, takaful and other Shari’ah-compliant products that are not fully addressed by conventional reporting frameworks.
The standards are widely used in countries with established Islamic finance markets, including Bahrain, Saudi Arabia, Pakistan, Sudan, Indonesia and several Gulf Cooperation Council states. Other countries, such as Malaysia and the United Kingdom, apply AAOIFI principles alongside international financial reporting standards.
In Nigeria, Islamic finance institutions have largely depended on conventional reporting standards, often making adjustments to accommodate Shari’ah-compliant transactions.
The proposed integration of AAOIFI standards into the Nigerian Financial Reporting Framework is expected to close these gaps, improve reporting credibility and align the country’s non-interest finance sector with global best practices, while maintaining local regulatory requirements.
