Profit Sharing Investment Accounts in Islamic Banks: Classification and Accounting Treatment in the Financial Statements

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In the Malaysian context, the recent Islamic Financial Services Act 2013 (IFSA) distinguishes investment accounts from Islamic deposits, whereby an investment account is defined by the application of Sharīʿah contracts having a non-principal guarantee feature for the purpose of investment. The accounting treatment of Islamic financial products in Malaysia, including the deposit and investment accounts, is dictated by the Malaysian Financial Reporting Standards (MFRS), which are equivalent to the International Financial Reporting Standards (IFRS) but different from the accounting standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).



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