Murābaha -An Islamic Financing Mode and the Challenges vis-a-vis the International Accounting Standards

Year: 2013

The  following  paper  on murābaha explores  the challenges  vis-a-vis  the  International  Financial Reporting  Standards  (IFRS). Some  aspects  are first  analyzed  and  then  compared  to  specific IFRS,   namely   IAS   2-Inventories,   IAS   23-Borrowing   Costs,   IAS   16-Property,   Plant   and Equipment,    IAS  18-Revenue,  IAS  40-Investment  property,  and  taxable  income. Murābaha,  a method  of  Islamic  Financing  with  its  fixed profit margin,  offers  the  seller  a  more  predictable income stream, however, it is also a controversial issue in the Islamic world of finance due to the sensitivity  of  the  profit  margin  as  opposed  to  interest.  From  IFRS’s point  of  view, there  are controversies   between   IFRS   and murābaha applications.   The   paper   tries   to   explain   the controversies  and  proposes  solutions  to  overcome  the  reporting  differences  between murābaha applications and IFRS.    


Vol 3 Issue 1 (June-2013)

Open Source


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