Manama, Kingdom of Bahrain: Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Islamic International Rating Agency (IIRA) signed a Memorandum of Understanding (MOU) to formalise and strenthen cooperation in achieving their shared goals for the development of the Islamic finance industry.
The MOU was signed by the Chairman, AAOIFI Board of Trustees, Sh. Ebrahim bin Khalifa Al Khalifa and President - Strategic Planning and Global Relationships of IIRA, Mr. Faheem Ahmad at the AAOIFI head office during the AAOIFI 19th Annual Shari’ah Boards Conference held virtually on 12-13 October 2021.
Islamic financial institutions (IFIs) not only have to demonstrate financial strength and stability, but it is also important that they comply with Shari’ah rules and principles in all their activities, operations and act as responsible fiduciaries. And with the developing Islamic finance industry there is an equally growing need to promote the core values of transparency, integrity, quality and independence, in addition to have Shari’ah compliance among the market participants.
AAOIFI developed its governance standard in cooperation with IIRA on Shari’ah Compliance and Fiduciary Ratings for Islamic Financial Institutions (GS 10) which was issued in December 2019. This standard sets out principles for the rating agencies to be applied for Shari’ah compliance and fiduciary rating of Islamic financial institutions (IFIs). It also provides principal guidance on the responsibility, acceptance, process, reporting and quality assurance for such services. However, rating agencies are free to develop their own detailed methodologies for such ratings including the rating scales.
On this occasion, Mr. Omar Mustafa Ansari, Secretary General, AAOIFI stated, “AAOIFI and IIRA have common objectives of developing and progressing the Islamic finance industry. Both institutions have jointly developed a governance standard on Shari’ah compliance and fiduciary ratings for institutions, and are curently working on another standard on ratings for instruments. This MoU only formalises this co-operation and provides a platform for further strengthening the relationship between the two organizations”.
Mr. Faheem Ahmed said: “With the signing of this Memorandum of Understanding, IIRA and AAOIFI have formalized their committment to jointly pursue a shared mission. As infrastructure institutions for Islamic finance, we aim to collectively promote high standards and homogenization of practices in the global Islamic markets. As such we have collaborated in the past by working together in areas of mutual interest, and with this MoU, will continue to broaden the scope of our efforts towards a common goal.”
AAOIFI, established in 1991, and based in the Kingdom of Bahrain, is the leading international not-for-profit organization primarily responsible for development and issuance of standards for the global Islamic finance industry.
AAOFI is supported by over 146* active institutional members, including central banks and regulatory authorities, financial institutions, accounting and auditing firms, and legal firms, from over 45* countries.
It has 113* standards and technical pronouncements in issue in the areas of Shari’ah, accounting, auditing, ethics and governance for international Islamic finance. 43* regulatory and supervisory authorities (RSAs) in 36* countries around the globe adopt and / or recognise AAOIFI standards and technical pronouncements either fully, partially, as guidelines, as supplementary reporting or as a basis of development of local standards / regulations.
* as of October 2021
For more information on AAOIFI its activities, please contact:
Dr. Rizwan Malik, Head, Standards Implementation and Strategic Developments, AAOIFI, Office: +973 – 17375401; e-mail: firstname.lastname@example.org
The Islamic International Rating Agency (IIRA) has been set up to provide independent assessments to issuers and issues that conform to principles of Islamic finance. IIRA's special focus is on development of local capital markets, primarily in the region of the Organization of Islamic Countries (OIC) and to provide impetus through its ratings to ethical finance, across the globe.
IIRA was founded as an infrastructure institution for the support of Islamic finance as conceived by the Islamic Development Bank (IDB). This puts IIRA in league with system supporting entities like AAOIFI and IFSB. The IsDB remains a prominent shareholder, and maintains oversight through its nominee, as Chairman to the Board of Directors.
Headquartered in the Kingdom of Bahrain, IIRA commenced operations in 2005 and launched its series of conceptually distinctive methodologies, beginning 2011. IIRA’s rating methodologies, information on its rating process, rating committee, and rating actions is available on www.iirating.com
© Press Release 2021
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