Islamic accounting and financial reporting Essay

Islamic accounting and financial reporting - Essay Example However, in certain scenarios, the accounting principles in most of the Islamic countries have also experienced major complexities due to their dissimilarities prevailing within the globally accepted accounting standards (Yaya, 2004). In relation to conventional insurance principle, the primary objective of Shari’ah is generally identified to be a concept of survival of individuals. With regard to this particular notion, the primary objective of insurance industry in the Islamic countries is to protect each individual from various risks that are likely to link with their life, health and/or wealth. In the context of the Islamic law agenda, the term insurance is acceptable owing to the general standards and provisions of Sharia’ah’s law (Arbouna, n.d.). The primary purpose of this essay is to critically explore the particular features of Takaful operations that differs them from the conventional insurance firms. The study also explains the key factors and reporting requirements that are frequently observed to create various conflicts with International Financing Reporting Standard (IFRS) for insurance companies. Term ‘Takaful’ is defined as a system in the Islamic insurance segment based on the guiding codes of ‘ta’awun† (mutual assistance) and ‘tabarru’ (voluntary contribution) (Matsawali & et.al, 2012). The Takaful industry in the Islamic accounting and reporting sector is often observed to experience rapid development in different nations since the previous few decades (Matsawali & et.al, 2012). In relation to the recent guidelines followed in the insurance sector, the Islamic insurance companies are able to formulate effective methods that are generally applied by conventional insurance companies to maximise profit and build strong relationship with a valid form of contract among both the parties involved in particular insurance. However, Takaful can be observed as such a system, which does not ensure offering adequate rights to the