Page 17 - CMA Journal (Mar-Apr 2025)

EXCLUSIVE
Exclusive Interview

INTERVIEW

ICMA: How can Pakistan’s financial system better
align with Islamic principles, and what role can
AAOIFI’s standards play in this transformation?
Omar Mustafa: To align with Islamic principles,
Pakistan’s financial system must adopt a comprehensive
framework that governs product structures, operations,
and ethics. The Accounting and Auditing Organization
for Islamic Financial Institutions (AAOIFI), established in
1991 and based in Bahrain, supports this transition by
offering globally recognized standards in five areas:
Shari’ah, Accounting, Auditing, Governance, and Ethics.
The AAOIFI’s 59 Shari’ah standards provide foundational
guidance on permissible financial products like
Murabahah and Ijarah, ensuring consistency and
doctrinal clarity. Complementing this, 36 Financial
Accounting Standards (FAS) and 7 auditing standards Mr. Omar Mustafa Ansari
enhance financial transparency and regulatory
confidence globally. Secretary General, Accounting and
Auditing Organization for Islamic
These frameworks help maintain the distinct identity of
Islamic finance. Structural alignment must be supported Financial Institutions (AAOIFI)
by strong internal systems. AAOIFI’s 24 governance
standards outline how Shari’ah principles should be
embedded into institutional processes, while the Code of “
Ethics promotes trust and professionalism. All these AAOIFI considers Pakistan as one
together ensure Islamic values are upheld throughout
the operations of Islamic financial institutions (IFIs). This of the most important
system can be compared to a universal socket with
adjustable prongs and built-in surge protection. Just as destinations and a good model of
the same accommodates British, American and European Islamic finance to emulate
plug types while ensuring safety, AAOIFI’s standards offer
a harmonized yet adaptable framework for Islamic globally. With consistent
finance. If everyone designed their own plugs and
sockets, none would work seamlessly together. application of these standards,
Similarly, without a unified approach, Islamic banks face Pakistan is positioned to establish
the risk of inconsistencies and regulatory short-circuits itself as a sustainable and a
(e.g., instability). AAOIFI mitigates this by standardizing
key Islamic finance products like Murabahah and Ijarah successful Islamic financial system
across jurisdictions, promoting systemic coherence. Its
flexibility also allows for the integration of local Shari’ah “
interpretations, much like how a universal socket adapts
to regional plugs. In such a structure, accepting a central
authority becomes crucial for consistency,
interoperability, and Shari’ah compliance.

ICMA’s Chartered Management Accountant, Jan-Feb 2025 15