AAOIFI: Accounting and Auditing Organization for Islamic Financial Institutions

AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) is the principal global body responsible for developing and issuing standards that govern how Islamic financial institutions operate. It publishes Sharia standards, accounting standards, auditing standards, governance standards, and ethics standards. Institutions across the GCC and beyond adopt these standards to ensure their products and contracts are structured in accordance with Islamic law.\n\nIts accounting work includes issuing Financial Accounting Standards (FAS). In early 2026, AAOIFI's Accounting Board approved its 2026 work plan alongside FAS 53, which covers Istisna-based development contracts - a type of contract used in construction and project finance under Islamic principles. The organisation also convenes annual conferences, including the AAOIFI-World Bank Annual Islamic Banking and Finance Conference and the AAOIFI Annual Sharia Boards Conference, which bring together scholars, regulators, and practitioners.\n\nAAOIFI standards are adopted or referenced by regulators and financial institutions across Bahrain, the UAE, Saudi Arabia, Qatar, Kuwait, and other jurisdictions with significant Islamic finance activity. For a full and current list of standards and work programmes, see the official AAOIFI website at aaoifi.com.

For English-speaking expats in the GCC who invest in Islamic financial products - whether Sharia-compliant equity funds, sukuk, or Islamic savings accounts - AAOIFI standards determine whether those products are genuinely structured in accordance with Islamic law. When a fund or bank states that its product is "AAOIFI-compliant," it means the underlying contracts and accounting treatments have been reviewed against these published standards, not just a local scholar's opinion.\n\nFrom a practical investment standpoint, AAOIFI compliance affects product availability and structure. Some UCITS funds domiciled in Ireland or Luxembourg that market themselves as Sharia-compliant in the GCC follow AAOIFI standards for screening and purification calculations. Expats should verify which Sharia standard a given product follows - AAOIFI or an alternative such as the AAOIFI-IsDB framework - before assuming uniform compliance across products. The relevant local regulators, such as the Central Bank of Bahrain (CBB) and the Dubai Financial Services Authority (DFSA), each have their own requirements around disclosure of the Sharia standards applied.