Islamic Finance For Dummies

Chapter 14

Issuing Financial Statements

In This Chapter

Reviewing the purpose of financial statements

Comparing Islamic and conventional financial statements

Getting to know the source of Islamic accounting standards

If accounting or auditing is your thing, you’ve come to the right place. But if not, don’t skip out just yet! My purpose in this chapter isn’t to delve into detail about what each line of a corporate financial statement means or to parse specific accounting standards. Instead, I just want to explain why some financial statements issued by an Islamic financial institution may look different from those issued by its conventional counterpart. From the perspective of end users, what do those differences mean?

I start with a quick review of the key financial statements issued by most companies and then turn the spotlight on Islamic financial institutions. I offer some detailed analysis of what’s included on the balance sheet and income statement for an Islamic company that you won’t find on a conventional version of these reports, and I introduce four statements that are unique to Islamic institutions. (I don’t spend time covering the cash flow statement and statement of ...