Publication: Issues and challenges of IFRS 9 in Malaysian Islamic financial institutions: recognition criteria perspective
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Date
2021
Journal Title
Journal ISSN
Volume Title
Publisher
Emerald Insight
Abstract
Purpose
The purpose of this paper is to investigate the effects and challenges of the new amendment of International Financial Reporting Standards (IFRS) 9 in Malaysia from the perspectives of regulators, auditors, accountants and academicians in Malaysian Islamic financial institutions. For the purpose of this study, this paper focuses on the recognition criteria perspective of the standard, which provides a basic understanding of the financial reporting framework.
Design/methodology/approach
Using 10 series of semi-structured interviews undertaken with key individuals in regulatory bodies, audit companies, full-fledged Malaysian Islamic Banks and Malaysian higher learning institutions.
Findings
The findings revealed that IFRS 9 strengthens International Accounting Standards 39 in terms of relevance and reliability, recognition of financial instruments and identification of business models. Nevertheless, Islamic financial institutions face challenges in terms of a faithful representation of fair value, substance over form, identification of financial instruments before recognition criteria and the extent of the role of risk management in reducing manipulation in identifying business models.
Research limitations/implications
This study provides implications to regulators and standard setters in Malaysia to enhance the quality of financial reporting framework and practices in Islamic financial institutions in this country using IFRS 9.
Practical implications
Practically, the findings of this study can be used by the regulators to resolve the issues that arise in adopting IFRS 9 among Islamic financial institutions to further enhance financial reporting quality.
Originality/value
The findings of this study are very important to ensure that the adoption of IFRS among Islamic financial institutions are in line with Sharīʿah principles. To date, no studies have been done on the challenges of adopting IFRS 9 among Islamic financial institutions in Malaysia.
Description
Journal of Islamic Accounting and Business Research
Volume 12 Issue 2
Keywords
Malaysia, Relevance, Reliability, Islamic financial institution, IFRS 9, Recognition criteria
Citation
Madah Marzuki, M., Abdul Rahman, A.R., Marzuki, A., Ramli, N.M. and Wan Abdullah, W.A. (2021), "Issues and challenges of IFRS 9 in Malaysian Islamic financial institutions: recognition criteria perspective", Journal of Islamic Accounting and Business Research, Vol. 12 No. 2, pp. 239-257. https://doi.org/10.1108/JIABR-04-2020-0100