Accounting Treatment of Sukuk Instruments under IFRS and the Challenges of Shariah Compliance
Abstract
Background: The study aims to review the accounting treatment for Sukuk instrument in IFRS to outline the challenges in Shariah compliance and provide its solutions. The study has focus on clarifying the use of Sukuk as an instrument to generate better use of IFRS in handling the Shariah compliance. The role of IFRS 9 is helpful in measuring the fair value and understanding the idea of business model cash flow characteristics under the parameters of IFRS 9. Method: The study adapts primary and secondary methods to support the data and make sure that the mixed method is used. The secondary data is taken from literature while primary from the 150 respondents through questionnaire. The Smart PLS is used for the results and statistical operations.
Findings: It has been found that the influence of IFRS 9 is a positive while handling the challenges of a Sharia perspective that needs to be addressed under the privilege of a sukuk instrument. Sukuk Msuhkarah is recorded for significance whereas Sukuk Ijarah for partial significance and Sukuk Wakalah for less significance on the context of Shariah. It is also successful in clarifying the idea that how possible IFRS classifications of hotel value through profit and loss can be applied under these instruments. Recommendations: Using monitoring and editing processes can be helpful because a perfect audit is required while dealing with the challenges of Sharia. Further, handling the challenges of Sharia in dealing with the perspective of financial statements handling.
Keywords: Accounting Treatment, Sukuk Instrument, IFRS 9, Challenges, Shariah Compliance.
