Adoption and Application of International Financial Reporting Standards (IFRS) in Banking Sector of Bangladesh : A Comprative Study

Abstract

The purpose of this study is to comparatively analyze the adoption and implementation of International Financial Reporting Standards (IFRS) in the banking sector of Bangladesh both traditional and Islamic banking. The study employs a literature-based method which is a kind of qualitative research approach. Using exploratory analysis the study identifies and compares adoption and application scenarios of IFRS in the traditional and Islamic banking sector as well as identifies major benefits and problems in the adoption and application of IFRS in both sectors. This study concludes that the adoption and application scenarios of IFRS in the banking sector are the satisfactory level and adoption of IFRS offered various benefits but a complete implementation of IFRS by Islamic banks has been proven to genuinely violate the shariah principles. Therefore a separate accounting framework for Islamic products and transactions is required. As the existence of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is still relevant and essential for the development of Islamic financial institutions. However continuous dialogue and consultation between the International Accounting Standards Board (IASB) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is needed to harmonize and minimize the difference between the two frameworks. This study expected to benefits the accounting standards-setting bodies and the interested parties as input for them to make a decision whether all standards provided by IFRS are applicable for Islamic Financial Institutions(IFIs) or not.