Sept 16 (Reuters) - The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has appointed a new secretary-general, as the standard-setting body looks to keep its influence in an increasingly challenging environment.
Saudi Arabian national Hamed Hassan Merah has been chosen for the post, AAOIFI said in a statement late on Monday, replacing Khaled Al Fakih, who left the organisation in May after two and a half years in charge.
Established in 1990, AAOIFI issues guidelines that are followed wholly or in part by Islamic financial institutions around the world.
But as Islamic banking has grown globally over the last several years, other standard-setting bodies have become increasingly active and influential, including national regulators and the Kuala Lumpur-based Islamic Financial Services Board (IFSB).
Meanwhile, Islamic finance has exposed itself to criticism over issues such as the boards of sharia scholars who vet products for religious permissibility. The scholars are highly paid by the banks they supervise, creating concern about the possibility of conflicts of interest.
A complex organisation with over 200 institutional members from more than 45 countries, AAOIFI has sometimes struggled to address such difficult issues quickly.
Established in 1990, it has issued a total of 88 standards covering sharia compliance, accounting and auditing. But only two of those standards have been issued in the last three years, while other Islamic finance organisations have ramped up their efforts as the industry goes global.
Merah most recently worked with Solidarity Saudi Takaful Company and before that with Riyadh-based Jadwa Investment, according to his profile on LinkedIn. Between 2004 and 2008 he was department manager for the sharia board secretariat at Saudi Arabia’s Bank Albilad. He has authored two books and several research papers on Islamic financial products.
“We are very confident that he will steer AAOIFI towards greater accomplishment and success...and enhancing its global positioning,” said Shaikh Ebrahim Bin Khalifa Al Khalifa, chairman of AAOIFI’s board of trustees.
Under its previous secretary-general, AAOIFI had said it would look to develop a new framework for disclosing financial data, while possibly revising standards for takaful (Islamic insurance), investment accounts and other products.
AAOIFI also said it would develop a standard covering the operations of sharia boards. But such efforts have not been completed.
The body has not so far played an active role in an industry-wide effort to bridge differences between accounting practices in Islamic and conventional finance.
The International Accounting Standards Board began a consultation with Islamic finance stakeholders this year, aiming to remove uncertainties over the application of its standards, but AAOIFI has been absent from discussions.
AAOIFI has branched out into offering a service to certify financial software, but last year it withdrew its certification from two technology providers without giving a public explanation.
Other industry bodies have accelerated their efforts to provide more guidance to the market. The IFSB is revising its guidelines on the supervision of Islamic financial institutions around the world, helping to tighten regulatory oversight.
The General Council for Islamic Banks and Financial Institutions, a non-profit organisation headquartered in Manama, is expanding its activities beyond the Gulf. It appointed a new secretary-general in March.
AAOIFI standards have been adopted, in full or in part, by jurisdictions including Bahrain, the Dubai International Financial Centre, Jordan, Lebanon, Qatar, Sudan and Syria. (Editing by Andrew Torchia)