Publication Details
Abstract
This article examines the prospects and mechanisms for enhancing Islamic accounting practices in Uzbekistan’s commercial banking sector and capital market institutions through a comparative analysis of the standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the International Financial Reporting Standards (IFRS). In the context of Uzbekistan’s ongoing financial sector reforms, increasing integration into global capital markets, and growing interest in Islamic finance instruments, the need for harmonized, transparent, and Shariah-compliant accounting frameworks has become increasingly important. The study explores the theoretical foundations and practical applications of Islamic accounting, emphasizing its distinct principles such as prohibition of interest (riba), risk-sharing, asset-backing, and ethical financial reporting. It analyzes how AAOIFI standards are specifically designed to reflect these principles, ensuring compliance with Shariah requirements, while IFRS focuses on providing globally accepted, investor-oriented financial reporting frameworks based on transparency, comparability, and decision-usefulness of financial information. The paper highlights key conceptual and methodological differences between the two systems, particularly in areas such as recognition and measurement of financial instruments, treatment of profit-and-loss sharing arrangements (e.g., mudarabah and musharakah), zakat calculation and disclosure, and accounting for Islamic financial products like sukuk. Furthermore, the article evaluates the current state of accounting practices in Uzbekistan’s commercial banks and emerging capital markets, identifying institutional, regulatory, and methodological gaps that hinder the effective adoption of Islamic accounting standards. Special attention is given to the challenges of dual reporting systems, lack of qualified специалистов in Islamic finance accounting, absence of unified regulatory guidance, and limited experience in applying AAOIFI standards within a predominantly IFRS-based financial system. Based on comparative analysis, the research proposes a set of practical recommendations aimed at improving the integration of Islamic accounting practices. These include the development of a hybrid accounting framework that aligns AAOIFI principles with IFRS requirements, capacity building through professional training and certification programs, strengthening the role of regulatory authorities in standard-setting and supervision, and promoting the development of Islamic financial instruments within the national capital market. The article also emphasizes the importance of digital transformation and fintech solutions in facilitating accurate and efficient implementation of complex Islamic accounting transactions. The findings of this study contribute to the broader discourse on financial system modernization in Uzbekistan by offering a structured approach to incorporating Islamic finance principles into existing accounting and reporting systems. The proposed mechanisms are expected to enhance financial transparency, attract foreign investment from Islamic finance markets, and support sustainable economic development by diversifying financial services. Overall, the article underscores the strategic importance of aligning national accounting practices with both international standards and Shariah-compliant frameworks in order to strengthen Uzbekistan’s position in the global financial landscape.