Islamic Finance Market: Financial Accounting- Report Writing Assignment

Internal Code: MAS1215

Report Writing Assignment:

Background Information: The global Islamic finance market is expected to reach USD 2.6 trillion by 2017 (PwC, 2013) and financial centres around the world want this business. Although Australia has a relatively small Muslim population (around 2%), we are seen as having high potential to expand into the area of Islamic finance (Maierbrugger, 2016). Islamic finance requires corporate governance that is grounded in the ethical and moral framework described by Sharia, and illegal or socially detrimental acts are prohibited (Abu-Tapanjeh, 2009). Following graduation, you have obtained work as an analyst for an Australian bank. The directors of the bank are considering expanding into Islamic financial products, and listened with interest as the chief economist of Citigroup recently suggested Australian banks could utilise principles of Islamic finance for the benefit of all Australians (Shapiro, 2016). To support their decision-making, the directors of the bank wish to understand the governance issues associated with issuing Islamic financial products, first at a theoretical level, and then in the Australian context. Required: In your report you will use academic literature, first to describe and explain the models and underlying theories of Corporate Governance; then to discuss and identify the place of Islamic corporate governance within these models, including the role of the Sharia committee. You will then critically evaluate whether financial services companies (including banks) operating under an Islamic corporate governance framework fit within the existing Australian corporate governance framework; and consider more specifically, whether Islamic financial products are compatible with the Australian business environment. Finally, based upon your analysis, you will advise the directors of the bank whether the principles of Islamic corporate governance and/or the issuance of Islamic financial products seem incompatible with the Australian business environment, or may be accommodated with minor legislative changes.