Accounting system in participation banks and accounting and auditing organization for Islamic financial institutions (AAOIFI) affecting finance in Turkey: Turkey-Bahrain comparison

Participation Banking has spread in the global finance sector with Islamic banking or interest-free banking. This banking first emerged in corn and then spread to the world accelerated the worldwide spread of the petrodollar, which flows into the Middle East, and the Muslims can not adopt the modern financial system built on the interest and interest system that does not conform to the Islamic religion. These financial institutions, which were allowed to operate under the name of Special Finance Institutions in our country in 1985, were taken into bank status in 1999 and subjected to the Banking Law No. 5411. With the subsequent amendments to the law, the Participation Banks took their name. As of April 2018, 5 participation banks operating in our country have a total of 1,035 branches and 15,076 employees. The separation of the participation banks from the conventional banks on the basis of the basic principles necessitated a separate accounting system. For this reason, some regulations were made by BRSA and a separate account plan was prepared for the participation banks. For the Islamic Banking system, which has spread rapidly in the globalizing world, internationally accepted accounting standards were needed. For this reason, in 1991 Bahrain-based Accounting And Auditing Organization For Islamic Financial Instittutions (AAOIFI) was established and started to publish standard. The aim of this study was to investigate the participation banks in Turkey and accounting system to examine the global Islamic banking sector integration. The AAOIFI standards, which are applied to the banks which are in the forefront of the sector and which are obligatory to be applied in many countries, are to make differences in the accounting systems of the participating banks in our country by comparing them with Islamic banks in Bahrain.