Obstruction Confronting the Application of Islamic Financial Accounting Standards in the Islamic Banking Sector in Libya: Employees Perspectives Study

Abstract

In this study, the primary objective is to examine the obstacles and hindrances that confront the application of Islamic Financial Accounting Standards laid down by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in the Libyan Islamic banking sector, viewed from the perceptions of employees, following the issuance of Law No. (1) in 2013, concerning the prohibition of credit and debit interest (Riba). The study adopted the descriptive analytical method by conducting a thorough review of books and scientific journals and studies concerning Islamic financial accounting standards. Required data was obtained with the help of a survey questionnaire distributed to the Islamic banking branches and windows, after which its validity and stability was established and analysis was conducted using SPSS. The results indicated that Islamic bank employees in Libya lacks serious senior administrators inclined towards applying the Islamic Financial Accounting Standards issued by AAOIFI, and lack of legally qualified and accounting employees to apply the standards. The study suggests that banks in Libya provide training and qualification initiatives to employees and concentrate on the educational materials provided in relevant colleges and universities in the country for the purpose of developing an professional cadre of qualified individuals to apply and practice Islamic banking and its standards.