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Sukuk General Review: Challenges on Shariah-Compliance & Accounting Implications

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Sukuk: General Review
Challenges on Shariah-compliance & Accounting Implications
Monsif MOUMNI
Introduction
The growth and popularity of the use of Islamic finance has been exceptional since the central bank of Bahrain issued the first sovereign sukuk in 2001. In fact, the size of the global Islamic finance market exceeds US$2 trillion. Although the sukuk market is still small compared to the conventional bond market, sukuk are considered as the most successful financial product among the Islamic financial institutions and also considered as one of the fastest industries in its growth in international financial landscape.
Sukuk generally refers to Shariah-compliant bonds; the spread in a striking pace of sukuk in GCC1 and Muslim-majority countries in Asia has made from it a very important way for fund raising. Recently sukuk have also been attracting attention in non-Islamic countries in Europe, Asia, and Africa; for example in 2014, sovereign sukuk were issued by the United Kingdom, Hong Kong, Luxembourg, and South Africa (Lackmann, 2015).
The main objective of this paper is to provide a panoramic picture describing the key elements characterizing sukuk from different perspectives combined. In this review we will first try to present the general context of sukuk i.e. the definition, types, and the basic structure of sukuk, and also to make a contrast of conventional bonds with sukuk to outline the main differences, and next we will discuss about controversy and Shariah concerns with sukuk, then finally we will analyze the implications for accounting reporting such as recognition and valuation issues related to sukuk structures.

General overview
Derived from the term ‘sakk’ in classic Arabic, the term ‘sukuk’ (the plural of ‘sakk’) as used today is synonymous with ‘Islamic bond’. However, sukuk are not IOUs 2or debt instruments like

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