The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) started life in 1991 in Bahrain as the Financial Accounting Organisation for Islamic Banks and Financial Institutions (FAOIBFI, or FAO for short). Its founding members were the Islamic Development Bank, Dar Al-Maal Al-Islami, Kuwait Finance House, Al-Rajhi Banking and Investment Corporation, and Dallah Albaraka. In 1995, FAO changed its name to AAOIFI. Its establishment was motivated by the need to formulate methods for financial reporting that would be in alignment with Islamic finance's rules and requirements. AAOIFI is an independent not-for-profit body that develops and prepares accounting, auditing, governance, ethics and Shariah standards for Islamic financial institutions and the industry. However, it lacks power de jure to enforce these standards. AAOIFI standards are adopted in Bahrain, Dubai International Financial Centre, Jordan, Lebanon, Qatar, Sudan and Syria. The relevant authorities in Australia, Indonesia, Malaysia, Pakistan, Saudi Arabia, and South Africa have issued guidelines based on AAOIFI’s standards. As at September, 2015, the body had issued a total of 88 standards: 48 on Shariah, 26 on accounting, 5 on auditing, 7 on governance, and 2 on ethics.
AAOIFI has around 200 institutional members from 40 countries. Its Shariah board, established in 1998, is highly influential and comprises some of the most prominent Shariah scholars working in the Islamic finance industry.