Scribd
Upload
30 views4 pages

Assingment Islamic Accounting Abdishakour Hussein

The document discusses accounting methods for Islamic financial institutions, specifically comparing the Separate Investment Account Methods (SIAM) and Pooling Method (PM) in terms of profit distribution to depositors. It provides calculations for weighted balances, depositor shares, and returns, highlighting that SIAM yields higher profits for the bank while Pooling Method offers better profit distribution for depositors. The document emphasizes the rationale behind these methods, focusing on the sharing of administrative expenses by the bank.

Uploaded by

haabulk
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
30 views4 pages

Assingment Islamic Accounting Abdishakour Hussein

The document discusses accounting methods for Islamic financial institutions, specifically comparing the Separate Investment Account Methods (SIAM) and Pooling Method (PM) in terms of profit distribution to depositors. It provides calculations for weighted balances, depositor shares, and returns, highlighting that SIAM yields higher profits for the bank while Pooling Method offers better profit distribution for depositors. The document emphasizes the rationale behind these methods, focusing on the sharing of administrative expenses by the bank.

Uploaded by

haabulk
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 4

2025

Assignment

ACCOUNTING FOR ISLAMIC FINANCIAL INSTITUTIONS


ABDISHAKOUR HUSSEIN SH.ALI AYANLE

SOMALILAND INSTITUTE OF BANKING AND FINANCING | NEAR TO ADNA ADAN UNIVERSITY


5.1 Answer
a) Summarize Table Calculations for the Weighted Balance, Depositor’s Share and Depositor’s

Deposit Type Average Weights Weighted Depositor’s Depositor’s


Balance in Year Balance Share Return
2006
6 Months & Less 25,000,000 0.5 12,500,000 456,750 1.83 %
9 Months & Less 30,000,000 0.75 22,500,000 821,739.1 2.74 %
12 Months & Less 40,000,000 1.0 40,000,000 1,460,869.5 3.65 %
More than 12 55,000,000 1.25 68,750,000 2,008,695.6 3.65 %
Months
150,000,000 143,750,000
➢ Formula

1) Weighted Balance = Average Balance * Weight

= 25,000,000 * 0.5 == 12,500,000

2) Depositor’s Share = Weighted Balance /Total Weighted Balance *Total Depositor’s Share

= 12,500,000 / 143,750,000 * ( 7,500,000 * 70% )

= 0.087 * 5,250,000 == 456,750

3) Depositor’s Return = Depositor’s Share / Average Balance

= 456,750 / 25,000,000 * 100% == 1.83 %

b) Profit Attribution Individual depositor

i. 300,000 * 2.74 % = 8,220

ii. 420,000 * 1.83 % = 7,686

iii. 230,000 * 3.65 % = 8,395


5.2 Answer
i)
Separate Investment Account Methods (SIAM)
Profit From Operations (Gross): 750,500,000
Less: Distribution of Profit to Depositors/ Investors (PSR = 20%) (150,100,000)
Net Income to Islamic Bank (PSR = 80%) 600,400,000
Add: Fee Based Income 125,500,200
Less: Indirect Expenses: ( 120,200,000)
Net Income to The Islamic Bank (Before Tax and Zakat) 605,700,200

Pooling Method (PM)


Profit From Operations (Gross): 750,500,000
Add: Fee Based Income 125,500,200
Less: Indirect Expenses: ( 120,200,000)
Net Income to Islamic Bank 755,800,200
Less: Distribution of Profit to Depositors/ Investors (PSR = 20%) (151,160,040)
Net Income to The Islamic Bank (Before Tax and Zakat) 604,640,160

In my opinions method SIAM more prefer than Pooling Method because


Islamic Bank gets much profit rather than Pooling Method. Other side
Depositors / Investors preferred Pooling Method in this Scenario get much
profit distribution.
SIAM is where the Islamic bank will share the gross profit with
depositors/investors. The administrative expenses such as provisions and
overhead (indirect expenses) will be borne by the Islamic bank.
Pooling method is where the profit is shared at net income rather than
gross income in the case of SIAM.
The Accounting for Islamic Deposit and Investment rationale of this method
is the bank has the right to share the administrative and other overhead
expenses with the depositor/investors.

You might also like