In recent years, there has been a growing tendency to establish closer ties among the Gulf Cooperation Council (GCC) countries (Bahrain, Saudi Arabia, Oman, Qatar, and United Arab Emirates) in economies and financial institutions. As a result, there is an increasing need for the harmonization of accounting regulations in order to improve cooperation and enhance the efficiency of the financial institutions among GCC countries. This study is an investigation of the accounting standards followed by the financial institutions in five GCC countries with some policy prescriptions for harmonization of the accounting regulations in GCC countries. This paper deals with accounting policies and practices, including loans and provisions, assets, investments, taxation, liabilities, foreign exchange, revenue recognization, and consolidation of GCC countries’ banking and other financial institutions.

An analysis of domestic and foreign banks' internal performance by investigating their financial ratios shows that banks in Bahrain, Oman, the United Arab Emirates (GCC countries) have improved their performance over the past several years. Commercial banks in these GCC economies are well capitalised and have adopted modern banking services. Most banks are found to be financially sound by international standards, measured by all key financial ratios. Their operations can be characterised by satisfactory asset quality, more than minimum BIS capital/asset ratio, and high level of profitability. External performance is measured by evaluating banks' market shares, regulatory compliance and public confidence; and most of the banks show better progress. Harmonization of the banks' supervisory and accounting systems towards IAS has contributed to the safety and competitiveness of the banking sector.

In recent years, the central monetary authorities of some Gulf Cooperation Council countries have made several regulatory changes in order to achieve social & economic goals. The monetary authorities of these countries have strengthened prudential norms. Asset classifications and provisioning norms have moved closer to international standards. Banks are required to maintain capital to risk weighted assets ratios of 8 percent required by the BIS. Local banks follow International Accounting Standards. Although the central monetary authorities of the GCC countries are active in supervising and monitoring their regulations on financial institutions, but not in a rapid way. In a global financial market, Islamic-banking regulators that operate Islamic banks should think about the compatibility of the regulatory setting. Through a deep understanding of the nature of the Islamic banking business and the recent western banking supervisory framework, Islamic banking regulators will be able to develop a sound banking system without loosing its own distinction.

The inadequacies of traditional management accounting (MA) information indicate a need for management to find proper measuring tools for emerging non‐financial performance (NFP) in the highly competitive financial services, as well as in the manufacturing industry. Thus, the role of MA in measuring the performances of emerging NFP has been receiving increased emphasis in the increasingly important service industries. Considering the shortcomings of the traditional MA information system, particularly the measurement of new emerging NFPs, this empirical research is an attempt to investigate the role of MA in non‐financial as well as financial performance measurement (PM) in selected banks and financial institutions (BFIs) in Finland. The study demonstrates that the role of MA in non‐financial PM is insignificant. However, management is paying more attention to its measurement. This study identifies three different aspects of NFP: profit‐driven NFP; NFP for long‐term competitive advantage; and independent NFP (those not linked with the profitability of an organisation).

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