Having reviewed the history of the Islamic banking development in the United Kingdom, this paper tries to evaluate the processes, rules and operational techniques used to regulate and supervise Islamic banks and financial institutions in this non-Islamic country. In addition, it tries to go over the Iranian Islamic banking system and compare it with that of England. The results of the paper show that the Shairah governance model used in the United Kingdom to conduct Islamic banking in a country with minimum Islamic environment and laws has special and important characteristics. Understanding these characteristics may have specific implications for enhancing the Shariah supervision in Iran. This research emphasizes some of them.

Islamic financial institutions, due to the nature of their activities, which is adherence to Sharia principles, are constantly exposed to Sharia risk. One of the measures leading to the management of this risk in these institutions is Sharia supervision. According to the definition provided by the Accounting and Auditing Organization for Islamic financial institutions (AAOIFI), Sharia supervision encompasses all precautionary and oversight measures aimed at ensuring the conformity of the activities of Islamic banks or financial institutions with the principles and laws of Islamic Sharia. In essence, the ultimate goal of this supervision is to achieve actions, activities, measures, principles, and methods that can minimize Sharia risk in these institutions. This research seeks to extract important components in designing a model of Sharia supervision in the capital market based on relevant international standards related to Sharia supervision provided by The Accounting and Auditing Organization for Islamic financial institutions (AAOIFI) and The Islamic financial Services Board (IFSB). In this research, all standards presented by these entities were first reviewed. Then, the relevant standards were extracted and analyzed using the thematic analysis method. In the next step, the extracted set of codes was reviewed and finalized in three stages. The comprehensive themes or important components in designing a model of Sharia supervision in the capital market include: Sharia supervisory board, implementation of Sharia supervision, independence of Sharia supervisory board, governance principles, codes of ethics for employees, audit and governance committee, internal Sharia supervision, codes of ethics for accountants and auditors, and implementation and disclosure of social responsibility.

The financial reporting of the country's banks, especially accounting of the Islamic contracts, has no comprehensive accounting standards. The accounting system of Istisna facilities in the banking system of Iran has an accounting instruction issued by the Central Bank. On the other hand, the standards of the Accounting and Auditing Organization for Islamic financial institutions (AAOIFI), in accordance with its Statement No.1, are applicable to all Islamic banks, regardless of the country's governing system. In this research, using the comparative method, the comparison of the Istisna contracting accounting procedure in Iranian banking with the AAOIFI has been investigated. The results of the research indicate that the accounting procedure of Istisna in Iran's banking system is not consistent with the usual accounting practices of AAOIFI, so that in the initial recognition of financial events, the recognition of the profit of the Istisna and grant of the first Istisna is not in full conformity. Also, these two procedures do not comply with the recognition of balance sheet items at the end of the financial period and in terms of disclosure or presentation in the financial statements. This discrepancy requires the need to pay more attention to regulations in the field of accounting and financial reporting of Islamic contracts, particularly the contract of Istisna.