This study is aimed to examine al-ijara thumma Al-bay (AITAB) operation and its related issues as practiced in Malaysia. Focus has been made on accounting treatment of Ijarah implemented by all Malaysian Islamic Bank that have AITAB as one of their products. Islamic mode of financing AITAB has grown in popularity, but not without criticism. Critical analysis has help identify the potentiality and the drawback of the said model, which enable us to come up with new model. Accounting treatments on Ijarah (AITAB) implemented by all Malaysian Islamic banks have no difference from conventional hire-purchase whereby Banks do not recognize asset and expenses. Therefore, the financial statements do not truly and fairly reflect the Shariah rights and obligations of the parties. Furthermore pertaining perceptions and expectations toward the actual and propose model of al-ijarah thumma Al-bay (AITAB) thirty questionnaires have been distributed. The finding of this study reveals the need to incorporate the missing part of Islamic principle of real contract and its related reward obligation at all cost, in order to uphold economics justices and cuter the financial needs for the various stakeholders. To solve the problem, Islamic Banks need to revamp their Ijarah product to be in line with Operating Ijarah or IMBT with all consequences and adopting the correct accounting treatment that truly reflect the legal form of the contract. Regulatory framework needs also to be reviewed to support this development.