AAOIFI Accounting Board approves transitional arrangement for early adoption of FAS 30

Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) during the eighth meeting of its Accounting Board (AAB) held on 29 and 30 December 2017 in Bahrain approved the early adoption of FAS 30 along with the existing provisions related to reserves in FAS 11.

The Board noted that while the exposure draft for FAS 35 “Risk Reserves” is issued already, but the finalization of the same needs some time to complete the due process. In view of the same the Board decided to allow a transitional arrangement as follows:

“Islamic Financial Institutions (IFIs) may early adopt FAS 30 “Impairment, Credit Losses and Onerous Commitments” (in line with paragraph 62 of FAS 30), with effect from 01 January 2018. In such situation, they shall also apply the existing clauses of FAS 11 “Provisions and Reserves” related to risk reserves (paragraphs 3/1 to 3/5/5 of FAS 11). This transitional arrangement shall be applicable till the period beginning on or after the date of issuance of FAS 35.”