AAOIFI Financial Accounting Standards Translation Committee has finalized and approved the issuance of the Arabic version of Financial Accounting Standard (FAS) No. 28 ‘Murabaha and Other Deferred Payment Sales’.
As a matter of board policy, FASs are drafted and issued in English. This is mainly due to the fact that Financial statements of an IFI (Islamic financial institution) are primarily prepared and presented in English in most jurisdictions adopting and applying FASs. However, AAOIFI in order to cater to the requests of the industry at large takes it upon itself to develop an Arabic version of these standards through a due process of quality translation.
FAS 28 prescribes and improves the accounting and reporting principles and requirements for Murabaha and deferred payment sales transactions and different elements of such transactions. It supersedes the earlier FAS 2 “Murabaha and Murabaha to the Purchase Orderer” and FAS 20 “Deferred Payment Sales”.
This standard aims at setting out the accounting rules for measurement, recognition and disclosure of the transactions of Murabaha and other deferred payment sales that are carried out by an IFI. However, this standard shall not apply to investments made in investment instruments e.g. equity instruments or sukuk, where the underlying asset for such instrument is a Murabaha or deferred payment sale. It will also not apply on Commodity Murabaha and Tawarruq transactions for which a separate standard is already in the development phase. Overall approach towards development of the standard included a focused effort to bring the standard closer to the international best practices of accounting, without compromising on Shari’ah principles and rules.
The standard can be accessed for free by CLICKING HERE