The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has been closely monitoring the current economic situation during COVID-19 pandemic and is aware that Islamic Financial Institutions (IFIs) may require some clarifications and interpretations, as well as, flexibility options for the application of AAOIFI governance, ethics and auditing standards.
In this challenging time, whereby the world economy is going through difficult times and regulators have started taking measures to deal with the effects of the pandemic, AAOIFI Governance and Ethics Board (AGEB) believes that it is important for the IFIs to maintain the true spirit of Islamic finance and demonstrate the universal ethical values and good governance practices.
AGEB had formed a COVID-19 response taskforce with a mandate to examine and provide guidance in the application of the relevant standards. After due deliberations, AGEB has issued a statement “Application of AAOIFI governance, ethics and auditing standards in view of the impact of COVID-19 pandemic” to provide clarifications and interpretations of the relevant standards as well as to allow deferment of effective date of certain AAOIFI governance, ethics and auditing standards.
The Chairman of the AGEB, Mr. Farrukh Raza stated that: “ethics is one of the most important aspects on which Islamic finance is based on; and it distinguishes IFIs from their conventional peers. Therefore, IFIs shall stand out in this testing time by taking all possible measures to address various matters of importance such as payment moratoriums, dealing with employees, deployment of charity funds and others, in line with Shariah’s ethical spirit”. He added, “the scope of this statement is to provide clarifications and interpretations of the relevant standards in respect of certain significant issues rising amid COVID-19 pandemic and the consequential economic factors and regulatory interventions”.
On this occasion Mr. Omar Mustafa Ansari, Secretary General of AAOIFI, stated: “the COVID-19 pandemic has a major impact on all fields, including Islamic finance industry. We are confident that this statement shall assist and guide IFIs in dealing with the new evolving circumstances, in line with the best governance practices and Islamic ethics”. He added, “the appropriate reaction of IFIs during these difficult times is the acid test for demonstrating the uniqueness of IFIs and their activities”.
The statement can be accessed by CLICKING HERE