The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Accounting Board (AAB) has issued of the exposure draft of its Financial Accounting Standard (FAS) on “Financial Reporting for Zakah”, which was approved by its Accounting Board.
In addressing the growing needs of the Islamic finance industry, the revision of FAS 9 on “Zakah” was on the agenda of the newly appointed ABB constituted in 2015, with a broader scope revision under consideration.
This standard improves upon and supersedes FAS 9 on “Zakah” and aims at setting out the accounting treatment of Zakah in the books of the institutions, including the presentation and disclosure by an Islamic financial institution.
The exposure draft aims to establish the principles of financial reporting related to Zakah attributable to different stakeholders of an Islamic financial institution. This was also done keeping in view the additional accounting and computations related matters are already set out in the Shari’ah standard 35 “Zakah”.
Mr. Hamad Al-Oqab, Chairman, AAOIFI Accounting Board, commenting on the issuance of the exposure draft stated that: “certain improvement opportunities were identified in the earlier standard, during the comprehensive review and revision project initiated by AAB for the existing FASs”. He further added that “in response, AAB considered it relevant and timely to initiate the revision of FAS 9 on Zakah. This FAS has been developed to provide guidance on institutions that are obliged to pay Zakah on behalf of certain or all stakeholders; and those that are not obliged to pay Zakah which shall apply the presentation and disclosure requirements. An additional illustrative guidances to the standard will be issued towards the finalization of the standard.”.
Public hearings to obtain industry feedback for the exposure draft is to be held during 2020. Comments on the exposure draft shall be directed – on or before 30 October 2020 to [email protected]. All comments and suggestions of the public hearings as well as written comments will be presented to the AAB to discuss and make the changes it deems necessary.
The exposure draft can be accessed by CLICKING HERE