The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Accounting Board (AAB) in its 16th AAB meeting held on 31 October and 1 November 2019 approved the issuance of the exposure draft of its Financial Accounting Standard (FAS) on “Financial Reporting by Waqf Institutions”.
The issuance of this standard was coordiated and supported by Future Investments for Awqaf and Wills and kindly funded by the Sheikh Muhammed Salih Al-Shawi Foundation.
In response to the growth of activities and evolution of different forms of Waqf institutions, AAOIFI initiated the Waqf project in 2016. Waqf institutions are entrusted with an appreciable amount of fiduciary responsibilities therefore it was also agreed control of any possibilities of corruption (financial or otherwise) would be needed. This resulted in the issuance of two standards on Waqf – ‘Waqf’ (issued by AAOIFI Shari’ah Board) and ‘Waqf Governance’ (issued by AAOIFI Governance and Ethics Board).
The absence of a comprehensive standard and guidelines on accounting for Waqf gave rise to the need for a FAS on Waqf. The AAB understands that it is necessary to support the institutions reporting objectives in a more effective and efficient manner. This FAS on Waqf aims to establish accountability and transparency of Waqf institutions in a manner suitable and in compliance with Shari’ah principles and rules and constitutes the final output in completion of the AAOIFI Waqf project. The objective of this standard is to establish principles of financial reporting for Waqf institutions, which are established and operate in line with Shari’ah principles and rules.
Mr. Hamad Al-Oqab, Chairman of AAB, commenting on the issuance of the exposure draft stated that: “the absence of a comprehensive standard and guidelines on accounting for Waqf gives rise to the need of a FAS on Waqf to ensure that transparency and accountability of Waqf institutions could be assured”. He further added that “the recording and reporting for Waqf has been inconsistent where different Waqf institutions have their own accounting practices. AAOIFI in its continued efforts aims to harmonize and standardize accounting practices, aims the same for Waqf institutions across the Islamic finance industry”.
The public hearings to obtain industry feedback for the exposure draft is to be held in multiple jurisdictions. Comments on the exposure draft shall be directed on or before 30 April 2020 to [email protected] All comments and suggestions of the public hearings as well as written comments will be presented to AAB to discuss and make the changes it deems necessary.
The exposure draft can be accessed BY CLICKING HERE