The Accounting Board (AAB) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) approved the issuance of the exposure draft on Financial Accounting Standard (FAS) on “Interim Financial Reporting” during its 25th AAB meeting held on 2-3 September 2021.
The primary statements of an Islamic financial institution are structurally different from the primary statements prepared under an alternative accounting framework. In the interest of timeliness of information taking account of the cost considerations involved in preparation and dissemination of such information, and to avoid repetition of information previously reported, the AAB concluded that guidance is required in respect of interim financial reports.
An institution may be either be required, or at times elect on its own, to provide less information at interim dates. However, the new standard emphasises that information about new activities, events and circumstances is reported to the stakeholders at regular intervals.
The standard aims to set out the principles for interim financial reporting for all institutions (including virtual entities) that have adopted AAOIFI FASs. This standard should be read with other AAOIFI FASs and generally accepted accounting principles, applicable in respective jurisdictions.
On this occasion, Mr Hamad Al Oqab, Chairman of AAB, stated that “over the last few years the board monitored the developments in the industry and are at the forefront to develop and enhance accounting and reporting best practices. This exposure draft prescribes guidance related to accounting treatments and presentation and disclosure of interim financial reports. Through timely and reliable interim financial reporting, AAOIFI aim to improve the ability of investors, creditors and others to understand an Islamic financial institution’s capacity to generate earnings and cash flows, its financial condition and liquidity and distribution of profits”.
The public hearings to obtain industry feedback for the exposure draft is to be held in online during the year 2021. Comments on the exposure draft shall be directed on or before 30 November 2021 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 on AAOIFI’s website via the following link: https://bit.ly/3wrvsw6