The Accounting Board (AAB) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has officially published the exposure draft of the revised “AAOIFI Conceptual Framework for Financial Reporting by Islamic Financial Institutions” and seeks opinion and feedback from the Islamic finance industry.
The AAB in its efforts and contribution to the Islamic finance industry and continued improvement to existing financial reporting practices, decided to revise the existing AAOIFI conceptual framework after observing market practices in various jurisdictions over the past several years. AAB understands the need to establish a common conceptual framework for accounting and financial reporting by institutions that demonstrate to the common users of general-purpose financial statements that the institutions comply, in form and in substance, with the principles and rules of Shari’ah in their financial and other dealings.
In this regard the revised conceptual framework introduces the main objectives as well as the concepts underlying financial accounting and reporting and accordingly would supersede the existing conceptual framework.
On this occasion Mr. Hamad Al Oqab, the Chairman of AAB commented that “a comprehensive conceptual framework is meant to provide a frame of reference about the fundamental principles required for setting accounting standards. The AAB strive to understand the complexities to resolve accounting disputes and at the same time follow Shari’ah principles and rules” he further continued that “in this regard the revised framework is expected to cater to the needs of accounting and financial reporting practices of the Islamic finance industry without any compromise and all the while uphold the core Shari’ah principles”.
The framework is primarily applied by the AAB for development of AAOIFI Financial Accounting Standards (FASs). Additionally, it serves as a reference point for selection and adoption of accounting policies in the absence of specific guidance under FASs.
This revised conceptual framework brings significant changes from its predecessor conceptual framework, by bringing new definitions and incorporating the principles that that are in line with the recently issued FAS.
Comments on the exposure draft shall be directed on or before 30 April 2019 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