The Accounting Board (AAB) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in its continued endeavour to make the financial statements of Islamic banks and financial institutions transparent, fair, understandable and comparable has officially re-issued the exposure draft of the revised Financial Accounting Standard (FAS 1) “General Presentation and Disclosures in the Financial Statements of Islamic Banks and Financial Institutions” and seeks opinion and feedback from the Islamic finance industry.
The Board, in its 18th meeting, agreed to re-issue the exposure draft which supersedes the earlier draft issued in December 2019. The re-issuance encompasses the need to highlight consequential amendments to certain standards as a result of a detailed review of the exposure draft already in issue and its impact on standards that have been issued, revised or are currently under revision. The Board also agreed to extend the scope of the revised FAS 1 to include consequential amendments to other standards.
This standard aims at setting out the overall requirements for presentation of financial statements, the minimum requirement for the content of the financial statements, and a recommended structure of financial statements that facilitate faithful presentation in line with Shari’ah principles and rules and comparability with the institutions’ financial statements of previous periods, and those of other institutions.
Mr. Hamad Al-Oqab, Chairman, AAB, commenting on the re-issuance of the exposure draft stated that: “the objective of the revised FAS 1 is to align the accounting treatments and the reporting requirements of Islamic finance institutions to the maximum extent possible with the generally accepted accounting principles and to cater to the growing information needs of users of financial statements. With the substantial growth achieved by the Islamic banking industry over the last decade the reporting requirements prescribed by the generally accepted accounting principles have simultaneously become more stringent, partly due to increased regulatory requirements”. He further added that “AAOIFI has been issuing and revising standards at a rapid pace with a total of 7 new standards issued between 2015-2019. The new standards and revisions necessitated a revised FAS 1 in order to conform to the reporting requirements prescribed in the newly developed and revised FASs”.
The revised FAS 1 aims to improve upon the accounting treatments prescribed in line with the global good practices and supersedes the existing FAS 1. The Board will also revise the illustrative financial statements that will accompany FAS 1. However, the illustrative financial statements will not be part of the standard but rather will be issued separately.
All comments on the exposure draft shall be directed – on or before 30 April 2021 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