The Accounting Board (AAB) of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held its 18th meeting on 22-23 June 2020.
The AAB considered the effect of FAS 30, “Impairment, credit losses and onerous commitments” on Takaful entities. The members discussed that a project on revising the Takaful standards is in progress and considered the fact that an extension of one year has already been provided and reflected in the effective date of FAS 30 in the same meeting.
The Board, considering request from numerous Takaful / Islamic insurance entities operating in various countries and jurisdictions, clarified that till the project of revising the Takaful standards is complete, the Takaful / Islamic insurance entities remain subject to FAS 15, that is specific to them. In respect of investments accounted for under FAS 25, these entities are subject to impairment requirements under the same standard. However for matters not covered under these standards, these institutions are encouraged, but not obligated, to develop, for the time being, their accounting policies according to FAS 30.