The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Accounting Board (AAB / the board) has officially issued the exposure draft of FAS on “Transfer of Assets between Investment Pools”.

The objective of the proposed standard is to establish the financial reporting principles and disclosure requirements applicable to all internal transfers of assets between investment pools related to (and where material, between significant categories of) owners’ equity, quasi-equity and off-balance-sheet assets under management of an institution. The proposed standard requires adoption and consistent application of accounting policies for such internal transfers in line with Shari’ah principles and rules and describes general disclosure requirements in this respect. This revised standard is intended to improve upon and supersede FAS 21 “Disclosure on Transfer of Assets”.

On this occasion, Mr. Hamad Al Oqab, chairman of AAB, stated that “Islamic financial institutions have specific types of stakeholders and operate under a unique business model. At times, there are transfers between various investment pools which may have issues related to Shari’ah compliance, transparency and fairness. This standard prescribes financial reporting principles in an attempt to address these issues”.

The exposure draft can be accessed by clicking here.