AAOIFI Accounting Board issues exposure drafts of Financial Accounting Standards (FASs) on “Deferred Delivery Sales” and “Istisna-based Development Contracts”
December 2024
PR/24/2024
The Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI’s) Accounting Board (AAB / the board) has officially issued the exposure drafts of financial accounting standards (FASs) on “Deferred Delivery Sales” and “Istisna-based Development Contracts”.
The two proposed standards are aimed to prescribe the accounting and financial reporting principles for recognition, measurement, presentation and disclosures related to deferred delivery sales transactions (including both, Salam and Istisna-based sales transactions) and Istisna-based development contracts (which are generally long-term in nature), respectively.
AAOIFI had earlier addressed these unique financial reporting requirements in FAS 7 “Salam and Parallel Salam” and FAS 10 “Istisna’a and Parallel Istisna’a”, which were identified for revision and improvement as a result of the comprehensive FAS review and revision project initiated by the board. The proposed revised FASs improve upon, and once finalised will eventually supersede, the existing FAS 7 and FAS 10.
On this occasion, Mr. Hamad Al Oqab, chairman of the AAB, stated: “The board recognised the need for aligning the existing standards with advancements in global best practices, along with the demand to cater to the newer products being offered by Islamic financial institutions.” He further expressed: “We sincerely thank the AAB members, working group members and AAOIFI’s secretariat for their unwavering dedication and commitment toward improving transparency in financial reporting.”
Mr. Omar Mustafa Ansari, secretary general of AAOIFI, stated: “The revision of the existing standards on Salam and Istisna mark another milestone of the comprehensive FAS review and revision project. I look forward to a positive response from the industry in the upcoming public hearing and roundtable events for the same.”
To obtain industry feedback, AAOIFI plans to hold a number of public hearing events for the exposure drafts during 2025.
The exposure drafts can be accessed on AAOIFI website through the below links:
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