31 December 2025

PR/15/2025

AAOIFI’s Accounting Board (AAB) Translation Committee has finalised and approved for issuance the Arabic version of Financial Accounting Standard (FAS) 45 “Quasi-Equity (Including Investment Accounts)”, FAS 46 “Off-Balance-Sheet Assets Under Management” and FAS 47 “Transfer of Assets Between Investment Pools”. The English version of these standards was issued in December 2023.

FAS 45 prescribes the principles of financial reporting related to the participatory investment instruments (including investment accounts) in which an Islamic financial institution controls the underlying assets, on behalf of the stakeholders other than owners’ equity. Such instruments normally qualify for reporting on-balance-sheet as quasi-equity. The standard also provides the overall criteria for on -balance -sheet accounting for participatory investment instrument, as well as, recognition, derecognition, measurement, presentation and disclosure for quasi- equity and similar instruments.

FAS 46 prescribes the requirements for the recognition, derecognition, measurement, selection, and adoption of accounting policies related to off-balance-sheet assets under management. It also addresses key financial reporting aspects, including impairment and onerous commitments. In addition, the standard sets out presentation and disclosure requirements, aligned with FAS 1 “General Presentation and Disclosures in the Financial Statements”. It also improves upon and brings in one place the requirements related to financial reporting of off-balance-sheet assets under management.

FAS 45 and FAS 46 supersede the earlier FAS 27 “Investment Accounts”.

FAS 47 prescribes the financial reporting principles and disclosure requirements applicable to all transfers of assets between investment pools related to owner’s equity, quasi-equity and off-balance-sheet assets under management of an institution. It requires adoption and consistent application of accounting policies for such transfers in line with Shari’ah principles and rules and describes general disclosure requirements in this respect. This standard supersedes FAS 21 “Disclosure of Transfer of Assets”.

The three financial accounting standards are effective for the financial periods beginning on or after 01 January 2026.

The Arabic versions of the standards can be accessed on AAOIFI website: Click here