The Accounting Board (AAB) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held its 24th meeting on 30-31 May 2021 via video conferencing.
The meeting commenced with an update on the “Taxonomy and Codification of the AAOIFI standards” project, which aims to enhance the layout and arrangement of the AAOIFI Shari’ah, accounting and governance, auditing and ethics standards. As a result its seeks to make these standards well-structured and better comprehensible and change the way they are documented, updated, referenced, and accessed for better alignment with international best practices which is expected to facilitate and increase the standards adoption worldwide.
The meeting agenda also included the presentation and discussion of the exposure draft on “Accounting for Takaful: Recognition and Measurement”, in light of the working groups’ comments and recommendations. The exposure draft sets out the principles for the recognition and measurement of Takaful arrangements and ancillary transactions with the objective to faithfully present the information related to these arrangements to relevant stakeholders. This constitutes the second output of the AAOIFI FAS on Takaful revision project and should be read in conjunction with the exposure draft “General Presentation and Disclosures in the Financial Statements of Takaful Institutions” already issued in December 2020.
On this occasion, Mr. Hamad Al Oqab, Chairman, AAB, stated that “this second output of the FAS on Takaful revision project aims to support the Takaful industry by aligning the accounting treatments and the reporting requirements of Takaful institution to the maximum extent with the generally accepted accounting principles while maintaining the salient features of Takaful which is based on Tabarru and risk-sharing model. Therefore, the exposure draft provides the necessary guidance to the Takaful institutions’ managed Participants’ Takaful Fund (PTF) and Participants’ Investment Fund (PIF).
The board’s suggestions and comments on the exposure will be provided to the respective working group and as per the requirements of the board and working group, the secretariat will initiate the final process of the issuance of the exposure draft.
The board was also presented with the AAB standards development and implementation update report which included its output for the period from January to May 2021. During the period, 10 working group meetings and more than 22 short sub-committee and executive meetings were held for development of the multiple AAB projects that have been under way.
AAOIFI is currently holding a number of public hearing events online. Details of the public hearings scheduled for 2021 with respect to the newly developed FASs will be announced in due course for participation by the industry stakeholders.
All AAOIFI standards can be accessed exclusively by subscribers to the digital version of AAOIFI standards, and free subscription can be attained on the AAOIFI website: http://www.aaoifi.com