The Accounting Board (AAB / the board) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held its 31^st meeting on 25-26 November 2022 at the AAOIFI head-office, Manama, Kingdom of Bahrain.

The meeting commenced with a discussion on the board’s progress report of 2022. During the year, five board meetings, thirteen working group meetings and thirty-eight short sub-committee meetings have been held for multiple projects. Additionally, ten public hearing sessions and five Shari’ah committee meetings were also held in 2022. The board priorities for 2023 have been established and agreed upon based on market need, including the need of guidance on accounting for gifts and prizes.

The board has approved in principle the issuance of the exposure draft on “Transfer of Assets between Investment Pools” i.e., revised FAS 21 “Disclosure on Transfer of Assets”. The standard aims to establish the financial reporting principles that apply in respect of transfer of assets between various investment pools of an Islamic financial institution. After the issuance of the exposure draft, the public hearing session will be held during 2023.

The board has also approved in principle the issuance of revised exposure draft of FAS 29 “Sukuk in the Books of the Originator” which is a part of a comprehensive project undertaken by AAOIFI on Sukuk including Shari’ah, financial accounting and governance standards. The standard prescribes accounting and classification of Sukuk issuance, in the books of the institution, its presentation requirements and related disclosures of information in the financial statements of the institution. It also provides guidance on off-balance-sheet Sukuk issued by the institution.

Additionally, the exposure draft of AAOIFI Standard on Auditing (SOA) 1 “Framework of Auditing” was presented to the board and the board comments will be presented to AAOIFI Governance and Ethics Board (AGEB) for their consideration.

The board agenda included reviewing and finalising the exposure draft of the revised Financial Accounting Standard (FAS) 27 “Investment Accounts” i.e., [ED of] FAS on “Quasi-Equity (including Investment Accounts)”, [ED of] FAS on “Control (of Asset and Businesses)” and [ED of]  FAS on “Off-Balance-Sheet Assets Under Management”.

On this occasion, Mr. Hamad Al Oqab, Chairman, AAB, stated that: “Multiple exposure drafts of financial accounting standards were approved in principle for issuance by the board in response to industry demand. With the issuance of a revised exposure draft on FAS 29 “Sukuk in the Books of the Originator”, the board aims to address the Sukuk issuers need for guidance in this area”. He added, “I would like to express my sincere appreciation to the board members and AAOIFI secretariat for their efforts in the standard development process in response to the ever-changing dynamics of the industry.”

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: www.aaoifi.com