The Accounting Board (AAB) of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held its 19th meeting via video conference on 8 August 2020.

The agenda of the meeting was confined to the discussion and finalization of Financial Accounting Standard (FAS) on “First Time Adoption of AAOIFI Financial Accounting Standards” which will supersede the guidance note, that was earlier issued under the same title, and should be read together and in line with AAOIFI Shari’ah Standard No. 6 “Conversion of a Conventional Bank to an Islamic Bank”.

The Islamic financial industry has grown exponentially, and the Board felt the need to address new developments and requirements by a full-fledge standard in order to better assist the institutions which contemplate adoption of AAOIFI FASs.

The Board deliberated on the changes to the exposure draft, issued in 2019, in view of the comments made by the AAOIFI Shari’ah Committee and the respective working group, as well as the written comments submitted to AAOIFI at the public hearings and accordingly adopted the final standard and approved it for issuance.

On the occasion, Mr. Hamad Al Oqab, Chairman, AAOIFI Accounting Board, stated: “the objective of this standard is to enable institutions to carry out adoption of AAOIFI financial accounting standards for the first time and to prepare accounting records and financial statements based on the AAOIFI FASs”. He added that “the new standard is expected to facilitate a smooth transition from conventional accounting frameworks to AAOIFI’s framework and to enable the preparers of financial statements to produce information that is comparable with the previous periods as well as with that of conventional institutions.”

The next AAB meeting is scheduled to be held in September 2020 via video conference with the final version of the revised AAOIFI conceptual framework on agenda.