The Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI’s) Accounting Board (AAB / the board) held its 38^th meeting on 10-11 May 2024, in the Kingdom of Bahrain. The agenda of the meeting included review of multiple ongoing standards and other technical pronouncements development projects.

The board reviewed, in general, the progress on overall standards development and review projects and agreed to prioritise such projects in view of their significance and the need of the industry.

The board deliberated on the need for issuance of an exposure draft of AAOIFI Financial Accounting Standard (FAS) on “Tawarruq and Commodity Murabaha” and considered numerous relevant technical aspects and challenges related to Shari’ah compliance and alignment with the overall AAOIFI framework. After due deliberation, the board resolved to develop a discussion paper on the subject, and to engage industry stakeholders to collect expert feedback as to the main aspects of the proposed standard, before moving ahead with the finalisation of the standard.

The board further discussed the preliminary study and the way forward for the revision of FAS 7 “Salam and Parallel Salam” and FAS 10 “Istisna’a and Parallel Istisna’a” given the necessity of alignment with “AAOIFI Conceptual Framework for Financial Reporting” and FAS1 “General Presentation and Disclosures in the Financial Statements”, as well as, the changes in the generally accepted accounting principles in respect of similar transactions, particularly the revenue recognition principles. As a result, the board agreed to proceed with the development of the exposure draft(s) in line with the conceptual agreements reached on the preliminary study.

Furthermore, the board reviewed the draft guidelines on computation for Zakah of Islamic financial institutions. Key aspects were highlighted and emphasised for inclusion in the guidelines, where additional input is still needed from the working group before advancing to the final phases of development.

The board also considered the draft technical release on the illustrative interim condensed financial statements, providing its recommendations for submission to the Technical Advisory and Interpretation Committee (TAIC).

Mr. Hamad Al Oqab, chairman of AAB, stated that: “The board, comprised of subject-matter experts and professionals, has held thorough discussions on current projects and will persist in its efforts to develop, assess, and launch projects to effectively cater to the pressing requirements of the Islamic finance industry in relation to financial reporting”. He also expressed his appreciation to the board members, AAOIFI secretariate, working group and committee members for their invaluable contributions and dedication towards the board’s mission.”