PR/07/2025

5 May 2025

The Accounting Board (AAB / the board) of Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI’s) held its 42^nd meeting on 22-23 April 2025, at AAOIFI’s head office, in the Kingdom of Bahrain. The board approved, in principle, the issuance of AAOIFI Financial Accounting Standard (FAS) 51 “Participatory Ventures”. The objective of FAS 51 “Participatory Ventures” is to prescribe the principles of accounting and financial reporting for the participatory ventures.

Mr. Hamad Al Oqab, Chairman of the AAB, at this occasion stated: “The new standard is now also addressing the financial reporting requirements for the working partner and the venture itself, in addition to the earlier standard’s requirements applicable only to the investor, and these are better aligned with the new framework and the generally accepted accounting principles”. He particularly applauded the contribution of the board members, working group members and the secretariat team.

The board further discussed the need to revise FAS 26 “Investment in Real Estate,” and resolved, in principle, to withdraw the standard on the premise that generally accepted accounting principles adequately cover the accounting treatment for property investments. The board decided to issue a statement, in due course, to officially withdraw the standard and to provide relevant guidance on the applicability of generally accepted accounting principles in the specific context of Islamic financial institutions. Till the time of issuance of such statement the current standard shall remain in effect.

The board also discussed the public consultation comments on the FAS Discussion Paper (FAS-DP) 01/2024 “Accounting and Financial Reporting Approach for Tawarruq and Commodity Murabaha” along with the draft of the proposed FAS on “Tawarruq and Commodity Murabaha”. It was agreed that further consultation with the industry is needed including input from Shari’ah experts and market practitioners, and the convention of a round table that brings together various stakeholders to elaborate on the same before a final decision is made in this respect.

The board also reviewed and approved its plan for the current year and evaluated the progress made in the development of current standards and the projects.