The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held a public hearing, via video conferencing, on exposure draft of its financial accounting standard (FAS) “Control (of Assets and Business)”, in collaboration with SOCPA – KSA, Marmara University – Republic of Turkiye, and Arab Monetary Fund – Abu Dhabi, UAE on Tuesday, 30 May 2023.

This standard improves upon, and brings in one place, existing standards’ requirements pertaining to control and aligns the same with generally accepted accounting principles, while retaining certain differences therefrom reflecting Shari’ah requirements or differences in business model (particularly considering the participatory structures).

It also prescribes and brings at one place criteria for establishment of control over assets and a business by institutions following AAOIFI FASs. This includes control over underlying assets(s) of a participatory structure as well as control of a business for the purpose of consolidation of financial statements.

Ms. Noof Shareeda, Senior Associate, Professional Standards Development, AAOIFI, delivered welcome remarks and a brief overview of the draft standard.

Dr. Zeyn Elabidin Hayat, Associate Professor, Marmara University – Istanbul, Republic of Turkiye, delivered an address, shedding particular light on the current situation of the Islamic (participatory) finance industry in the Republic of Turkiye, and the role of AAOIFI standards, particularly financial accounting standards as guidance for specific types of transactions and arrangements related to participatory institutions and structures.

The exposure draft was presented by Mr. Mohammad Majd Bakir, Director, Professional Standards Development, AAOIFI, highlighting the content and structure of the exposure draft, the rationale for issuance and the need identified by AAOIFI Accounting Board (the board) for a revision of FAS 27 “Investment Accounts”, particularly for the purpose of enhancing the financial reporting requirements in respect of relevant products and matters. The session was accompanied by an interactive Q&A round during which the participants raised specific questions and received answers and explanations on the same. They also provided comments and suggestions for improvement of the draft.

This session was attended by a large number of practitioners and experts in the areas of Islamic finance, Shari’ah, accounting, auditing, consulting, and academia. AAOIFI expressly acknowledges and appreciates the support of the industry and expert participants.

All industry feedback received — in the form of questions, comments, suggestions, and recommendations — will be collated and taken back to the respective working group and will be raised to the board for further deliberation and consideration.

The exposure draft can be accessed through this link:

• [ED of] “Control (of Assets and Business)” link