The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held a public hearing, via video conferencing, on the exposure draft of its financial accounting standard (FAS) “Quasi-equity (including Investment Accounts)”, in collaboration with Arab Monetary Fund, UAE Banks Federation – United Arab Emirates and Bahrain Association of Banks (BAB), Kingdom of Bahrain on Monday, 20 June 2023.

This standard prescribes the principles of financial reporting related to the participatory investment instruments that establish a control of the institution on behalf of the stakeholders other than the owners’ equity. Such instruments (including, in particular, the unrestricted investment accounts) normally qualify for on-balance-sheet accounting and are reported as quasi-equity.

It also provides the overall criteria for on-balance-sheet accounting for participatory investment instruments and quasi-equity, as well as, pooling, recognition, derecognition, measurement, presentation and disclosure for quasi-equity. It further addresses financial reporting related to other quasi-equity instruments and certain specific issues.

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

Ms. Amal Almasri, Head of Supervision Department – Islamic Banks, Central Bank of Syria, member, AAOIFI Accounting Board, presented a brief background of the planned development project for the standards superseding financial accounting standards FAS 27 “investment account”, and the rational for developing this standard “Quasi-equity (including Investment Accounts)”.

The exposure draft was presented by Mr. Mohammad Majd Bakir, Director, Professional Standards Development, AAOIFI, highlighting the content and structure of the exposure draft 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 the 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] “Quasi-equity (including Investment Accounts)” https://bit.ly/3X2ZKSV