The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), held a Public Hearing event at the head office of Bank Muscat in Muscat, Sultanate of Oman for two of its accounting and governance standards’ exposure drafts namely: FAS 25 (revised) “Investments in Sukuk, shares and similar instruments”, and GSIFI 10 “Shari’ah compliance and fiduciary ratings for Islamic financial institutions.
The event was attended by local banking and finance professionals, Shari’ah scholars, professionals from audit firms, academicians and students of Islamic finance universities. Public hearings for these standards were previously held in Bahrain, Turkey, Pakistan and Sudan. Industry feedback received during the public hearings in the form of questions, comments, and recommendations, as well as those directly provided to AAOIFI by the industry stakeholders will be compiled and presented to the respective working groups and technical boards to be discussed and deliberated upon before the final issuance of the standards.
Exposure draft of FAS 25 (revised) proposes to improve upon and supersede the AAOIFI’s FAS 25 “Investment in Sukuk, Shares and Similar Instruments” issued in 2010. The draft standard aims at setting out required principles for the classification, recognition, measurement, presentation and disclosure of investment in Sukuk, shares and other similar instruments of investments made by Islamic financial institutions (IFIs / the institutions). The standard defines the key types of instruments of Shari’ah compliant investments and defines the primary accounting treatments commensurate to the characteristics and business model of the institution under which the investments are made, managed and held.
Exposure draft of GSIFI 10 proposes that Shari’ah compliance and fiduciary ratings shall be carried out for all IFIs on a non-mandatory basis and provides for the key principles for the rating agencies to be applied for Shari’ah compliance and fiduciary rating of Islamic financial institutions. It provides principal guidance on the responsibility, acceptance, process, reporting and quality assurance for such services.
Commenting on the occasion, the Acting Secretary General, AAOIFI, Mr. Omar Mustafa Ansari thanked the management of Bank Muscat – Meethaq Islamic Banking and said that Omani market has been quite receptive to the opportunities in Islamic banking and finance and have shown a proactive approach in promoting local Islamic finance industry”. He added. “AAOIFI will work closely with institutions for promoting Islamic banking industry and standardization of practices in the Sultanate. He also expressed appreciation to the industry and the academia for their participation in the hearings.
Future public hearings will be held in different parts of the world to obtain the industry feedback on other exposure drafts issued by AAOIFI. The details of the future public hearings will be announced before the events for participation by the industry stakeholders. Comments on the exposure drafts on FAS 25 (revised) and GSIFI 10 can be sent to [email protected] and [email protected] respectively.