The Accounting Board (AAB) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) approved the issuance of the exposure draft on Financial Accounting Standard (FAS) on “Financial Reporting for Islamic Financial Services Offered by Conventional Financial Institutions” and invites industry opinion.
The objective of this exposure draft is to establish financial reporting requirements for all Islamic financial services offered by conventional financial institutions through stand-alone branches, divisions and windows including virtual modes. The exposure draft is aligned with the accounting treatments and the reporting requirements of the AAOIFI Conceptual Framework for Financial Reporting (Revised 2020) and the revised FAS 1 exposure draft. The revised standard will duly supersede the existing FAS 18 “Islamic financial services offered by conventional financial institutions”.
Mr. Hamad Al Oqab, Chairman of AAB, stated: that “over the last few years the board monitored the growth of Islamic finance windows and the conventional financial institutions evolving practices in its offering of Islamic financial services and decided that there is a need to improve the existing FAS 18 to ensure Shari’ah compliance. The board expects that a revised standard will improve the current reporting practices by the conventional financial institutions offering Islamic financial services.”
Mr. Omar Mustafa Ansari, Secretary General of AAOIFI, also stated: “as the demand for Shari’ah-compliant products grows, the board recognize and understand the challenges in establishing full-fledged Islamic banks in jurisdictions that do not mandate AAOIFI FASs. Since many conventional financial institutions offer Islamic financial services under the banner of Shari’ah compliance, the board perceived the need to accommodate the requirement of such institutions and the industry stakeholders at large”.
The public hearings to obtain industry feedback on the exposure draft will be held online during the year 2021. Comments on the exposure draft shall be directed to AAOIFI by 30 September 2021 (on the email: [email protected]). All comments and suggestions raised at the public hearings as well as written comments will be submitted to AAB for its this elaboration and approval of the changes it deems necessary.
The exposure draft can be accessed BY CLICKING HERE