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 “Presentation and Disclosures in the Financial Statements of Takaful Institutions”.
Work on Takaful project was initiated with the objective of aligning AAOIFI standards as close as possible to global accounting standards, duly addressing the specific Shari’ah requirements. Due to complexity inherent in Takaful products, the board decided to develop one standard prescribing the presentation and disclosure matters, and one or more separate standards prescribing the accounting treatments specific to Takaful products.
The objective of this exposure draft is to set out the overall requirements for presentation of financial statements, the minimum requirement for the contents of, and disclosures in, the financial statements, and a recommended structure of financial statements that facilitates faithful presentation in line with Shari’ah principles and rules for Takaful institutions.
This revised FAS is expected to supersede the existing FAS 12 “General Presentation and Disclosures in the Financial Statements of Islamic Insurance Companies” and is the first part of the deliverables of the Takaful project. The second part of the project, covering the specific requirements for accounting for Takaful that will replace the other three existing FASs on Takaful accounting, is in development process.
On this occasion, Mr Hamad Al Oqab, Chairman of AAB, stated that “over the last few years the board monitored the developments in the Takaful industry which include considerable changes to the regulatory environment as well as the significant developed and enhanced accounting best practices in the conventional insurance sector.” He also added that “the board initiated a comprehensive revision project for FASs on Takaful in 2018 under the recommendation of the “AAOIFI Financial Accounting Standards (FAS) review and revision project. In response to the notable changes in the Takaful industry and other international accounting standard setting bodies the board thought it was timely to fast track the process of revising FASs on Takaful as well”.
The public hearings to obtain industry feedback for the exposure draft is to be held in online during the year 2021. Comments on the exposure draft shall be directed on or before 30 March 2021 to [email protected]. All comments and suggestions of the public hearings as well as written comments will be presented to AAB to discuss and make the changes it deems necessary.
The exposure draft can be accessed BY CLICKING HERE