The Accounting Board (AAB) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has officially issued financial accounting standard (FAS) 37 “Financial reporting by Waqf institutions”. This standard has been finalized by the board after extensive discussions and due deliberations involving comments received from Shari’ah scholars representing various jurisdictions worldwide as well as those received in writing from industry experts at different stage of development including public hearings.
The standard addresses the accounting and financial reporting requirements Waqfs and similar institutions that aim to ensure compliance, in form and in substance, with Shari’ah principles and rules. The implementation of this comprehensive standard is expected, in turn, to contribute towards improving effectiveness and efficiency of operations of Waqfs, maximizing benefits to the beneficiaries and encouraging proper accountability and management.
This standard is a culmination of the Waqf comprehensive project for the revision and development of the Shari’ah, governance and accounting standards on Waqf, which was launched by AAOIFI in 2017. The initiation of the development of a financial accounting standard on Waqf was documented and effected by an agreement that was entered into by and between AAOIFI and Future Investment (Istithmar al-Mustaqbal- Saudi Arabia) on 12 April 2017. This involved the formation of a dedicated working group for the new standard, taking effect on the date of the agreement. The exposure draft of the standard was developed and then presented to the working group in September 2019. Over the course of past year, the working group and the board worked extensively on fine-tuning the structure and content of the draft, taking into consideration the feedback gathered at multiple public hearings and industry interactions.
On this occasion, Mr Hamad Al Oqab, Chairman of AAB, stated that “this standard shall eliminate the dearth of guidance on accounting requirements for Waqf and similar institutions. It is a new standard which shall be perfected after it is introduced to the industry”. He also called on AAOIFI to closely monitor implementation challenges that the industry may face following its issuance.
Mr. Omar Ansari, Secretary General, AAOIFI, stated: “as the entire project for development of Waqf standards has finally completed, I would like to extend special thanks and appreciation to the dedicated working group, the board and AAOIFI’s team, and broadly to all experts and professionals who helped make this immense project possible. My thanks also go to the benefactors, Al-Shawi Foundation and Future Investment (Saudi Arabia) for their sponsorship and support, without which the overall project could not have been achievable within the defined time window and resources”. He added: “we trust that this standard will help improve level of transparency in the operations and financial results of Waqfs as well as establish a better foundation for demonstrating financial performance of Waqfs across the industry and beyond”
This standard can be accessed by CLICKING HERE