The Accounting Board (AAB) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) adopted and approved the issuance of the revised “AAOIFI Conceptual Framework for Financial Reporting” for issuance.

The conceptual framework is being revised to align the basic definitions between the recently introduced standards in line with global practices, and to further harmonize the basis for selecting the most appropriate accounting treatments. The revised conceptual framework introduces the objectives and the concepts underlying financial accounting and reporting and would supersede the existing conceptual framework. The conceptual framework and all AAOIFI FASs shall be read, interpreted and implemented in conjunction with and in the context provided by AAOIFI Shari’ah Standards.

On this occasion, Mr Hamad Al Oqab, Chairman of AAB, stated that “this revised conceptual framework brings significant changes from its predecessor, by introducing new definitions and incorporating the principles that are in line with the recently developed and issued standards and serve as a reference point for the development of all future AAOIFI FASs.” He added that “this revised conceptual framework introduces a hierarchy for selection and application of accounting policies as guidance for the preparers of financial statements to assist them in making judgment about reporting when FASs or similar pronouncements are not available. It is expected that the framework will assist national standard setting bodies in developing national accounting standards.”

Mr. Omar Ansari, Secretary General, AAOIFI, stated that “the conceptual framework is primarily applied by the AAB for development of AAOIFI Financial Accounting Standards (FASs). It will also serve as a foundation for selection and adoption of accounting policies in the absence of specific guidance under FASs.” He extended particular thanks to the board, working group, committees and the industry participants who took part in the public hearings held for the revised conceptual framework, which also provides a basis for resolving accounting differences in a manner suitable and in compliance with Shari’ah principles and rules.”

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