AAOIFI issues standard on Waqf Governance

The Governance and Ethics Board (AGEB / the board) of the Accounting and Auditing Organization for Islamic Financial institutions (AAOIFI) in its 17th meeting approved the issuance of its governance standard (GS 13) “Waqf Governance”.

AAOIFI initiated the Waqf comprehensive project for revision and development of the Shari’ah, governance and financial accounting standards on the Waqf in 2017, in collaboration with Future Investments and the International Institute of Islamic Waqf (IIIW). The project has gone through extensive standard development process by a research and development team, and numerous experts and scholars remained involved during the project. The revised Shari’ah standard on Waqf was issued in March 2019 while the financial accounting standard on financial reporting by Waqf institutions (FAS 37) was issued by the AAOIFI Accounting Board in December 2020. Waqf Governance is the final component concluding this comprehensive project.

The Waqf has been one of the important organs in Muslim societies since beginning of Islamic era and has played a significant role in the social and economic development of the Muslim and wider communities, worldwide. The Waqf is entrusted with a great deal of fiduciary responsibilities and it is essential to safeguard the interests of the beneficiaries and curb any possibilities of corruption and malpractices. With the evolution of better governance structures and technological advancements influencing all spheres of socioeconomic lives, the board agreed that it was necessary to rethink the rules of governance for the Waqf to achieve the Waqf objectives in a more effective and efficient manner.

The standard provides the core principles of governance (from both, corporate governance and Shari’ah perspective) as applicable to the Waqf. It covers various topics including but not limited to key responsibilities and principles for establishing terms of reference of different organs of the Waqf, policies and procedures, guidance on internal control, guidance on transparency and disclosures, etc.

The Chairman of the AGEB, Mr. Farrukh Raza, stated: “A lack of confidence is one of the main issues that the Waqf sector suffers from. This would potentially have social and economic implications, adversely affecting the general community in which the Waqf operates as well as the entire Waqf sector”. He added: “I am confident that this standard will significantly help avoiding malpractices in the sector and help amplify the socioeconomic benefits it can produce”. He added: “We highly appreciate the efforts and time devoted by the board and working group in developing this standard despite their eventful work agendas and industry engagements”.

Mr. Anas AlDowayan, Chief executive officer of the International Institute for Islamic Waqf (IIIW) stated: “We have had the honor to work with our partner (AAOIFI) in developing the Waqf governance standard, in order to organize the management of the Waqf and its assets in accordance with the best international practices and to fulfill the requirements of financial safety for the Waqf and the societal impact of the Waqf institution.”

On this occasion, Mr. Omar Mustafa Ansari, the Secretary General, AAOIFI stated: “I would like to extend my sincere gratitude to both Future Investment and IIIW for their support and collaboration. Also, I would like to thank the board and working group members for their tireless efforts for improving the quality of the standard. Their extensive experience in Waqf sector has undoubtedly contributed to the development of a key governance standard that aims to promote and strengthen the core values of the Waqf and their governance practices, as well as enhance the public and stakeholders’ confidence in the Waqf”.

The final standard on Waqf Governance can be accessed BY CLICKING HERE

The final guidance note on Waqf Governance can be accessed BY CLICKING HERE

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