The Accounting Board (AAB) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has officially published the exposure draft of AAOIFI’s accounting standard on “Financial Reporting for Sukuk-holders” and seeks opinion and feedback from the Islamic finance industry.

During the project on Sukuk accounting, it was decided to develop accounting guidelines in order to ensure that the Sukuk-holders and other stakeholders are provided with suitable financial information about the assets/venture at the back end. This became more relevant for the instruments which are off-balance sheet.

Special purpose vehicles (SPV) are used to for the purpose of securitization by various institutions by transferring / de-recognizing asset(s) from their books to the SPV. These off-balance sheet arrangements range from lease transactions to securitization of assets. Pursuant to the issuance of an exposure draft on Sukuk Issuances / Sukuk in the Books of the Issuer (FAS 29) there was a need to provide in detail the accounting by SPVs for the benefit of Sukuk-holders.

The AAOIFI public hearings will be held in the months of October and November 2017 in various parts of the world. The Public hearings are scheduled to be in Bahrain, Lebanon, Turkey, and Pakistan. Further details with respect to specific dates and venues, will be announced shortly. Comments on the exposure draft are welcome and should be directed no later than 10 December 2017 to this email: accounting@aaoifi.com.

All comments and suggestions of the public hearings are presented to AAB to discuss and to make necessary changes required.

 The exposure draft can be accessed BY CLICKING HERE