The Accounting Board (AAB) of Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held its 18th meeting on 22-23 June 2020.
The AAB deliberated on the feedback received from the Islamic financial institutions working in various markets, about the potential constraints in adopting and implementing the recently issued FASs, in the wake of the COVID-19 pandemic. The members agreed that institutions are facing practical difficulties in making the procedural shift in their operations; specifically in the modifications required in the IT systems, and the training of relevant staff. In view of that, the AAB decided to provide one year extension of the effective date of the recently issued AAOIFI FASs, namely, FAS 30 ‘Impairment, credit losses and onerous commitments’, FAS 31 ‘Investment agency (Al-Wakala Bi Al-Istithmar)’, FAS 33 ‘Investments in Sukuk, shares and similar instruments’, and FAS 34 ‘Financial reporting for Sukuk-holders’; from 1 January 2020 to 1 January 2021. The AAB emphasized that institutions are still encouraged to early adopt these standards.
However, the extension of effective date shall not be applicable to institutions which have already completed the process of implementation, or where regulatory requirements do not allow such extension.