AAOIFI publishes new standard, reviewing several others GLOBAL: AAOIFI has issued a new accounting standard on investment accounts, which will be incorporated in the next publication of AAOIFI standards due early this year, according to a press statement by the organization. The institution is also currently in the process of reviewing a number of existing standards and “developing new ones in order to giver better support to the industry,” confirmed Dr Hamed Hassan Merah, its secretary-general. Replacing two previous accounting standards on investment accounts (FAS 5 Disclosure of Bases for Profit Allocation between Owners’ Equity and Investment Account Holders, and FAS 6 Equity of Investment Account Holders and their Equivalent), the new guideline, known as FAS 27 (Financial Accounting Standard No. 27), regulates Mudarabah transactions which are placed on a short-term basis as interbank-bank deposits as well as transactions of which the Mudarabah contract is considered equity of investment accountholders. The standard, however, does not apply to the following investment vehicles: own equity instruments, Wakalah, reverse Murabahah, Musharakah and Sukuk. Developed through extensive consultation with key stakeholders of the global Islamic finance community, the comprehensive due process involved 13 stages from commissioning consultants to prepare exposure drafts to the official publication. Established in 1991, the Bahrain-based institution has thus far issued 88 standards covering the areas of Shariah, accounting, auditing, ethics and governance for international Islamic finance. Last month, it agreed to join the International Accounting Standards Board’s newly-established Consultative Group on Shariah Compliant Instruments and Transactions, at the invitation of the latter.
Posted on: Mon, 05 Jan 2015 12:29:24 +0000
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