The amendments to FAS 23 clarify, that control over an entity that triggers consolidation does not only exist if the Islamic financial institution preparing consolidated financial statements holds 50 per cent or more of the voting rights in the entity or if the Islamic financial institution has obtained control through agreement with the entity's other shareholders or with the entity itself. Rather, the amendments clarify that, in addition to the existing stipulations in the FAS 23, control may also exist through rights arising from other contractual arrangements, voting rights of the Islamic financial institutions that give de facto power over an entity, potential voting rights, or a combination of these factors. FAS 23 will thus be closer aligned with IFRS 10 Consolidated Financial Statements.

The amendment is effective for annual reporting periods ending on or after 31 December 2015. The full text of the amendment will be included in the next publication of AAOIFI standards scheduled for early 2015.

Please click for the press release on the AAOIFI website offering more details on the amendments to FAS 23.