AAOIFI issues final standard on impairment and credit losses

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24 Nov, 2017

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is an Islamic international autonomous non-for-profit corporate body that prepares accounting, auditing, governance, ethics and Sharia'a standards for Islamic financial institutions and the industry. The newest standard published by the AAOIFI deals with impairment and credit losses covering current and expected losses.

The new standard FAS 30 Impairment, Credit Losses and Onerous Commitments is not converged with the corresponding requirements in IFRS 9 Financial Instruments as it was concluded that "the impairment and credit losses approaches taken by the generally accepted accounting principles recently set by various accounting standard setters and regulatory standard setters, as well as, the regulators, cannot be applicable on Islamic finance transactions in a similar manner".

The standard is effective from the financial periods beginning on or after 1 January 2020. Earlier adoption is permitted.

The issued standard can be accessed exclusively by subscribers, however, free subscription is available through the AAOIFI website. Please see the press release on the AAOIFI website for more information.

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