AAOIFI issues two new financial accounting standards

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04 Jan, 2019

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has issued financial accounting standard (FAS) 33 'Investments in Sukuk, Shares and Similar Instruments' and FAS 34 'Financial Reporting for Sukuk-holders'.

FAS 33, which supersedes FAS 25, sets out improved principles for classification, recognition, measurement, presentation and disclosure of investment in Sukuk, shares and other similar instruments of investments made by Islamic financial institutions in line with Sharia’a principles. It defines the key types of instruments of Sharia’a compliant investments and defines the primary accounting treatments commensurate to the characteristics and business model of the institution under which the investments are made, managed and held.

FAS 34 aims to establish the principles of accounting and financial reporting for assets and businesses underlying the Sukuk to ensure transparent and fair reporting to all relevant stakeholders, particularly including Sukuk-holders.

The two standards are effective for financial periods beginning on or after 1 January 2020 with earlier adoption permitted. The press release on the AAOIFI website offers more information and access to the new standards.

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