Islamic Finance Consultative Group [IASB only]

Date recorded:

Update (Agenda Paper 28)


The Islamic Finance Consultative Group (the ‘Group’) was formed following the 2011 Agenda Consultation to assist in assessing whether the Board needed to take action to address the needs of Islamic finance. The Group has met annually, except 2016 when, according to the paper, the Group was relaunched. That Group held a meeting in July 2017 and a second in March 2018 in Dubai.  The Group does not issue guidance, but matters discussed by the Group might subsequently be referred to the Board.

At its March 2018 meeting, the Group discussed questions arising in applying IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases to particular Islamic products. This included considerations of (i) whether an Islamic financial institution would apply IFRS 15 and/or IFRS 9 or IFRS 16 to an arrangement in which it provides Sharia-compliant financing, and (ii) whether a receivable arising in such an arrangement would meet the ‘solely payments of principal and interest’ test in IFRS 9. The Group noted that the judgements involved in analysing such arrangements require consideration of the facts and circumstances relating to the specific transactions, which can vary.

Presentations focusing on the impediments to applying IFRS Standards to Islamic transactions in Pakistan and Indonesia were also made.

The Group considered that none of the matters discussed required further consideration by the Board. 

The next meeting of the Group will take place in the first quarter of 2019.

Staff recommendation

The paper did not contain any staff recommendations.


The staff stressed that the Islamic Finance Consultative Group (the ‘Group’) is part of the Board’s broader strategy of supporting the implementation of IFRS Standards.

The Vice Chair of the Group noted that all the members of the Group recognised that given the diversity of Islamic transactions in practice the Group would take a step-by-step approach. He also considered that it would be best for the Group to meet annually in order to ensure that there are sufficient topics to discuss each time.

The staff noted that the intention was for the Group’s discussions to help practice to think about the questions to consider when applying IFRS to Islamic transactions, and confirmed that if those discussions highlighted any issues that would require the Board’s attention, these would be brought to the Board or the Interpretations Committee. Similar to a Transition Resource Group (TRG), the Group will not issue any formal guidance itself.

One Board member highlighted the help brought by the Malaysian Accounting Standards Board (‘MASB’) to the Group. The staff equally complimented the work done by the staff of the MASB to prepare the Group’s meeting as well as the comprehensive report of the Asian-Oceanian Standard-Setters Group’s (AOSSG) Islamic Finance Working Group prepared under Malaysian leadership, which was discussed at the Group’s meeting.

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