The three discussion papers originally issued in December 2011 were DP i-1 Takaful, DP i-2 Sukuk and DP i-3 Shariah Compliant Profit-sharing Contracts.

On takaful, which in many material respects can be likened to conventional insurance, respondents agreed on most points: A takaful contract should be within the scope of MFRS 4 Insurance Contracts (equivalent to IFRS 4 Insurance Contratcs); Qard, an interest-free loan, from a takaful operator to a deficient participants' fund should be measured at cost; and a retakaful contract should be subject to the same financial reporting requirements as a takaful. There was also general agreement regarding participating contracts, revenue recognition, and additional disclosures. However, there were mixed views as to whether a takaful operator should present consolidated financial statements for itself and its participants’ funds.

On sukuk, which can be compared to a conventional bonds, there seemed to be also general agreement among the respondents. Questions discussed were the consolidation of special purpose entities (SPEs) related to the sukuk issuance, derecognition, classification, measurement, and treatment of derivatives. Regarding the derecognition of an asset that has been transferred for a sukuk issuance, respondents concluded that a reporting entity should derecognise the asset only if the relevant derecognition criteria for that asset are met, even though the transfer may be considered a true sale under Shariah. Respondents also agreed that the IASB’s proposed expected loss model for the impairment of financial assets may be applied to sukuk.

Regarding Shariah compliant profit-sharing contracts, respondents agreed that the MFRS classification and measurement requirements (equivalent to the corresponding IFRS requirements) could be applied even if this may seem contrary to the ‘partnership’ nature of the base contract.

Contrary to its earlier intentions, the MASB will not develop Technical Releases (TRs) based on the discussion papers and the comments received. This is to avoid that a TR could be seen as a local local interpretation of IFRSs. Nevertheless, the MASB will seek ways to help build a framework for the overall consistent treatment of Islamic finance transactions. It will also continue lobbying for the IASB itself to issue guidance on Islamic financial reporting matters. The IASB had announced in the feedback-statement to the agenda consultation that it has asked the MASB to help with setting up an expert advisory group on Islamic accounting. However, currently the IASB only aims at "learning more about Islamic (Shariah-compliant) transactions" before it makes any commitment regarding issuing any guidance.

Please click for access to the feedback statement on the MASB website.