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Outcomes of IASB outreach meeting on issues in the application of IFRS 9 to Islamic finance

  • IASB (International Accounting Standards Board) (blue) Image
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24 Sep 2014

The IASB has made available a recording and a summary report from the meeting of its Consultative Group for Shariah-Compliant Instruments and Transactions in Kuala Lumpur on 5 September 2014. The meeting was a combination of a working group meeting and an outreach meeting to discuss issues in the application of IFRS 9 'Financial Instruments' to Islamic finance.

The meeting's discussions were based on a staff paper made available beforehand. The intention behind the meeting was not to re-open IFRS 9, which has just been published in its final version, but to discuss issues around the application of the standard to Islamic Finance und thus to address uncertainties and possibly reduce diversity in practice.

The discussions focused on three questions:

  1. Which IFRS applies to the accounting of Islamic financial instruments? Are these contracts with customers that fall within the scope of IFRS 15 Revenue from Contracts with Customers?
  2. Do some of the instruments common in Islamic finance meet the characteristics-of-the-instrument test in IFRS 9?
  3. How should the revenue from Islamic finance instruments be described and measured?
It was suggested that the issues raised during the meeting should be compiled as the work product of the consultative group. However, there were fears that such guidance could be regarded as mandatory by some local regulators.

Please click to access the recording and the report from the meeting on the IASB website.

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