AOSSG updates report on Islamic financial transactions under IFRS
16 Mar 2018
In 2010, the Islamic Finance Working Group of the Asian-Oceanian Standard-Setters Group (AOSSG) conducted research into Islamic financial transactions under IFRS and published a paper examining and explain the issues in applying IFRS to Islamic financial transactions. In 2017, the working group decided to update the paper to understand the current status of the issues examined in the original report. The updated report is now available.
The updated report notes that the 15 issues identified in the 2010 paper remain relevant for discussion within the current context. Although the issues are quite distinct to Islamic financial transaction, the updated report suggests that they can be addressed within IFRS. However, the updated conclusion stresses:
Accounting for Islamic financial transactions requires judgment about facts and circumstances and should not be made based on contract names.
The report also notes that the Working Group plans to have a separate discourse on the application of IFRS 9, IFRS 15, IFRS 16, and IFRS 17 to specific Islamic financial transactions:
Application of IFRS to Islamic financial transactions is an ongoing agenda item as IFRS Standards evolve over time. The “Big Four” Standards – IFRS 9, IFRS 15, IFRS 16 and IFRS 17 – may pose challenges to Islamic financial reporting. For this reason, there need to be a collective effort to apply IFRS in a consistent manner and to improve understanding of the Standards, without compromising Shariah tenets.
Please click to access the updated report on the AOSSG website.