30 Dec The Accounting and Auditing Organisation for Islamic Financial Institutions ( AAOIFI) has issued a new accounting standard on investment. This paper focuses on the issue relevant to the need for Islamic accounting standards in reporting Islamic Financial Institutions (IFIs), in the context of Malaysia. Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is an independent industry body dedicated to the development of internatio.

Author: Tonris Mulrajas
Country: Nicaragua
Language: English (Spanish)
Genre: Business
Published (Last): 5 February 2018
Pages: 78
PDF File Size: 19.79 Mb
ePub File Size: 9.47 Mb
ISBN: 233-3-38215-844-2
Downloads: 39034
Price: Free* [*Free Regsitration Required]
Uploader: Faujind

AAOIFI – Al Baraka Bank

Selection between the standards depends upon one’s objectives. This is not due to bias, but rather to inherent difficulties either in identifying the transactions and other events to be measured standares in devising and applying measurement and presentation techniques that can convey messages that correspond with those transactions and events.

Over the next year, AAOIFI will continue with our on-going work to develop a number of new standards and revise existing standards in order to ensure that the standards can support further growth of the international Aaoifi accounting standards finance industry. Meanwhile, the accounting standard on consolidation — FAS 23 Consolidation aaoifi accounting standards has been revised to give additional clarification on the way an Islamic financial institution should determine if financial statements of an investee company, or a subsidiary, should be aaoifi accounting standards with its own.

This page stanrards used Facebook comments. Cash used to redeem bonds. Accordingly SPV does not include the building as an asset on its balance sheet. Sukuk investors stake in investment fund. The implications will be seen when the accounting for sukuk transactions is considered in detail.


In paragraph 33 and 34 the framework emphasises the need to faithfully represent the transactions that have taken place:.

Accounting for sukuk under IFRS and AAOIFI accounting standards

Accordingly AAOIFI does not allow substance to determine the presentation of the accounts but instead gives significant weight to the legal form of contracts and Shariah requirements are overriding. Payment of sukuk financing obligation. Cash at the end of the year. These assumptions give rise to the following income statement, aaoifi accounting standards flow aaoifi accounting standards and axoifi sheet for Trader plc over the five year life of the bond.

Select Language English Arabic. This aggregate cost needs to be spread over the five years in the most appropriate manner.

Standarvs would also like to thank our institutional members, central banks, regulatory authorities, Islamic financial institutions and the international Islamic finance industry as a whole for aaoifi accounting standards support that has been given on the development aaoifi accounting standards adoption of AAOIFI standards.

In order to present a complete set of accounts for Trader plc, some assumptions are required regarding its other financial numbers.

Shari’a Standards

Net cash from financing activities. Net cash generated by operating activities.

Accounting, Auditing and Governance Standards. In such circumstances, the reporting of a sale would aaoifi accounting standards represent faithfully the transaction entered into if indeed there was a transaction. Proceeds from issue of bonds. For comparability, Trader plc is shown as distributing only the same amount of profit each year as a dividend aaoifi accounting standards its shareholders as it distributes under IFRS accounting.


This diagram was created specifically for this website article, and was not present in the published book chapter for space reasons. As accounting issues are much easier to understand when illustrative numbers are available, this chapter considers two transaction scenarios. The sukuk transaction is designed to replicate the economics of the conventional bond transaction aaoifi accounting standards the perspective of Trader plc.

For any new comments, please use the Disqus comments facility above. Distribution to sukuk holders.

Accounting, Auditing and Governance Standards

Tap here for MENU. From aaoifi accounting standards standards development and revision program over the past year, we have issued, amongst others, a new accounting standard on investment account and a revised aaoofi standard on consolidation.

IFRS requires one to compute an annual cost of aaoifj to apply to the amount owed. The above diagram shows the sukuk structure with the initial and periodical cash flows. The above quotations illustrate that the aaoifi accounting standards standard-setting organisations have different priorities.

Both standards setting aaoifi accounting standards have set out the purposes of financial accounting as they see them. In other cases, however, it may be relevant to recognise items and to disclose the risk of error surrounding their recognition and measurement.