Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) convened a meeting for its Accounting and Auditing Standards Board in Beirut, Lebanon on 16 October 2009. The meeting was hosted by Banque du Liban (Central Bank of Lebanon) and held at its premises in Beirut.
Drafts of new updated international accounting standards for Islamic finance industry – on conceptual framework for financial reporting and accounting for investments – were approved at the meeting. The drafts will now be circulated to the international Islamic industry for comments as part of AAOIFI’s on-going consultation with the industry.
Attending the meeting were members of AAOIFI’s Accounting and Auditing Standards Board comprising prominent Shari’a scholars and representatives from leading regulatory and supervisory authorities, Islamic financial institutions, accounting and auditing firms, and industry participants. Banque du Liban is represented in the Board.
AAOIFI standards are followed by Islamic financial institutions in the leading Islamic finance centres including Lebanon, Bahrain, France, Indonesia, Jordan, Kuwait, Malaysia, Pakistan, Qatar, Saudi Arabia, South Africa, Sudan, Syria, United Arab Emirates, and United Kingdom.
Dr. Mohamad Nedal Achaar, Secretray General of AAOIFI said “we have developed the updated standards to further support the expansion of Islamic finance industry and promote international best practices in Islamic financial institutions across the world”.
He also expressed his appreciation to the Banque du Liban for its generosity in hosting the meeting in Beirut and hoped that the close cooperation between AAOIFI and Banque du Liban would help Lebanon to position itself at the forefront of Islamic finance development.
Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is pleased to announce that existing Financial Accounting Standard No. 23 Consolidation is being revised.
Provisions of existing Standard state that the power to control rests with the voting rights over the entity and a parent should consolidate entities in which it, directly or indirectly through other entities, owns more than 50% of the voting rights. Meanwhile, the provisions of revised Standard do not strictly follow the legal form of control but stipulate a comprehensive criterion for identification of control over subsidiaries.
On account of issuance of revised FAS 23: Consolidation in imminent future, implementation of the existing Standard on Consolidation is therefore held in abeyance until further notice. Exposure draft of the revised Standard will be circulated to the international Islamic finance industry for comments and submitted to a public hearing scheduled for January 2009.
Copy of this statement in pdf format can be downloaded from here.
AAOIFI is introducing a program to certify financial contracts between Islamic financial institutions and their clients comply to AAOIFI’s standards – particularly Shari’a standards.
The objectives of the program are to increase awareness of AAOIFI’s standards, to promote compliance to AAOIFI’s standards, and to introduce harmonization of Islamic finance practices. The certification will assist Islamic financial institutions in marketing Shari’a-compliant products to their customers and will provide independent endorsement on the institution’s Shari’a compliance.
The program is currently being developed in consultation with AAOIFI’s Shari’a Board and Accounting & Auditing Standards Board.