AAOIFI looks to revise Sukuk standards

24/11/2014 14:39 AST

Speaking at the annual conference on Islamic banking and finance organised by Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), Dr. Hamed Hassan Merah, AAOIFI Secretary General, said, “Following recent extensive discussions with our Shari’ah Board, we are planning to carry out an integrated programme to potentially revise or supplement the existing Shari’ah Standard on Sukuk. We are also looking at the possibility of developing clearer guidance on Sukuk that will incorporate accounting, legal, technical, and tax-related aspects. This will take into consideration the current and evolving developments in the industry. We hope this will enhance transparency of Sukuk transactions and promote further harmonization, and effectively provide further support towards growth of Sukuk across the globe. We will deliberate this further with the industry and provide further details of our work program in due course.”

The conference, organised in cooperation with the World Bank and under the auspices of the Central Bank of Bahrain, concluded on 18 November 2014 in Manama, Kingdom of Bahrain. At the session on Sukuk and Islamic capital markets, the conference discussed the areas of further harmonisation and standardisation on structuring and issuance of Sukuk. AAOIFI has issued, amongst others, Shari’ah standards on Sukuk and Islamic finance mechanisms that are used in as underlying structures for Sukuk such as Ijarah (leasing), Murabaha (deferred-payment sales), Mudaraba (investment management) and Musharaka (partnership). It has also issued accounting standards on those Islamic finance mechanisms and investments in Sukuk. In order to complement and supplement those existing standards, AAOIFI will be carrying out development of new standards relating to Sukuk that will give more comprehensive and extensive guidance in order to support continuing growth of Sukuk.

The session on updates on AAOIFI accounting standards discussed the impending issuance of revised accounting standard on investment accounts and the on-going revisions of accounting standards on Ijarah and Mudaraba. The revised accounting standard on investment accounts is scheduled to be issued by the end of 2014 while the consultation notes and exposure drafts of revised accounting standards on Ijarah and Mudaraba in the first half of 2015. In addition to those standards, AAOIFI is looking to issue consultation notes on revision of accounting standards on Takaful (Islamic insurance) also in the first half of 2015.

CPI Financial