At its 46th accounting board meeting in Bahrain in June, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) discussed standard developments including the public consultation on the exposure draft for FAS 54 “Direct Costs: Determination, Attribution and Reimbursement”.
The standard sets out the accounting and financial reporting principles for the determination, attribution and reimbursement of direct costs incurred by Islamic financial institutions with regard to the shari’ah-compliant contracts and arrangements (and to other institution in connection with their respective Islamic finance transactions).
The standard has been approved in principle, and is expected to be issued within this year, after completion of the due process.
Hamad Al Oqab, Chairman of the AAOIFI Accounting Board stated: “The focus of the board has been to facilitate the Islamic financial institutions in implementation of consistent accounting practices with more transparency, in line with shari’ah principles and rules. I believe that FAS 54 will bring greater harmony in financial reporting practices and, additionally, will help improving the level of compliance with Shari’ah principles and rules across the industry”.