AAOIFI issues exposure draft to revise standard on presentation of financial statements of Islamic insurers
Source: Middle East Insurance Review | Mar 2021
The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has released an exposure draft of a Financial Accounting Standard (FAS) on the presentation and disclosure in financial statements of takaful companies.
The Bahrain-based standard-setting body said work on the project was initiated with the objective of aligning AAOIFI standards as close as possible to global accounting standards, duly addressing the specific shariah requirements.
Due to the complexity inherent in takaful products, the AAOIFI’s accounting board decided to develop one standard prescribing presentation and disclosure, and one or more separate standards prescribing the accounting treatment specific to takaful products.
When approved, the FAS is expected to supersede the existing FAS 12, ‘General presentation and disclosures in the financial statements of Islamic insurance companies’.
AAOIFI said that this is the first part of the deliverables of the takaful project. The second part, covering the specific accounting requirements for accounting for takaful that will replace three existing FASs on takaful accounting, is being developed.
AAOIFI chairman of the accounting board Hamad al Qqab said, “The board initiated a comprehensive revision project for FASs on takaful in 2018 under the recommendation of the AAOIFI Financial Accounting Standards review and revision project. In response to the notable changes in the takaful industry and other international accounting standard-setting bodies, the board thought it was timely to fast track the process of revising FASs on takaful as well.”
Comments on the exposure draft are to be submitted by 30 March 2021. M