IslamicFinance.de

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has signed an MOU with the Participation Banks Association of Turkey (TKBB) to collaborate in the promotion of Islamic finance in Turkey. AAOIFI and TKBB agreed to work in areas of common interest, such as the meaningful exchange of information and conducting joint capacity-building programmes. Osman Akyüz, the Secretary General of TKBB, said that they would also focus on increased representation of Turkish experts in AAOIFI’s boards and committees. AAOIFI Secretary-General Omar Mustafa Ansari emphasized the role of TKBB for the growth of Islamic finance in Turkey and assured the full support of their initiatives and activities.

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) held a public hearing of two of its standards hosted by Banque du Liban (BDL) (Central bank of Lebanon) in Beirut, Lebanon. AAOIFI also held its 10th meeting of the AAOIFI Accounting Board (AAB), where the Board deliberated on the Exposure Draft on Ijarah and Ijarah Muntahia Bittamleek, and the Standards Review and Revision Project. Several public hearings for AAOIFI standards have earlier taken place in Bahrain, Egypt, Pakistan, Turkey, United Arab Emirates (UAE) and future public hearings will be held during 2018 in different parts of the world to obtain industry feedback on other exposure drafts already issued by AAOIFI.

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has issued its first standard covering wakala, or investment agency contracts. The guidance aims to address the use of wakala in areas such as over-the-counter instruments, treasury placements and Islamic bonds. Wakala is common as a standalone product, but AAOIFI opted to focus its standard on more complex instances where it is combined with other contracts. Islamic banks use wakala for both their short and long-term funding needs, and in recent years have incorporated the contract into hybrid sukuk versions. In wakala, one party acts as agent for another and the AAOIFI standard focuses on this principal-agent relationship. It states that the relationship does not transfer ownership rights of the assets to the agent, the principal should account for the assets in its accounting books. The standard also requires the principal to evaluate the nature of the investment at inception.

Senior scholars in Islamic finance are exploring ways to prevent legal disputes with new rules aiming to clarify responsibilities. The discussions are part of the annual sharia conference of the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). AAOIFI has developed a comprehensive sharia standard for sukuk that is being finalised, with work underway on three accounting standards and a governance standard. According to Said Bouheraoua, director of the Malaysia-based International Sharia Research Academy for Islamic finance, Dana Gas and other cases highlight the potential need to legislate work of scholars and penalties for breaches. At present, only the central bank of Malaysia has stipulated such fines, although this requires proving breaches occurred in 'bad faith' making penalties difficult to apply.

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is close to finalising governance and sharia standards for Islamic endowments, known as awqaf. Deputy Secretary General Omar Mustafa Ansari said the development of an accounting standard for awqaf was underway. A governance standard for awqaf would provide guidance on internal controls, policies and procedures, transparency and disclosures. According to a Dubai government estimate, awqaf may hold around $1 trillion in assets around the globe. Most awqaf do not disclose full financial figures, although their underperformance is believed to be considerable since they are run by administrators rather than return-oriented investment managers.

The world's top Islamic finance scholars are scrutinizing the validity of cryptocurrencies. The discussions are part of the annual sharia conference of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) being held in Bahrain this week. The key question for scholars is whether cryptocurrencies fall under the so-called "ribawi" category, which includes commodities like gold and silver. AAOIFI primarily issues accounting and sharia standards for Islamic finance institutions, but there is no current indication on cryptocurrencies. Scholar deliberations, however, could clarify what types of cryptocurrencies are religiously acceptable and influence future product development.

The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is working to establish standards and norms for Shariah-compliant banking practices worldwide. The AAOIFI has hundreds of member institutions from over 45 countries. In October 2017, Saudi Arabia’s central bank, the Saudi Arabian Monetary Agency, joined AAOIFI. Its standards are widely used in the industry and are compulsory in some countries such as Bahrain and Oman. To homogenize industry practices, in 2017 the AAOIFI adopted guidelines for centralised Shariah boards and new standards for gold-based products. In 2018, the AAOIFI is developing new draft rules on Shariah compliance and fiduciary ratings.

The head of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has resigned. Hamed Hassan Merah presented his resignation after more than three years and the board of trustees accepted it. As a complex organisation with 200 institutional members from across 45 countries, the AAOIFI had been slow to respond to issues relating to conflicts of interest and product standardisation. Under Merah, the AAOIFI tackled such issues head on, launching a review of its accounting, auditing and sharia standards. In November, Merah said AAOIFI would now prioritize wider adoption of its standards by engaging national regulators in key markets, including Turkey and Malaysia. Saudi Arabia’s central bank joined AAOIFI as an institutional member in October 2017.

Saudi Arabia’s central bank has joined the Islamic financial regulator Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The move could increase cross-border financial deals in the region, as guidelines will apply to all financial institutions within Saudi Arabia. Both conventional and Islamic banks will now be subject to the same standards, potentially encouraging deals with other Muslim countries. AAOIFI Chairman Sheikh Ebrahim bin Khalifa Al Khalifa stated that the addition of the Saudi central bank would help foster closer collaboration with the kingdom. Saudi Arabia may now hold ambitions of becoming a global heavyweight in the Islamic finance sector. However, it will face intense competition from Malaysia, South Africa and the UK.

AAOIFI has issued its Governance Standard No. 8 "Central Shari’ah Board", which also marks the issuance of 100 standards so far. Standards have been issued in areas of accounting, auditing, governance, ethics as well as Shari’ah. According to Chairman Dr. Ishrat Hussain, this standard will support the regulators for establishing and operating Shari’ah boards at jurisdiction level. A survey with experts was conducted and public hearing sessions were held in Bahrain, United Arab Emirates, Turkey, and Pakistan. Although the standard encourages the creation of Central Shari’ah Boards (CSB) at national levels, the guidance provided would standardise the global regulatory practices in this respect. The standard also presents a country-level approach for regulating the Islamic Finance Industry. It provides detailed guidance on the definition, scope of work, responsibilities, appointment, composition, independence and terms of reference of a Central Shari’ah Board.

A set of new Shariah standards for Islamic banking and financing have been launched by the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The launching ceremony was attended by Islamic finance scholars and specialists from across the region. The recently issued Shariah standards include No.(55) Competitions and Prizes Standard, No.(56) Liability of Investment Manager Standard, No.(57) Gold and its Trading Controls Standard and No.(58) Repurchase Standard. These standards are deemed important Shariah reference for the industry, including legislative bodies, regulatory authorities and financial institutions. They are also important to other professional entities such as law firms, accounting and consultancy firms, universities, academic institutions and research centres.

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) will develop a package of standards covering Islamic endowments or awqaf. AAOIFI did not give a time frame for the completion of its awqaf standards, but said its board had discussed and approved specifications regarding the accounting standards. The plans are part of wider industry efforts to modernise awqaf, which receive donations to operate specific social projects, such as mosques, schools and welfare schemes. Most awqaf do not disclose full financial figures, although their underperformance is believed to be considerable. In India, awqaf are estimated to own 490,000 properties but their estimated annual income is just 1.63 billion rupees ($25.22 million.)

The Auditing Organisation for Islamic Financial Institutions (AAOIFI) has published the exposure draft of the accounting standard on Sukuk and invites feedback from the Islamic finance industry. The objective of the standard is to prescribe the accounting and financial reporting guidance for the accounting treatment and classification with regard to the Sukuk issuance. It also covers the presentation and disclosure of Sukuk issuance. It provides principle-based accounting treatments for broadly two types of Sukuk issuance, off balance sheet and on balancesheet as well as respective subcategories. Comments on the exposure draft are welcome and should be directed no later than 31 March 2017 to accounting@aaoifi.com. Comments and suggestions will be presented in an upcoming meeting to discuss and make necessary changes to the standard.

Two standard-setting bodies are proposing new guidelines for sukuk that would make them more transparent and easier to structure. The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) published draft accounting standards for sukuk. It clarifies how sukuk should be treated on balance sheets and which information issuers should disclose. The AAOIFI said it had also formed a working group to overhaul its sharia standards for sukuk. Last year, the Malaysia-based Islamic Financial Services Board (IFSB) drafted its own guidelines for disclosure related to Islamic capital market products. Aligning the market around common standards and requiring all issuers to disclose the same information could increase investment in sukuk.

The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has issued a draft standard on murabaha to update guidance on the most common financing tool used by Islamic banks. AAOIFI is conducting a wide review of its standards to encourage convergence of industry practices and increase consumer appeal. The proposed standard would supercede two earlier ones on murabaha. It would also cover new areas such as the accounting treatment on the liability side of a murabaha transaction. AAOIFI is seeking industry feedback on the draft until the end of March, aiming to make the final version effective from January 2019.

A global body for Islamic finance has issued a draft standard on centralized sharia boards, aiming to improve corporate governance in the industry. The proposed rules come at a time when Islamic banks are trying to widen their appeal in the Middle East and Southeast Asia, while opening up entirely new markets in Africa. The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is seeking industry feedback on the proposed standard until the end of February. AAOIFI said the standard would encourage convergence of industry practices by avoiding contradictory rulings and fostering consistency across products and services. While the standard does not prescribe term limits for scholars, it does require sharia boards to implement a rotation policy for its members while including members with expertise in areas such as accounting and law.

The Shari’ah Board of AAOIFI held its annual meeting from 17 to 19 November 2016 in the Kingdom of Bahrain. The meeting was concluded with issuance of a number of resolutions as well as the adoption of two new Shari'ah standards. The new standard on the Liability of Investment Manager defines the concepts of transgression and negligence and breach of contractual stipulations on the part of the investment manager. The standard also sets out the Shari'ah rulings pertaining to investment manager's liability or volunteering to bear liability. AAOIFI has also approved a new standard on Gold and it Trading Controls. The standard will be officially launched at a press conference whose date will be announced shortly. It will also be published together with other standards in the new edition of AAOIFI's standards.

A worldwide Sharia standard for bullion trading is moving closer to realisation. An exposure draft has been brought out and placed before the wider public for possible feedback. It was the Accounting and Auditing Organisation for Islamic Financial Institutions that adopted the exposure draft. This was the result of preparatory work and extensive consultations. The General Secretariat was tasked with inviting the opinions of scholars and experts to probe the depth of the exposure draft and its inclusion of relevant technical aspects and issues faced by practitioners in the industry.

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) plans to finalize several new standards by the end of the year. Bahrain-based AAOIFI has published a draft sharia standard for gold-based products with a one month consultation period ending on Nov. 9. AAOIFI's sharia board also discussed work on a new sharia standard covering credit cards, while a final draft of a sharia standard covering liability of investment managers would be issued during its next meeting. Standards for murabaha, sukuk and ijara are also underway with a working group expected to finalize them by the end of the year. A revision of the existing standard on sukuk will cover issues including the asset-backed and asset-based nature of sukuk, capital boosting instruments, beneficial ownership and non-viability clauses.

Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) will arrange its Annual Shari'a Conference on 7 and 8 May 2012 in Manama, Kingdom of Bahrain. The conference will be held under the patronage of the Central Bank of Bahrain.
The conference represents a part of AAOIFI's consultation with the industry to help its standard-setting efforts.
Some of the topics that will be discussed at the conference include Shari'a compliance and supervision processes, continuing development of Islamic financial and capital markets, legal issues in Islamic finance, potential areas for further growth of Islamic finance, and development of human capital resources in Islamic finance.