AAOIFI Financial Accounting Standards (FAS)
The accounting standards AAOIFI issues for Islamic financial institutions, covering contract types and Islamic-specific reporting.
AAOIFI's Financial Accounting Standards set out how Islamic financial institutions recognise, measure, present and disclose their transactions. They include standards for specific contracts such as murabaha and other deferred payment sales, ijarah, salam and istisna, and for matters specific to Islamic finance such as investment accounts, zakah, takaful and risk reserves. Some jurisdictions require them, while others apply international standards with supplementary guidance.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
Deferred profitThe profit on a deferred-payment sale that is recognised over the payment period rather than all at once at the sale date.Quasi-equityAAOIFI's category for investment accounts and similar risk-sharing funds, presented between liabilities and owners' equity.Ijarah accountingHow lessors and lessees report ijarah contracts, including leases ending in ownership, under AAOIFI's ijarah standard.Takaful accountingAccounting for takaful contracts and funds, which keeps the participants' funds and the operator's own accounts distinct.Zakat baseThe pool of qualifying wealth on which zakat is calculated, after including zakatable assets and deducting what the method allows.