Quasi-equity
AAOIFI's category for investment accounts and similar risk-sharing funds, presented between liabilities and owners' equity.
Quasi-equity is the category AAOIFI uses for funds, such as unrestricted investment accounts, that are neither liabilities nor owners' equity, because their holders share in the institution's investment risk and returns without being shareholders. AAOIFI's accounting standard on quasi-equity, including investment accounts, sets out how such funds are recognised, measured and presented. Presenting them separately helps readers see who bears which risks.
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
Unrestricted investment accountAn investment account whose funds the bank may invest at its discretion and commingle with its own in a pooled portfolio.Profit-sharing investment account (PSIA)An account whose funds the bank invests, usually as mudarib, with returns based on actual results rather than a promised rate.AAOIFI Financial Accounting Standards (FAS)The accounting standards AAOIFI issues for Islamic financial institutions, covering contract types and Islamic-specific reporting.Investment poolA group of assets funded by identified sources, such as shareholders or investment account holders, whose income is allocated to them.