AAOIFI issues Financial Accounting Standard 31 Investment Agency (Al-Wakala Bi Al-Istithmar) officially in Arabic

AAOIFI's Accounting Board (AAB) Translation Committee has finalised and approved for issuance the Arabic version of Financial Accounting Standard (FAS) 31 Investment Agency (Al-Wakala Bi Al-Istithmar). The English version of this standard was issued in December 2017.

This standard intends to define the accounting principles and reporting requirements for investment agency (Al-Wakala Bi Al-Istithmar) transactions and instruments to be in line with the ever-changing global best practices, in the hands of both the principal and the agent.

This standard sets out that the primary consideration for an investment agency transaction is determination of a principal-agent relationship. Such a relationship does not entail transfer of the ownership right and incidental risks and rewards to the agent, hence such transactions shall be kept off-balance-sheet for the agent. On the contrary, the principal shall account for the assets or investment in assets in its books (i.e., on-balance-sheet).

This standard became effective for the financial periods beginning on or after 1 January 2021.

To view the Arabic version, please click on the following link: link