AAOIFI clarification of media reports

The  Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has issued clarification of recent news reports.

Referring in particular to news carried by Reuters, AAOIFI said, “In particular, Thomson Reuters had included the following sentences in their reports: 

1. AAOIFI plans to improve the operations of sharia boards by strengthening the certification process for scholars, Fakih said.
2. AAOIFI will also look at ways of fostering the rise of a new, younger generation of Islamic scholars, through steps such as training courses, Fakih said.
3. To balance opposition to change within AAOIFI, Fakih seems to want to involve the widest possible range of industry interests in the debate; he called for "rigorous and meaningful discussions...not only among scholars but also with all participants of Islamic finance."
4. AAOIFI, one of the top standard-setting bodies in Islamic finance globally, will over the next couple of years conduct a broad review of how the industry operates, addressing issues such as how boards of scholars work, the organisation's secretary-general Khaled Al Fakih said earlier.

 (1), and (3) were included in a report entitled "AAOIFI in wide review of Islamic finance standards" dated 29 April 2012 while (4) in a report entitled "AAOIFI issues 7 Shari'a standards for Islamic finance" dated 30 April 2012.

“We would like to clarify that neither AAOIFI nor Dr Khaled R Al-Fakih had issued statements (1), and (4) above.

“The quotation on (3) was given to Thomson Reuters only in response to its written questions relating to AAOIFI's upcoming Shari'a Conference. Thomson Reuters ' written questions were:

• What is the priority of the themes to be discussed at the conference?
• What is the level of debate among scholars - which areas remain contentious, if any?
• What are some of the outcomes expected from the May conference?
• What is the status of the review of standards, when can we expect an announcement of this?

“In response to Thomson Reuters ' specific question on What is the level of debate among scholars - which areas remain contentious, if any?, AAOIFI had submitted a written reply that "we are hoping for rigorous and meaningful discussions at the conference, not only among scholars but also with all participants of Islamic finance industry. In particular, we would like to see insightful debate on Repo and hedging that can help us develop standards that can benefit the industry."

“AAOIFI had also provided Thomson Reuters with the following status relating to work program for accounting and governance standards:

Review of accounting standard on Investments in Real Estate - exposure draft released in Jan 2012, final standard expected to be issued in 2nd half of 2012.

Review of accounting standards on Investment Accounts - consultation note released in Jan 2012, exposure draft expected to be issued in 2nd half of 2012, final standard in 1st half of 2013.

Review of accounting standards on Takaful - consultation note expected to be released in 2nd half of 2012, exposure drafts from 1st half of 2013, in, final standards from 2nd half of 2013.

Development of new Governance Standard for Shari'ah Supervisory Board - consultation note to be released in 2nd half of 2012, exposure draft in 1st half of 2013, final standard in 2nd half of 2013.

“With regards to development of new Governance standard, AAOIFI had stated in our e-mail to Thomson Reuters that the standard was potentially to give guidance relating to relationship between Islamic financial institutions and their Shari'ah Supervisory Board. The standard would potentially incorporate additional guidances on terms of references for Shari'ah Supervisory Board similar to international best practices guidances on terms of references for financial institutions' board of directors. It is to build upon and complement our existing seven governance standards.”

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