Page 135 - ICD AR21 EN

ANNEXES
• allowingeffectiverateofreturn/profitratemethodforaccountingforrentalincome,inthehandofthelessor;
• testingforimpairmentofright-ofuseassetshallbesubjecttorequirementsoffAS30"impairment,Credit Losses and Onerous Commitments"; and
• detailedguidelinesareprovidedforpresentationanddisclosureswithenhanceddisclosurebylessorandlessee of information as compared to previous requirements in FAS 8.
Impact on Lessor Accounting
FAS 32 does not change substantially how a lessor accounts for Ijarah. FAS 32 has changed and expanded the disclosures required.
Under FAS 32, an intermediary lessor accounts for the head Ijarah and the sub-ijarah as two separate contracts. As required by FAS 32, an allowance for expected credit losses has been recognised on the finance lease receivables.
34 STANDARDS ISSUED BUT NOTYET EFFECTIVE
The following new financial accounting standards of The Accounting and Auditing Organization for Islamic Financial Institutions (“AAOIFI”) have been issued except for FAS 29 “sukuk issuances” which is in the stage of exposure draft and is expected to be issued in near future. The Corporation intends to adopt these financial reporting standards when they become effective where applicable and is currently assessing the impact of these new financial accounting standards on its financial statements and systems.
Financial Accounting Standard – 29 “Sukuk Issuances”
The standard aims to provide guidance for accounting, classification and presentation for Sukuk issuances primarily based on the Sukuk structure, which may include on balance sheet, as well as, off balance sheet accounting. These classifications depend on the control of such assets comprising of power to control and nature of control i.e. for risks and rewards as well as varying benefits to the institution or the fiduciary responsibility on behalf of the Sukuk- holders. This standard shall be applied for accounting and financial reporting for Sukuk issuance in the books of the issuer.
Financial Accounting Standard – 37 “Financial Reporting by Waqf Institutions”
The objective of the standard is to establish principles of financial reporting by Waqf institutions, which are established and operated in line with Shari’ah principles and rules. This standard shall be effective for the financial periods beginning on or after 1 January 2022 with early adoption permitted. The Corporation is currently evaluating the impact of this standard.
Financial Accounting Standard – 38 “Wa’ad, Khiyar and Tahawwut”
The objective of this standard is to prescribe the accounting and reporting principles for recognition, measurement and disclosures in relation to Shari’ah compliant Wa’ad (promise), Khiyar (option) and Tahawwut (hedging) arrangements for Islamic financial institutions (the institutions). This standard shall be effective for the financial periods beginning on or after 1 January 2022 with early adoption permitted. The Corporation is currently evaluating the impact of this standard.
Financial Accounting Standard – 39 “Financial Reporting for Zakah”
This standard aims at setting out accounting treatment of Zakah in the books of an Islamic financial institution, including the presentation and disclosure in its financial statements. The objective of this standard is to establish
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