Page 136 - ICD AR21 EN

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021
(CONTINUED)
34 STANDARDS ISSUED BUT NOT YET EFFECTIVE (Continued)
the principles of financial reporting related to Zakah attributable to different stakeholders of an Islamic financial institution. This standard shall be effective for the financial periods beginning on or after 1 January 2023 with early adoption permitted. The Corporation is currently evaluating the impact of this standard.
Financial Accounting Standard – 40 “Financial Reporting for Islamic Finance Windows”
The objective of this standard is to establish financial reporting requirements for Islamic financial services offered by conventional financial institutions (in the form of Islamic finance windows). This standard shall be effective on the financial statements of Islamic finance window of conventional financial institutions for the periods beginning on or after 1 January 2024 with early adoption permitted.
Financial Accounting Standard – 1 (Revised 2021) “General Presentation and Disclosures in the Financial Statements”
The revised FAS 1 describes and improves the overall presentation and disclosure requirements prescribed in line with the global best practices and supersedes the earlier FAS 1. It is applicable on all the Islamic financial institutions and other institutions following AAOIFI FASs. This standard sets out the overall requirements for presentation of financial statements, the minimum requirements for the contents of the financial statements and a recommended structure of financial statements that facilitate faithful presentation in line with Shari’ah principles and rules and comparability with the institution’s financial statements of previous periods, and the financial statements of other institutions. This standard shall be effective on the financial statements of the institutions beginning on or after
1 January 2023 with early adoption permitted. The Corporation is currently evaluating the impact of this standard.
35 LIBORTRANSITION
As a result of the global financial crisis, the reform and replacement of the inter-bank offered rates (‘IBOR’) has become a priority for global regulators. The LIBOR transition is a significant event that poses complex challenges for banks and the financial system. The Financial Conduct Authority, the regulator of LIBOR confirmed a timeline when LIBOR settings will cease. Most of the non-USD denominated settings as well as the 1-week and 2-month settings will cease on December 31, 2021. The remaining USD settings will cease on June 30, 2023. The Islamic Corporation for the Development of the Private Sector (ICD) has certain contracts outstanding at the end of 2021 which will mature after June 30, 2023. The implication of this is that:
• LIBORrateswillnotbeavailableforcontractsmaturingafterthatdateandanalternativeratetobeused for the remaining part of the maturities will have to be agreed.
• Somecontractsmayhavefallbackclauses,andsomemaynothave.‘’Fallbacks’’areprovisionswhich contemplate a change or cessation of an interest rate and for example provide for the introduction of a new financing rate or means of determining a new rate.
• ReplacementofanIBORwiththerelevantRisk-FreeRate(RFR)orafallbacktotherelevantRFRmay result in paying more or receiving less than ICD would have otherwise.
134 ICD ANNUAL REPORT 2021