Page 93 - ICD AR21 EN

Zakat and tax
The Corporation, being a multilateral financial institution, is not subject to Zakat or taxation in the member countries. The Corporation’s equity is part of Baitul Mal, which is not subject to Zakat and tax.
Segment reporting
Management has determined the chief operating decision maker to be the Board of Directors as this body
is responsible for overall decisions about resource allocation to development initiatives within its member countries. Development initiatives are undertaken through a number of Islamic finance products as disclosed
on the face of the Statement of Financial Position, which are financed centrally through the Corporation’s equity capital and financing. Management has not identified separate operating segments within the definition of FAS 22 "Segment Reporting" since the Board of Directors monitor the performance and financial position of the Corporation as a whole.
4 ACCOUNTINGJUDGMENTSANDESTIMATES
Estimates, assumptions and judgments are continually evaluated and are based on historical experience and other factors, including professional advices and expectation of future events that are believed to be reasonable under the circumstances. Significant areas where management has used estimates, assumptions or exercised judgments are as follows:
i) Investment entity
In determining an investment entity status, the Corporation considered the following:
a) The Corporation’s management believes that the AAOIFI accounting standards do not contain any guidance on investment entities and, therefore, based on the conceptual framework has followed the guidance under IFRS 10 related to investment entities. Any guidance issued by AAOIFI in the future years may require the management to re-assess the Corporation’s status as an investment entity.
b) The Corporation provides investment management services to a number of investors with respect to investment in managed funds;
c) The Corporation generates capital and income from its investments which will, in turn, be distributed to the current and potential investors; and
d) The Corporation evaluates its investments’ performance on a fair value basis, in accordance with the policies set out in these financial statements. Management believes that it meets the criteria of substantially all investments being evaluated at fair value as of December 31, 2021
The Board of Directors concluded that the Corporation meets the definition of an investment entity. Their conclusion is reassessed on an annual basis.
ii) Impairment allowance for financing assets
The measurement of credit losses under FAS 30 across all categories of financial assets requires judgement, in particular, the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses and the assessment of a significant increase in credit risk. These estimates are driven by a number of factors, changes in which can result in different levels of allowances. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.
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