The Securities and Exchange Commission of Pakistan (SECP) recently introduced three new international auditing and accounting standards to improve regulation and governance of Shariah-compliant financing sector.
“SECP granted approval to its Islamic finance department for the adoption and notification of the three additional Shariah standards,” the commission said in a statement. “The AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) Shariah standards have been notified after a thorough consultative process.”
Initially, SECP had notified the standards for public consultation in November 2017 and subsequent to the receipt of the opinion from stakeholders and upon completion of the consultation period the Shariah standards have been formally notified for adoption in Pakistan.
“These Shariah standards which the commission has notified and adopted include Shariah Standard No 17-Investment Sukuk, Shariah Standard No 18-Possession (Qabd) as well as Shariah Standard No 23-Agency and the Act of an un-commissioned agent (Fodooli),” SECP said.
AAOIFI is an Islamic international autonomous non-for-profit corporate body that prepares accounting, auditing, governance, ethics and Shariah standards for Islamic financial institutions and the industry.
The commission said it has been playing a ‘highly’ proactive role in providing an enabling legal and regulatory environment for the growth of Islamic finance in the country.
“Geared towards development and growth of Islamic finance, it has been replicating the best international practices as laid down by Islamic Financial Services Board through its regulations and policy guidelines,” it added. “As a step further towards harmonisation and standardisation in the business practices of Islamic financial institutions, the SECP has been adopting the accounting and Shariah standards from time to time.”
SECP further said it has been working in close collaboration with the leading global standard-setting bodies in Islamic finance for effective regulation and governance of the Islamic financial sector.
In 2005, 2007 and 2013, the SECP had notified three Islamic financial accounting standards (IFAS) for adoption, namely IFAS 1-Morabahah, IFAS 2- Ijarah and IFAS 3- profit and loss sharing on deposits, respectively.
In January 2016, the commission notified four Shariah standards of AAOIFI, including Shariah standard no 3- default in payment by a debtor, Shariah standard no 8-murabahah to the purchase order, Shariah standard no 9- Ijarah and Ijarah Muntahia Bittamleek and Shariah standard no 13- Mudarabah.—Agencies