AAOIFI CPAAGE cheat sheet

Murabaha: sale at cost plus disclosed mark-up; the mark-up is fixed at contract date and cannot increase for late payment.

Musharakah: profit is shared per an agreed ratio (which may differ from capital contribution); losses are shared strictly in proportion to capital.

Mudarabah: rabb al-mal supplies capital, mudarib supplies effort; business losses fall on capital unless the mudarib breached duty or was negligent.

Ijarah: the lessor retains ownership and bears major maintenance and ownership risk; rental must be fixed for the lease term.

Salam: full price is paid at contract date for a precisely specified fungible good delivered later; goods must not be an identified specific asset.

Istisna: price may be paid in instalments against manufacturing progress; the specification, not an existing asset, is the subject matter.

Riba al-fadl arises when exchanging the same ribawi commodity in unequal quantities; riba al-nasi'ah arises from deferment of exchange.

Zakah on monetary wealth is 2.5% of zakatable assets held for one lunar year above the nisab threshold.

Takaful: contributions are donated to a pooled fund; surplus and deficit are handled under tabarru' and the operator's mudarabah/wakalah fee.

Murabaha receivables are measured at amortised cost; deferred profit is recognised over the financing period using the effective profit rate.

Ijarah assets remain on the lessor's statement of financial position and are depreciated over their useful life.

Mudarabah capital contributed by the institution is reported as a financing asset (mudarabah financing), not as an investment in a subsidiary, absent control.

Salam and istisna balances are carried at cost less amounts settled or delivered; revenue is recognised as delivery occurs.

Zakah and charity funds are not liabilities of the institution; they are presented separately and excluded from owners' equity.

Investment account holders (IAHs) participate in profits per the mudarabah ratio; the institution's share is the mudarib share.

Provisions for doubtful Islamic financing follow the same impairment logic as conventional loans, but accrued profit on impaired murabaha is suspended.

Sukuk are classified by the underlying contract (ijarah, musharakah, mudarabah) and measured according to the holder's business model.

Every Islamic financial institution must appoint a Shari'ah Supervisory Board (SSB) with at least three members competent in fiqh al-muamalat.

The SSB issues fatwas and rulings binding on the institution; management must implement them and cannot override them.

An internal Shari'ah review unit reports to the SSB independently of business lines and audits compliance with fatwas.

An annual Shari'ah audit and a Shari'ah compliance report are presented to shareholders in the annual report.

SSB members must be independent of management and disclose any conflicts of interest; remuneration must not depend on business results.

The institution must have a Shari'ah compliance framework covering product approval, training, and remediation of non-compliant earnings.

Non-compliant income must be identified, segregated, and disposed of to charity, not credited to shareholders' profit.

The code of ethics applies to all staff, including the SSB, and covers honesty, confidentiality, competence, and conflict of interest.

Confidentiality: client information may be disclosed only with consent or where required by law or regulation.

Conflicts of interest must be disclosed and managed; staff must not use position or inside information for personal gain.

Gifts and entertainment are permitted only if modest, customary, and not intended to influence a business decision.

Marketing must be fair and not misleading; products must be described accurately as Shari'ah-compliant only after SSB approval.

Whistleblowing channels must allow reporting of unethical or non-compliant conduct without retaliation.

Fair treatment of clients includes transparent pricing, clear disclosure of profit rates, and timely complaint handling.