AAOIFI CPAAGE flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Murabaha mark-up

A disclosed profit amount added to the cost of a good in a sale contract; it is fixed at contract date and cannot be increased for late payment.

Musharakah loss sharing

In a musharakah partnership, losses are borne strictly in proportion to each partner's capital contribution, regardless of the agreed profit-sharing ratio.

Mudarabah capital loss

Business losses in mudarabah fall on the capital provider unless the mudarib breached the contract, was negligent, or acted beyond the agreed mandate.

Ijarah ownership risk

In ijarah the lessor keeps ownership and bears major maintenance and ownership-related risks, while the lessee pays rent for usufruct.

Salam contract conditions

Salam requires full price payment at contract date and a precisely specified fungible good delivered later; an identified existing asset is not valid.

Istisna subject matter

Istisna is a manufacturing contract whose subject is a specified item to be built; the price may be paid in instalments against progress.

Riba al-fadl

Riba al-fadl is the excess arising when the same ribawi commodity is exchanged in unequal quantities, even if settlement is immediate.

Zakah rate on wealth

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

Takaful tabarru' pool

Takaful contributions are donated into a pooled fund used to pay claims; the operator earns a wakalah or mudarabah fee under the model.

Murabaha receivable measurement

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

Ijarah asset recognition

Ijarah assets stay on the lessor's statement of financial position and are depreciated over their useful life, not expensed as receivables.

Mudarabah financing classification

Capital the institution contributes as rabb al-mal is reported as mudarabah financing, not as an investment in a subsidiary, absent control.

Salam revenue recognition

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

Zakah and charity funds

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

Investment account holders

IAHs share in the profits of the mudarabah pool per an agreed ratio; the institution's share is the mudarib share.

Impaired murabaha profit

When murabaha financing is impaired, accrued but uncollected profit is suspended and not recognised as income until recovered.

Sukuk classification

Sukuk are classified by their underlying contract, such as ijarah, musharakah, or mudarabah, and measured per the holder's business model.

SSB composition

Each Islamic financial institution must appoint a Shari'ah Supervisory Board of at least three members competent in fiqh al-muamalat.

SSB rulings authority

SSB fatwas and rulings are binding on the institution; management must implement them and cannot override or ignore them.

Internal Shari'ah review

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

Shari'ah compliance report

An annual Shari'ah audit results in a compliance report presented to shareholders within the institution's annual report.

SSB independence

SSB members must be independent of management, disclose conflicts of interest, and have remuneration not tied to business results.

Non-compliant income

Income earned from Shari'ah-non-compliant sources must be identified, segregated, and disposed of to charity, not credited to shareholders.

Shari'ah compliance framework

The framework covers product approval, staff training, monitoring, and remediation of non-compliant earnings across the institution.

Code of ethics scope

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

Confidentiality rule

Client information may be disclosed only with the client's consent or where required by law or regulation; otherwise it must be protected.

Conflict of interest

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

Gifts and entertainment

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

Marketing accuracy

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

Whistleblowing protection

Channels must allow staff to report unethical or non-compliant conduct, with protection against retaliation for good-faith reports.

Fair client treatment

Fair treatment includes transparent pricing, clear disclosure of profit rates, and timely handling of client complaints.

Competence obligation

Staff must have and maintain the knowledge and skills needed for their duties, and must not accept work beyond their competence.