AAOIFI CPFAS cheat sheet

FAS 1 defines the statement of financial position format for Islamic financial institutions: assets, liabilities, equity of unrestricted investment account holders (UIAH), and owners' equity are presented separately.

Mudarabah: profit is shared per agreed ratio; losses are borne by the capital provider (rabb al-mal) unless the mudarib breaches fiduciary duty, negligence, or contract terms.

Musharakah: profits shared per agreement; losses shared strictly in proportion to capital contributions.

Murabaha: cost plus disclosed profit is recognized at inception; deferred profit is recognized over the instalment period using an effective-yield approach.

Ijarah: lessor recognizes lease rentals on a time-apportioned basis; the asset remains on the lessor's books and is depreciated over its useful life.

Zakah: FAS requires disclosure of zakah base and whether the institution or the investment account holders bear the obligation; it is not an accrual tax expense.

Salam and istisna'a: advance/construction payments are recognized as receivables or work-in-progress, with revenue recognized on delivery or percentage of completion respectively.

Investment accounts: UIAH are presented as a distinct equity-like class, not as liabilities, and restricted investment accounts (RIA) are off-balance-sheet.

Revenue is recognized only when the right to receive it is established and the amount is reliably measurable; any penalty or late fee is not revenue.

GS 1: the Shari'ah Supervisory Board (SSB) is an independent body of at least three members with relevant fatawa expertise; the institution must not influence its opinions.

GS 2: the SSB issues fatawa and rulings; the internal Shari'ah review unit conducts ex-post compliance reviews and reports to the SSB and audit committee.

GS 3: the SSB report is published in the annual report, stating whether operations complied with Shari'ah rules and identifying any violations.

GS 4: the audit and governance committee oversees financial reporting, internal controls, and Shari'ah compliance, with a majority of independent members.

GS 5: independence of the SSB member is compromised by a material financial interest, close family ties to management, or concurrent executive office.

GS 6: the SSB must have access to all records, staff, and management; the institution must provide adequate resources and remuneration.

GS 7: the corporate governance framework must cover the rights of investment account holders, disclosure of related-party transactions, and conflict-of-interest management.

GS 8: central Shari'ah governance requires a national-level authority to harmonize rulings and a code of ethics for SSB members.

Ethics standards require honesty, integrity, objectivity, confidentiality, professional competence, and compliance with Shari'ah rules.

Confidentiality is breached only where disclosure is required by law, court order, or regulatory authority, or where the client consents.

A conflict of interest must be disclosed and managed; the professional must not act where objectivity is impaired.

Independence: an auditor must not hold a financial interest in, or serve as an officer of, the audited institution.

The ethical duty of the SSB member is to issue rulings based on evidence (dalil), not on commercial pressure or personal gain.

Gifts and hospitality that could influence professional judgment must be refused or disclosed to the governance body.

Professional competence requires continuing education on Shari'ah and accounting developments; an opinion must not be issued outside one's competence.

Whistleblowing: the ethics framework requires reporting of Shari'ah violations or fraud through defined internal channels without retaliation.

Riba: any guaranteed increase on a loan of money (riba al-fadl or riba al-nasi'ah) is prohibited; returns must be linked to risk-sharing or a real asset.

Gharar: excessive uncertainty in contract terms voids a transaction; minor uncertainty tolerated where necessary for trade.

Maysir: gambling or speculative contracts without real economic purpose are prohibited.

Murabaha requires the institution to own the asset before selling it on deferred terms; the profit is a sale markup, not interest.

Ijarah must transfer usufruct (manfa'ah), not ownership, for a defined period and rent; the lessor bears major maintenance and ownership risk.

Sukuk represent ownership in tangible assets, usufruct, or a project; returns are linked to the underlying asset's performance, not a guaranteed coupon.

Takaful is a mutual risk-sharing arrangement based on tabarru' (donation); surplus distribution is governed by the participants' agreement.

Zakah is due on qualifying wealth at 2.5% of the zakah base after the nisab threshold and the passage of one lunar year (hawl).

Penalties for late payment are charitable donations, not income to the institution, and must not be treated as revenue.

FAS 1 defines the statement of financial position format for Islamic financial institutions: assets, liabilities, equity of unrestricted investment account holders (UIAH), and owners' equity are presented separately.

Mudarabah: profit is shared per agreed ratio; losses are borne by the capital provider (rabb al-mal) unless the mudarib breaches fiduciary duty, negligence, or contract terms.

Musharakah: profits shared per agreement; losses shared strictly in proportion to capital contributions.

Murabaha: cost plus disclosed profit is recognized at inception; deferred profit is recognized over the instalment period using an effective-yield approach.

Ijarah: lessor recognizes lease rentals on a time-apportioned basis; the asset remains on the lessor's books and is depreciated over its useful life.

Zakah: FAS requires disclosure of zakah base and whether the institution or the investment account holders bear the obligation; it is not an accrual tax expense.

Salam and istisna'a: advance/construction payments are recognized as receivables or work-in-progress, with revenue recognized on delivery or percentage of completion respectively.

Investment accounts: UIAH are presented as a distinct equity-like class, not as liabilities, and restricted investment accounts (RIA) are off-balance-sheet.

Revenue is recognized only when the right to receive it is established and the amount is reliably measurable; any penalty or late fee is not revenue.

GS 1: the Shari'ah Supervisory Board (SSB) is an independent body of at least three members with relevant fatawa expertise; the institution must not influence its opinions.

GS 2: the SSB issues fatawa and rulings; the internal Shari'ah review unit conducts ex-post compliance reviews and reports to the SSB and audit committee.

GS 3: the SSB report is published in the annual report, stating whether operations complied with Shari'ah rules and identifying any violations.

GS 4: the audit and governance committee oversees financial reporting, internal controls, and Shari'ah compliance, with a majority of independent members.

GS 5: independence of an SSB member is compromised by a material financial interest, close family ties to management, or concurrent executive office.

GS 6: the SSB must have access to all records, staff, and management; the institution must provide adequate resources and remuneration.

GS 7: the corporate governance framework must cover the rights of investment account holders, disclosure of related-party transactions, and conflict-of-interest management.

GS 8: central Shari'ah governance requires a national-level authority to harmonize rulings and a code of ethics for SSB members.

Ethics standards require honesty, integrity, objectivity, confidentiality, professional competence, and compliance with Shari'ah rules.

Confidentiality is breached only where disclosure is required by law, court order, or regulatory authority, or where the client consents.

A conflict of interest must be disclosed and managed; the professional must not act where objectivity is impaired.

Independence: an auditor must not hold a financial interest in, or serve as an officer of, the audited institution.

The ethical duty of the SSB member is to issue rulings based on evidence (dalil), not on commercial pressure or personal gain.

Gifts and hospitality that could influence professional judgment must be refused or disclosed to the governance body.

Professional competence requires continuing education on Shari'ah and accounting developments; an opinion must not be issued outside one's competence.

Whistleblowing: the ethics framework requires reporting of Shari'ah violations or fraud through defined internal channels without retaliation.

Riba: any guaranteed increase on a loan of money (riba al-fadl or riba al-nasi'ah) is prohibited; returns must be linked to risk-sharing or a real asset.

Gharar: excessive uncertainty in contract terms voids a transaction; minor uncertainty is tolerated where necessary for trade.

Maysir: gambling or speculative contracts without real economic purpose are prohibited.

Murabaha requires the institution to own the asset before selling it on deferred terms; the profit is a sale markup, not interest.

Ijarah must transfer usufruct (manfa'ah), not ownership, for a defined period and rent; the lessor bears major maintenance and ownership risk.

Sukuk represent ownership in tangible assets, usufruct, or a project; returns are linked to the underlying asset's performance, not a guaranteed coupon.

Takaful is a mutual risk-sharing arrangement based on tabarru' (donation); surplus distribution is governed by the participants' agreement.

Zakah is due on qualifying wealth at 2.5% of the zakah base after the nisab threshold and the passage of one lunar year (hawl).

Penalties for late payment are charitable donations, not income to the institution, and must not be treated as revenue.

FAS 1 defines the statement of financial position format for Islamic financial institutions: assets, liabilities, equity of unrestricted investment account holders (UIAH), and owners' equity are presented separately.

Mudarabah: profit is shared per agreed ratio; losses are borne by the capital provider (rabb al-mal) unless the mudarib breaches fiduciary duty, negligence, or contract terms.

Musharakah: profits shared per agreement; losses shared strictly in proportion to capital contributions.

Murabaha: cost plus disclosed profit is recognized at inception; deferred profit is recognized over the instalment period using an effective-yield approach.

Ijarah: lessor recognizes lease rentals on a time-apportioned basis; the asset remains on the lessor's books and is depreciated over its useful life.

Zakah: FAS requires disclosure of zakah base and whether the institution or the investment account holders bear the obligation; it is not an accrual tax expense.

Salam and istisna'a: advance/construction payments are recognized as receivables or work-in-progress, with revenue recognized on delivery or percentage of completion respectively.

Investment accounts: UIAH are presented as a distinct equity-like class, not as liabilities, and restricted investment accounts (RIA) are off-balance-sheet.

Revenue is recognized only when the right to receive it is established and the amount is reliably measurable; any penalty or late fee is not revenue.

GS 1: the Shari'ah Supervisory Board (SSB) is an independent body of at least three members with relevant fatawa expertise; the institution must not influence its opinions.

GS 2: the SSB issues fatawa and rulings; the internal Shari'ah review unit conducts ex-post compliance reviews and reports to the SSB and audit committee.

GS 3: the SSB report is published in the annual report, stating whether operations complied with Shari'ah rules and identifying any violations.

GS 4: the audit and governance committee oversees financial reporting, internal controls, and Shari'ah compliance, with a majority of independent members.

GS 5: independence of an SSB member is compromised by a material financial interest, close family ties to management, or concurrent executive office.

GS 6: the SSB must have access to all records, staff, and management; the institution must provide adequate resources and remuneration.

GS 7: the corporate governance framework must cover the rights of investment account holders, disclosure of related-party transactions, and conflict-of-interest management.

GS 8: central Shari'ah governance requires a national-level authority to harmonize rulings and a code of ethics for SSB members.

Ethics standards require honesty, integrity, objectivity, confidentiality, professional competence, and compliance with Shari'ah rules.

Confidentiality is breached only where disclosure is required by law, court order, or regulatory authority, or where the client consents.

A conflict of interest must be disclosed and managed; the professional must not act where objectivity is impaired.

Independence: an auditor must not hold a financial interest in, or serve as an officer of, the audited institution.

The ethical duty of the SSB member is to issue rulings based on evidence (dalil), not on commercial pressure or personal gain.

Gifts and hospitality that could influence professional judgment must be refused or disclosed to the governance body.

Professional competence requires continuing education on Shari'ah and accounting developments; an opinion must not be issued outside one's competence.

Whistleblowing: the ethics framework requires reporting of Shari'ah violations or fraud through defined internal channels without retaliation.

Riba: any guaranteed increase on a loan of money (riba al-fadl or riba al-nasi'ah) is prohibited; returns must be linked to risk-sharing or a real asset.

Gharar: excessive uncertainty in contract terms voids a transaction; minor uncertainty is tolerated where necessary for trade.

Maysir: gambling or speculative contracts without real economic purpose are prohibited.

Murabaha requires the institution to own the asset before selling it on deferred terms; the profit is a sale markup, not interest.

Ijarah must transfer usufruct (manfa'ah), not ownership, for a defined period and rent; the lessor bears major maintenance and ownership risk.

Sukuk represent ownership in tangible assets, usufruct, or a project; returns are linked to the underlying asset's performance, not a guaranteed coupon.

Takaful is a mutual risk-sharing arrangement based on tabarru' (donation); surplus distribution is governed by the participants' agreement.

Zakah is due on qualifying wealth at 2.5% of the zakah base after the nisab threshold and the passage of one lunar year (hawl).

Penalties for late payment are charitable donations, not income to the institution, and must not be treated as revenue.

FAS 1 defines the statement of financial position format for Islamic financial institutions: assets, liabilities, equity of unrestricted investment account holders (UIAH), and owners' equity are presented separately.

Mudarabah: profit is shared per agreed ratio; losses are borne by the capital provider (rabb al-mal) unless the mudarib breaches fiduciary duty, negligence, or contract terms.

Musharakah: profits shared per agreement; losses shared strictly in proportion to capital contributions.

Murabaha: cost plus disclosed profit is recognized at inception; deferred profit is recognized over the instalment period using an effective-yield approach.

Ijarah: lessor recognizes lease rentals on a time-apportioned basis; the asset remains on the lessor's books and is depreciated over its useful life.

Zakah: FAS requires disclosure of zakah base and whether the institution or the investment account holders bear the obligation; it is not an accrual tax expense.

Salam and istisna'a: advance/construction payments are recognized as receivables or work-in-progress, with revenue recognized on delivery or percentage of completion respectively.

Investment accounts: UIAH are presented as a distinct equity-like class, not as liabilities, and restricted investment accounts (RIA) are off-balance-sheet.

Revenue is recognized only when the right to receive it is established and the amount is reliably measurable; any penalty or late fee is not revenue.

GS 1: the Shari'ah Supervisory Board (SSB) is an independent body of at least three members with relevant fatawa expertise; the institution must not influence its opinions.

GS 2: the SSB issues fatawa and rulings; the internal Shari'ah review unit conducts ex-post compliance reviews and reports to the SSB and audit committee.

GS 3: the SSB report is published in the annual report, stating whether operations complied with Shari'ah rules and identifying any violations.

GS 4: the audit and governance committee oversees financial reporting, internal controls, and Shari'ah compliance, with a majority of independent members.

GS 5: independence of an SSB member is compromised by a material financial interest, close family ties to management, or concurrent executive office.

GS 6: the SSB must have access to all records, staff, and management; the institution must provide adequate resources and remuneration.

GS 7: the corporate governance framework must cover the rights of investment account holders, disclosure of related-party transactions, and conflict-of-interest management.

GS 8: central Shari'ah governance requires a national-level authority to harmonize rulings and a code of ethics for SSB members.

Ethics standards require honesty, integrity, objectivity, confidentiality, professional competence, and compliance with Shari'ah rules.

Confidentiality is breached only where disclosure is required by law, court order, or regulatory authority, or where the client consents.

A conflict of interest must be disclosed and managed; the professional must not act where objectivity is impaired.

Independence: an auditor must not hold a financial interest in, or serve as an officer of, the audited institution.

The ethical duty of the SSB member is to issue rulings based on evidence (dalil), not on commercial pressure or personal gain.

Gifts and hospitality that could influence professional judgment must be refused or disclosed to the governance body.

Professional competence requires continuing education on Shari'ah and accounting developments; an opinion must not be issued outside one's competence.

Whistleblowing: the ethics framework requires reporting of Shari'ah violations or fraud through defined internal channels without retaliation.

Riba: any guaranteed increase on a loan of money (riba al-fadl or riba al-nasi'ah) is prohibited; returns must be linked to risk-sharing or a real asset.

Gharar: excessive uncertainty in contract terms voids a transaction; minor uncertainty is tolerated where necessary for trade.

Maysir: gambling or speculative contracts without real economic purpose are prohibited.

Murabaha requires the institution to own the asset before selling it on deferred terms; the profit is a sale markup, not interest.

Ijarah must transfer usufruct (manfa'ah), not ownership, for a defined period and rent; the lessor bears major maintenance and ownership risk.

Sukuk represent ownership in tangible assets, usufruct, or a project; returns are linked to the underlying asset's performance, not a guaranteed coupon.

Takaful is a mutual risk-sharing arrangement based on tabarru' (donation); surplus distribution is governed by the participants' agreement.

Zakah is due on qualifying wealth at 2.5% of the zakah base after the nisab threshold and the passage of one lunar year (hawl).

Penalties for late payment are charitable donations, not income to the institution, and must not be treated as revenue.