MASB issues accounting for Islamic financial transactions - zakat and ijarah (10 April 2006)

In keeping with the increased international integration of the Malaysian Islamic financial system, the Malaysian Accounting Standards Board (MASB) has issued guidance on how to account for Zakat and Ijarah (Islamic leasing) in Islamic financial transactions for companies.

It is also in line with the country's development of a comprehensive Islamic financial system that is increasingly becoming more liberalised and integrated with the international financial system.
MASB's guidance in the form of technical releases is for those involved in Islamic products and explains how to apply MASB accounting standards to Islamic financial transactions.
MASB executive director Dr Nordin Mohd Zain said the accounting for Zakat on business only deals with financial reporting issues related to zakat, namely that zakat is an expense of the entity. The calculation of the bases for zakat and matters outside MASB's purview are referred to various authoritative bodies.
Meanwhile, the technical release on Ijarah was written on the premise that an asset under Islamic leasing is split between the underlying asset which belongs to the lessor, and the right which belongs to the lessee.
Dr Nordin said Ijarah is the long-awaited culmination of a five-year project and the final technical release is much more comprehensive than the earlier draft announced to the public in July 2004. 

Copies of both the technical releases can be purchased from the MASB office or downloaded from the MASB website.