MASB Islamic technical pronouncements-MASB

The MASB does not issue separate Islamic accounting standards. MASB approved accounting standards shall apply to Shariah compliant financial transactions and events, unless there is a Shariah prohibition. Any additional guidance on accounting for Islamic financial transactions and events will take the form of other pronouncements, which supplement MASB approved accounting standards. MASB may also issue Discussion Papers for public comment in order to seek confirmation of the Board’s understanding of certain matters, as well as to solicit views on alternative solutions and tentative conclusions.

Other than technical pronouncements and Discussion Papers, MASB may decide to issue reports, issue papers or other forms of documents that would serve as a reference in applying MASB approved accounting standards to Islamic financial transactions.

The following are documents relating to Islamic financial reporting currently in issuance:

[Click on a title to view the document on-line. Alternatively, hardcopies of the documents can be purchased via by clicking on this link.]

Document	Remark
Issues Bulletin 1 MFRS 17 Insurance Contracts: Definition and Scope for Takaful (MASB Pronouncements)	This Issues Bulletin concludes that takaful would fall within the scope of MFRS 17 Insurance Contracts
Issues Bulletin 2 Columnar Presentation of Takaful Funds in Takaful Entity Financial Statements (MASB Pronouncements)	This Issues Bulletin reaffirms that columnar presentation can be made in the primary financial statements of a takaful entity when applying MFRS 17 Insurance Contracts.
Issues Bulletin 3 Reporting Qard in the Takaful Fund Column within Takaful Entity Financial Statements Annex (MASB Pronouncements) [Updated in December 2024 for an editorial correction]	Issues Bulletin 3 addresses the accounting for qard in the context of a takaful operator’s obligation to contribute qard to a takaful fund in order to rectify a deficit under section 95 of the Islamic Financial Services Act 2013. This Issues Bulletin concludes that from the takaful fund perspective, qard forms part of fulfillment cash flows under MFRS 17 Insurance Contracts. The MASB also considered the accounting implications of qard in the event that a takaful entity chooses to prepare separate takaful operator column in its financial statements. For discussion and guidance on qard from the perspective of the takaful operator, please refer to the Annex to the Bulletin.
Issues Bulletin 4 Application of Malaysian Financial Reporting Standards (MFRS) to Islamic Social Finance Transactions (MASB Pronouncements)	This Issues Bulletin provides accounting consideration and disclosure guidance to Islamic Financial Institutions in extending Islamic Social Finance (ISF) programmes to targeted customer segments, as offered under the Bank Negara Malaysia’s iTekad initiative. The proposed accounting consideration and disclosures guidance ensures ISF transactions are accounted for and consistent with relevant MFRS requirements as well as sufficient and appropriate disclosures are made in the general-purpose financial statements.
Statement of Principles i-1 (SOP i-1), Financial Reporting from an Islamic Perspective (MASB Pronouncements)	SOP i-1 serves to inform that MASB approved accounting standards shall apply to Islamic financial transactions, unless there is a Shariah prohibition. The appendices to SOP i-1 include a review by the Shariah Advisory Council (SAC) of Bank Negara Malaysia, which concluded, among others, that “generally accepted accounting principles or methods, as discussed in MASB’s proposal [i.e. SOP i-1], may be applied in financial reporting from an Islamic perspective as their application does not conflict with general Shariah principles or methodologies”.
Technical Release i-1 (TR i-1), Accounting for Zakat on Business (MASB Pronouncements)	When an entity pays zakat on business, TR i-1 requires it to be recognised as an expense of the entity. This is to differentiate between zakat paid by an entity in its own legal capacity, and zakat paid on behalf of its shareholders.
Technical Release i-2 (TR i-2), Ijarah (MASB Pronouncements)	Withdrawn
Technical Release i-3 (TR i-3), Presentation of Financial Statements of Islamic Financial Institutions (MASB Pronouncements)	Archived
Technical Release i-4 (TR i-4), Shariah Compliant Sale Contracts (MASB Pronouncements)	Archived
Discussion Paper i-1 (DP i-1) Takaful	DP i-1 discusses takaful accounting issues such as whether takaful falls within the scope of MFRS 4, the recognition and measurement of qard, consolidation, presentation of financial statements of takaful entities, retakaful, participating contracts, revenue recognition and the need for additional disclosures.
Discussion Paper i-2 (DP i-2) Sukuk	DP i-2 discusses sukuk accounting issues such as consolidation of any entities created through the sukuk issuance, derecognition of assets transferred through the sukuk issuance, classification and measurement of sukuk by the issuer and investor, fair value measurement, impairment, derivatives, guarantees and related party disclosures.
Discussion Paper i-3 (DP i-3) Shariah Compliant Profit-sharing Contracts	Shariah compliant profit-sharing contracts, or shirkah, are commonly used as underlying contracts in many Islamic finance products, including banking deposits, partnership agreements and joint asset arrangements. DP i-3 Shariah Compliant Profit-sharing Contracts outlines the most often-cited accounting issues related to Shariah compliant profit-sharing contracts such as classification and measurement, smoothing techniques, and consolidation, joint ventures and investments in associates.
Feedback Statement on MASB Discussion Papers DP i-1 Takaful, DP i-2 Sukuk and DP i-3 Shariah Compliant Profit-sharing Contracts	The Feedback Statement is a summary of responses and comments received on Discussion Paper i-1 Takaful, Discussion Paperi-2 Sukuk and Discussion Paper i-3 Shariah Compliant Profit-sharing Contracts. It does not provide any Board decisions.

Other Materials

Document	Remark
Research Paper, Waqf	This Research Paper on accounting for waqf is issued by the Malaysian Accounting Standards Board as part of its Islamic research. If a waqf takes the form of an incorporated company, then its financial statements would likely be prepared or lodged under a law administered by the Securities Commission, the Central Bank or the Registrar of Companies. In accordance with the Financial Reporting Act 1997, such financial statements shall comply with MASB approved accounting standards. Hence, the MASB directed its staff to look into potential financial reporting issues relating to corporate waqf. The Research Paper is intended to stimulate discussion on accounting for waqf. The recommendations contained therein do not prescribe accounting treatments for the issues identified.
Report on the Review of Shariah Policy Documents	The Report on the Review of Shariah Policy Documents from a Financial Reporting Perspective issued by the Malaysian Accounting Standards Board is part of its Islamic research. The Shariah Policy Documents as issued by Bank Negara Malaysia prescribe operational and Shariah requirements which may impact how businesses are run, including financial reporting processes. In this regard, the MASB has taken the agenda on board to review the Policy Documents from a financial reporting perspective. The Report compiles, among others, the thought process and matters that needed to be considered in determining the appropriate accounting treatment for an Islamic financial transaction. The Report concludes that determining the appropriate accounting treatment would require an entity to analyse the overall facts and circumstances pertaining to a particular transaction and hence the report does not prescribe any specific accounting treatment.
A Word about Islamic Finance : Part I	In this first of a two-part article, MASB staff explain what is Islamic finance, and share the behind-thescenes thinking that led the MASB to subject Islamic financial institutions (IFIs) to Malaysian Financial Reporting Standards (MFRS) - a verbatim adoption of International Financial Reporting Standards (IFRS).
A Word about Islamic Finance : Part II	In this second of a two-part article on Islamic finance, MASB staff look at current issues with applying International Financial Reporting Standards (IFRS) to Islamic transactions, and suggest what the International Accounting Standards Board (IASB) can do to do to promote IFRS usage by entities engaged in Islamic finance.

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MASB Islamic technical pronouncements

[Updated in December 2024 for an editorial correction]