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Accounting Conceptual Framework: MASB & AAOIFI (Recognition (Income…
Accounting Conceptual Framework: MASB & AAOIFI
Qualitative characteristic
AAOIFI
Faithful representative
Relevance
Enhancing Qualitative Characteristic
MASB
High Quality
Comparability
Relevance
Reliability
Prudence
Financial Statement Elements
MASB
Income
Equity
Liabilities
Expenses
Asset
AAOIFI
Equity on investment account holder
Off-balance sheet
Same as stated in MASB
Return on investment account
Recognition
Assets & Liability
MASB: Future economic benefits flow to the entity
AAOIFI: Transaction satisfies certain criteria
Income
MASB: Concurrent effect
AAOIFI
Obligation one party to another party
Revenue collect with reasonable & certainty
substantially completed
Expenses
MASB: Occurrence of decrease future economic benefits
AAOIFI: Conjunction to effect generate revenues
Importance of conceptual framework
AAOIFI
Act as guidance
Encourage harmonization
Unique relationship of IFI and parties vs. conventional inst.
Demonstrate that IFI shariaah compliance
MASB
Structure process of creating fin.reporting
Identify the users and explicity define the obj.
Developing financial standard
Financial Reports & Process
AAOIFI
General purpose financial reports
Primary statement
Statement of accounting policies
Explanatory note
Supplementary statement
Special purpose financial statement
Asset and liability covered under particular contract
Statement of income and expenditure
Income statement for the purpose income taxation
MASB conceptual framework
Objective
MASB
Provide useful information that is useful to users
AAOIFI
Fin. accounting
Determine rights & obligation of intersted parties
Provide useful information
Enhance the managerial and productive capabilities
Fin.reports
IFI's economic resources & related obligations
Assist in the determination of zakat
Discharge of its fiduciary responsibilities
IFI's compliance with shariaah
IFI's discharge its social responsibilities