KARACHI: The Securities and Exchange Commission of Pakistan (SECP) has notified Islamic Financial Accounting Standards (IFAS-1) on Murabaha transactions.
A notification issued by the SECP directed financial institutions to follow IFAS-1 in preparing their financial statements. The new Islamic standards were prepared with the assistance of a committee that included members of the Institute of Chartered Accountants of Pakistan (ICAP).
The committee followed the guidance of Shariah Appellate Bench of the Supreme Court of Pakistan in its judgment on Riba in 1999, under which ICAP was directed to play its role in Islamisation of economy.
In compliance with that directive, the ICAP constituted a committee on accounting and auditing standards of interest-free modes of financing and investment. After thorough consultation with banks, financial institutions and the State Bank of Pakistan, the committee developed Islamic Financial Accounting Standards with a view that its implementation will have a significant bearing on Islamisation of economy.
The IFAS-1 shall be required to be followed in presentation of the financial statements of financial institutions and banks. The notification was issued by the Securities and Exchange Commission under Section 234(3) of the Companies Ordinance, 1984, under SRO 865, the Islamic Financial Accounting Standard-1 “Murabaha”.