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Notes to the Separate Financial Statements
FOR THE YEAR ENDED 31 DECEMBER 2022
34 EFFECTS OF NEW AND REVISED FINANCIAL ACCOUNTING STANDARDS
The following new FASs, which became effective for annual periods beginning on or after 1 January 2022, have been adopted in these separate financial statements.
Financial Accounting Standard – 37 “Financial Reporting by Waqf Institutions”
The objective of the standard is to establish principles of financial reporting by Waqf institutions, which are established and operated in line with Shari’ah principles and rules. This standard is effective for the financial periods beginning on or after 1 January 2022. The standard is not applicable as the Corporation is not a Waqf institution.
Financial Accounting Standard – 38 “Wa’ad, Khiyar and Tahawwut”
This standard sets out the principles for measurement, recognition and disclosure of Wa’ad (promise), Khiyar (option) and Tahawwut (hedging) transactions that are carried out by Islamic financial institutions. Wa’ad
and Khiyar arrangements may be categorized into; (a) ancillary wa’ad or Khiyar where the wa’ad or Khiyar is associated with Shariah compliant agreement, and is related to the structure of the transaction or product, example a (wa’ad) promise by the purchase orderer (potential buyer) attached to a Murabaha transaction, or
a promise to purchase after the end of the Ijarah term in an Ijarah Muntahia Bittamleek transaction, or the (khiyar) option of seeing (i.e. inspecting) in a sale transaction and (b) Wa’ad or Khiyar where the wa’ad or Khiyar is used as a standalone shariah compliant arrangement in itself, example foreign exchange forward promise or an option of cancellation of a sale with Arboun. An institution may designate a hedging relationship between a Wa’ad or Khiyar (referred to as a hedging instrument) and a hedged item where a hedging relationship exists.
An ancillary wa’ad or Khiyar by itself does not give rise to any asset or liability. On the other hand, a product wa’ad or Khiyar give rise to a recognized constructive obligation in the books of the institution. This standard is applicable on the financial statements of the Corporation for the periods beginning on or after 1 January 2022. The Corporation did not have any significant impact of tahawwut on its separate financial statements as the Corporation fair values it hedge instrument through separate income statement. The Corporation believes that wa’ad will not have any significant impact and khiyar is not applicable as the Corporation does not use Khiyar in its contractual arrangements.
REINVIGORATING THE PRIVATE SECTOR TO SHAPE A BETTER FUTURE 137