Recognise Murabaha receivables and unearned profit using the deferred-profit method required by FAS 28.
Finance & Banking
Accounting for Murabaha, Ijarah and Sukuk Under AAOIFI Standards
Learn to recognise, measure and disclose Murabaha, Ijarah and Sukuk transactions under AAOIFI Financial Accounting Standards and reconcile them with IFRS reporting.
🗓️Duration5 training days
📚Content4 modules · 8 sessions
🎓On completionAccredited attendance certificate
About the programme
Course Overview
Islamic banks and takaful operators must account for contracts that have no direct equivalent in conventional lending, and finance teams that force Murabaha, Ijarah and Sukuk into standard loan templates end up with disclosures that do not match the underlying contract or the shariah supervisory board's ruling. This course works through the AAOIFI Financial Accounting Standards that govern each instrument: FAS 28 for Murabaha and deferred payment sales, FAS 32 for Ijarah, and the Sukuk-specific guidance for on-balance-sheet and off-balance-sheet issuances. Participants build entries for cost-plus profit recognition on Murabaha receivables, distinguish operating from Ijarah Muntahia Bittamleek arrangements and their right-of-use treatment, and classify Sukuk al-Ijarah, Sukuk al-Wakala and Sukuk al-Musharaka according to whether they represent debt-like or equity-like instruments. The programme covers the reconciliation points auditors raise when a bank reports under both AAOIFI and IFRS, including profit equalisation reserves, investment risk reserves and impairment under expected credit loss models adapted for asset-backed contracts. Sessions combine standard-by-standard walkthroughs with worked journal entries, so participants leave able to prepare disclosure notes that a shariah auditor and an external auditor will both accept without rework.
Expected Learning Outcomes
Distinguish Ijarah operating leases from Ijarah Muntahia Bittamleek and apply the correct depreciation and transfer treatment.
Classify Sukuk issuances as on-balance-sheet or off-balance-sheet based on asset transfer and risk retention.
Draft disclosure notes covering profit equalisation reserves and investment risk reserves for investment account holders.
Reconcile AAOIFI-based statements with an IFRS reporting pack for group consolidation purposes.
Apply expected credit loss concepts to Murabaha and Ijarah receivables under FAS 30 impairment guidance.
Prepare a shariah-compliant chart of accounts mapping for a new Islamic financing product.
Who Should Attend
Financial accountants and controllers at Islamic banks and windows of conventional banks.
Internal and external auditors reviewing shariah-compliant financial statements.
Product and structuring specialists who need to understand downstream accounting impact.
Shariah compliance officers coordinating between the supervisory board and finance.
Regulatory reporting analysts consolidating Islamic and conventional subsidiaries.
Finance graduates moving into Islamic banking accounting roles.
Course Modules
Select any module to see its sessions and points.
01Murabaha and Deferred Sale Recognition Under FAS 28
2 sessions · 8 points
Session 1Cost Structures and Deferred Profit Allocation
- Build the initial recognition entry for a Murabaha receivable at acquisition cost plus the agreed profit margin.
- Allocate deferred profit across the payment schedule using the time-apportionment method AAOIFI permits.
- Treat early settlement rebates (Ibra) and their effect on recognised profit for the remaining term.
- Distinguish Murabaha to the purchase orderer from spot Murabaha for working-capital financing.
Session 2Default, Impairment and Late Payment Charges
- Apply the FAS 30 credit loss model to Murabaha receivables segmented by risk grade.
- Separate contractual late-payment charges donated to charity from income the bank may recognise.
- Document the write-off approval trail required before a Murabaha receivable is derecognised.
- Reconcile provisioning outputs between the AAOIFI model and a parallel IFRS 9 calculation for group reporting.
02Ijarah and Ijarah Muntahia Bittamleek Under FAS 32
2 sessions · 8 points
Session 1Lessor and Lessee Accounting Mechanics
- Record the right-of-use asset and Ijarah liability at the lessee's incremental financing rate.
- Depreciate leased assets over the shorter of the lease term or useful life, consistent with ownership retention.
- Distinguish operating Ijarah income recognition from the amortised financing pattern used in Ijarah Muntahia Bittamleek.
- Account for maintenance and takaful cost allocation between lessor and lessee under the underlying contract.
Session 2Transfer of Ownership and Sub-Ijarah Structures
- Recognise the gain or loss on transfer of title at the end of an Ijarah Muntahia Bittamleek term.
- Account for a unilateral promise to transfer ownership without triggering premature sale recognition.
- Treat sub-leasing arrangements where a lessee assigns usufruct rights to a third party.
- Present Ijarah assets and liabilities separately from conventional finance leases in the statement of financial position.
03Sukuk Classification and Issuer Accounting
2 sessions · 8 points
Session 1On-Balance-Sheet Versus Off-Balance-Sheet Treatment
- Assess whether an asset transfer to the special purpose vehicle meets AAOIFI derecognition criteria.
- Classify Sukuk al-Ijarah cash flows as lease income passed through to certificate holders.
- Distinguish asset-based Sukuk, where the originator retains repurchase obligations, from asset-backed structures.
- Present Sukuk proceeds as a liability, equity instrument or non-controlling interest depending on structure.
Session 2Profit Distribution, Reserves and Investor Reporting
- Calculate periodic profit distributions to Sukuk holders based on the underlying pool's performance.
- Build a profit equalisation reserve schedule that smooths payouts across reporting periods.
- Draft the investment risk reserve disclosure explaining loss-absorption mechanics to certificate holders.
- Prepare a maturity and redemption note reconciling Sukuk carrying value to expected cash settlement.
04Group Reporting, Disclosure and Audit Readiness
2 sessions · 8 points
Session 1Reconciling AAOIFI and IFRS Reporting Packs
- Map AAOIFI financial statement line items to the IFRS chart of accounts used by a parent group.
- Identify the adjustments needed when a conventional parent consolidates an Islamic subsidiary's results.
- Explain measurement differences between FAS 30 provisioning and IFRS 9 expected credit loss outcomes.
- Prepare a bridge schedule that finance can present to the audit committee without restating underlying ledgers.
Session 2Disclosure Notes and Shariah Audit Coordination
- Draft the shariah non-compliance income disclosure and its treatment as charitable donation.
- Prepare segment disclosures separating financing, investment and Sukuk-related income streams.
- Coordinate documentation requests between the external auditor and the internal shariah audit function.
- Compile a disclosure checklist covering related-party Murabaha and Ijarah transactions with connected parties.
What the participant receives
4 course modules
A structured syllabus
8 training sessions
across 5 days
32 detailed points
Applied, detailed content
Accredited attendance certificate
On completing the programme
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