What is Sukuk Accounting?
Sukuk accounting refers to the recognition, measurement, and disclosure of Islamic financial certificates that represent ownership in an underlying asset, project, or service, structured to comply with shariah principles.
How It Works
- Classify the sukuk under IFRS 9 based on the business model and cash flow characteristics.
- Recognise the sukuk at fair value plus transaction costs on issuance or purchase.
- Apply amortised cost, FVOCI, or FVTPL measurement after initial recognition.
- Recognise profit on the sukuk based on the effective profit rate.
- Disclose shariah-compliance certifications and underlying-asset details in the notes.
Saudi Context
Saudi sovereign and corporate sukuk issuances are governed by the Capital Market Authority and listed on Tadawul. SAMA-supervised Islamic banks and conventional banks with Islamic windows hold large sukuk portfolios reported under SOCPA-adopted IFRS.
Example
A company buys SAR 1,000,000 of a 5-year ijara sukuk paying 5% annual profit. Under amortised cost, it recognises SAR 50,000 of profit income each year, treated as part of operating income.