S.R.O. 431(I)/2007, Islamabad, the May 22, 2007

SROS: S.R.O. 431(I)/2007, Islamabad, the May 22, 2007 SRO 431(I)/2007, DATED MAY 22, 2007 REGARDING THE FINANCIAL STATEMENTS BY COMPANIES AND MODARABAS WHILE ACCOUNTING FOR IJARAH(LEASE) TRANSACTIONS AS DEFINED BY THE SAID STANDARD TO BE PUBLISH IN PART II OFTHE GAZETTE OF PAKISTAN Statutory Notification(S.R.O.) GOVERNMENT OF PAKISTAN SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Islamabad, the May 22, 2007 NOTIFICATION S.R.O. 431(I)/2007, Islamabad, the May 22, 2007:- In exercise of the power conferred by sub-section(3) of section 234 of the Companies Ordinance, 1984(XLVII of 1984), the Securities and Exchange Commission of Pakistan is pleased to direct that the Islamic Financial Accounting Standard 2, annexed to this notification, issued by the Institute of Chartered Accountants of Pakistan, shall be followed in regard to the financial statements by companies and modarabas while accounting for Ijarah(Lease) transactions as defined by the said Standard: Provided that the Commission may grantan exemption to any company or any modaraba, if it is in the public interest so to do, from compliance with all or any of the requirements of the aforesaid Standard. Annex to Notification ISLAMIC FINANCIAL ACCOUNTING STANDARD IFAS 2 IJARAH Issued By The Institute of Chartered Accountants of Pakistan IFAS 2 ISLAMIC FINANCIAL ACCOUNTING STANDARD IFAS 2 IJARAH I.The standards, which have been set in bold italic type, should be read in the context of the background material and implementation guidance in this Standard. Islamic Financial Accounting Standards are not intended to apply to immaterial items Objective 2.The objective of this Standard is to prescribe, for lessees and lessors, the appropriate accounting policies and disclosure to apply in relation to ljarah Scope 3.This Standard shall apply in accounting for ljarah as defined in paragraph 5 but shall not apply to: 3.1 lease agreements to explore for or use minerals, oil, natural gas and similar non-regenerative resources; 3.2 licensing agreements for such items as motion picture films, video recordings, plays, manuscripts, patents and copyrights; 3.3 lessors of investment property leased out under operating leases(see…