From islamic-finance
Activate for: istisna'a, construction finance Islamic, manufacturing contract, FAS 10, parallel istisna'a, percentage of completion, project finance Islamic, istisna'a receivable, istisna'a in progress, construction contract Islamic, infrastructure sukuk construction, milestone financing.
npx claudepluginhub panaversity/agentfactory-business-plugins --plugin islamic-financeThis skill uses the workspace's default tool permissions.
Istisna'a: Bank contracts to have a specific asset MANUFACTURED or CONSTRUCTED
Activate for: murabaha, cost-plus financing, deferred sale, commodity murabaha, tawarruq, FAS 2, murabaha receivable, deferred murabaha income, murabaha portfolio, murabaha schedule, murabaha profit recognition, mark-up financing.
Answers queries on Japan's Qualified Invoice System (インボイス制度) with structured guidance on qualified invoices, registration numbers, tax credits, special measures, and transitional rules.
Activate for: bank reconciliation, nostro reconciliation, suspense account, GL reconciliation, provision reconciliation, inter-company reconciliation, nostro break, unmatched item, reconciling item, MT940, MT950, MT942, aged items, reconciliation certificate, suspense clearing, four-way reconciliation, IFRS 9 provision reconciliation, settlement break, trade reconciliation, position break, GL-to-risk reconciliation. NOT for: IFRS 9 ECL model calculation (use ifrs9-ecl), capital adequacy reporting (use basel-capital), AML transaction monitoring (use aml-typologies).
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Istisna'a: Bank contracts to have a specific asset MANUFACTURED or CONSTRUCTED and then delivers it to the customer. The asset need not exist at contract date. Unlike salam: payment may be deferred or in stages (not required upfront).
Shariah requirements:
Parallel istisna'a: The bank enters CUSTOMER ISTISNA'A (bank is contractor, sells to customer) and a separate BACK-TO-BACK ISTISNA'A (bank is buyer, construction company is contractor).
The bank is in the middle as intermediary. The two contracts must be INDEPENDENT (bank bears construction risk in both).
Apply the PERCENTAGE OF COMPLETION method:
Revenue recognised = Contract revenue x % completion to date — Previously recognised revenue
% completion methods:
Period-end accounting entry (% of completion method): Dr: Istisna'a Receivable / Contract Asset [Revenue to recognise this period] Cr: Revenue from Istisna'a [Same]
Dr: Construction Costs / WIP [Costs incurred this period] Cr: Cash / Payables [Same]
Period profit = Period revenue - Period costs incurred
If contract is a LOSS-making contract (expected costs > contract price): Recognise the FULL expected loss immediately in the current period. Dr: Loss on Istisna'a Contract [Full expected loss] Cr: Provision for Istisna'a Loss [Same]
IFRS 15 over-time revenue recognition applies if:
Arithmetic of % completion is IDENTICAL under AAOIFI FAS 10 and IFRS 15. Key difference: AAOIFI requires explicit Shariah compliance confirmation of milestone specifications (to satisfy gharar prohibition). IFRS 15 does not require this.
Gross vs. Net presentation:
GROSS (default): Show:
NET (if offset criteria are met — IAS 32):
Criteria for netting: Must have both a legal right to set off AND the intention to settle on a net basis or simultaneously. In most parallel istisna'a structures, these criteria are NOT met → GROSS presentation is required.
BALANCE SHEET IMPACT: Gross presentation can double the reported balance sheet size. This has direct regulatory capital implications for the bank.
AAOIFI FAS 10:
IFRS 15 (IFRS regimes):