The MASB has had a project on Islamic financial reporting since its founding in 1997. The initial sentiment was that a separate, stand-alone set of Islamic standards was necessary to satisfactorily report Islamic transactions and events; and in 2001, the standard MASB i-1 (later re-numbered FRS i-1), Presentation of Financial Statements of Islamic Financial Institutions, was issued.
However, subsequent staff research appeared to indicate that much of the conventional accounting concepts and generally accepted accounting principles could be applied to Islamic financial transactions and events albeit with additional disclosures to explain the use of Islamic contracts. Indeed, even MASB i-1 (FRS i-1) was largely a reiteration of requirements already found in FRS 101, Presentation of Financial Statements, and FRS 108, Accounting Policies, Changes in Accounting Estimates and Errors.
As a result of staff research and other consultations, namely with the Shariah Advisory Council of Bank Negara Malaysia, the MASB ceased its policy of issuing Islamic accounting standards. It may instead issue other documents that discuss the application of MASB approved accounting standards to Islamic transactions. These documents, however, are neither standards nor interpretations to standards.
On 15 September 2009, the MASB issued Statement of Principles i-1 (SOP i-1), Financial Reporting from an Islamic Perspective to affirm that MASB approved accounting standards shall apply to Shariah compliant financial transactions and events, unless there is a Shariah prohibition. Since the MASB would no longer be issuing Islamic accounting standards, it accordingly withdrew FRS i-1.