Page 230 - Bank Muamalat_AR24

228 BANK MUAMALAT MALAYSIA BERHAD

NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2024 (29 JAMADIL AKHIR 1446H)

2. MATERIAL ACCOUNTING POLICIES (CONT’D.)

(q) Fair value measurement (cont’d.)
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within
the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical instruments;
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement,
which is directly (i.e. prices) or indirectly (i.e. derived from prices) observable; and
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group and the Bank
determine whether transfers have occurred between fair value hierarchy levels by re-assessing categorisation (based on
the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

The fair value of financial instruments and further details are disclosed in Note 48.
(r) Government financing scheme and government financing facility

Financing under a government scheme is recognised and measured in accordance with MFRS 9 Financial Instruments,
with the benefit at a below market and concession rate is measured as the difference between the initial carrying
amount or fair value of the financing and the amount received. Government financing facility is measured in accordance
with the amount received.
The benefit of a financing or a facility under a government scheme that addresses identified costs or expenses incurred
by the Group and the Bank is recognised in the profit or loss in the same financial period when the costs or expenses
are recognised, when the required conditions are fulfilled in accordance with MFRS 120 Accounting for Government
Grants and Disclosure of Government Assistance.

(s) Investment accounts
Investment accounts are either:

i. Unrestricted investment accounts
An unrestricted investment account (“UA”) refers to a type of investment account where the investment
account holder (“IAH”) provides the Bank with the mandate to make the ultimate decision without specifying any
particular restrictions or conditions. The UA is structured under Mudarabah contracts.
Impairment allowances required on the assets for investment accounts are charged to and borne by the investors.

ii. Restricted investment accounts
Restricted investment account (“RIA”) refers to a type of investment account where the IAH provides a specific
investment mandate to the Bank such as purpose, asset class, economic sector and period of investment.

RIA is accounted for as off-balance sheet as the Bank has no risk and reward in respect of the assets related to
the RIA or to the residual cash flows from those assets. RIA is a type of restricted investment account based on
the Mudarabah contract where the IAH and the Bank agree to share the profit generated from the assets funded
by the RIA based on an agreed profit sharing ratio (“PSR”), while losses shall be borne by the IAH.