Toward a Flawless Shariah Economy and Islamic Finance (original) (raw)
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Islamic Accounting Systems and Practices
gave us guidelines regarding all aspects of our life to deal successfully in this earth and to get salvation in hereafter. Accounting is also an integral part of our life. This article gives us an introduction to Islamic Accounting and its contrast to Traditional Accounting. This article also identifies the basic features and objectives of Islamic Accounting, justifies the need for the development of a separate accounting system for the Islamic Organizations, and analyzes the traditional concepts of accounting in the Islamic point of view. The proposition of the article is that the role of accounting and accountants would be more accurate, effective, complete and fair if any firms and organizations follow Islamic accounting.
ISLAMIC & CONVENTIONAL SYSTEM OF ACCOUNTING &FINANCE A COMPARATIVE STUDY
Abstract: This study investigates the need for an alternative "Islamic accounting" which is consistent with the worldview, values and socioeconomic norms of the Islamic society. It proposes an outline of an Islamic accounting theory together with empirical investigations of (i) the perception of Muslim accountants and accounting academics on Islamic accounting and (ii) the unislamic behavioral consequences of conventional accounting on users. The study starts from a premise that the worldviews and values of a society affect its economic objectives and norms, which in turn affect the accounting system, and vice versa. An examination of the worldviews, values and economic objectives of the Western society and the capitalist economic system which underlie conventional (Anglo-American) accounting shows them to be different from those of an Islamic society. This presents a prima facie case for Islamic accounting. Islamic principles are suggestive of a variety of implications for governance and accounting. Reflecting upon Islamic principles, we here engage with the notion of accounting for the environment. Drawing from key Islamic texts and relevant earlier literature, we elaborate and discuss key Islamic principles of relevance and delineate what they suggest for accounting. Our endeavors here are consistent with a concern to contribute to a critical theoretical project seeking to develop a progressive and emancipating universalism that is respectful of difference, a project with its accounting implications. In concluding, we point, among other things, to the irony whereby Western transnational corporations have sought to promote their particular brand of corporate social (and environmental) responsibilities for accounting in Arab countries, variously influenced by Islam, with little mention of a notion of accounting for the environment integral to and deeply rooted in Islam. Islam has represented one of the most significant manifestations of ‘the Other’ for those in the Western world for many centuries. Suggestions that accounting methods in Islamic societies have influences on the emergence and development of double-entry bookkeeping have been resisted, and accounting in Islamic societies remains a largely closed book to those in the West. Modern accounting in Islamic societies must face the challenge of reconciling a desire to adopt International Financial Reporting Standards with a need to preserve core Islamic values. Much of the theoretical, normative and prescriptive research in Islamic economics, finance and accounting emphasizes the social and moral character of these disciplines. Considering such emphases, this paper critically explores the potential of aspects of contemporary Islamic accounting research and practice to contribute to the critical accounting project in the latter’s efforts to achieve more emancipatory and enabling forms of accounting. The paper concludes that minimal critical theorizing, and the narrow instrumental and mechanical emphasis of the majority of Islamic accounting research, are indications that Islamic accounting research is diverting from its primarily proclaimed social and moral roles. This is further exacerbated by the uncritical emulation and embracing of conventional accounting operations and standards by so-called Islamic ones. The paper also attempts to identify ways forward for Islamic banking and accounting research to realize more emancipatory praxis. Over the last decade, Islamic finance has grown quite impressively. With the growth in Islamic finance the need for Shariah (Islamic law) compliant financial products have also increased. Key Terms: Islam, Islamic law (Shariah), Islamic Accounting, Islamic Banking, Islamic Economics, Islamic Finance, Islamic Tax (Zakat), Islamic Insurance (Takaful), Interest (Riba), Uncertainty (Gharar), Gambling (Maysir), Unlawful (Haram), Lawful (Halal) & Globalization of Islamic System of Accounting & Finance
A closer look at accounting for Islamic financial institutions
SHS Web of Conferences
This paper provides a discussion of a study that examines accounting in Islamic perspectives. The discussion includes an overview of the development of Islamic finance, accounting in Islamic perspectives, and four key accounting assumptions, namely 'substance over form', 'time value of money', 'fair value' measurement and 'recognition based on probability', which serve as important guides to preparers of financial information.
Islamic accounting is the process of identification, measurement and reporting the legitimacy of financial activities which is useful for decision making, zakat calculation and calculation of true benefit of Islamic investment operations, according to the Islam commands. As a lifestyle, Islam has paid great attention to business activities. Thus, God has provided the instructions for human salvation in this world and the hereafter. In economic activities, redemption should be the final goal and accounting as an instrument for providing the information in economic environment, should serve this purpose. There are different goals for Islamic accounting such as Usefulness for decision-making, accountability, Islamic responsiveness and accountability through Zakat. In this regard, accounting features are focused on measurement and disclosure. In the field of measurement, dominant opinion is that, for the purposes especially determining Zakat, we should use the current values. In disclosure aspect, the emphasis is on following the Sharia and providing the required information, especially in the field of social responsibilities.
1 Issues in Accounting Standrads for Islamic Financial Insitituions
2004
The contemporary experience of Islamic banking is hardly more than three decades old, though it proved to be groundbreaking with far reaching impacts worldwide. Among the major challenges faced by Islamic banking experts and Shariah Scholars has been the idea of developing appropriate accounting and auditing standards, to
30 years of research in Islamic accounting: a literature review
PSU research review, 2022
Purpose-This paper aims to examine the Islamic accounting research. In particular, the paper extensively investigates the literature on Islamic accounting to understand the issues, contexts, methods and theoretical paradigms thereof. Design/methodology/approach-The study has adopted a literature review approach. It has examined the key journal publications for 30 years in accounting discipline and systematically identified the Islamic accounting papers during 1990-2020. In total, 95 papers were identified until June 2020, and they were thoroughly reviewed to identify the relevant issues, contexts, methods and theoretical paradigms. Findings-The study has found that Islamic accounting papers covered issues of both Islamic organizations (e.g. Islamic financial institutions) and of Muslim countries. The key issues include the regulation and regulatory compliance, annual report disclosures, corporate and Islamic governance, accounting profession, gender, accountability matters, management accounting and control, waqf accounting and zakat management. The study has also observed various normative guidelines from the academics on how the teaching of Islam is enacted in accounting, accountability and governance matters to attain the maqasid al-shari'a, i.e. human welfare, social justice and equity. Research limitations/implications-The study is not empirical. Hence, the limitations of literature review papers are applicable in this case. Moreover, it is possible that this study could not identify some of the important literature on Islamic accounting (such as the papers published in Arabic by the academicians and professionals of Arab world). Practical implications-The study enables both Islamic accounting academics and practitioners to identify the main Islamic accounting issues and realize the importance of Islamic accounting. Social implications-When the author considers Islamic accounting as a social construction and tries to understand the phenomenon through social theories, the author acknowledges the relevance of Islamic accounting in the society in which it operates. It can be noticed from the discussion that Islamic accounting emphasizes on social welfare, balance, equity and providing relevant information to follow the commandments of God. Originality/value-To the best of the author's knowledge, this study is the first to provide a synoptic view on the issues, context, methods and theoretical paradigms of Islamic accounting, while covering major accounting journals in 30 years.
Universal Journal of Accounting and Finance, 2021
Accounting information systems are evolving along with modern information technology, which opens up countless opportunities to expand the intellectual, scientific and professional potential, contributing to the culture and "language" of accounting, professional principles extend beyond one country. However, differences in national and regional accounting systems still persist and reflect not only a diversity of accounting policy views but also deeper structural differences rooted in legal, financial and social systems. The Islamic (partner) accounting model appears to be the least studied and, at the same time, the most different from other accounting models. The economy of Islamic states is an important part of the world economy, so Islamic and other companies operating or investing in an Islamic institutional environment have a direct interest in proper disclosure of accounting information. The major goal of the research is to find similarities and differences between the IFRS and Islamic banking and to prove that it’s beneficial in the modern Islamic countries. In order to assess and compare the IFRS and the Islamic banking practices the authors used comparative analysis and empirical study of the major parts of the both accounting systems. The major findings include the proof of the positive role of Auditing Organization for Islamic Financial Institutions (AAOIFI) which develops norms of convergence of International financial accounting standards (IFRS) and AAOIFI, and the proof that Islamic banking is based on the Sharia and Islamic ethics, but can be based on other principles that are not contrary to Sharia. The authors have come to a conclusion that zakat (religious tax for the poor and needy) is a positive social external effect, and that Islamic accounting is characterized by greater disclosure than traditional accounting.