Background Accounting Standards for financial reporting by Islamic financial institutions have to be developed because in some cases Islamic financial institutions encounter accounting problems due to existing accounting standards such as IFRSs or local GAAP being developed based on conventional institutions, conventional product structures or practices, and may be perceived to be insufficient to account for and report Islamic financial transactions. Sharia'a compliant transactions that observe the prohibition on charging interest may not have parallels in conventional financing and therefore, there may be significant accounting implications. Likewise, the Islamic finance industry is under considerable pressure to enhance practice and improve risk management systems and protect investors.
This is especially true when the adjective is Islam Christian or Buddhist may at least sound more peaceful which is media-hyped to be synonymous with terrorism.
On the other hand, the development of Islamic banking and finance now embraced even by ardent capitalist institutions such as Citibank, HSBC and ANZ banks may interest accountants to the possibility of new opportunities for the profession especially in the wake of lay offs and downsizing by the big four firms.
Perhaps, the Enron affair has rekindled an interest in having a more honest profession who truly care about the public interest in addition to their pockets.
Whatever the interest or curiosity, we hope accountants will find this series of articles interesting, informative, and profitable and yes we hope it may even lead to a bit of soul searching. From this, it can be seen that both Islamic and conventional accounting is in the business of providing information.
The differences lie in the following: Apparently this is achieved by the user making the appropriate, buy, sell or hold decisions on their investments. Following from the above, the type of information which Islamic accounting identifies, measures is different. Conventional accounting concentrates on identifying economic events and transactions, while Islamic accounting must identify socio-economic and religious events and transactions.
A few of us, older ones, might still remember when we did our first accounting or book-keeping courses, we had to do final accounts i. However, Americanization of the curriculum has popularised the term financial statements.
Hence, the concentration of accounting has moved from stewards manorial accounts to accounting for money accentuated by the monetary measurement concept. This is not to say that Islamic accounting is not concerned with money especially when accounting for businesses. On the contrary due to prohibition of interest-based income or expense, profit determination is more important in Islamic accounting than conventional accounting.
However, Islamic accounting must be holistic in its reporting Hence, both financial and non-financial measures regarding the economic, social, environmental and religious events and transactions are measured and reported.
Conventional accounting mainly uses historic cost or lower to measure and values assets and liabilities. The profession is well aware of the limitations of the stable unit of measure assumption of the monetary unit and to its credit has tried in the past in its inflation accounting initiatives.
However, despite recommendation from its own research efforts True blood committee? From an Islamic point of view, at least for the purpose of computation of Zakat, current valuation is obligatory see for example, Clarke et al, prompting calls for a current value Balance Sheet Baydoun and Willet, A further difference is, Islamic accounting may require a different statement altogether to deemphasize the focus on profits by the income statement provided by conventional accounting.
They argue that this shows and encourages a cooperative environment in business as opposed to a destructive competitive environment. The third category of differences is in the users of the information.
Although the profession has recognised various stakeholders as users of accounting information see for example, the Corporate Report,the users which it focuses on are shareholders and creditors i. Financiers — those who provide the funds. From recent developments in finance and financial markets, accounting seems to be serving an elite group of financiers — market players and banks and other financial institutions.
It has been accused of helping a group of rich people get richer Gray et al. Religion and accounting- an explosive mix? Why not accounting for Islamic organisations or accounting from the Islamic perspective?.
|Islamic accounting||Those concepts that are not violating the Islamic principles will be accepted and those that are found to be in violation will be then either rejected or modified.|
|Islamic Accounting Principles||There are many similarities between Islamic and conventional accounting, as both are about providing useful economic information to permit users to make rational decisions by facilitating comparisons and thereby minimising the cost of assessing alternatives investments. Information provided by conventional accounting focus on individuals who control resources while Islamic accounting information concentrates on the community who participate in exploiting resources.|
|Principles of Islamic Accounting | Bookshare||A comprehensive guide, this groundbreaking reference offers both insight into Islamic accounting best practices and disclosure for Shariah-compliant instruments. Covering everything from basic transaction analysis to the preparation of financial statements, this reference serves as a broad framework around which undergraduate students can build their understanding of the Islamic business environment by offering context and showcasing how Islamic values can influence the disclosure of financial information.|
|Islamic Accounting - Definition, Principles & Comparison | AIMS Blog||And, it is hard to accept when the same idea is connected with some religious principles, such as accounting in Islam.|
|ISLAMIC ACCOUNTING – A PRIMER||Background Accounting Standards for financial reporting by Islamic financial institutions have to be developed because in some cases Islamic financial institutions encounter accounting problems due to existing accounting standards such as IFRSs or local GAAP being developed based on conventional institutions, conventional product structures or practices, and may be perceived to be insufficient to account for and report Islamic financial transactions.|
The worry is that the addition of any religious adjective may compromise the objectivity of the discipline as religion is mostly seen as an unchanging dogma and code not subject to pragmatic or logical considerations.
We will take this matter in two stages:Principles of Islamic Accounting is the first and only text that covers the fundamentals of Islamic accounting in English. A comprehensive guide, this groundbreaking reference offers both insight into Islamic accounting best practices and disclosure for Shariah-compliant leslutinsduphoenix.com: Nabil Baydoun.
Reflecting upon Islamic principles, we here engage with the notion of accounting for the environment. Drawing from key Islamic texts and relevant prior literature, we elaborate and discuss key Islamic principles of relevance and delineate what they suggest for accounting.
Islamic accounting can be defined as the “accounting process” which provides appropriate information (not necessarily limited to financial data) to stakeholders of an entity which will enable them to ensure that the entity is continuously operating within the bounds of the Islamic Shari’ah and delivering on its socioeconomic objectives.
Bachelor In Islamic Banking And Finance (Hons) | Asia Pacific The Bachelor in Islamic Banking and Finance (APU) is designed to provide both theories and practical applications with concentration on Islamic fundamental and Shari’ah principles in order to assist expansion in the banking in Accounting and Finance with a specialism in Forex and .
Oct 31, · The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) is an Islamic international autonomous non-for-profit corporate body that prepares accounting, auditing, governance, ethics and Sharia'a standards for Islamic financial institutions and the industry.
The Principles of Islamic Accounting Definition and discussion of some accounting principles and how they are fit into Islamic framework to furnish an accounting system and procedures for Islamic Financial institutions will be considered here.