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Islamic Accounting and Business Practices: A Conceptual Framework

Introduction

This paper discussed about Islamic accounting means the concept of accountability in Islam [taklif]. Allah control Man to give back the entrusted things to whom they are due. Therefore, Man is accountable for the religious aspects and also for social, business and contractual dealings.

Main Content

The problems in traditional financial accounting are inadequate and incomplete records. If the good accounting information is complete, it can provides intended users with all the necessary information to fulfil information needs and requirements. However, it’s also creating problems in accounting system. They must including all relevant information in order to provide accurate information. From my point of view, traditional accounting emphasizes on users requirement of information while Islamic accounting emphasizes on accountability of the accountants in disclosing the information.

The entity concept which states that the firm and its owners are separate entities and one firm is separate from another firm because the owners are not liable for the company’s debt at the time of bankruptcy but have the rights to residual profits which is unlawful and similar to gambling. This concept was disagrees by Islamic Shari’ah. If the owners become bankrupt, then the liabilities may be distributed to their successors or legal inheritors. From my view, entity concept is needed to record the business’s transactions separately and to distinguish them from the owners’ personal transactions.

Conclusion

As conclusion, from Islamic perspective stated that accountability is a basic constitutional concept in the Muslim society and belief. They have their own accounting system practice in recording and communicate the transactions.

The Development Of the Conceptual Framework For Accounting For Islamic

Banking

Introduction

The emergence of Islamic banks and financial institution and the specialist in Islamic Shariah and accounting have led them to seek the most appropriate means to provide reliable and relevant information to users of financial statement of organizations. According to Stauton 1984, different societies have different worldviews and values, therefore, a symmetrical conceptual framework may be difficult to achieve. From my point of view, some societies are emphasizes on the principles of Islam and less emphasizes on the objectives of financial reporting, the proposition of accounting and definitions of accounting principles from Shari’ah principles. Thus, the different worldviews of Islamic perspective affects the information needs of an Islamic community that are different from those of a capitalist community.

Main Content

From Islamic perspective, there are at least three classifications of terminology hierarchy referring Kitabul Taarief :

1. Asl (foundation, eg. the compliance of Shari’ah Islamiah)

2. Mabda (principle, eg. halal mu’amalah, truth and fairness in the