The intent of this paper to research the possibility to look for a new accounting theory and accounting criterions puting mechanism under some of Islamic principles.The paper has discussed basic Islamic rules of “ Amanah ” ( Custody ) , “ Shahadat ” ( Testimony ) , colony in “ Bay ” ( concern trade ) and “ Shura ” ( Reding ) in the context..
As the accounting criterions puting procedure will be based on Divine Guidance ( Quran and Sunnah ) , the extent of subjectiveness in puting and using accounting criterions can be minimized. These are initial ideas. An accelerated incorporate attempt at OIC ( Organization of the Islamic Countries ) degree to further research the rules, specially “ Bay ” , may be really useful.The new set of accounting criterions would hold a broad range and merely non be limited to Islamic finance. The paper provide an penetration for another set of accounting criterions which may better the present position of accounting profession.
The research aim is to happen out the importance of Islamic accounting every bit compared to conventional accounting criterions. Therefore an attempt is made to happen out the assorted characteristics of Islamic accounting along with the benefits and its comparings with the conventional accounting system.
Research Problem and inquiries:
The research job includes the facts that specify the benefits of Islamic accounting every bit compared to conventional accounting systems. The inquiries include the followerss.
What is really the Islamic accounting system?
What are the benefits of Islamic accounting system?
How this is different from other accounting system?
Research Source of informations:
The information will collected from primary beginnings via questionnaire and secondary beginnings like old surveies and researches, book and magazines, and on-line resources.
Scope and restrictions:
The range of this research is merely to the extent of this peculiar Islamic accounting survey in comparing to the conventional accounting criterions. The chief variables that the research workers will look into are:
Methods and company to present such accounting criterions.
Significance of the survey:
This survey will come in ready to hand to function other fabricating companies and any related parties Therefore ; it will be important for the general populace, pupils of finance and possible clients of Bankss, investors, and may be utile for research workers.
Definition of footings
Muslim accounting can be defined as the accounting procedure which provides appropriate information to stakeholders of an entity which will enable them to guarantee that the entity is continuously runing within the bounds of the Islamic Shariah and presenting on its socioeconomic aims. Islamic accounting is besides a tool, which enables Muslims to measure their ain answerabilities to God. The significance of Islamic accounting would be clearer if we compare this with the definition ofA conventional accounting. Conventional accounting as we know it is defined to be the designation, entering, categorization, construing and communication economic events to allow users to do informed determinations ( AAA, 1966 ) .
Literature & A ; Related Studies II Chapter
Stephen A. Zeff ( 2003 ) has taken a good stock of journey of accounting profession and its present position in the United States of America. If we thoroughly reexamine this paper we shall besides reason that one of the basic jobs with the present accounting is its going from its built-in function of attesting independently the province of personal businesss of an entity
Laureen A. Maines and James M. Wahlen recommend that “ Finally, we support
research that focuses on preparers because of their cardinal function in the fiscal
describing procedure. “ ( 2006 ) .
Furthermore we supports the proposition that “ Accounting should be more basically about answerability than rating ” ( Colson,2005 )
In general accounting should be able to execute the undermentioned functions:
1-Properly protecting the interest entrusted by the stakeholders. This is more than book maintaining.
2-Facilitating timely answerability of all the parties particularly of the direction
3-Testifying the true and just position of concern to the stakeholders.
4-Providing dependable information for successful determination devising to all the stakeholders.
Soon a batch of argument is traveling on the assorted facets of following accounting criterions. Some are reasoning in favor of accounting criterions based on GAAP and some are in favor of IFRS ( like Benston, Bromwich and Wagenhofer,2006 ; Tarca, 2004 ; Jamal and Sunder, 2007 ; Soderstrom and Sun ; Goncharov & A ; Zimmermann, 2002 and Bradshaw, & A ; Miller, 2002 ) .
There is besides a treatment traveling on regulative competition among accounting criterions and pick to choose a specific set of accounting criterions ( Sunder, 2002 ) .
Than we besides argue sing harmonisation of accounting criterions. The joint attempts of IASB and FASB to develop a common conceptual model although full of challenges ( McGregor and Street, 2007 ) , would be a landmark for accounting profession. All these attempts are to acquire high quality of accounting criterions. However, the consequences of joint attempts of IASB and FASB are yet to be seen in the coming old ages.
“ More significantly, the boards need to guarantee that the revised model references comprehensively both initial and subsequent measuring. This should include a clear articulation of acceptable measuring bases every bit good as designation of the measurement property or attributes that when applied will bring forth the highest quality determination utile information ” ( McGregor and Street, 2007 ) .
Evaluations of the survey:
From the above survey it ‘s clear that the Islamic Accounting is far manner better and trusty accounting system. In this Accounting system all the defects of the Conventional accounting system are drawn off and a good method of picturing the true image of the accounting statement can be achieved.
The research is designed in the signifier of the questionnaires and other secondary beginnings of informations. The effort was made to maintain secretiveness and clear up the inquiries to the respondent before the filling of questionnaire. Besides the interview inquiries were designed to keep secretiveness of the individuality of the individual.
Beginnings of Datas
There are two types of informations in any research, primary and secondary informations. In this reportthe research workers have used the primary beginning of informations through distributing questionnaires along with secondary beginning of informations.
Purpose and research inquiries or void hypothesis
The intent of the survey is to happen out the benefits of the Islamic banking and compare it with the conventional banking system and happen out if truly the Islamic banking system a better system than the other one.
The sample size consists of 30 respondents. These respondents are the Chartered Accountants with the cognition of both Conventional and Islamic accounting system. Along with that the accounting attorneies were besides among those who were consulted.
Scope and restrictions
The range of the research is the rating of the Islamic accounting system. No other sample shall be used to carry on this research. The research is done as the research worker must subject the survey consequences before the terminal of the class to go through the class demand.
What is your appellation?
How many of old ages of experience in accounting you have?
What is your age?
What is your gender?
Make you cognize about the Islamic accounting system and conventional accounting system?
Do you believe Islamic Accounting systems are better than Convention Accounting systems?
Do you believe that Islamic Accounting system should be made compulsory for all the organisation?
Do you believe that Islamic Accounting is the reply to all the organisation jobs that investors, authorities and other parties faces in footings of transparence?
How you grade your cognition about Islamic Accounting system?
Suggest any drawbacks or betterment you want to be added in Islamic Accounting system?
In the terminal, the Islamic accounting criterions are really of import to every state in the universe. This helps the state to acquire connected and channelized from the outside universe. Thus the domestic company becomes multinationals and the authorities earns more revenue enhancements. The concern in the state grows and prospers, therefore doing the company back on its pess.
The Accounting criterions besides aim at bettering the fiscal wellness of the company. That is to take lesser determinations when the Bankss say no to a company.