1-compare the characteristic of islamic accounting versus conventional - copy
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COMPARE THE CHARACTERISTIC
OF ISLAMIC ACCOUNTING
VERSUS CONVENTIONAL
ACCOUNTINGZul Husni Bin Ag Damit
Mohd Hafiz Bin Amat
Muhammad Hafizuddin Bin Shamsuddin
Madsan Bin Salimeu
Prepare by:
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INTRODUCTIONISLAMIC VS CONVENTIONAL ACCOUNTING Islamic Accounting – Accounting process
which provides appropriate information to stakeholders of an entity which will enable them to ensure that the entity is continuously operating within the bound of the Islamic Shari’ah and delivering its socioeconomic objectives.
Conventional Accounting – Identification, recording, classification, interpreting and communication of economic events to permits users to make decisions.
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DIFFERENCE BASED ON…1. The objective of providing the
information.2. Types of information that are
identified.3. How is it measured?4. User of the information
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1) THE OBJECTIVE OF PROVIDING THE INFORMATION.
Conventional Accounting – As an aid to make decision whose ultimate purpose is to efficiently allocate scarce resources available to their most efficient uses by providing information efficiency in the market.
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Islamic Accounting – Enable user to ensure that Islamic organisations abide by the principles of the Shari’ah in its dealings and enables the assesment of whether the objectives of the organisations are being met.
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2)WHAT TYPE OF INFORMATION IS IDENTIFIED?
a. Concentrate b. Reason
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2)WHAT TYPE OF INFORMATION IS IDENTIFIED?
Conventional Accounting Islamic Accounting
identifying economic events and transactions
identifying socio-economic and religious events and transactions.
Americanization of the curriculum has popularized the term financial statements. Hence, the concentration of accounting has moved from steward’s manorial account to accounting for money
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.
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3). HOW IS IT MEASURED?
Conventional Accounting Historic cost to measure and values
assets and liabilities. Arose from the needs of bankers and
shareholders. Interest-based bankers who are
interested - capital and interest are repaid.
Valuation of assets-historical cost but anticipating all liabilities in conservatism concepts .
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Islamic Accounting Computation of zakat- current valuation
is obligatory. Zakat based on historical cost valuation
would yield lower receipts in times of inflation or rising costs.
Current values would satisfy Islam’s concept of justice.
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4) TO WHOM IS IT COMMUNICATE(THE USERS)?
ISLAMIC ACCOUNTING CONVENTIONAL ACCOUNTING
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CONVENTIONAL ACCOUNTING
ISLAMIC ACCOUNTING
Shareholders Creditors Elite group of
financer Market player Banker Other institution
Reason:- Helping a group of
rich people get richer
Gamut of stakeholder recognized by cooperate report
Reason:- Ensure they comply
with shari’ah principle Do not harm other while
making money ethically Achieve equitable
allocation and distribution of wealth among members of society
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The uniqueness of Islam lies in its practicalities - not merely a belief but is a complete way of life.
This can be analogically be seen from Islamic faith whereby for every human, 2 angels accompanied them at right and left shoulders, record every good deeds and sins (the double-entry bookkeeping principles?)
mentioned comprehensively in Quranic verses, portrayed to shoulder responsibility of social and economic justice
In recent years - conventional accounting - suffers from the lack of desirable information.
The objectives of Islamic accounting - avoidance of doubts and consequently to ensure fairness between all relevant parties and equitable transfer and distribution transfer and distribution of property rights and wealth.
CONCLUSION
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MANY THANKS FOR YOUR ATTENTION
See you in other occasions