Chapter 5Page 166
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In the previous chapter, the researcher attempted to argue the need for an alternativeIslamic Accounting in the form of pull factors; those factors that motivate thedevelopment of Islamic accounting. The first category of Pull Factors, the theoreticalimperative of Islamisation of Accounting, was discussed in the previous chapter. Inthis chapter, the second category of Pull Factors, the practical imperative, will bediscussed.The practical imperative or necessity for the development of an alternative “IslamicAccounting” is the establishment of Islamic business and not for profit organisationswhich are specifically based on the Shari’ah or controlled by Muslims who may wishto follow its precepts. These socio-economic organisations are part of the Islamiceconomic and financial system, which is based on the Islamic world-view. Theresearcher believes that the objectives, operations and practical accountingrequirements of these organisations need an alternative “accounting” framework inorder for their objectives to be achieved, their operations to run smoothly and theiractivities accounted in a true and fair manner within the world-view in which theyoperate.This chapter is organised as follows:In section 5.1, the principles and objectives of the Islamic economic and financialsystem will be presented. As the prohibition of interest (
) “is one of the keyelements of the Islamic Economic programme” (Ahmad,1994a, p5), the definition of
, some possible reasons for its prohibition and the controversies surrounding itsdefinition are discussed.