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Chp 11 Conclusion

Chp 11 Conclusion


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Published by: Dr. Shahul Hameed bin Mohamed Ibrahim on Jan 08, 2009
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Chapter 11

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In this concluding chapter, the aims and objectives of the study together with the motivation for the study are reiterated in the next section. A summary of the discussion presented in chapters 2 to 5 on the need for an Islamic accounting follows in section 11.2. In section 11.3 the main theoretical findings of the study are summarised. This is followed by section 11.4, which presents a summary of the main findings of the empirical surveys. In section 11.5 the limitations of this research and suggestions for further research are presented. The thesis is concluded in section 11.6 with the original contributions to knowledge of this study.

This study has aimed to investigate the possible need for ‘Islamic accounting’ as an alternative to the conventional (Anglo-American) accounting system currently in practice in most parts of the world. In particular, it aimed to study whether the objectives, characteristics and consequences of conventional accounting were appropriate to Islamic organisations and Muslim users and if not, to propose the outlines of an Islamic accounting theory. The second part of the study was aimed at obtaining evidence as to the perception of Malaysian Muslim Accountants and Academics on the suitability of conventional accounting for Muslim users and Islamic organisations, as well as the objectives and characteristics of Islamic accounting. In addition it also aimed at obtaining empirical evidence on the unIslamic behavioural consequences of conventional accounting on Muslim users. The motivation for the study is the seemingly inexorable dominating tendency of AngloAmerican conventional accounting, for example, in the example of the ex-communist states such as China to adopt Anglo-American accounting methods in line with the

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liberalisation of its economy. This globalisation tendency of conventional accounting is despite the known influence of cultural, religious, social, business and political factors on the nature of accounting practice. Further conventional accounting has been accused, in the social and critical accounting literature as creating disastrous social and environmental realities as well as promoting certain negative social values rather than being objective and neutral as held out be, by the accounting profession. If this were true, the impact of conventional accounting would be more disastrous for Islamic society, which has a different world-view and values compared to Western capitalistic societies which nurtured conventional accounting. Thus the researcher was motivated to enquire as to what factors made conventional accounting inappropriate for Islamic society and what factors drove the need for the development of an ‘Islamic accounting’ which would be more appropriate for Islamic society. Having argued the need for an Islamic accounting, the study aimed to map a theoretical outline of Islamic accounting in terms of its objectives and characteristics and consequences. Finally the study aimed to test this theoretical outline with the perceptions of Malaysian Muslim Accountants and academics as a prelude to further research which can expand the survey to other Muslim countries.


As opposed to the image of conventional Anglo-American accounting as a neutral, value-free and objective technical activity, it was argued that accounting affects and is affected by society in a complex intertwining relationship (Chapter 2).

11.2.1 Development of values underlying conventional accounting.
Conventional accounting was shown to have certain underlying philosophical assumptions, which were the outcome of the Western worldview, values and social and economic values. These values, the result of the historical evolution of European

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civilisation, which went through several stages of development, were shown to be different from that of Islamic civilisation (Chapter 2). It was shown that while the

Western worldview is a mainly materialist worldview with secularism, democracy, consumerism, utilitarianism as its core values, the Islamic values present a dual-world view of trusteeship of God’s resources and accountability here and in the hereafter. This worldview affects Islamic economic objectives and norms which is aimed at pleasing God through obedience to the Shari’ah in all aspects of life. The basic difference was due to the Islamic teaching of Tawhid or Oneness (Unity) not only of God but also of creation and the practical consequence of this teaching is the unity of the state and mosque as opposed to the secularist thrust in the West. A comparison of the Islamic world-view and values with that of Islam showed significant differences. For example, the strong belief of accountability in the hereafter had implications for the definition of welfare and success. Success in the West is mainly measured in terms of material possessions whereas an Islamic world-view would include material progress and good deeds undertaken. God’s pleasure takes the place of (or at least conditions) the utilitarianism of modern economic theory. Further the prohibition of interest, gambling, alcohol and aleatory contracts in Islam, has major economic and accounting implications. Interest bearing securities are prohibited, hence profit calculations, which preserves equity between stakeholders, become much more important in Islamic accounting. Further calculation of Zakat (an Islamic religious tax) becomes an important issue which has further implication on the valuation system used in accounting. The implications of these different world views on the economic behavioural codes and on both conventional accounting and Islamic accounting was postulated in Figure 2-4 in Chapter 2 in terms of differences in the objectives, users, recognition, measurement and disclosure characteristics. Since the accounting-society interface (figure 2-1) means that worldview affects accounting and vice-versa through user behaviour, it was argued that the use of conventional accounting by Islamic organisations, especially

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established to achieve Islamic socio-economic objectives, may lead to inconsistent behaviour of Muslim users of accounting information (Figure 2-5). This may in turn lead to non-achievement of the objectives of Islamic organisations and in the long-term perversion of the organisations themselves into capitalistic organisations. Thus, the development of an alternative Islamic accounting system consistent with Islamic values was shown to be necessary.

11.2.2 The Push factors: Why conventional accounting is inappropriate for Islamic organisations and users.
This study next investigated in detail the factors, which necessitated the development of an Islamic accounting system (Chapters 3,4 and 5). The researcher grouped these factors into two categories; the push factors and the pull factors. The push factors are those that made the existing conventional accounting system inappropriate for Islamic organisations and users while the pull factors consists of those factors which provided the impetus for Islamic accounting. The push factors, which rendered conventional accounting inappropriate for Islamic organisations and users, were shown to be its objectives, characteristics and consequences (Chapter 3). Specifically, the underlying assumptions, the economic environment and dysfunctional effects of decision-usefulness were examined together with problems of the definition of social welfare which decision usefulness is supposed to obtain. It was shown that the developed capital market assumptions underlying the objective of conventional accounting (to provide cash-flow information to investors and creditors) may not be true of developing countries in general and Muslim countries in particular. Further, the definition of social welfare, which was supposed to result from the use of accounting information, was shown to have some problems in the context of an Islamic society. Specifically social welfare could not be measured only in material terms in an Islamic society, as the equation of material allocative efficiency to social

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welfare, seem to indicate. This could in fact lead to efficiency at the expense of equity and justice, which are cornerstones of Islamic society. The researcher showed that the requirement to calculate Zakat and preserve equity between stakeholders made some conventional accounting principles such as historical cost and prudence (together with the historical cost profit model) inappropriate from an Islamic point of view. It was suggested that a modified form of realisable income might be more suitable for Islamic organisations. In tandem with the concern of critical and social accountants, the damaging consequences of conventional accounting to the natural environment, social fabric (e.g. loss of employment, privatisation) and multinational companies’ exploitation and inequitable wealth transfer from developing countries was also shown to be unacceptable from an Islamic perspective. Finally, the behavioural consequences at the micro level resulting from the use of conventional management accounting tools such as budgeting and performance evaluation was shown to be unIslamic. The use of these tools could lead to cheating, conflict between employees and managers, between employees and to a perversion of the social objectives of Islamic organisations to materialist ones.

11.2.3 Pull Factors 1: The theoretical imperative

The first category of ‘pull factors’ for Islamic accounting was then investigated (Chapter 4). It was shown that a paradigm shift in epistemology is taking place in the Muslim world through the attempted Islamisation of Knowledge. This movement was seeking to reintegrate knowledge with revelation – a position anathema to Western academics resulting from their historical experience with Christianity. For the Muslim, however, the movement was ‘back to original roots’ as for the Muslim world, the present bifurcation of knowledge into secular and religious is an unacceptable deviation from an Islamic perspective. This was claimed to be one of the causes of the Muslim malady of poverty

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and deprivation, in which they find themselves, leading a schizophrenic dichotomous life inconsistent with their fundamental beliefs. Islamisation of knowledge seek to recast modern disciplines (especially those of the social sciences) in the light and the vision of Islamic values and worldview. This study considered the various approaches to the Islamisation of Knowledge suggested in the literature with a view to adopt the appropriate approach to Islamise accounting, which this research project is an initial attempt. It was found that following all the steps suggested was too daunting due to time and financial constraints for a PhD project such as this. Thus it was thought best to incorporate only parts of the suggested methods such as critically re-examining the Western values embedded in accounting which are anti-Islamic and substituting these with Islamic principles deduced from the Islamic world-view and Islamic economics. Islamisation of knowledge was also compared to developments in epistemology and sociological paradigms of Burrell and Morgan (1979). As the selection of a single paradigm of Burrell and Morgan was not appropriate for this research, the researcher located this research in a third dimension (the Islamic paradigm). This was due to special nature of this research, which took into account both the warnings of Hopper and Powell (1985), that there is a strong relationship between the positions on each continuum, as well as adding a non-material spiritual dimension which does not configure in contemporary Western epistemology.

11.2.4 Pull Factors 2: The practical imperative
This study also reviewed the development of Islamic organisations and features of the Islamic Economic System, which constituted the theoretical basis of these institutions (Chapter 5). In particular, the problem of the riba (interest) which is prohibited under Islamic Law but which forms the corner stone of capitalist financial institutions and markets, were discussed. It was shown, that although there were differences of opinion on the definition of riba even in Muslim circles, which tried to exclude commercial

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interest from the prohibition, the majority of Muslim scholars and masses consider all forms of interest, commercial or otherwise as prohibited. The various types of Islamic Organisations were discussed and it was shown that modern corporate form of organisation was allowed under Islam with the exception of debt capital and possible misgivings of limited liability. However, all Islamic organisations would have to follow the Shari’ah with the consequence that they could not operate in certain prohibited industries. These included alcohol, pornography conventional finance and gambling. Hence, all Islamic organisations are ethical investors although the criteria of what is ethical may be different in Islam as compared to Western ethical investments. Further, it was shown that the profit maximisation model is not suitable for Islamic organisations as their objective tend to incorporate secular utility and ‘ritual utility’, the latter

consisting of non-profit oriented social objectives intended to please God. Various types of Islamic business and non-profit organisations were reviewed briefly. These included Zakat collection and distribution agencies, Awqafs (endowments), Islamic insurance companies and Islamic businesses. The objectives and operations of Islamic banks were reviewed in some detail. This review showed that the structure, objectives and operations of these Islamic organisations were somewhat different from their capitalistic counterparts. As such, their accounting requirements were somewhat different. For example, the operations, the nature of the financial instruments used by Islamic banks and the need to allocate profits between the banks and depositors, required different capital adequacy ratio regulations and different accounting standards and procedures. In addition, the ethical nature of these banks required different disclosure standards especially for non-financial disclosures.


The researcher adopted a normative-deductive methodology to outline a theory of Islamic accounting (Chapter 6). This was done after considering the ethical background

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of Islamic organisations and the objectives of Islamic economics under which Islamic business organisations operate. The attainment of falah (success and welfare), which included both economic and social attainments, was shown to be the objective of Islamic economics. These attainments would have to be accounted to God in the hereafter, in the Islamic perspective but it was recommended for Muslims to keep track of their actions in this life. Consistent with this world-view and economic paradigm, the researcher defined and suggested that an “Islamic Accountability” framework would be more appropriate for Islamic accounting rather than “decision-usefulness” advocated for conventional accounting (Chapter 6). As such, the researcher proposed an Islamic accountability model, showing a dual accountability role for Islamic organisations (or accountors) – one to God (in the form of social accountability to society and stakeholders) and one to the contracted accountee. Besides the primary objective of “Islamic accountability”, the researcher also proposed subsidiary objectives of Islamic accounting. These included the provision of information on Shari’ah compliance, the proper assessment and distribution of Zakat, the equitable and fair distribution of wealth generated by the organisation among its employees and other stakeholders and the promotion of a co-operative environment and solidarity. Further, the researcher also suggested that stakeholders other than shareholders might be as important if not more important as users of Islamic accounting information, in line with the Islamic concept of taklif’ or “responsibility according to capacity”. Since large corporation used more community resources, they would have to be accountable for them to the community. The researcher also considered the characteristics of Islamic accounting and proposed that it be holistic and integrative rather than restricted by the monetary measurement concept to “internalities” only. It was proposed that Islamic accounting should inform users on Shari’ah compliance and prohibited transactions, wealth distribution, internal employee/manager relationships and social and environmental impact of the

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accounting entity. The researcher also suggested that traditional auditing should be extended to Islamic auditing which would attest the compliance of the Islamic organisation to Shari’ah rulings and social obligations. Finally, the researcher noted the importance of income calculation in Islamic accounting as there would be an absence of interest-based instruments and a preponderance of Mudharaba and Musharaka (dormant and active partnerships respectively) contracts. Due to this and the wealth transfer implications of Zakat, it was suggested that the historical cost model should be replaced with a mixed valuation model using current valuation for stocks and fixed assets but separating the operational and holding gains.

For the purpose of obtaining consensus of certain categories of Islamic accounting users, the questionnaire method (both postal and delivered) was considered to be most appropriate and was used to obtain evidence of perceptions of respondents on Islamic accounting issues (Chapter 7). This was in line with the Islamic jurisprudence principle of ‘ijma (consensus of scholars or the learned) which is used to expand Islamic Law. The choice of Malaysian Muslim Accountants and Accounting Academics were targeted as the population to be surveyed as the researcher viewed that these were the relevant ulema or scholars whose perceptions were important. The choice of Malaysia as the research site was due to several reasons such as familiarity in terms of language and contacts, finance and time considerations. More important in selecting Malaysia as the research site was that the country is in the process of long-term Islamisation in its political, social and economic system. Malaysia has set up Islamic banks, insurance and investment companies as well as setting up Zakat collection agencies and Islamic universities. Further, an Islamic money market as part of an Islamic financial system operating in parallel with the conventional system has been set up. In addition, there is a developed stock exchange with many big companies, which can be described as

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Muslim if not Islamic. Further, there is a general Islamic resurgence in Academia as well as among Muslim businessmen who try to implement Islam in their activities. The Islamic accounting Questionnaire (IAQ) was used to elicit perception of Malaysian Muslim Accountants and Accounting academics on the question of; • • The ethical framework of Islamic business organisations The ability of Islamic scriptural sources to provide for the development of a regulatory framework for contemporary Islamic organisations. • The appropriateness of conventional accounting information and principles for Islamic organisations • • The main and subsidiary objectives of Islamic accounting The relative importance of stakeholders other than shareholders as users of Islamic accounting • The information which Islamic accounting should provide and its characteristics.

From the above research areas, ten hypotheses were formulated to be tested in the questionnaire survey. Of the 317 questionnaires mailed and delivered to Malaysian Muslim accountants, there were 105 respondents representing an overall response rate of 34% and 5.7% of the total population of Malaysian Muslim Accountants. Of the 157 Muslim Accounting Academics surveyed, 101 academics respondents, which represented a response rate of 64.3% and 22.9% of the total population of Muslim Accounting Academics. Multi-item scores for each research area was computed using means of several questions in each area of interest. revealed strong support for: • • • • The Islamic ethical framework of Islamic business organisations The ability of Islamic scriptural sources for developing regulatory framework for contemporary Islamic organisations. The accountability framework of Islamic accounting The importance of non-financial and the integrated nature of Islamic accounting information. A descriptive analysis of the scores indicated

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There was somewhat less support for: • • The inappropriateness of conventional accounting and The importance of stakeholders other than shareholders

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However, the respondents disagreed strongly that conventional accounting principles of historical cost, prudence and money measurement were inappropriate for Islamic accounting. A Kruskall-Wallis tests of differences of means indicated that there is a relationship between the responses and certain characteristics of the respondents. This included the sector in which the respondent worked (public, commerce or firm), whether the respondent was a professional accountant or academic and the highest educational qualifications of the respondent. The place of qualification and the level of social and environmental accounting education showed relationship to a few of the areas investigated. The level of Islamic qualifications, overseas technical assistance to firms, and experience of respondents seems to have negligible effect on the answers. Since this was an exploratory study, the relationships were not explored further. Due to the exploratory nature of the subject, it was decided to use simple statistical tests of central tendencies, to test the ten hypotheses formulated. Due to the nonnormality of some of the sample distributions, both non-parametric sign test of median as well as the parametric t-tests of means were used. From the testing of the hypothesis (Chapter 9), it was found that: 1) Malaysian Muslim accountants and accounting academics believed that Islamic Business organisations concentrate more on the attainment of social welfare than on profits (Hypothesis 1). In other words, they perceived that Islamic organisations should work under the constraints of the Shari’ah, ensure the just treatment of all stakeholders, avoid damage to the environment, pay sufficient wages to its employees even at the cost of reducing shareholder’s profits and promote the attainment of social welfare.

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2) The respondents further believed that Islamic business organisations do not participate in activities, which are not in line with Islamic socio-economic principles (Hypothesis 2). This meant that Islamic business organisations should not raise debt finance and deal in futures and options or undertake short selling or contra trading. 3) The belief in the ability of the socio-economic principles in the Qur’an and Sunnah to be developed into to an economic/regulatory framework to meet the current needs of Islamic organisations were particularly strong among Malaysian Muslim accountants and accounting academics (Hypothesis 3). This was indicated by population mean and medians of more than 4 (meaning strongly agree). This at least implies that secularisation of the middle class accounting professionals and academics have failed in Malaysia. This bodes well for the development of Islamic economic ethos in Malaysia in future. 4) The respondents also perceived that conventional accounting do not direct Muslim users towards Islamic behaviour (hypothesis 4) and that conventional accounting needed major modification for Islamic organisations. 5) However, the respondents did not believe that financial statements provided under conventional accounting impeded the fair allocation of wealth between stakeholders or hinder the making of appropriate decisions to control the organisations to ensure the attainment of their objectives (Hypothesis 5). Despite this, the respondents perceived that the information provided by conventional accounting do not allow them to properly disclose their Islamic accountabilities. 6) The respondents strongly perceived the conventional accounting concepts of historical cost, prudence and monetary to be suitable for Islamic organisations (hypothesis 6). This finding could be due to the perception that general belief that accounting is concerned with money and prudence principle serves as a protection to absent shareholders and creditors from overvaluing the assets.

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7) Malaysian Muslim accountants and accounting academics also believed that decision-usefulness is not the main objective of Islamic accounting (Hypothesis 7). In fact they strongly perceived ‘Islamic accountability’ to be the main objective of Islamic accounting as their median and mean score for this question was more than four. 8) The respondents also held the belief that Islamic/Social objectives of Islamic accounting are more important than economic objectives of Islamic accounting (Hypothesis 8). Although they did not reject the objective of shareholder wealth maximisation and efficient capital allocation, Zakat assessment and distribution, Shari’ah compliance and the creation of a co-operative environment within and without the organisations were held to be more important. 9) Further, Malaysian Muslim accountants and accounting academics believed that in contrast to conventional accounting, shareholders are not more important users of Islamic accounting than other stakeholders especially, benevolent loan creditors, employees, government and the community (Hypothesis 9). This lends increasing support to an accountability framework for Islamic accounting. 10) Finally, the respondents believed that Islamic accounting emphasises Islamic/social information rather than purely financial information on profits, cash- flows and financial position (Hypothesis 10). Specifically, they perceived that Islamic accounting should provide wider holistic information on environmental impact, employee-manager relationship and working conditions, Islamically prohibited activities and social impact on the community. Further, the respondents perceived that current values should be used in the balance sheet and called for Shari’ah audit and the inclusion of externalities. As the main objective of this questionnaire was seeking consensus, a proportion test was conducted using the conservative cut-off mark of 40% of population disagreement. This had to be rejected in all cases except that of conventional accounting principles. This means that at least 60% of the Malaysian Muslim Accounting Academics and

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Accountants agree or strongly agree to those areas shown above, except for conventional accounting principles of historical cost, prudence and monetary measurement. This shows strong support for the development of an Islamic accounting system that is more in line with Islamic values and more appropriate for Islamic organisations and users. The unIslamic behavioural consequences of conventional accounting was tested using the ‘finance’ and ‘non finance’ questionnaires (Chapter 10). It was found that the type of organisation exerted a strong moderating influence affecting investment, financing and operating behaviour. It was found that Islamic business organisations better adhered to Islamic guidelines in financing activities to a higher extent and to a slightly lesser extent in investment and operating activities. Muslim organisation adhered only moderately adhered to Islamic guidelines while Muslims in non-Muslim organisations do not generally adhere to Islamic guidelines in all three activities. Hence, Islamic culture and commitment diminishes the power of accounting to misdirect Muslims to behave in an unIslamic manner but does not completely purge it except in the choice of financing. However, accounting does affect influence Muslims in all types of organisations to seek quick profits which could be considered against the broad objectives of the Shari’ah. Islamic organisations also do not seem to avoid luxury projects and do not seek environmentally friendly investee companies. Further, the respondents found conventional accounting information to be less than useful in making Islamic investment decisions. Thus, there is some evidence of unIslamic behaviour in the search for profits encouraged by conventional accounting and inappropriateness of conventional accounting for investment purposes. There also seems to be lesser Islamic commitment among foreign directors whereas a higher Islamic commitment seems to exist among employees and managers. Islamic commitment seems to be low in Muslim organisations among both employees and managers, except for Non-executive directors. This may indicate evidence of unIslamic behaviour among Muslims in such organisations. In general, however, the level of

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Islamic commitment is highly correlated with the type of company; Islamic company highest, Muslim companies moderate (but with high variability) and non-Muslim company lowest. This finding is consistent with theoretical expectations. Although overall conventional accounting do not seem to spur Islamic organisations to any unIslamic behaviour, in general, Muslim organisations and Muslims in non-Muslim organisations had to follow the dictates of conventional accounting to maximise profits even when this is contrary to Islamic guidelines. Finally, the behavioural effects of conventional accounting tools on Muslims were investigated using the ‘non-finance questionnaire’ distributed to non-finance personnel working in various types of organisations. The investigation focused on three areas; budget pressures, performance evaluation and profit focus. It was found that about one-third of the respondents agreed to padding and cutting corners (such as training, safety and welfare) to achieve budgets, while another one third were neutral and the rest disagreed. Slightly more than one-quarter of the

respondents agreed that budgets caused friction among employees and between employees and managers, while about 40% of the respondents were neutral with about one-third disagreeing. Hence, while in general, it can be inferred that budgeting does lead to unIslamic behaviour, the extent of such negative behaviour does not seem to be high. The responses in the performance evaluation area indicated that performance is based on budget achievement and accounting numbers. However, strangely, extraneous circumstances and to a lesser extent social and community work are seem to be taken into account in assessing performance. Overall, although there seem to be some reliance on accounting numbers (which may be considered unIslamic) but this seem to be balanced by other non-accounting performance indicators. Hence, there is no evidence that the performance evaluation tools of conventional accounting leads to unIslamic behaviour.

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There is some evidence that conventional accounting causes a profit-focused behaviour among Muslims. It seems that staff welfare, training, benefits, working conditions and even safety are sacrificed to increase profits. However, the answers are not consistent as the majority of respondents reported that working conditions are taken seriously. Perhaps, this is the case as long as it does not affect profits too much! Further, the inductance affect of accounting does not seem to lead to the sacrifice of Islamic ideals. Overall, the results indicate that conventional accounting might lead to a strong profit focus (and thus unIslamic behaviour), the inconsistency in responses suggest that the evidence may be less reliable. In contrast to the hypotheses tested (Chapter 9) from the Islamic accounting Questionnaire, however, the results from both the finance and non-finance questionnaire were not generalisable to the population of finance managers and nonfinance personnel in Malaysian companies as the sample selected was not random. Hence, inferential statistical tests could not be applied, as the results would not have been valid. However, the sample statistics has given some preliminary insights on the behaviour effects of conventional accounting on Muslim users. Although the results seem to be mixed, there is a case for further investigation of unIslamic behavioural effects of conventional accounting on a larger scale.


As with all research, this research had some limitations. In particular several important aspects of Islamic accounting could not be investigated due to the length and time limitations. These include the structure of the Islamic accounting report, and the indepth discussion of recognition and measurement system for Islamic accounting. The scope of the empirical research was also restricted due to cost and time considerations to Malaysia.

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Hence, the perception survey needs to be extended to Muslims in other countries to broaden the consensus. This could also reveal differences in perceptions due to cultural differences among Muslims. In addition it could be extend to Muslim religious scholars or ulema as their opinion lends credibility to any consensus of academics and professionals in terms of acceptability under Islamic Law. The range of accounting principles tested could also be extended in future research to include conventions other than the historical cost, prudence and monetary measurement principles tested in this research. This would be a basis to confirm or refute the compatibility of conventional accounting principles to Islamic accounting. Future research could also look into the design of data-capture systems and measurement techniques to measure externalities and non-financial data and the structure of Islamic accounting Reports. There is also need to refine and extend the survey of the behavioural accounting questionnaires in order to make inferences to the population of Muslim users. However, future case studies of Islamic, Muslim and Muslims in Non-Muslim organisation covering a period of time could lead to much better insights than surveys regarding the unIslamic consequences of accounting. In particular, the interaction between Islamic culture, commitment and behaviour and how it changes over time will provide better evidences of the negative consequences of conventional accounting on Muslim users, if any.

This research, to the researcher’s knowledge, is the first to enquire into the need for Islamic accounting. Previous research such as those by Baydoun & Willet (1998), Hamid et al., (1993) and Abdulgader (1990) had addressed different aspects of Islamic accounting such as Islamic corporate report, profit allocation problems in Islamic banks and Harmonisation of International Accounting standards. This research is the first to contribute comprehensively into the need for Islamic accounting although it does not

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offer solutions in many areas.

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The previous comprehensive study by Gambling & Karim (1991) was quite in depth but it did not really answer why Islamic accounting was necessary by questioning the contemporary accounting system and whether an alternative system was necessary at all. This study is the first to suggest that Islamic accounting is needed because of the interaction of values with economic behaviour and accounting and that the different value system of Islam required a different accounting system. It showed that the Western philosophical assumptions underlying conventional accounting is more consistent with a capitalist economic system rather than an Islamic economic system and thus not appropriate for Islamic organisations. This study also the first to examine in detail the objectives, characteristics, and macro and behavioural consequences of conventional accounting which was shown to be inconsistent with Islamic values and therefore not conducive to Islamic organisations. This study is also a first attempt in the Islamisation of accounting and the exposition of the Islamisation of knowledge and its link to the sociological paradigms of Burrell & Morgan (1979) could also be seen as a contribution to Islamisation of knowledge in general. This research is also a first in its exposition of the implication of the objectives and operations of various Islamic organisations to the need for an alternative Islamic accounting system, although the need for modification of accounting for Islamic banks had been recognised in previous literature. This study extends it briefly to various types of Islamic organisations. The proposals outlining a theory of Islamic accounting based on an Islamic accountability model is another original contribution of this research, although the practicability of this need to be addressed in later research. The proposals outline shows that Islamic accounting has different objectives and characteristics, different from those of conventional accounting in order bring about the appropriate accountable behaviour of users and Islamic organisations.

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This research is also the first to conduct empirical investigations of perceptions of accounting professional and academics on the objectives, characteristics of Islamic accounting and the suitability of conventional accounting to Islamic organisations. The strong support for Islamic accounting among Western-educated Muslim intellectuals was also remarkable as it also showed the failure of secularisation of these groups. Although the results of the behavioural accounting questionnaires were mixed and may not be very reliable, it did add some insight into the possibility of negative behavioural consequences of conventional accounting on Muslim users. To the researcher’s knowledge, this type of investigation is also the first to be undertaken by any researcher.

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