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Financial reporting which is mainly


Garfinkel early on asked scholars to appreciate the multiple ambiguities of the word
'accounting', stressing the unity of the numeric and narrative forms of accounts-keeping
that render organizational forms 'tell-able' (see also Munro 1996: 5; 2001: 474-5). As he
put it, 'Any setting organizes its activities to make its properties as an organized
environment of practical activities detectable, countable, recordable, reportable, tell-a-
story-about-able, analyzable - in short accountable'(G arfinkel 1967: 33).

In Islamic finance, some very anthropological ideas - including debate over the social
construction of reality and the role of values and beliefs in bureau-cratic practice - have
become a terrain of struggle over meanings and their pragmatic uses.

In doing so, the AAOIFI entered a field previously dominated by Shari'a Supervisory
Boards. Even after the advent of the AAOIFI, most Islamic businesses of any
appreciable size still rely on the seal of approval granted by an independent Supervisory
Board made up of clerics and scholars. The AAOIFI has been careful not to tread on the
toes of independent Boards, and relies on their standards-setting to guide its own. The
AAOIFI itself boasts a Board made up of internationally prominent individuals. The
AAOIFI has drafted standards that are readily grasped by its counterpart non-Islamic
organizations, most notably the International Accounting Standards Committee.Yet
while its language and principles share common ground with those of key international
accountancy codes, for example the scheme of conventions which has come to be
known as the Generally Accepted Accounting Principles, it is not en-gaged in a struggle
for authority with local, national, or regional Boards. Indeed, the AAOIFI needs Boards,
and vice versa. The AAOIFI relies on Boards to provide the 'data' from which it crafts
universally applicable Islamic accounting standards. In a process analogous to the
establishment of the Uniform Commercial Code in the United States during the early
twentieth century (Llewellyn 1951; R.W. Perry pers. comm.), the AAOIFI collects infor-
mation on existing Islamic accounting practices and distils from the available data 'best
practices' that will have the most universal transferability and, ultimately, transparency
to both Islamic and non-Islamic businesspeople and regulators. Supervisory Boards, for
their part, can gain legitimacy for their decisions by referring to the AAOIFI standards,
and at the same time provide a clerical seal of approval for the standards themselves.
Understanding the transition from Supervisory Boards to the AAOIFI requires that we
consider something other than the apparent shift in authority from religion to bureau-
cracy. Instead, we should turn to the way in which accounting in Islamic banking and
finance creates particular kinds of 'facts' and engages a specific rhetoric of rationality.

The facts of accounting are special facts: they are supposed to help people make good
decisions about the management of their assets. It is a textbook truism that the principal
objective of accounting practice is to guarantee the 'decision-usefulness' of the
information that accountants collect, analyse, and present to auditors, shareholders,
managers, and others.7 The underlying assumption of the decision-usefulness
framework is that rational economic actors need information in order to make effective
economic decisions which will serve their self-interest. Since, in this framework, the
aggregate activities of self-interested maximizers create the most efficient allocation of
resources, decision-usefulness is the corner-stone of the efficient functioning of
markets. Although the market ideology here is self-evident, the framework is none the
less powerfully hegemonic.

The argument could be made that different spirits do or ought to possess Islamic
economics, rendering conventional accounting irrelevant. An Australian accounting
scholar writing recently about Islamic accountancy explicitly rejected the AAOIFI's
approach to standards-setting - beginning with data from actual practices and
'objectives established in contemporary accounting thought' tested against Islamic
religious norms - in favour of proceeding from 'objectives based on the spirit of Islam'
(Lewis 2001: 112). His position is thus based on the assumption that there is a spirit of
Islam that is necessarily dif-ferent from that which animates other economic or
cosmological orders. This is a much debated point among Muslim scholars who
specialize in Islamic

Islamic economics and finance being entrenched body and soul in mainstream
economic doctrines has remained without a distinctive birth-pang of its own. Its
epistemology ... remained in foreign moorings just as the early rationalist Muslim
scholars distorted the Qur'anic worldview with Greek thought. [It remains] subservien[t]
to modernity rather than upholding [the] purity of human faculty to the Qur'anic
worldview and its deep analytical vision (Islamic Economics and Finance internet
listserv, 13 July 1999).

In this, they take on the same per-formative 'window-dressing' functions as the facts of
conventional accounting that Carruthers (1995) has described.

Modern Islamic banks can use mudarabahc ontracts to generate liquidity and turn a
profit, acting as intermediaries between the depositor-investors and the managers of
business ventures. In effect, modern Islamic banking takes the classic mudarabahc
ontract and scales it up: the depositor-investor becomes the rabb-al-mali n relation to
the bank, as nmudarib,wh ich manages the depositor-investor's money. At the same
time, the bank assumes the position of the rabb-al-mal in relation to the business
enterprise in which the bank invests, which

I had the same thoughts as you a few years ago, insisting that Accounting is a technical
subject and therefore there is no question of an Islamic or Christian or Buddhist
Account-ing ... Unfortunately, modern corporate accounting is not a matter of just
numbers but a whole philosophy. Accounting can lead to perceptions of reality ...
Ultimately, what accounting tells us [is that] what makes more money is the best thing.
Over time, people will become mesmerised with this infactuation [sic] and act
accordingly (Islamic Econom-ics and Finance internet listserv, 7 Feb. 2000).

That the debate is framed in the same terms as contemporary academic theorizations of
the social construction of reality reveals a convergence between internal debates about
Islamic accounting and critical accounting scholarship. As one Islamic accounting
scholar writes, citing a classic article in that scholarship, 'Islam accepts the fact that
accounting is a social construc-tion (Hines 1988) and itself constructs social reality but
this social reality which the accounting constructs must conform to the dictates of
Islamic belief' (Ibrahim 1999: 17). Rifaat Ahmed Abdel Karim, one of the figures
responsible for the creation of the AAOIFI, was a former student of the accounting
theorist, Trevor Gambling. The two co-authored the book, Busi-ness and accountinge
thics in Islam, a work deeply influenced by social account-ing theories (Gambling &
Karim 1991).

What interests me here is the convergence between the creation of AAOIFI international
accountancy standards, the internal debate on Islamic accountancy, and ethnography.
Like ethnographers (and like early twentieth-century compilers of the United States's
Uniform Commercial Code, one of whom was an ethnographer),19 the members of the
AAOIFI have observed, recorded, and compiled the 'best practices' of Islamic
accounting world-wide and abstracted from them a written set of proscriptive rules for
Shari'a-compliant accountancy. Like ethnography, this process includes the debates
about the process itself, embodied in the comments of Islamic accountants who echo
critical accountants - or, rather, share the same field of discourse and citational
authorities, and the same techniques for generating knowledge. Knowledge is produced
through shifts in scale, levels of abstraction from a 'reality'. In internal debates over
Islamic accounting, as in critical accounting, there is a further instrumentalization of the
knowledge thereby produced. As a construction, social reality is cast as a particular kind
of resource, something that can be used for specific purposes, something that can be
struggled over like a terrain. At the same time it is something that can create or
instantiate other things in people and social spaces: it is a construction that can make
more constructions. It creates 'values' and 'behaviours', as well as, recursively, itself,
even as it is the product of such values and behaviours. It has parts, which are related
to other parts - either explicitly, by the actors in social worlds themselves, or implicitly,
only to be drawn out by social analysts deter-mining the distinctions between domains,
between form and content, text and context, and subjective from objective.
The Origin and Evolution of Nineteenth-Century Asset AccountingAuthor(s): Richard P.
BriefReviewed work(s):Source: The Business History Review, Vol. 40, No. 1 (Spring, 1966), pp.
1-23Published by: The President and Fellows of Harvard CollegeStable URL:

Economists usually define profit as the change in the "value" of net assets in two successive
fiscal periods. The application of this conceptual definition raises rather abstruse theoretical
issues; con-sequently, during the last 100 years accountants have developed a set of pragmatic
principles to deal with the problem of measuring asset "values" and profit.

An important reason for the sluggish acceptance of a particular set of accounting principles is
that a firm would be expected to determine its business practices according to its own criterion
of "usefulness" in the absence of any institutional compulsion toward a specific form of behavior.
That is, the set of practices actually selected by a firm should be consistent with its goals; and
given a choice, the one chosen would be that expected to yield maximum economic benefits.

A more fundamental explanation for diversity concerns the ele-ment of strategic behavior among
firms. As Morgenstern states, "there are degrees of freedom in behavior which are compatible
with equally plausible descriptions of the system .... Consequent-ly, a lie or falsification . . . is
exceedingly hard to discover except by chance. Yet the chance factor itself is a necessary,
constituent element of every social system. Without it 'bluffing,' a perfectly sound move in
strategic behavior . .. would be impossible. But it is a daily occurrence. Bluffing is an essential
feature of rational strategies." 2 Such "degrees of freedom in behavior" have produced diverse
accounting methods. This is the chronic dilemma faced by the accounting profession and those
that seek to impose uniform standards.
The Interprofessional Linguistic Communication of
Accounting Concepts: An Experiment in Sociolinguistics

Journal of Accounting Research Vol. 18 No. 2 Autumn 1980 Printed in U.S.A.

Accounting can be viewed as a language, which embodies both lexical and grammatical
characteristics (Belkaoui [1978]). Within the linguistic relativity school, the role of
language is emphasized as a mediator and shaper of the environment; this would imply
that accounting language may predispose "users" to a given mode of perception and
behavior. This explanation is congruent with the "Sapir-Whorf Hypothesis" (Belkaoui
[1978], Jaim [1973]). Furthermore, the affiliation of users with different professional
organizations or communities with their distinct interaction networks may create different
accounting language repertoires. Account- ants from different professional groups may
use different linguistic codes because of different organizational constraints and
objectives. At worst, a confounding lack of communication may emerge. The objective
of this paper is to explore the application of sociolinguistics, the sociology of language,
to accounting. Specifically, three professional groups of users and producers of
accounting information were selected in order to deter- mine if there were any
differences in the linguistic behavior of users and producers of accounting concepts.

empirical and conceptual studies have examined the semantic problems of external
accounting communications (Haried [1972; 1973], Oliver [1974], Flamholtz and Cook
[1978], Libby [1979], Belkaoui [1978], and Jain [1973]).

Accounting can be viewed as a language because it possesses both lexical and

grammatical characteristics. That is, accounting may be defined as a set of lexical or
symbolic representations, such as debit, credit, etc., assigned a meaning through
translation rules known as accounting terminologies and used as parameters for a set of
grammatical or manipulative rules known as accounting techniques. Hence, the ac-
counting terms are accounting vocabulary, and the accounting rules are its syntax.
Sociolinguistics assumes that the socialization of individual conscious- ness and the
social molding of personality are largely determined by language (Luckmann [1975, p.

The discipline deals with the interac- tion between two aspects of human behavior-the
use of language and the social organization of behavior. One focus is on the generally
accepted social organization of language usage within speech communities. This focus
is known as the descriptive sociology of language and seeks to discover who speaks or
writes what linguistic codes, to whom, when, and why. A second focus is concerned
with the discovery of the determinants explaining changes in the social organization of
language use and behav ior. It is known as the dynamic sociology of language. What
both foci imply is the existence in any speech community of several varieties of
language or "verbal repertoires." Thus, the sociology of language attempts to explain
the underlying causes of the verbal repertoires of a given speech community (Fishman
[1970, p. 4]). The implication of the above statement is that within each language there
are linguistic codes which play an important role as a mediator of the perceptual
cognitive processes employed in defining the social environment (Bernstein [1958],
Schatz- man and Strauss [1955], Cowan [1969], Erwin-Tripp [1969], and White- man
and Deutsch [1968]).

Needless to say, these preliminary results point to the need for more conceptual and
empirical research on the determinants of the interprofes- sional linguistic
communication of accounting concepts. Specific issues identified which need further
research include: (a) the presence and the nature of the "institutional language" within
each accounting professional group; (b) the presence of a profession-linked linguistic
code in the accounting field composed of a "formal language" and a "public lan- guage";
and (c) testing whether the public language is understood by users of public data (e.g.,
financial analysis) and whether the formal language is understood by users of formal
data (e.g., students).
To cite this document: R.H. Parker, (1994),"Finding English Words to Talk about Accounting
Concepts", Accounting, Auditing &
Accountability Journal, Vol. 7 Iss: 2 pp. 70 85

Words and Concepts

This article discusses the problems that English-speaking accountants have faced in finding
words[1] to express some of the concepts they have tried to articulate. The article makes use of
de Saussures (1915, Part 1, Ch. 1) distinction
between the word itself (the signifier) and what the word is used to mean (the
signified). Both are subject to change. Thus not only may a word change its
meaning (i.e. refer to a different concept) over time, but equally the concept may
also change. Those who use the words and concepts may or may not perceive
that these changes are taking place. As Mills (1989, p. 22) has reminded us, it is
one of the functions of accounting historians to know how words have been
used in the past.

It has been argued (Whorf, 1941; 1956)

that we cannot form concepts for which our native language makes no
provision but this is not now generally accepted. Eskimos, for example, learn to
perceive varieties of snow through experience rather than from the fact that
their language provides them with individual words for each variety. English
speakers can without difficulty make the same distinctions, if they need them,
by creating phrases (Steinberg, 1982, p. 109). Similarly the Australian aboriginal
language Pintupi has separate words for many different kinds of hole which can
be expressed in English only by phrases (e.g. katarta, the hole left by a goanna
when it has broken the surface after hibernation). The current consensus is that
language does not determine the way we think, but it does influence the way
we perceive and remember And people certainly find it easier to make a
conceptual distinction if it neatly corresponds to words available in their
language (Crystal, 1987, p. 15). Developing a concept can be slowed down by a
lack of appropriate words and confusions can be cleared away when suitable
words are found.

The concept of true and fair view can be used as an illustration. This
concept has been deliberately left vague by British accountants who are not
greatly worried by their inability to define it precisely. The form of wording
true and fair has led to separate discussions as to what is meant by truth
and fairness, which could have been avoided if true and fair had been
treated as a hendiadys, i.e. the expression of a complex idea by two words
coupled with and. In most other European languages true and fair is
translated as one word, e.g. fidle in French, getrouw in Dutch (Nobes, 1993).
Paper Number 02/04
Ros Haniffa
Mohammad Hudaib
University of Exeter, UK
Abdul Malik Mirza
King Fahd University of Petroleum & Minerals, Saudi Arabia
and Queensland University of Technology, Australia

Please do not quote without permission.

Address for correspondence:
Dr Abdul Malik Mirza
Department of Accounting & MIS
King Fahd University of Petroleum & Minerals
Box #1817
Dhahran 31261, SAUDI ARABIA
Phone: 966 3 860 4285
Fax: 966 3 860 3489
Choice of accounting and reporting policies influences the allocation of resources and
distribution of income to various claimants in the firms contractual relationships. The
conventional policymaking approaches fail to generate a complete picture of the firms
reality because they focus on technical and economic explanations. These approaches
ignore the embeddedness of managers in relationships beyond human self that may
influence and constrain their choices. More importantly, such approaches eschew moral
and religious influences that define what appropriate behaviour is. We argue that based
on the Islamic concept of uqud (contracts), the principles of Shariah Islamiiah should
drive accounting and reporting policies for Muslim managers. Since adherence to
Shariah Islamiiah is a form of worship, managers must balance between wealth
allocation to firms claimants and to oneself by taking into account the welfare of both
fellow humans and also the environment when making choices on accounting and
reporting policies. By doing so, Muslim managers are able to fulfil obligations to Allah,
society, the environment, and self and to achieve al-adl (socioeconomic justice) and al-
falah (success in this world and hereafter).

a philosophical review of the ethical construction of accounting knowledge and the use
of Shariah Islamiiah for guidance in the development of accounting theory (Haniffa and
Hudaib, 2002) and accounting policy choices in a riba-free environment (Mirza and
Baydoun, 2000).

In Islam, scholars perceive accounting as an assurance function that seeks to establish

al-adl (socioeconomic justice) and al-falah (success in this world and hereafter) through
its formalized procedures, routines, objective measurement, control and reporting, in
accordance with Shariah Islamiiah (Haniffa and Hudaib, 2002). Further, according to
Hayashi (1989, p:42), Islamic accounting is a ... theory which thinks how it could
allocate resources justly. Therefore, one can conclude that accounting is more than a
mere technical activity. It is an instrument, and a powerful one at that, for achieving
justice and equity in society.