CHAPTER 8: DATA ANALYSIS OF THE ISLAMIC ACCOUNTING

QUESTIONNAIRE
8.0 INTRODUCTION
This chapter consists of two main parts. The underlying conditions for applying
statistical techniques especially considerations of the research design, the scales used, the
independence of the sample groups, and the distribution characteristics of the underlying
populations, are discussed first in section 8.1. A discussion of the validity and reliability of the
Islamic Accounting Questionnaire in section 8.2 follow this. In the second part of this chapter,
starting with section 8.3, an analysis of the dependent variables of the Islamic Accounting
Questionnaire (IAQ) is presented. Interpretations of the results of this analysis are presented
in section 8.4. Section 8.5 presents some descriptive statistics on the independent variables
while the results of Kruskal-Wallis tests of significance are presented in section 8.5. The
chapter is concluded in section 8.6 with a summary of the main findings.

8.1 RESEARCH DESIGN, VARIABLES, SCALES AND STATISTICAL

TECHNIQUES

8.1.1 Research Design

Bryman & Cramer (1997) outline two types of research designs: the experimental
and the survey/correlational design. In the experimental research design, the researcher
can control and manipulate the variables of interest by having a control group and varying
the treatment or stimulus. He can also control the sequencing of the treatment or stimulus
i.e. their time order. This is important to establish cause effect relationships, which can not
only be used to explain phenomenon but to predict and control future occurrences.
In the survey/correlational design, which is adopted in this research, the researcher is
unable to control and manipulate the variables, for example, it is impossible for the
researcher to control the social accounting education or the working experience variables of
the professional accountants and academics surveyed in this study. What concerns us here
is that “the research design characteristics permeate and inform a number of stages of the
research process” and “has implications for the kinds of statistical manipulation (i.e the type
of tests) which can be performed on the resulting data” (Bryman & Cramer, 1997, p 5).
The experimental design is said to be especially strong in respect of internal
validity. An internally valid study is said to provide firm evidence of cause and effect.
According to Bryman & Cramer (1997), three criteria have to be fulfilled to establish cause
and effect namely; apparent relationships, non-spuriousness and time order of the two
related variables to establish which is the cause and which is the effect.
Experimental designs achieve a high degree of internal validity because these allow
the researcher to eliminate contaminating factors through the use of a control group and
randomly assigning cases to the test and control groups. The survey design used in this
research, however, cannot be said to have the same degree of internal validity as an
experimental design, as in this case, data on a large number of variables is collected
concurrently and the independent variables cannot be manipulated. The concurrent
collection of data also makes it impossible to establish a time order to the variables in
question as compared to the experimental design where manipulated independent variables
can be directly observed. However survey design can reveal relationships between variables
although it is limited in its capacity to elucidate causal processes. These relationships can
however be spurious as another unidentified variable may cause both these variables to
move with each other, which cannot be controlled for as in the experimental design, or the
relationship can be purely circumstantial. he spuriousness or otherwise of relationships
between variables can be tested by using multivariate techniques, which will not be
undertaken in this research as it is exploratory. However, establishing the putative cause
and effect may be very difficult in survey design as we cannot establish which variable is the
cause and which variable is the effect as the relationship can be in either way. For example,
it is difficult to establish whether a favourable attitude to Islamic accounting leads to a
disaffection with conventional accounting or whether disaffection with conventional
accounting causes a favourable disposition to Islamic accounting.
In many cases, however, the direction of cause and effect is not a problem,
especially when individual characteristics of respondents are concerned. For example, if it is
found that religion of respondent and favourable disposition to Islamic accounting are
related, then it is reasonable to assume that it is religion which is the cause and the
disposition to Islamic Accounting which is the effect and not the other way round!
This research is mainly exploratory in nature and seeks to explore the attitudes and
perceptions of Malaysian accountants and academics towards Islamic and conventional
accounting and their ethical stance regarding Muslim business organisations. It is more
concerned to see the majority opinion or perception rather than cause effect relationships of
the independent variables themselves.

8.1.2 Variables
Variables are those measures that indicate the extent of the concept. It is named as
such because they vary with respect to the case or units of analysis i.e. not all accountants
think that maximising profits is desirable. The may also vary with respect to the same case,
over time. If there is no variation in the measure, it is a constant. Constants are very scarce
in the social sciences because the human dimension is very varied in its behavioural
responses. In social science research, we try to measure the variation that variables exhibit.
In univariate analysis, one variable at a time is analysed to find out how the cases or
persons in this research are distributed in relation to a single variable. In multivariate
analysis, we analyse more than one variable at a time.
Variables can be classified into dependent and independent variables. Dependent
variables are those that vary because of the causative effect of independent variables i.e.
independent variables cause the variation in the dependent variable. These are the variables
that are of primary interest to the researcher as he is trying to predict or explain this variable.
Solutions to problems may be obtained by trying to analyse the variation of the dependent
variable (Sekaran, 1992). Independent variables are those that influence the dependent
variable positively or negatively.
Sekaran (1992) also defines two other variable types i.e. Moderating and intervening
variables. A Moderating variable is one that has a strong contingent effect on the
independent-dependent variable relationship. The presence of this variable modifies the
originally expected relationship between the independent and dependent variables (Sekaran,
1992). For example, in this study it could be hypothesised that being Muslim (the
independent variable) may cause the person to be more disposed towards Islamic
accounting. However, social and environmental education may make him much more so.
Intervening variables are those that arise from the independent variable between the
time the independent variable act to produce the effect on the dependent variable. It
introduces a time dimension and better explains cause and effect relationships. For
example, social accounting education (the moderating variable) may sharpen, refine and
broaden the Islamic ethical concepts of Muslim accountants (the intervening variable) to be
more disposed towards business ethics of Muslim business organisation. (See figure 8 -1).

Sharpened Favourable disposition

Muslim ethical concepts to
(intervening Islamic Accounting
variable)

Social Accounting Education.

(moderating variable)
 FIGURE 8-1:MODERATING AND INTERVENING VARIABLES

8.1.3 Scales or levels of measurement

The variables discussed above can take certain scale types or levels of
measurement (Siegel & Castellan, 1988). They inform us that behavioural scientists, taking
physics as a model, assign numbers to behavioural or social variables to enable data
analysis and manipulation. He warns us that in order to perform certain arithmetic operations
such as adding and squaring, the structure of the method of mapping numbers (scoring) to
social observations should be isomorphic to some numerical structure which includes these
operations. The interpretable operations on a given set of scores are dependent on the level
of measurement achieved (Siegel & Castellan, 1988). This has also implications for the
techniques that can be used to analyse data.
Many statisticians have divided the level of measurement scales into four categories;
nominal or categorical, ordinal, ratio, and interval scales. The weakest level of measurement
is the nominal or categorical scale, which uses numbers to classify an object, person or
characteristic into different mutually exclusive categories. For example, 1= Muslim, 0= Non
Muslim is used in section 4 of the Islamic Accounting Questionnaire. Since any set of
symbols may equally well represent the classification, the symbols can be interchanged, if
done so consistently, without altering the information in the scale. For example, religious
classification in the IAQ could easily be reclassified into 1 for Muslim and 2 for Non Muslim.
This means that the only kinds of statistics admissible are descriptive statistics, which would
be unchanged by such a transformation, such as mode and frequency counts. In certain
cases non-parametric tests such as c2 can be used to test hypotheses regarding distribution
of cases among categories. However mathematical operations such as additions cannot be
performed, as it would be meaningless.
The ordinal or ranking scale is the next level of measurement. In this scale objects
in one category of the scale are not only different from other categories but have some kind
of relation, such as magnitude or order, among them. The categories have relations of ‘more
than’ or ‘less than’ to other categories. However, the difference between the scales may not
be equal. For example in the Likert scale Strongly Agree although given a scale of 5
compared to Agree (given a 4) does not mean that SA shows twice the agreement of Agree,
as different unequal numbers could easily have been given such as 5 for agree and 7 for
strongly agree.
The ordinal scale is order preserving if transformed as such does not change the
information contained in the ordinal scale. The statistic most appropriate for this is the
median as it is not changed by changes in scores above or below it. With ordinal scaling,
hypotheses can be tested by a large group of non-parametric or distribution-free tests. For
the application of parametric tests, there needs to be an assumption of normality of the
underlying population.
The Interval scale is one where the different objects, not only has an ordering
between themselves, but the differences or distances between any two numbers on the
same scale has meaning. This scale has no absolute zero. In this scale, the ratio of any two
intervals is independent of the unit used and the zero point. An example of an interval scale
is temperature be it Celsius or Fahrenheit. It can be shown that the ratio of the differences
between readings one scale is equal to the ratio of the equivalent differences on the other
scale. In the case of temperature the ratio between 30 and 10 and 10 and 0 degrees Celsius
is the same as the ratio between the equivalent 86 and 50 and 50 and 32 degrees
Fahrenheit1[1].
Since any change in the numbers associated with the positions of the objects in a
interval scale must preserve, not only the positions, but also the relative differences between
the objects. This scale is not affected by multiplying by a positive constant and adding a
1[1]
30-10/(10-0)=86-50/50-32
constant to this product. Since this is a truly quantitative scale, all the common parametric
statistics such as means and standard deviations can be applied to data measured on this
scale. If the data meets two further conditions i.e. normally distributed population and if the
observations are independent then the researcher can utilise normal parametric tests such
as the t test and F test. Using non-parametric tests in such cases would not utilise all the
information contained in the data set.
The Ratio Scale has all the characteristics of the interval scale, but in addition, has
an absolute zero, for example, age and mass. The numbers used in this scale are true
numbers with a true zero. The ratio between any two numbers are preserved when
multiplied by any positive constant and such transformation does not alter the information
contained in the scale. Any parametric test can be used when this scale is achieved but it is
rare in the social sciences.
Bryman & Cramer (1997) argue that, although the 1 to 5 scale and the Likert scale
(such as that used in the IAQ for sections 1 to 3) are, strictly speaking, ordinal scales, many
researchers treat them as interval scales. “Thus, there seems to be a trend in the direction of
this more liberal treatment of multiple-item scales as having the qualities of interval variables
although many purists would demur from this position. Moreover, there does not appear to
be a rule of thumb which allows the analyst to specify when a variable is definitely ordinal
and when interval.” In this research, it is proposed to follow current practice and to treat
multiple-item measures such as those used in the IAQ as though they were interval scales.
Labovitz (1970) also argued for the treatment of ordinal data as interval in view of the
considerable advantages that can accrue to the researcher as a result of using analytical
techniques such as correlation and regression which are both powerful and easy to interpret.
Further he argued that the amount of error that can occur is minimal.
Bryman & Cramer (1997) further argue that this process of treating ordinal data as
interval becomes more compelling when the number of categories is considerably greater.
Further Sekaran (1992) informs us that research already undertaken indicates that a slight
increase in the number of items in a multiple-item scale does not improve the reliability of the
ratings. Thus the Likert and 1 to 5 scale, used in this research, is treated as interval to allow
the researcher to perform non-parametric statistics. However, to ensure this does not result
in very much difference, parametric tests are also carried out.

8.1.4 Measurement scales

Measurement is the attribution of numbers to the units of analysis, which represents
the concept or phenomena, the researcher is trying to discern. Measurement assists in the
specification differences in the level of the concept found by allowing systematic differences
between the object such as people studied (Bryman & Cramer, 1997). However, concepts
such as the perceptions of ‘ethical position of Muslim Business Organisations’, usually need
several indicators to reflect the concept fully, as there are usually many facets through
which a concept might be expressed. A single indicator may leave out these other
dimensions that together measure the concept.
In the Islamic accounting questionnaire, three main concepts are measured viz. the
ethical position of business in section 1, the perceptions on conventional accounting in
section 2 and the perceptions on Islamic accounting in section 3. Section 3 may be divided
into 3 sub concepts i.e. the objectives of Islamic accounting, the importance of various
stakeholders and the nature and content on Islamic accounting. To measure these concepts
various indicators (each represented by a separate group of questions) are used.
In section 1, indicators regarding the Shari’ah indicate the ethical position of Islamic
business i.e. the rules/framework under which Muslim organisations operate, investment
policy, belief in the ability of Islamic principles to be developed and operational policies of
Muslim business organisations. These are in turn subdivided into more refined indicators by
means of statements. Likert scaling is used in some of these and a 1 to 5 scaling is used in
other questions. By using aggregate scores of the related items, a more comprehensive
integrated measure can be obtained for individual cases to better discriminate the
participants as opposed to a situation in which fewer indicators are used to measure the
concept. It also reduces the chances of a misunderstood question (as happened in this
research) invalidating the research as the other indicators may save the day.

8.1.5 Statistical Techniques

Statisticians, mathematicians and even social scientists have developed hundreds of
statistical tests, which one can apply in data analysis. Computer statistical packages such as
SPSS, which have been developed especially for the social sciences makes the number
crunching easy and fast. However the bewildering assortment of tests available have made
the researcher spoilt for choice. However, not all tests are equal, neither are they equally
applicable in all circumstances. Statistical tests can be basically divided into parametric and
non- parametric tests. The former tests are used when the populations from which the
sample is derived, have normal or approximately normal distributions. Further if two or more
samples are being compared, then in order to use parametric tests, not only should both the
populations from which the samples are derived be normal but also their variances should
be equal. These restrictive assumptions are not required for Non-parametric tests. These
tests (sometime referred to as ‘distribution-free’ tests) require only that the distributions of
the populations from which they are derived are similar in shape (Siegel & Castellan, 1988).
Inferential statistics are based on probability. Here we try to deduce characteristics of
the populations based on the characteristics of the sample. The way this is done is to set up
the hypothesis we want to reject as the H0, the null hypothesis and the hypothesis we want to
accept as the alternative hypothesis, H1. The decision is to reject Ho in favour of H 1 when a
statistical test yields a value whose probability of occurrence, if Ho is true is below a given
small probability level, known as the significance level and denoted by a. This is usually .05
or .01 representing 5% or 1%. There is always a chance that we are wrong because we can
never be sure that the sample represents the population exactly.
There are two types of errors which one can make in testing hypotheses using
statistical techniques; Type I and Type II error. Type I error (denoted as a) is the probability
of rejecting the null hypothesis when in fact it is true. This is the same as the significance
level above. Type II error (denoted as b) is the probability of accepting the null hypothesis
when it is false. There is an inverse relationship between Type I and Type II errors. This
means that a decrease in a will increase b for any given sample size. The only way to
decrease both errors will be to increase the sample size (Siegel & Castellan, 1988). The
researcher may have to balance the probabilities of making both types of errors. Different
statistical tests give different balances between committing these two errors. Here is where
the power of a test becomes important.
The power of a test is defined as the probability of rejecting Ho, when it is in fact false
i.e. Power = 1-b. Therefore the more powerful the test, the better. The power of a test
increases with the size of the sample, and also depends on the type of test. Besides the
power, the choice of statistical test used depends on the research design, the scales used,
the distribution and variance of the populations from which the sample is derived. These will
be discussed beginning in the next section. Finally, a more difficult part of data analysis is
the interpretation of the results. It is only too easy in this age of computerised statistical
packages to compute statistics, which are totally meaningless such as the median colour of
a car. The interpretations the researcher gives to the results of the data analysis depend, as
for the choice of the statistical technique to be used, on the research design, the statistical
model, the scale and measurements used and the statistical technique applied.

8.2 VALIDITY AND RELIABILITY

Whenever measurement takes place, there is always the possibility of errors. These
errors could be procedural errors, where the way in which the research was carried out was
not proper or there might be problems with the measuring instrument itself. In order for
research to be rigorous i.e. its results acceptable to the academic community, the validity
and reliability of the research results must be demonstrated as far as possible.
 When the error which occurs with measurement is random i.e. varies randomly
between cases, in some case positive and some cases negative then the observed mean
score is an unbiased estimate of the true mean despite the measurement errors (Summers
1977, p 15). However, if the same measure is given repeatedly to the same person, it may
produce a different set of scores. This is said to affect the reliability of the measurement.
Reliability of a measuring instrument refers to the consistency of the scores produced on
repeated measurement. Thus, the presence of random errors affects the reliability or
consistency of the measuring instrument.
However, errors need not be random. If an observed score is systematically affected by
another variable to which the instrument is not sensitive, it is said to affect the validity of the
measurement procedure. Hence measurement of validity of an instrument measures both
random and constant errors whereas reliability measurements only measure random errors.

8.2.1 Validity
Validity means that the findings of the research are in agreement with the theoretical
or conceptual values. In other words, it is the ability produce results that are accurate and to
measure what is supposed to be measured (Sarantakos, 1998). For example, if we find that
80% of Malaysian Accountants strongly agree on the need for an alternative Islamic
accounting, then it is actually 80% who are in agreement and not, say 30%.
Validity indicates the degree to which an instrument measures the construct which is
under investigation (Bohrnstedt, 1977). According to Sekaran (1992) content validity ensures
that “the measure includes an adequate and representative set of measures that would tap
the concept. The more the scale items represent the domain or universe of the concept, the
greater the content validity” (p 171). Content validity measures how well the dimensions and
elements of a concept have been delineated. He suggests that face validity is a minimum
index of content validity i.e. whether the items look like they are measuring what they are
supposed to measure.
Measuring face validity is a subjective procedure wherein experts give their
judgements on whether the items are valid. As mentioned in chapter 7, the IAQ went through
eight revisions and a pilot study. The staff and postgraduate students both Muslim and Non
Muslim, of the Department of Accountancy of the University of Dundee were consulted in the
process of designing the questionnaire and it went through a metamorphosis. As a result, the
face validity of the IAQ was judged to be adequate.
Bohrnstedt (1977) suggests the use of cluster analysis to analyse the content validity
of the items in the scale, after dividing the items into strata. If the items in a stratum
correlates higher than with the items in other strata, then the items have content validity for
that dimension. The theory is that if different items are measuring the same attitude or trait,
then the underlying trait should be causing the covariance among the items, The higher the
correlation, the better the items are measuring the construct.
This was undertaken in the IAQ as follows; for each section of the IAQ, a cluster
analysis was performed using SPSS to see how well the questions fit together. A
dendrogram was printed to indicate which clusters hang together with others to identify the
various strata.
The dendrogram in figure 8-2 shows that the items in section 1 of the IAQ can be
classified into 3 clusters below 5 distance cluster level. Questions 1.5a-d, Q.1.7a – d and
Q1.3a-c, Q1.2, and Q1.6 fit very well together, as they all associate below the 5 distance
cluster level. . Further Q1.1 and 1.4 seem to be related but not that closely 2[2]. The findings
are line with the concepts behind the Questionnaire and hence suggest that the questions in
section 1 do have content validity.

A principal component analysis show that Q1.1 and Q1.4 measure two different concepts. A reliability
2[2]

analysis gives an alpha value of –0.0124 indicating very insignificant negative correlation.
* * * * * * H I E R A R C H I C A L C L U S T E R A N A L Y S I S
Rescaled Distance Cluster Combine

C A S E 0 5 10 15 20 25
Label Num +---------+---------+---------+---------+---------+

Q1.7A 12 -+
Q1.7B 13 -+
Q1.7D 15 -+-----+
Q1.7C 14 -+ +-----+
Q1.2 2 -+-+ I I
Q1.3B 4 -+ +---+ I
Q1.3A 3 ---+ +-----------------------------------+
Q1.6 11 ---+ I I
Q1.3C 5 ---+ I I
Q1.1 1 -------+-----+ I
Q1.4 6 -------+ I
Q1.5C 9 -+-+ I
Q1.5D 10 -+ I I
Q1.5A 7 ---+---------------------------------------------+
Q1.5B 8 ---+

FIGURE 8-2 :DENDROGRAM USING WARD METHOD FOR SECTION 1 OF THE

IAQ

For section 2, of the questionnaire, the dendogram in figure 8-3 shows that only
Q2.1-Q2.3 and Q2.6a-Q2.6b fit together below the 5 distance cluster level. However
principal component analysis of Q2.1-Q2.4, Q2.6a-Q2.6c and Q2.5b-Q2.5c shows only one
component above an eigenvalue of one. This means the questions in these three groups
measure the same concept within the group. However, rQ2.5a seem to measure a different
concept and hence is not combined together for hypothesis testing.

* * * * * * H I E R A R C H I C A L C L U S T E R A N A L Y S I S
Dendrogram using Average Linkage (Between Groups)
Rescaled Distance Cluster Combine

C A S E 0 5 10 15 20 25
Label Num +---------+---------+---------+---------+---------+
Q2.2 2 -+-+
Q2.3 3 -+ +---------+
Q2.1 1 ---+ +-----+
Q2.4 4 -------------+ +-----+
Q2.5C 6 -------------------+ +-----+
Q2.5B 5 -------------------------+ +-----------------+
RQ2.5A 10 -------------------------------+ I
Q2.6A 7 -----+---------------------+ I
Q2.6B 8 -----+ +---------------------+
Q2.6C 9 ---------------------------+
FIGURE 8-3: DENDROGRAM USING WARD METHOD FOR SECTION 2 OF THE
IAQ
For section 3, on the objectives and characteristics of Islamic accounting, the
dendogram in figure 8-4 shows that Q3.2a and b are grouped together (the financial
objectives) are distinguished from Q3.2c, d, e and f (non-financial objectives, which also
form a group). Q3.3a-e appear to be related at around 5-distance cluster level. Questions
Q3.4a, b,c,d and e also form a close group near the 5-distance cluster level while Q3.4f
seems to be related to the group at slightly above 5-distance cluster level. Perhaps this is
reflective of the fact that nationality issues are not considered Islamic issues. Q3.6 to Q.3.13
can be taken together as except for Q3.10, q3.7 and Q3.11are related much less closely at 8
or 10 distance level. However, the reliability test in table 8-1 shows all the questions Q3.4a-f
and Q3.6 –Q3.13 measure the same concept. Hence, as a whole, this section can be said
to have content validity.

* * * * * * H I E R A R C H I C A L C L U S T E R A N A L Y S I S
Dendrogram using Average Linkage (Between Groups)
Rescaled Distance Cluster Combine

C A S E 0 5 10 15 20 25
Label Num +---------+---------+---------+---------+---------+

Q3.2D 2 -+-+
Q3.2E 3 -+ +-+
Q3.4D 13 ---+ +-+
Q3.2C 1 -----+ I
Q3.12 23 -+-+ I
Q3.13 24 -+ I I
Q3.6 17 ---+-+ I
Q3.8 19 ---+ +-+-------+
Q3.4E 14 ---+ I I I
Q3.9 20 -----+ I I
Q3.2F 4 -------+ +-+
Q3.10 21 -------+ I I
Q3.4B 11 -----+-+ I I
Q3.4C 12 -----+ +-----+ I I
Q3.4A 10 -------+ +-+ I
Q3.4F 15 -------------+ +-------------------------------+
Q3.3D 8 -----+-----+ I I
Q3.3E 9 -----+ I I I
Q3.3A 5 -----+---+ +---+ I I
Q3.3B 6 -----+ I I I I I
Q3.3C 7 ---------+-+ +-+ I
Q3.7 18 ---------+ I I
Q3.11 22 ---------------+ I
RQ3.2B 25 -----------+---------+ I
RQ3.2A 26 -----------+ +---------------------------+
Q3.5 16 ---------------------+

FIGURE 8-4: DENDROGRAM USING WARD METHOD FOR SECTION 3 OF THE

IAQ

8.2.2 Tests for Reliability

Reliability refers to the consistency of the test to produce the same results on
repeated use, otherwise the measuring instrument would not be accurate over repeated use.
Reliability can be divided into external and internal reliability. External reliability refers to the
consistency of the measure over time. To test for such reliability, the same test could be
administered twice to the same group of participants after some time lapse for test-retest
reliability. This was not an option in this research. Hence the external reliability could not be
tested. However, the internal reliability of the items in the questionnaire was tested using
SPSS alpha model method. This tests gives us an idea of how reliable a group of questions
measure the same concept when they are added together to get an index or aggregate
score, as is undertaken in this research. However, since there are many ways in which we
can split the items in a scale, there may be different measures of reliability depending on
how we split the items of the scale. To get over this, Cronbach’s Alpha, which generally
measures the ‘average’ of all possible split-half reliability coefficients, is calculated. If this
alpha measure results in is 0.8 or above (as a rule of thumb) (Bryman & Cramer, 1997), then
the items are said to be internally reliable.
 From table 8-1 it can be seen that most of the groups of Questions from the IAQ
which are used to compute aggregate scores measures the concept reliably when the
questions are combined together. This is evidenced by the Cronbach’s alpha figure of
around 0.8. Remembering that 0.8 is a rule of thumb, the question groupings measuring the
concepts are highly valid since all the groups except for ETH1 and CAINF are higher than or
around 0.8 do not seem to reliably measure the concept. A principal components analysis of
the questions constituting ETH1 and CAINF showed that there was only one principal
component with an eigen value of 1 or more. Hence these questions as a group a reliable3[3].

TABLE 8-1
Reliability Analysis for Islamic Accounting Questionnaire
Question Group Aggregate Hypothesis Cronbach’s Alpha
Score
Q1.2,Q1.3a-b, rQ1.3c,Q1.6 ETH1 H1 0.27724[4]
rQ1.5a-rQ1.5d ETH2 H2 0.8466

Q1.7a-d QSREL H3 0.9465

Q2.1-2.4 UNISL H4 0.7611

Q2.5b and Q2.5c CAINF H5 0.57265[5]
Q2.6a-c CAP H6 0.7570
Q3.2a-Q3.2b MFOB,
H8 0.7364
Q3.2c-Q3.2f MNFOB
Q3.3a-e STIMP H9 0.7659
Q3.4a-Q3.4f and Q3.6-Q3.13 SEI H10 0.8509

3[3]
A Pearson correlation matrix also show that the correlations between the questions are significant except
between Q1.3c and 1.6 which is significant only at the 10% level.
4[4]
On an initial analysis of the responses to Q 1.4 were being answered in the “wrong direction”. The researcher
suspected that the question was not understood. This was confirmed by some participants’ requesting
clarification to the same questions when the questionnaire was administered to some academics. The phrase
“technical interpretation” (see figure 7-2, page 309) was not understood properly and the word its objectives
(the Shari’ah’s) was misinterpreted to be the company’s. Many responded with strongly agree answers. Some of
the respondents who indicated their address were contacted to explain what was meant by Q1.4. As a result
about 70% of the contacted participants changed their answers while others maintained their original response.
As all participants could not be contacted because of the address of all respondents were not known, it was
decided to leave Q1.4 out of the aggregate scores and hypothesis testing. Reliability analysis conducted with
Q1.4 included in this group of question gave a Cronbach’s alpha of 0.1421. Hence, the reliability of including
question 1.4 in this grouping was suspect. Hence, Q1.4 is left out of this grouping and the score ETH1. A
principal components analysis of this group of questions including Q1.1 produces two components with eigen
values above 1, while if Q1.1 is left out of the score, there is only one component with eigen value above 1.
Hence, Q1.1 does not measure the same concept and is left out of the group.
5[5]
Including rQ2.5a in CAINF gives a Cronbach’ alpha of 0.3888 making the group more unreliable.
8.2.3 Sampling Error
In order to enable generalisations to the populations, the characteristics of the
sample must represent the characteristics of the population. In this research, the
respondents for the IAQ were from education (accounting academics) and professional
accountants working public practice, commerce and industry, and government. 270
questionnaires (90 each to accountants in the public sector, in public practice and in
commerce & industry respectively) were mailed through the MIA. Another 157
questionnaires were hand delivered to universities while 35 were delivered to accountants in
audit firms and 12 to accountants in companies making a total of 474 questionnaires
distributed. Of this 206 Questionnaires were returned representing a response rate of about
43%. Of the responding accountants, 46 responses from commerce and industry, 34
responses from public practice and 25 responses were from the government sector. The
other responses were from 101 accounting academics in the Universities. Some of the
questions were partially completed but most were usable for many of the questions. The
sample size of each question therefore varies up to a maximum of 206. Missing values are
taken into account when computing aggregate scores.
Table 8-2 shows the number sent and received, which is used as the basis for the
sampling error analysis:

Total in Sector Total Total Res pons e

Sector Population % Q. Sent Received rate %
Education 441 28 157 101 64
Commerce & Indus try 558 36 102 46 45
Public Practice 231 15 125 34 27
Government 325 21 90 25 28
1555 100 474 206 43

TABLE 8-2:DISTRIBUTION AND RECEIPT OF ISLAMIC ACCOUNTING QUESTIONNAIRES

From the total population of Muslim accounting academics and accountants 6[6], it can
be seen that the education sector is over represented while the pubic practice and
government sector are underrepresented. A c2 test (see table 8-3) shows that the differences
between actual responses and the expected responses for the working sector is significantly
different. Hence, the sample composition is not reflective of the population composition. This
means that inferences cannot be made as a whole to the actual population although point
estimates of the population parameters can be made by weighting the means of each
working sector according to the sectoral composition of the population.

c2 DF P-Value

50.401 3 0.0000

TABLE 8-3: C2-TEST FOR SAMPLE REPRESENTATION OF POPULATION

SECTORAL CHARACTERISTICS

There were 1840 Muslim accountants registered with MIA in October 1998 when the survey was carried out.
6[6]

Of these 726 were not working in any of the three sectors tested. They might include retired, dead and other
members who might not be working as accountants but who are still registered with MIA. This group was
overlooked by the researcher and was not sampled in the research. Hence, any results would not be applicable to
them. However, if the assumptions that these members are not active in the accounting field is true, then their
opinion as accountants may not matter. The hypotheses tested would only be applicable to the accountants
working in the three sectors.
Since the researcher wants to hypothesise regarding two groups, the academics and the
professional accountants in the three sectors, it has to be done for each sector. Since the
academics are presented as a separate group, no problem arises from this sampling error.
However, for the professional accountants, the analysis has to be conducted by sector and
each statistic by sector has to be significant before the null hypothesis for the whole
population of accountants can be rejected or otherwise.

8.3 DEPENDENT VARIABLES: FINDINGS

Tables 8-4 to 8-6, shows the response frequencies, the frequency percentages and
descriptive statistics for each question (in sections 1,2 and 3 of the questionnaire), in the
IAQ. The questions in the table are arranged according to the scale used. Table 8-4 shows
the questions using the Likert Scale while Table 8-5 shows the questions using the ranking
1-5 scale. Questions, which have fixed responses, are shown separately in table 8-5. The
questions, which have an opposite direction (i.e. where the researcher expects a low score
to show a favourable disposition to Islamic accounting), are shaded. The unshaded
questions indicate favourable dispositions towards the alternative hypotheses if responses
tend towards agree. The shaded questions indicate favourable dispositions towards the
alternative hypothesis if responses tend towards disagree. In order to make analysis by
sections easier, different sections within the same table are separated by a bold line.

8.3.1 Analysis & Findings of Section 1 of Islamic Accounting Questionnaire (IAQ).

From table 8-4, it can be seen the mean response for section 1 of the IAQ varies
between 1.98 to 4.70. Questions 1.3c to Question 1.5d should have low scores for a
favourable disposition to Islamic business ethics. It can be seen that the mean scores for this
group of questions range from 1.98 to 3.84 and are indeed lower compared to the others,
generally supporting the hypothesis No. 1 and 2 see chapter 7) of the researcher.
Specifically, the respondents believed that Islamic business organisations should not involve
themselves in prohibited interest based investments and short selling, and ‘speculative’
investments, such as options and contra trading, which are ‘gray’ areas in terms of Islamic
law, contradicting the spirit of the Shari’ah. Q1.5a to d covers these areas.
Referring to the response frequencies, more than 73% of valid participants did not
agree to Islamic business organisations participating in short selling and interest based debt
market. As for contra trading and participating in futures/options, about 59% and 40%
respectively disagreed.
This is not surprising as the position of these under Islamic law is still being debated
although a majority of scholars consider short selling prohibited because under Islamic law,
one cannot sell what one does not possess. Futures and options are looked upon with
concern in terms of uncertainty (gharar) and gambling. However, the scholars are do not
want to prohibit it totally because there might be a necessity for futures in case of real need
as opposed to speculative activity in the market. Kamali (1997b) for example has argued that
futures and options may be permissible whereas Usmani (1999) has argued otherwise. Only
about 11% strongly support participation in options markets and about 22% neither agree
nor disagree. However, the researcher’s hypothesis that Islamic business organisations
should not aim to maximise profit for shareholders is not supported by this research. The
response frequencies for this question show about 74% do not support the hypothesis, while
only 11% do. Both a t test for mean=3.84 and sign test of median=4 versus the alternative
hypotheses of mean <3.84 and median <4 show p values of .51 and 0.3085 meaning that
the alternative hypotheses have to be rejected. However, in many cases the participants
indicated (by means of comments in the questionnaire) that maximisation of profits of
shareholders should be subject to the Shari’ah constraint. The overwhelming support for
social welfare as indicated by the response to q1.2 (98% agreed or strongly agreed to this)
with a mean of 4.7 and, a median and mode of 5, shows that the respondents believe that
maximisation of profits should not be at the cost of these other objectives.
 The group of questions with the highest favourable frequencies is that concerned
with the perception of the participants with regard to the capability of the socioeconomic
principles to be developed into a modern business and a legal framework for various type of
organisations. The agreement for this varied between 97% to 99% of which about 58%
indicated strong agreement. Although this might reflect the religious beliefs of the
participants rather than any proven capability, religion does have affect on values and
perceptions and subsequently financial transactions (Sa’ada, 1997). This at least indicates
that attempts at secularisation of Muslim society may have failed. There is a yearning and
strong belief in the capability of Islam to meet modern business legislation without losing
sight of ethics.
 TABLE 8-4: RESPONSE FREQUENCIES FOR DEPENDENT VARIABLES (LIKERT SCALE) - IAQ
Str. Disagree Disagree SD & Disagree NAD Agree Str. Agree SA & Agree Std. SE Valid
Count % Count % Count % Count % Count % Mean Median Mode Dev. of Cases
Mean
Q1.1 30 15.1 12 6.0 42.0 21.1 14 7.0 63 31.7 80 40.2 143 71.9 3.76 4 5 1.42 0.10 N=199
Q1.2 2 1.0 0 0.0 2.0 1.0 2 1.0 50 24.5 150 73.5 200 98.0 4.70 5 5 0.59 0.04 N=204
Q1.3a 0 0.0 6 3.0 6.0 3.0 10 4.9 79 38.9 108 53.2 187 92.1 4.42 5 5 0.72 0.05 N=203
Q1.3b 3 1.5 2 1.0 5.0 2.5 7 3.4 68 33.3 124 60.8 192 94.1 4.51 5 5 0.75 0.05 N=204
Q1.3c 3.0 1.5 20 9.9 23.0 11.3 30 14.8 103 50.7 47 23.2 150 73.9 3.84 4 4 0.94 0.07 N=203
Q1.4 31.0 16.3 31 16.3 62.0 32.6 20 10.5 68 35.8 40 21.1 108 56.8 3.29 4 4 1.39 0.10 N=190
Q1.5a 87.0 45.5 56 29.3 143.0 74.9 21 11.0 19 9.9 8 4.2 27 14.1 1.98 2 1 1.16 0.08 N=191
Q1.5b 35.0 19.0 39 21.2 74.0 40.2 40 21.7 50 27.2 20 10.9 70 38.0 2.90 3 4 1.30 0.10 N=184
Q1.5c 73.0 38.8 65 34.6 138.0 73.4 23 12.2 20 10.6 7 3.7 27 14.4 2.06 2 1 1.13 0.08 N=188
Q1.5d 50.0 27.2 58 31.5 108.0 58.7 34 18.5 31 16.8 11 6.0 42 22.8 2.43 2 2 1.22 0.09 N=184
Q1.6 0 0.0 10 5.0 10.0 5.0 17 8.4 92 45.5 83 41.1 175 86.6 4.23 4 4 0.80 0.06 N=202
Q1.7a 0 0 0 0 0.0 0.0 2 1.0 80 39.8 119 59.2 199 99.0 4.58 5 5 0.51 0.04 N=201
Q1.7b 0 0 0 0 0.0 0.0 4 2.0 79 39.3 118 58.7 197 98.0 4.57 5 5 0.54 0.04 N=201
Q1.7c 0 0 0 0 0.0 0.0 6 3.0 81 40.5 113 56.5 194 97.0 4.54 5 5 0.56 0.04 N=200
Q1.7d 0 0.0 1 0.5 1.0 0.5 5 2.5 77 38.3 118 58.7 195 97.0 4.55 5 5 0.57 0.04 N=201
Q2.1 3 1.5 54.0 27.4 57.0 28.9 40.0 20.3 78 39.6 22.0 11.2 100 50.8 3.31 4 4 1.0 0.07 N=197
Q2.2 4 2.0 22.0 11.0 26.0 13.0 18.0 9.0 103 51.5 53.0 26.5 156 78.0 3.60 4 4 1.0 0.07 N=201
Q2.3 2 1.0 51.0 26.4 53.0 27.5 49.0 25.4 69 35.8 22.0 11.4 91 47.2 3.30 3 4 1.0 0.07 N=193
Q2.4 4.0 2.0 37.0 18.4 41.0 20.4 31.0 15.4 92 45.8 37.0 18.4 129 64.2 3.90 4 4 1.0 0.07 N=200
Q3.6 1.0 0.5 8.0 4.0 9.0 4.5 12.0 6.0 111 55.5 68.0 34.0 179 89.5 4.19 4 4 0.8 0.05 N=200
Q3.7 7.0 3.6 28.0 14.6 35.0 18.2 38.0 19.8 84 43.8 35.0 18.2 119 62.0 3.58 4 4 1.1 0.08 N=192
Q3.8 2.0 1.0 1.0 0.5 3.0 1.5 14.0 7.0 112 56.0 71.0 35.5 183 91.5 4.25 4 4 0.7 0.05 N=200
Q3.9 1.0 0.5 5.0 2.5 6.0 3.0 34.0 17.1 113 56.8 46.0 23.1 159 79.9 3.99 4 4 0.7 0.05 N=199
Q3.10 2.0 1.0 8.0 4.0 10.0 5.0 32.0 16.1 105 52.8 52.0 26.1 157 78.9 3.99 4 4 0.8 0.06 N=199
Q3.11 6.0 3.0 44.0 22.1 50.0 25.1 45.0 22.6 82 41.2 22.0 11.1 104 52.3 3.35 4 4 1.0 0.07 N=199
Q3.12 2.0 1.0 1.0 0.5 3.0 1.5 7.0 3.4 82 40.4 111.0 54.7 193 95.1 4.47 5 5 0.7 0.05 N=203
Q3.13 0.0 0.0 3.0 1.5 3.0 1.5 12.0 6.0 113 56.2 73.0 36.3 186 92.5 4.27 4 4 0.6 0.05 N=201
TABLE 8-5: RESPONSE FREQUENCIES FOR INDEPENDENT VARIABLES (1-5 RANKING SCALE) - IAQ
Not at all 2 (3)= (1) + 3 4 Very much (5)+(6)
(1) (2) (2) (4) (5) so(6)
Count % Count % Count % Count % Count % Count % Count % Mean Median Mode Std S.E.rror of Valid N
Deviation Mean
Q2.5a 31 16.1 61 31.6 92 47.7 67.0 34.7 26 13.5 8 4.1 34 17.6 2.58 3.00 3.00 1.04 0.08 N=193
Q2.5b 23 12.3 49 26.2 72 38.5 57 30.5 37 19.8 21 11.2 58 31.0 2.91 3.00 3.00 1.18 0.09 N=187
Q2.5c 14 7.8 45 25.0 59 32.8 51 28.3 43 23.9 27 15.0 70 38.9 3.13 3.00 3.00 1.18 0.09 N=180
Q2.6a 19 10.2 27 14.5 46 24.7 45 24.2 47 25.3 48 25.8 95 51.1 3.42 4.00 5.00 1.29 0.09 N=186
Q2.6b 15 7.9 22 11.5 37 19.4 39 20.4 55 28.8 60 31.4 115 60.2 3.64 4.00 5.00 1.25 0.09 N=191
Q2.6c 18 9.9 30 16.5 48 26.4 46 25.3 45 24.7 43 23.6 88 48.4 3.36 3.00 3.00 1.28 0.09 N=182
Q3.2a 0 0.0 11 5.4 11 5.4 28 13.7 67 32.7 99 48.3 166 81.0 4.24 4.00 5.00 0.88 0.06 N=205
Q3.2b 8 4.0 26 12.9 34 16.9 73 36.3 56 27.9 38 18.9 94 46.8 3.45 3.00 3.00 1.06 0.07 N=201
Q3.2c 1 0.5 4 2.0 5 2.5 22 10.9 55 27.2 120 59.4 175 86.6 4.43 5.00 5.00 0.80 0.06 N=202
Q3.2d 3 1.5 3 1.5 6 2.9 19 9.3 50 24.4 130 63.4 180 87.8 4.47 5.00 5.00 0.84 0.06 N=205
Q3.2e 1 0.5 5 2.5 6 3.0 12 5.9 41 20.3 143 70.8 184 91.1 4.58 5.00 5.00 0.76 0.05 N=202
Q3.2f 0 0.0 12 6.1 12 6.1 28 14.1 71 35.9 87 43.9 158 79.8 4.18 4.00 5.00 0.89 0.06 N=198
not important at less important as important more much more
all (1) (2) (3)= (1) + (2) (4) important(5) important (6) (4)+(5)+(6)
Count % Count % Count % Count % Count % Count % Count % Mean Median Mode Std Std. Valid
Deviation Error N
of
Mean
Q3.3a 3 1.5 21 10.2 24 11.7 115 56.1 38 18.5 28 13.7 181 88.3 3.33 3.00 3.00 0.89 0.06 205
Q3.3 2 1.0 29 14.3 31 15.3 85 41.9 62 30.5 25 12.3 172 84.7 3.39 3.00 3.00 0.91 0.06 203
b
Q3.3 5 2.5 33 16.2 38 18.6 76 37.3 51 25.0 39 19.1 166 81.4 3.42 3.00 3.00 1.05 0.07 204
c
Q3.3 3 1.5 17 8.3 20 9.8 81 39.5 55 26.8 49 23.9 185 90.2 3.63 4.00 3.00 0.98 0.07 205
d
Q3.3e 6 2.9 27 13.2 33 16.1 72 35.1 65 31.7 35 17.1 172 83.9 3.47 3.00 3.00 1.02 0.07 205
Q3.4a 4 2.0 22 10.7 26 12.7 50 24.4 57 27.8 72 35.1 129 62.9 3.83 4.00 5.00 1.09 0.08 205
Q3.4 10 5.0 26 12.9 36 17.9 49 24.4 72 35.8 44 21.9 116 57.7 3.57 4.00 4.00 1.12 0.08 201
b
Q3.4 9 4.5 24 11.9 33 16.4 48 23.9 62 30.8 58 28.9 120 59.7 3.68 4.00 4.00 1.14 0.08 201
c
Q3.4 1 0.5 6 3.0 7 3.5 11 5.5 31 15.4 152 75.6 183 91.0 4.63 5.00 5.00 0.76 0.05 201
d
Q3.4 3 1.5 7 3.5 10 5.0 32 15.9 76 37.8 83 41.3 159 79.1 4.14 4.00 5.00 0.91 0.06 201
e
Q3.4 13 6.5 26 12.9 39 19.4 59 29.4 65 32.3 38 18.9 103 51.2 3.44 4.00 4.00 1.13 0.08 201
f

TABLE 8-6:RESPONSE FREQUENCIES OF DEPENDENT VARIABLES (CATEGORICAL SCALE)-IAQ

Profit& Stewardship Own choice Zakat Islamic

Cashflows Accountability Accountability
Count % Count % Count % Count % Count % Mean Median Mode Std. Standard Valid
Deviation Error of N
Mean
Q3.1 3 1.5 7 3.4 4 2.0 41 20.0 150 73.2 4.60 5.00 5.00 0.81 0.06 N=205

Sundry Interest
Prohibited Mean Median Mode Std Standard Error Valid N
Income Income
Transactions Deviation of Mean
- Int. Income
Count % Count % Count %
Q3.5 14 7.3 29 15.0 150 77.7 2.7 3.0 3.0 0.6 0.04 N=193
 Responses to Q1.3a and b and Q1.6 indicate strong support for the view that
Islamic business should be concerned with fair treatment of all stakeholders, safeguarding
the environment and payment of sufficient wages to employees even at the expense of
lower profits to shareholders. The agreement for these issues varied from 86.6% to 94.1%
of the participants. A mean response of 4.23 to 4.51 indicates fairly strong agreement. For
the environment and fairness to stakeholders issues, the median and mode responses
were 5 indicating strong agreement. In the case of paying sufficient wages to employees,
the median and mode was 4 indicating agreement. Some respondents were of the opinion
that Islamic Business organisations should pay competitive wages, which may not
necessarily be a low wage policy.
As stated earlier, question 1.4 seems to have been misunderstood and accordingly
many participants answered in the opposite direction to the hypothesis. Hence, although
more than 50% of the participants seem to have favoured a technical interpretation of the
Shari’ah, no firm conclusions can be made. The question seems to have been interpreted
as meaning that an Islamic business organisation should follow a technical interpretation of
the Shari’ah rather than one in line with the organisation’s objectives and intent, as
opposed to a question on the objective and intent of the Shari’ah. About 57% responded
with agreement indicating a non-favourable response. Of the participants contacted (how
many) to give a correct interpretation of the question about 70% agreed to change their
responses from Agree to Disagree. If this were true of the all the respondents, the results
would have supported the researcher’s contention. Since the results are doubtful, this
question has been excluded from the calculation of the aggregate scores and is not used to
test any hypothesis.

8.3.1.1 Aggregate Scores for Section 1 of IAQ

An overall score for this section; ISBUSETH (for Islamic business ethics) was
computed using, SPSS mean function as follows:

ISBUSETH= mean.47[7](BUSOB, ETH2, QSREL, ESWELF) (8.1)

where

BUSOB8[8] = mean.3 (Q1.3a, Q1.3b, rQ1.3c) (8.2)

which is the mean of Questions 1.3a, Q1.3b and Q1.3c. The r in rQ1.3c means that it is a
re-coded version of Question 1.3c. This is undertaken to reverse the direction of scoring as
some questions were in the opposite direction to the hypothesis. Hence, in a re-coded
question a Strongly Disagree response would score a 5, whereas the normal scoring is a 5
for Strongly Agree. The purpose of this re-coding exercise was to ensure consistency in
the interpretation of the aggregate scores so that a higher score always indicates a
favourable disposition towards the researcher’s alternative hypothesis, whereas a lower
score would indicate otherwise. The BUSOB score uses the questions 1.3a to 1.3c, which
ask the participants about the objectives of Islamic Business organisations.
To ensure that sectional and aggregate scores incorporate the various dimensions
of the concepts measured, these scores are computed so as to require all the components
of the respective formulae to be non-missing. In order to obtain a reasonable total number
of valid participants (at least two third of all respondents) for the sectional and aggregate
scores, the minimum number of questions for sub-score to be validly computed was set by
7[7]
Mean.4 ( the .4) is a program instruction to ensure all four sub-scores must are valid and present for an
individual respondent before the overall score can be computed. If for example, there were too many
participants not answering a particular question, then the score would not be computed for that participant.
This is the reason for the different numbers of total valid participants for each question although the total
number of responses were 206. Mean.2 ( as in BUSOB) would ensure that at least two questions are valid
before the score is computed.
8[8]
Business Objectives of Islamic business organisations)
trial and error until the aggregate and sectional scores were associated with a reasonable
total number of participants. If the computation of the lowest sub-scores had been set so
as to require all questions in the sub-score to be answered, the sub-scores, for many
participants would not have been computed, as certain participants would have not
answered certain questions. This would then cascade into the calculation of the sectional
and aggregate scores. These latter scores would not be computed for many participants
thus associating them with a lower number of total participants. Hence, interpretations of
sectional and aggregate score would not be possible for many participants in the sample.
The second sub-score,

ETH2 (ethical investment) = mean.2(rQ1.5a,rQ1.5b,rQ1.5c,rQ1.5d) (8.3)

which is the mean of the questions Q1.5a to Q1.5d re-coded to reverse the direction of
scoring as was done for q1.3c for BUSOB. Here, since there are four questions, responses
to at least 2 of the 4 questions must be non-missing before the score is computed. The
researcher decided to reduce it to at least 2 as making it more stringent (e.g. insisting on 3
or 4 non-missing questions), the number of valid participants for the sectional and overall
aggregate scores became very small losing valuable information.
The third sub-score for ISBUSETH is QSREL (relevance of Qur’anic and Sunnah
principles for modern organisations). The series of questions, which asks the participants’
responses to these, are Q1.7a-d. Hence, this score is computed, as the mean of these four
questions subject to at least three responses is non-missing.

Hence, QSREL= mean.4(Q1.7a,Q1.7b,Q1.7c, Q1.7d) (8.4)

Here even with the requirement of all the 4 questions to compute the score, the valid
number of participants was 200 and as such, it was felt that there was no need to reduce
the number of questions.
The final sub-score for ISBUSETH is ESWELF (employee & social welfare
orientation of Islamic/ Muslim Business Organisations) made up of mean of Questions 1.2
and 1.6 subject to the requirement that both questions should have responses. Hence,

ESWELF=MEAN.2(Q1.2,q1.6) (8.5)

We can see that Questions 1.1 and 1.4 has been completely left out in computing
ISBUSETH because of the confusion in the interpretations of question 1.4 and the fact that
the reliability analysis indicated that Q1.1 (and Q1.4) did not fit in with the rest. As such the
researcher felt that it was safer to leave out the responses to these questions in the
computation of the ISBUSETH score and consequently in the overall IA score discussed in
section 8.4.

8.3.1.2 Interpretations of aggregate scores

The aggregate scores will have a value between 1 and 5. This means there are
only 4 classes of scores as scores of 0 to 1 and above 5 are not possible. Some
aggregate scores involve questions using mixed scales. As such a score of 1 may not
mean “strongly disagree” or “not at all” but a point on a scale indicating disposition to what
the scores measure. For easier interpretation, the raw aggregate score has been
converted to 0 to 100% score. Thus, we can take 50% and more to indicate a favourable
disposition towards the concept measured by the score and vice versa. In order to do this,
the following formula is used.

% score = (Rawscore –1) x 100/4= (Rawscore-1) x 25. (8.6)

For example a raw score of 3 will be (3-1) x 25%= 50% on the percentage scale.
8.3.1.3 Aggregate scores for Section 1 of the IAQ.
Table 8-7 shows that the BUSOB score has a mean raw score of 3.8 with a median
and mode of 3.7. This converts to mean% of 68.9% and median% of 66.8% respectively
indicating strong support for ethical objectives of Islamic business such as, fairness of
stakeholder treatment, safeguarding the organisation and the relative unimportance of
maximising shareholder profits. A table of summarised frequency (Table 8-8) shows that
90% of the participants scored 56% or more for Islamic business objectives.
From table 8-7, we it can also be seen that the raw mean scores for ETH2 (i.e.
ethical investment decisions of Islamic business organisations) is 3.8 and mode and
median of 4.0 and 5.0 respectively. This converts to mean score of about 70%, a median of
75% and mode of 100%. This means that the most frequent score was 100% and at least
50% of the participants were 75% in favour of ethical investment. Table 8-8 shows that
82% of the participants responded with a mean of 50% or more for this group.
For QSREL (the relevance of the socio-economic principles contained in the Qur’an
and Sunnah to the development of a business/legal framework for various modern
organisations), the mean score was 4.6, with both the median and mode being 5. This
translates to about 90% for the mean, and 100% for the mode and median. The frequency
table shows 100% of the participants scored 50% and above. This shows overwhelming
faith in the relevance of the Qur’an and Sunnah for modern Muslim organisations and
perhaps shows that respondents felt that there should be a Muslim contribution to the
legal/ethical framework of organisations in future.
The mean score for ESWELF is 4.5 translating to a percent score of 86.5% with the
same median and mode. The frequency table (table 8-8) shows that 72% of the
participants scored 60% and above whereas 99% of the valid participants scored 50% and
above. This shows that respondents believed that Islamic business organisations should
take into account a decent living wage for its employees, even if shareholder profits were
reduced thereby. Similarly both Islamic and Muslim business organisations should
promote social welfare in the Islamic context rather than just concentrate on profits.
Although maximising profits for shareholders was considered a legitimate objective of such
organisations, the response to ESWELF indicates that it is not their only objective.
Finally an overall score for this section ISBUSETH (Islamic business ethics for
Muslim/Islamic business organisations) indicates both a mean and median of 4.2 and a
mode of 4.7. This corresponds to an overall mean% and median% of about 79% with a
mode% corresponding to 92%. The frequency table shows that 67.5% of the valid
participants (N=200 out of total of 206) scored 75% for this score and 100% of them scored
mean of 54.25% or more. The above score shows overwhelming support for the hypothesis
that Islamic business organisations should conform to Islamic business ethics and law.

8.3.2 Analysis & Findings of Section 2 of the Questionnaire

The mean score for the first part of section 2 of the questionnaire ranges from 3.31
to 3.9 (see table 8-4) indicating weak agreement with the hypothesis (Hypotheses No. 4
and 5, chapter 7) that conventional accounting is inappropriate for Muslim organisations,
due to its ill effects. The median and mode were 4.0 (except for question 2.3 which had a
median of 3.0) indicating agreement on this issue. However this agreement was not as
strong as in the previous section. The strongest agreement was on question 2.2 where
78% of the valid participants agreed or strongly agreed that conventional accounting
fosters materialism, individualism and competition among Muslim users and these traits are
not Islamic. About 64% of the valid participants agreed or strongly agreed that
conventional accounting needed major modification to provide the right kind of information
for Muslim users. However only about 51% agreed or strongly agreed that conventional
accounting principles, with their roots in capitalist cultural values, are inappropriate for
Islamic business organisations. Although about 28% disagreed on this issue, only 1.5%
strongly disagreed compared to 11.2% who strongly agreed.
 Table 8-5, shows that about 48% of the valid participants’ (193) felt that
conventional financial statements provided information which was inappropriate for Islamic
business organisations. Only about 17% felt that it provided appropriate information. About
34% thought that it provided fairly appropriate information. The mean, median and mode
responses to question 2.5b of section 3 suggest that the participants believed that
conventional accounting impeded the fair allocation of wealth between stakeholders.
However a closer look at the frequency section of the table 8-5, reveals that about 31 –
38% of the valid participants believed that it impeded fair allocation of wealth very much
and hindered much or very much the ability to make appropriate decisions in line with
Islamic objectives.
 TABLE 8-7: IAQ AGGREGATE SCORES – DESCRIPTIVES

Aggregate Mean Mean Median Median Mode Mode Maximu Minimu Percentile Percentile Standard Std Vali
Scores. % 9[9] % % m m 25 75 Error of Deviatio d
Mean n N

BUSOB
3.8 68.9 3.7 66.8 3.7 66.8 5.0 2.00 3.3 4.0 0.0 0.5 203

ETH2
3.8 69.7 4.0 75.0 5.0 100.0 5.0 1.00 3.3 4.8 0.1 1.1 178

QSREL
4.6 88.9 5.0 100.0 5.0 100.0 5.0 3.00 4.0 5.0 0.0 0.5 200

ESWELF
4.5 86.5 4.5 87.5 4.5 87.5 5.0 1.50 4.0 5.0 0.0 0.6 201

ISBUSET
H
4.2 78.7 4.2 79.2 4.7 91.7 5.0 3.17 3.8 4.5 0.0 0.4 171

UNISL
3.5 63.3 3.5 62.5 4.0 75.0 5.0 1.00 3.0 4.0 0.1 0.8 199

FACON
3.1 53.5 3.0 50.0 3.0 50.0 5.0 1.00 2.5 3.7 0.1 0.8 189

CAPRIN
2.5 38.2 2.3 33.3 2.0 25.0 5.0 1.00 1.7 3.0 0.1 1.1 190

9[9]
Mean%, Mode% and Median% are calculated using the formula: (M-1)*25 to convert them into % scale, where M= mean, mode or median respectively.
UNCONA
C
3.1 51.6 3.1 51.4 2.9 47.9 4.7 1.50 2.6 3.5 0.1 0.6 171

OBIA 3.7 68.3 3.7 66.7 3.7 66.7 5.0 2.2 3.5 4.0 0.0 0.5 204

STIMP
3.5 61.4 3.4 60.0 3.0 50.0 5.0 1.2 3.0 4.0 0.1 0.0 202

INF 4.0 74.2 4.0 75.0 5.0 100.0 5.0 1.4 3.6 4.6 0.1 0.7 203

CHIS 4.0 75.3 4.0 75.0 4.0 75.0 5.0 1.6 3.7 4.4 0.0 0.7 202

ONIA 4.0 74 4.0 75.1 2.9 46.3 4.7 2.3 3.8 4.2 0.0 0.5 194

IA 3.8 68.9 3.7 68.2 3.6 66.1 4.6 2.8 3.5 4.0 0.0 0.4 139
 TABLE 8-8: IAQ AGGREGATE SCORES – RESPONSE FREQUENCIES

BUSOB ETH2 QSREL ESWELF ISBUSETH UNISL FACON CAPRIN UNCONAC

Freq. Cum Freq. Cum% Freq. Cum% Freq. Cum% Freq. Cum% Freq. Cum% Freq. Cum% Freq. Cum% Freq. Cum%
%
1 & above 7 3.90 1 .05 3 1.5 27 14.20
1.33 1 4.50 1 0.50 2 3 59 18.90 2 1.2
1.67 2 .15 13 25.80 5 4.1
2.00 1 .5 11 10.70 1 1.00 10 6 22 14 32 42.60 10 9.9
2.33 2 1.48 5 13.50 20 16 24 27 20 53.20 27 25.7
2.67 7 4.93 7 17.40 11 22 17 36 10 58.40 33 45.0
3.00 11 10.34 17 27.00 3 1.5 6 4.00 4 2 34 39 32 53 32 75.30 40 68.4

3.33 33 26.60 22 39.30 1 1.5 10 9.00 17 12 22 50 33 70 13 82.10 26 83.6

3.67 64 58.13 4 41.60 3 3 38 34 26 63 14 78 8 86.30 13 91.2
4.00 57 86.21 42 65.20 67 37 37 27.40 48 62.5 45 86 21 88 10 91.60 12 98.2
4.33 6 89.16 15 73.60 4 39 76 65.20 23 76 17 94 14 96 11 97.40 1 98.8
4.67 7 95.07 3 75.30 12 45 23 89 3 96 1 96 2 100
5.00 10 100 44 100 101 100 70 100 18 100 8 100 6 100 5 100 100
Valid 203 178 200 201 171 199 189 190 171
Participants
Missing 3 28 6 5 35.00 7 17 16 35
 TABLE 8-9:IAQ AGGREGATE SCORES – FREQUENCIES (CONTINUED)

OBIA STIMP INF CHIS ONIA IA

Freq. Cum% Freq. Cum% Freq. Cum% Freq. Cum% Freq. Cum% Freq. Cum%

1 & above 1 0.50

1.33 1 0.50 1 0.50
1.67 1 1.00
2.00 2 1.00 3 2.50 4 2.50 2 1.00
2.33 3 2.50 21 12.90 8 6.40
2.67 3 3.90 11 18.30 3 7.90 2 1.50 6 4.10 4 2.9
3.00 21 14.20 55 45.50 23 19.20 11 6.90 1 4.60 13 12.2
3.33 43 35.30 39 64.90 29 33.50 33 23.30 26 18.00 41 41.7
3.67 59 64.20 11 70.30 22 44.30 41 43.60 60 49.00 48 76.3
4.00 59 93.10 33 86.60 44 66.00 60 73.30 63 81.40 25 94.2
4.33 8 97.10 18 95.50 32 81.80 34 90.10 34 99.00 8 100
4.67 2 98.00 3 97.00 8 85.70 17 98.50 2 100.00
5.00 4 100 6 100 29 100 3 100 139
Valid 204 202 203 202 194 139
Missing 2 4 3 4 12 67
 Responses to Q2.6a to c on the appropriateness of the historical cost, prudence
and money measurement concepts seem to indicate that the participants consider that
these principles are appropriate for Islamic organisations. The mean score for these
questions ranges from 3.35 to 3.64 (see table 8-5). The median score of 4.0 (except for
Q2.6c which was 3.0) indicating that at least 50% of the participants are of this opinion.
Hence, the realisation that conventional accounting needs major modification may have
arisen out of a fear that it leads to a way of life not in line with Islamic teachings rather than
from a deep insight into the problems of conventional accounting principles, which were
discussed in chapter 3. This means that probably accounting education has succeeded in
the acceptance of these principles as Islamic and further research needs to be carried out
in detail to ascertain whether the participants are aware of the unislamic consequences of
these principles.

8.3.2.1 Aggregate scores for Section 2 of the IAQ.

An overall score for this section, UNCONAC (unsuitability of conventional
accounting to Islamic/Muslim Business organisations) was computed as follows:

UNCONAC=mean.3(UNISL,FACON,CAPRIN) (8.7)

where

UNISL10[10]= mean.3(q2.1 to q2.4) (8.8)

FACON11[11] =mean.2(rq2.5a,q2.5b,q2.5c) (8.9)
CAPRIN12[12]= mean.2(rq2.6a-rq2.6c) (8.10)

Again Q2.5a, Q2.6a-c had to be re-coded to reverse the direction of scoring and
appropriate minimum of two non-missing questions had to be incorporated.
Table 8-6 shows that the raw mean score for UNISL is 3.53, which translates to
64.25%. This shows that overall the participants feel that, conventional accounting lead to
improper attitudes and cannot lead to Islamic social welfare; it needs major modification to
be in line with Islamic principles. However this feeling is not as strong as that on Islamic
business ethics discussed in section 8.3.2.1 where the mean score ranged from 70% to
90%. The mean score for FACON is 53.5% (3.14-1 x 25) which is even lower than the
score for UNISL. This shows a low level of support for the hypothesis that the financial
statements prepared under conventional accounting are not suitable for Islamic business
organisations.
The raw mean score for CAPRIN was 2.55 with a median 2.33 and a mode 2.0.
These scores translate to a mean percentage score of 38.75%, a median of 33.25% and a
mode of 25.00%. The results for this score indicates that the hypotheses (No. 4 and 5, see
chapter 8) of the researcher, that conventional accounting principles are not suitable for
accountants, is not supported by the participants in this research. This may be due either
to a genuine feeling that they are suitable and that as on the surface, historical cost,
prudence and monetary measurement concepts do not appear to contradict Islamic
principles. Otherwise professional accounting education may have taken root and
succeeded in instilling a perception that these concepts are appropriate, in the participants.
The overall score for section 2 of the IAQ is represented by UNCONAC. From table 8-7, it
can be seen that the mean and median scores for UNCONVAC are both 3 and the mode is
2.9. This translates to percentage scores of around 52% for both the mean and median,
and 48% for the mode respectively. This shows there is a low level of support to the
hypothesis that conventional accounting is unsuitable for Muslim users and organisations.

10[10]
UNISL=unIslamic behavioural consequence of conventional accounting.
11[11]
FACON=Financial statements prepared under conventional accounting is not suitable.
12[12]
CAPRIN= unsuitability of conventional accounting principles.
However, with 171 valid participants out of 206 and from the median score, about 83% of
total respondents support the hypothesis. Even here, the accounting principles and the
technical aspects of conventional accounting that are not suitable seem to be in doubt.
Hence further research needs to broaden this area.

8.3.3 Analysis & Findings of Section 3 of the Questionnaire

In Table 8-6, the responses to Q3.1 shows that 73.2% favoured “Islamic
accountability” to be the main objective of Islamic Accounting with 20% opting for Islamic
accountability through Zakat accountability. The traditional objective of financial statements
offered by the FASB (1978) for cashflows and investment decisions for stock market
players only got 1.5% and the stewardship objective was favoured by 3.4% 13[13]. This is an
overwhelming change in the direction of Islamic accounting from conventional accounting
and shows tremendous support for hypothesis number (No.6) that Islamic accountability is
the main objective of Islamic accounting as compared to decision usefulness.

8.3.3.1 Objectives of Islamic Accounting

Despite this however, the participants ranked efficient allocation of capital highly
with a score of 4.2, 4.4 and 5 for the mean, median and mode of Q3.2a, with 80% of the
respondents scoring it 4 or 5 (see table 8-5). This suggests that decision usefulness with
the ultimate purpose of efficient allocation of resources, is perceived by the respondents to
have a high priority in Islamic accounting. This seem to be generally in line with answers to
question 2.3 where 48% of the participants felt that the efficient allocation of resources can
lead to Islamic welfare. The fact that 25% of the respondents were neutral or disagreed to
question 2.3 indicates a substantial number of participants are unsure about this question.
This area needs further probing to make sure that this is the case.
The mean score for Q3.2b of 3.4 with both median and mode of 3 indicates that
maximising shareholder wealth is considered an objective of Islamic accounting which is of
average importance. About 17% of the participants felt that this was not important whereas
36.3% of the participants scored a 3 which means of average importance. Compared to the
previous question where 80% scored 4 or 5 only about 48% scored a 4 or 5 for this
question.
Question 3.2c to f asked the participants to rank the Islamic ethical objectives of
Islamic accounting regarding fair allocation of wealth, Zakat calculation and distribution,
Shari’ah compliance and a conducive co-operative environment for stakeholders. Table 8-
4, shows that between 79.8% and 91.1% of the participants scored these statements a 4 or
5 indicating that these objectives were important. The mean scores were 4.2 to 4.6
whereas the mode and median were 5 except for the median of q2.2f, which was 4. As
expected, Shari’ah compliance and Zakat calculation and distribution seem to be the major
objectives of Islamic accounting.
An aggregate score, OBIA (Objectives of Islamic accounting) was calculated for this
group of questions using the formula.

OBIA =mean.4(rq3.2a,rq3.2b,q3.2c,q3.2d,q3.2e,q3.2f) (8.11)

This score measures the Objectives that Islamic accounting should pursue. Q3.2a
and Q3.2b were re-coded to reverse the direction of scoring. Here a minimum of 4 out 6
questions should be non-missing for this sub- score to be computed. Any further increase
in the minimum number of questions required to compute the score reduced the valid
number of participants by about 20% for each additional required question. Hence the
minimum required was kept to 4.
Table 8.7 shows that the mean for the OBIA score is 3.73with the median and mode
both being 3.7. This corresponds to a mean percentage score of 68.3% which shows a

Only 4 out of 205 respondents indicated their own choice. Hence the scoring of own choice as 3 do not
13[13]

present a problem.
fairly favourable disposition to the religious and ethical objectives of Islamic accounting
compared with a narrow profit and shareholder focus. The inter-quartile range 3.5 to 4
(62.5% and 75%) shows that 75% percentage of the respondents scored 62.5% or more.

8.3.3.2 Importance of other stakeholders

Q3.3a to Q3.3e asked to participants to rank the importance of other stakeholders
as compared to shareholders as users of Islamic accounting information. Most participants
(between 81.4 to 90.2%, see Table 8-5) suggested that employees, government,
community, benevolent loan creditors and consumers are at least, as important, if not more
important than shareholders. The mean score ranged from 3.3 to 3.6 and the mode and
median score was around 3. An exception to this general finding related to benevolent loan
creditors where the median was 4 meaning that this group was considered more important
than shareholders by 50% of the participants. This is understandable, as benevolent loan
creditors do not charge interest or get any return. They may lend interest free to an Islamic
voluntary or charitable organisation. As they are entitled to a return of their loan by the
Shari’ah, the only way they can monitor the usage of their funds is through accounting
information designed for them. Hence Islamic accounting, especially for non-business
organisations bears this stakeholder in mind.
An overall score for this group of questions, STIMP(importance of stakeholders)
was computed using the formula:

STIMP= mean.5(q3.3a,q3.3b,q.3.3c,q3.3d, q3.3e) (8.12)

Even with a minimum requirement of 5 questions for the score to be computed, the
total number of valid participants producing this score was 202. Hence all the questions
were retained for this aggregate score. Table 8-7 shows a mean score for STIMP of 3.5
with the median and mode being 3.4 and 3.0 respectively. This produces a percentage
mean score of 62%, median of 60% and a mode of 50%. This shows that participants
consider other stakeholders are generally more important users of Islamic accounting than
shareholders. The inter-quartile range (3 to 4) shows that 75% of participants ranked other
stakeholders as important, more important or much more important than shareholders.
This is inline with the importance of different members of community in an Islamic
society. The rights of all sections should be taken into account when conducting business
under an Islamic ethos. The results therefore show strong support for the researcher’s
hypothesis (No.7, section 7.3.3.3 of chapter 7) that Islamic accounting should be geared to
various stakeholders in contrast to the shareholder/creditor emphasis of conventional
accounting.

8.3.3.3 The Type Of Information Which Islamic Accounting Should Provide

Q3.4a to f asked the participants to rank the importance of different kinds of
information that should be provided by Islamic accounting. This includes the impact of
organisational activities on the environment, employee working conditions, distribution of
salaries of different groups of employees and managers, Shari’ah prohibited activities,
social impact on the community and allocation of wealth between National and Foreign
interests. The mean score for these groups of questions ranged from 3.4 to 4.6 with mode
and median of 4 to 5 (see Table 8-5). This shows that the participants felt the information
listed was important or very important. Again as expected, the highest score was for
information on Shari’ah prohibited activities, although this hopefully would be redundant in
an Islamic organisation. In the real world however, Muslim and Islamic companies cannot
be 100% Islamic and some of their transactions with Non- Muslim countries may not be in
line with the Shari’ah. As such it is important to disclose this information, so that the user
can identify that portion of prohibited income and decide what to do with it.
The allocation of wealth between National and Foreign interest received the lowest
score of 3.4 with only 51.2% considering it to be important or very important. Many of the
participants to whom the questionnaire was administered thought that a better question
would be between Muslim and Non Muslim interest would be more important as nationality
was considered not important as compared to a common faith.
An aggregate score for this group of questions, INF(information which IA should
disclose) was computed using the formula

INF= mean.4(q3.4a,q3.4b,q3.4c,q3.4d,q3.4e,q3.4f) (8.13)

The minimum required questions were set at 4 to obtain a reasonable count of valid
participants. Although an increase to the minimum number of questions to 5 only resulted
in about 7% decrease in valid participant count, It was decided to lose one question here to
increase participant count in the sectional and overall aggregate score (ONIA and IA)
respectively. Here the score is only computed if at least four of the five score were not
missing. Table 8-7 shows that the mean was 4.0, the median score was 4.0 with a mode of
5. This translates to mean percentage score of 75% for the mean, 75% for the median and
100% for mode. The inter-quartile range of 3.6 to 4.6 indicates that at least 75% of the
participants scored 65% ((3.6-1) x25) or more indicating a highly favourable disposition
towards broader social, religious, employee and environmental concerns for Islamic
accounting.

8.3.3.4 The characteristics and nature of Islamic accounting

The last group of questions (Q3.6 to Q3.13) in this section asked the participants’
opinion on the characteristics of Islamic accounting as opposed to conventional
accounting. This included whether Islamic accounting should be holisitic, de- emphasise
the conventional cash flow, profits and financial position information, whether it should take
account of externalities, unrealised profits, use current values and whether it should be
Shari’ah audited.
The participants scored a mean score of 3.35 to 4.47 to this question (see Table 8-
4). This means % score of 58.75% to 86.75% indicating favourable to highly favourable
disposition to the proposed content of Islamic accounting. The median and mode of 4 to 5
indicate that a large number of participants supported these contents. As expected the
Shari’ah audit, integration of non-financial information and using current values for Zakat
calculations were supported by over 90% of participants. The only question which had a
low favourable response was the recognition of unrealised profits to ensure equitable
distribution of wealth between present and past shareholders which was supported by only
52.3% of the participants with 25 % totally disagreeing and another 23% unsure.
An aggregate score for this group of questions, CHIS (characteristics of Islamic
Accounting) was computed using the formula:

CHIS= mean.6(q3.6,3.7,3.8,3.9,3.10,3.11,3.12, q3.13) (8.14)

Here 6 out of the 8 questions must be non-missing before the score is computed.
The reduction of two questions, increase the valid participants scoring the variable by
about 12%. Table 8-7 indicates that the mean for CHIS was 4.0 with the median and mode
for this score being 4. This works out to a mean, median and mode of 75%. These are high
scores indicating that the participants favoured Islamic accounting should be broader
based and revolutionary (emancipatory in the words of Tinker, 1985). This is in the sense of
having a different framework, using different values and broader than conventional
accounting. From the 25th percentile of 3.71, it can also be worked out that 75% of the
participants scored 67.5% or more for this aggregate score indicating a high level of
support.
8.3.3.5 Aggregate scores for Section 3 of the IAQ.
An overall score (ONIA-Objectives and Nature of Islamic Accounting) was
computed for this section as follows:

ONIA= mean.5(q3.1, OBIA, STIMP, INF,CHIS) (8.15)

The overall score ONIA has a minimum computational requirement of 5 which

means all the five components must be present and non-missing before the score is
computed. From Table 8-7, the mean score for ONIA was 4.0 with median 4 and mode of
2.9. This translates to 75% for both the mean and median% and about 46.3% in
percentage terms. The mean and median show a high level of support for the objectives
and characteristics of Islamic Accounting proposed by the researcher. With a valid count of
194 out of 206 (or 94% of the sample), this support is also overwhelming.

8.4 INTERPRETATION OF THE FINDINGS AS A WHOLE

An overall Islamic accounting score (IA) was computed as follows:

IA = mean.3 (ISBUSETH, UNCONAC, ONIA) (8.16)

corresponding to the three sections of the Islamic Accounting Questionnaire. The

equation is the mean score of the three sub scores.
This mean score of the three sub scores is computed with the condition, all the
three sub-scores must not be missing. If any of the three sub-scores were missing, this
overall IA score would be computed as missing. In effect this, this takes into account
almost the entire questionnaire.
From table 8-7, it can be seen that the mean score for IA is 3.8, which works out to
about 69%. From the inter-quartile range of the same table, it can be seen that at least
75% of the valid respondents scored 3.5, which translates to 62.5%. This shows a high
level of support for the hypotheses on the need for the development of an Islamic
accounting and the problems with conventional accounting. However, with valid count of
only 139 participants (about 67%), the response is not overwhelming but substantial. It
must be borne in mind that the criteria is very rigorous in that IA score takes into account
almost all the questions the researcher had asked in the Islamic accounting questionnaire
and from table 8-8, it can be seen that only 2.9% of the valid participants scored below
50%. This means 97% of the valid 139 participants were favourably disposed to Islamic
accounting although their extent of support for the researcher’s contentions varied from
50% to 90.75%.

8.5 INDEPENDENT VARIABLES: FINDINGS

This section describes the findings on the independent variables given in section 4
of the IAQ. Section 4 of the IAQ as discussed in chapter 7, asked the participants to fill in
blanks or tick boxes to certain information which was considered as having a bearing on
the type of responses given. This included the sector in which the participant worked and
his or her length of working experience. Also asked were the educational qualifications and
place of qualification, the Islamic qualification and the place this was acquired. The
participant were asked to indicate whether they received any formal education in social and
environmental accounting and they were asked for their religion. In the case of accountants
in public practice, another factor, which was thought to have some influence on the
response, was whether the local audit firm received technical assistance from overseas
associates.

8.5.1 Working Sector

Sector Frequency % Valid % Cumulative

 %
Government 25 11.6 11.6 11.6
Education 101 50.5 50.5 62.0
Commerce 46 21.8 21.8 83.8
Public Practice 34 16.2 16.2 100.0
Total 206 100.0 100.0

TABLE 8-10: PARTICIPANTS BY WORKING SECTOR

Table 8-10 shows that the largest number of participants was from the education
sector followed by forty-six from commerce and industry, thirty-four from public practice and
twenty-five from government.

8.5.2 Accountancy Related Experience:

The distribution of accounting related working experience (including teaching) of the
participants shows a mean experience was 8.2 years with a standard deviation of 7.08
years. The median experience is 5 years. The mode experience is 4 years (32 cases)
which also represents 15.5% of the sample. The next highest experience is 5 years with
12.1% of the sample. It can be seen that the age distribution is positively skewed with most
of the respondents having between 2 to 7 years of working experience (about 45% of the
respondents). Another 15% have between 7.5 to 12.5 years while about 10% of the
respondents have below 2.5 years of experience. This means that about 80% of the valid
sample respondents have less than 12.5 years experience. Considering that the retirement
age in Malaysia is 55, and the schooling starts at 7 and ends after 17 years of schooling to
degree level, then the maximum working life of graduates (and professionals) is 31 years
and the average is 15.5 years. Therefore, a suitably grouped frequency distribution would
be as the one shown in table 8-11. We can consider that the group more than 15 years as
a highly experienced category, 6 to 15 years as experienced, 2 to 5 years as moderately
experienced and below 2 as inexperienced. 20 of the participants did not reply to the
experience questions.

Working Frequenc Percent Valid % Cumulative %

Experience y
Valid
More than 15 21 10.2 11.3 11.3
yrs.

6 to 15 years 66 32.0 35.5 46.8

2 to 5 years 87 42.2 46.8 93.5

less than 2 years 12 5.8 6.5 100.0

Total 186 90.3 100.0

Missing
System 20 9.7

Total
206 100.0

TABLE 8-11:GROUPED EXPERIENCE FREQUENCY TABLE

 The data is consistent for a developing nation such as Malaysia, where the
accounting profession and capital market began only in the 1970’s. This is also especially
true for Muslims/Malays as these groups have been disadvantaged in terms of education
and social standing until the New Economic Policy implemented in the 1970’s produced a
generation of educated and experienced Muslims only in the 1990’s. Hence this can be
taken as evidence of the sample representing the population in terms of experience
distribution.

8.5.3 Education.
Education is very important in framing the values and attitudes of people. The type,
the place and level of education can determine attitudes. It is hypothesised that secular
education may lead to a norm of anti-religiousness among its graduates. This would be
especially true of a positivist/empirical/scientific education, which places value on doubt,
scepticism and empirical proof as the methodology and epistemology of knowledge.
However in recent years, especially in accounting a more critical and humanist approach
may have diluted this ‘science is all’ phenomenon. Hence the place and school from which
the education is obtained is important. It is hypothesised that if the education has been
from an Anglo-American school, positivism would be more apparent and the participants
might have a negative attitude towards Islamic accounting as they might be opposed to
anything which smacks of religion. Further the relatively permissive culture in the West may
have influenced the graduates somewhat into adopting values which are opposed to
Islamic or any religious beliefs. However, if graduates have been exposed to a more
broad-based or critical approach in their courses, this may make them more inclined
towards a social/Islamic form of accounting. Malaysian University graduates may have a
higher Islamic awareness level than those from other countries because of the introduction
of Islamic civilisation as a compulsory subject at university level in Malaysia. Further many
academics with Masters degrees may have received their basic degree qualifications from
Malaysia and this may have an effect on their attitude.
The level of education may have an effect on the attitude towards Islamic
accounting. A post graduate qualification may indicate a more favourable attitude whereas
an undergraduate qualification which emphasises technical or career oriented education or
a professional qualification alone may indicate a less favourable disposition. From the
perspective of the Muslim world, education has become dichotomous (see chapter 4) after
colonisation, secular education having overcome to a large degree the traditional religious
education system. Many scholars have also obtained their education from overseas.
Malaysia had adopted a policy of sending Malays to Western countries for their tertiary and
post secondary education since the 1970’s with scholarships and other incentives. There
were about 10,000 (mainly Malay/Muslim) scholars in the UK alone in 1998. Although the
policy of sending students overseas has gradually decreased especially with the economic
crisis beginning in May 1998, the Muslim professionals and academics who occupy
important positions in various sectors who form the populations were a result of this policy.
These conditions lead to the importance of education on attitudes towards a particular
subject.

HIGHEST COUNTRY FROM WHICH HIGHEST TOTAL %

QUALIFICATIONS QUALIFICATION
WAS OBTAINED

Anglo American European Malaysi Other Non-

a Muslim
countries
BA/BS
47.4
14 1 75 2 92
MA/MS
29.4
46 5 6 57
PhD/D
16.0
22 3 6 31
Professional
5.7
8 3 11
Diploma
1.0
2 2
Others
0.5
1 1

100.0
90 6 90 8 194

TABLE 8-12: QUALIFICATIONS/PLACE OF EDUCATION OF PARTICIPANTS

Table 8-12 shows that roughly an equal (47.4% and 45.4%) proportion of valid
participants had undergraduate and post graduate qualifications. However, while 81.5% of
the graduates obtained their qualifications from Malaysia, 88.7% or 79 participants
obtained their post-graduate qualifications from Non-Muslim countries mainly Anglo-
American. (81.5%obtained their education from Malaysia, About 6% had professional
qualifications alone. A cross-tabulation of education with sector shows that all except two
of the postgraduates are in the education (Universities) sector. Further 73.8% of the
participants majored in accounting in their highest qualifications.

8.5.4 Islamic Education

It is hypothesised that Islamic education would make the participants more
favourably disposed towards Islamic accounting. Islamic education could be of two types; a
traditional ritual education without its underlying objectives and philosophy or a more
broad-based one. Usually the higher the level, the broader the education, hence it is
hypothesised that a higher Islamic education level would lead to a more favourable attitude
towards Islamic accounting. Further if the Islamic education was obtained in the West,
there might be a more critical approach to religion and a more unfavourable attitude to
Islamic accounting. However one has to note that the Islamists do not normally have a
traditional or degree level Islamic education. Most of them have only basic religious
education in Mosques or secular schools and Islam is more often self-thought through
reading, weekly study circles, seasonal worship camps, attending talks in mosques and
interaction with the local Islamic community. Hence the level of formal Islamic education
may not indicate Islamic awareness.

Qualification Frequency % Valid % Cumulative

%

Valid
Ijazah (degree) 7 3.4 4.3 4.3

Sanawi (religious .A 1 .5 .6 4.9

Level)
Certificate(one year 14 6.8 8.5 13.4
post O level)

STPM ( A Level) 1 .5 .6 14.0

SPM (O Level) 127 61.7 77.4 91.5

PMR/SRP (Form 3) 6 2.9 3.7 95.1

Other 8 3.9 4.9 100.0

Total 164 79.6 100.0

Missing
System 42 20.4

Total
206 100.0

TABLE 8-13: HIGHEST ISLAMIC QUALIFICATIONS

Table 8-13 shows only 7 participants (about 3.4%) had degree qualifications in
Islam and the overwhelming majority of participants namely 127 (about 62%) had only
SPM or ‘O’ Level qualifications. Another 42 participants did not answer this question but we
may assume that they have none. This is consistent with the fact that those who are either
graduates in accounting/business or professional accountants usually followed a secular
education route and the only formal Islamic qualification available was a subject ‘Islamic
Religious Knowledge’ at SPM and STPM (O and A level).
For purposes of further analysis, the above qualifications are grouped into two categories;
(i) SPM and lower, and (ii) HSC and higher. Further, since all except two of these
participants obtained their Islamic qualifications from Malaysia, the place of Islamic
qualifications will not be analysed as a variable.

8.5.5 Social and Environmental Accounting Education

There have been calls for a more critical and ethical approach to teaching
accounting (for example, Gray et al., 1994). If the participants have had exposure to social
and environmental accounting education, this might act as a moderating variable to
increase their commitment for Islamic accounting.
Yes= have formal social accounting education; No= No formal social accounting education
Response Frequency Percent Valid % Cumulative %

Yes
71 34.5 34.5 34.5

No
135 65.5 65.5 100.0

Total
206 100.0 100.0
 TABLE 8-14: FORMALLY STUDIED SOC & ENV ACCTNG

Table 8-14 shows that about one-third of participants have studied social and
environmental accounting. The effect of this on participants’ responses is further analysed
later.

8.5.6 Receipt of Foreign technical assistance by local firms

Lastly, one of the ways in which conventional accounting is globalised, is through
the activities of multinational accounting firms especially the big four and their erstwhile
competitors. Hence if local firms get technical assistance from their overseas counterparts,
then there might be a tendency to follow and defend Anglo-American ‘best’ practice and
therefore a lower tendency towards an alternative Islamic accounting.

Yes=receive technical assistance; No= do not receive technical assistance

Frequenc % Valid Percent Cumulative
y %

Valid
Not 165 80.1 82.5 82.5
applicable

yes 21 10.2 10.5 93.0

no 14 6.8 7.0 100.0

Total 200 97.1 100.0

Missing
System 6 2.9

Total
206 100.0

TABLE 8-15: FIRM RECEIVES TECHNICAL ASSISTANCE

Table 8-15, reveals that about half the participants in public practice received
technical assistance from overseas countries. Since one of the principal avenues of
globalisation of Anglo-American accounting values is carried out through multi-national
accounting firms, this may lead to an unfavourable disposition towards Islamic accounting.

8.6 SIGNIFICANCE TESTS OF ASSOCIATION BETWEEN INDEPENDENT

AND DEPENDENT VARIABLES
In order to test for meaningful relationships between dependent and independent
variables, a statistical test that gives an indication of whether there are significant
differences between the means (or medians) of various groupings of respondents was
undertaken.
The participants with different education and experience may be assumed to be
from different populations, which are independent of each other. In order to see whether
there is a significant differences in the characteristics of these various groups, two
categories of tests could have been undertaken. Since the normality of the various groups
cannot be assumed and there are more than two groups (represented by more than two
independent variables), a Kruskall- Wallis one way analysis of variance test of mean ranks
for K populations was undertaken using SPSS. This test gives the difference between the
means of ranks between groups and the associated p values (=a, the significance level).
 TABLE 8-16: SIGNIFICANCE LEVELS; KRUSKAL-WALLIS TESTS OF DIFFERENCES OF RANKED MEANSBETWEEN
POPULATIONS GROUPED BY INDEPENDENT VARIABLES –IAQ
SOC &
PLACE ENV PLACE SOC &
WORKING PROF EXPERE HIGHEST OF ISLAMIC ACC TECH WORKING PROF EXPERE HIGHEST OF ISLAMIC ENV TECH
QUEST. SECTOR CATEG CATEG QUALIF QUAL. QUAL EDU. ASST. QUEST. SECTOR CATEG CATEG QUALIF QUAL. QUAL ACC EDU. ASST.
Q1.1 0.275 0.251 0.718 0.153 0.990 0.105 0.305 0.509 Q3.1 0.373 0.308 0.338 0.100 0.258 0.492 0.559 0.328
Q1.2 0.168 0.377 0.003 0.436 0.845 0.702 0.974 0.751 Q3.2a 0.044 0.646 0.370 0.009 0.074 0.452 0.300 0.198
Q1.3a 0.245 0.159 0.013 0.006 0.002 0.545 0.059 0.184 Q3.2b 0.932 0.942 0.932 0.239 0.478 0.746 0.429 0.602
Q1.3b 0.003 0.002 0.016 0.001 0.003 0.885 0.684 0.447 Q3.2c 0.115 0.122 0.140 0.029 0.564 0.841 0.898 0.704
Q1.3c 0.145 0.024 0.877 0.326 0.602 0.302 0.759 0.377 Q3.2d 0.462 0.546 0.287 0.052 0.602 0.810 0.839 0.316
Q1.4 0.137 0.162 0.373 0.006 0.011 0.576 0.040 0.155 Q3.2e 0.339 0.888 0.179 0.014 0.056 0.267 0.783 0.047
Q1.5a 0.018 0.058 0.377 0.080 0.261 0.527 0.729 0.897 Q3.2f 0.075 0.091 0.513 0.018 0.671 0.169 0.980 0.573
Q1.5b 0.586 0.535 0.517 0.070 0.707 0.741 0.307 0.793 Q3.3a 0.117 0.268 0.641 0.440 0.866 0.950 0.592 0.905
Q1.5c 0.590 0.300 0.587 0.083 0.949 0.575 0.260 0.686 Q3.3b 0.000 0.007 0.170 0.026 0.112 0.966 0.047 0.370
Q1.5d 0.068 0.032 0.846 0.000 0.499 0.227 0.253 0.229 Q3.3c 0.073 0.040 0.741 0.446 0.467 0.988 0.049 0.415
Q1.6 0.474 0.397 0.713 0.622 0.629 0.521 0.284 0.472 Q3.3d 0.242 0.190 0.347 0.538 0.150 0.255 0.033 0.066
Q1.7a 0.088 0.373 0.918 0.414 0.345 0.474 0.670 0.782 Q3.3e 0.165 0.132 0.339 0.089 0.236 0.811 0.031 0.526
Q1.7b 0.212 0.242 0.205 0.668 0.596 0.716 0.629 0.492 Q3.4a 0.000 0.000 0.105 0.000 0.005 0.461 0.228 0.768
Q1.7c 0.471 0.531 0.967 0.639 0.812 0.910 0.490 0.169 Q3.4b 0.000 0.000 0.278 0.011 0.011 0.363 0.394 0.140
Q1.7d 0.260 0.611 0.933 0.466 0.537 0.655 0.886 0.418 Q3.4c 0.020 0.007 0.122 0.008 0.307 0.653 0.117 0.093
Q2.1 0.031 0.054 0.676 0.004 0.588 0.389 0.216 0.482 Q3.4d 0.346 0.227 0.295 0.702 0.580 0.055 0.242 0.296
Q2.2 0.023 0.062 0.717 0.010 0.971 0.230 0.892 0.478 Q3.4e 0.050 0.008 0.568 0.056 0.392 0.497 0.287 0.672
Q2.3 0.101 0.567 0.767 0.016 0.716 0.535 0.688 0.474 Q3.4f 0.098 0.107 0.799 0.065 0.585 0.128 0.108 0.497
Q2.4 0.067 0.107 0.541 0.348 0.764 0.540 0.020 0.347 Q3.6 0.179 0.450 0.620 0.024 0.426 0.435 0.813 0.211
Q2.5a 0.441 0.809 0.532 0.911 0.479 0.558 0.524 0.385 Q3.7 0.001 0.800 0.278 0.016 0.586 0.292 0.499 0.983
Q2.5b 0.149 0.932 0.463 0.901 0.913 0.892 0.161 0.765 Q3.8 0.266 0.058 0.486 0.146 0.928 0.908 0.813 0.851
Q2.5c 0.066 0.149 0.327 0.395 0.720 0.491 0.183 0.099 Q3.9 0.000 0.001 0.164 0.001 0.087 0.527 0.252 0.494
Q2.6a 0.978 0.806 0.605 0.673 0.857 0.954 0.772 0.767 Q3.10 0.391 0.152 0.029 0.105 0.799 0.949 0.793 0.803
Q2.6b 0.668 0.675 0.831 0.609 0.644 0.984 0.704 0.687 Q3.11 0.730 0.652 0.184 0.113 0.983 0.711 0.391 1.000
Q2.6c 0.224 0.973 0.434 0.502 0.679 0.441 0.591 0.858 Q3.12 0.156 0.482 0.090 0.232 0.653 0.658 0.578 0.581
Q3.13 0.025 0.042 0.308 0.154 0.070 0.797 0.645 0.816
Total Number of Significant Variables out of 51 Variables 13 11 4 18 5 0 6 1
 Table 8-16, gives the results of these tests for each dependent variable. The dependent
variables, which show significant differences between various groups (at the 5% level), are
shown in bold. It shows that the highest qualification, the working sector and the professional
category (whether professional, academic or others) of the participants, seem to be the most
significant variables affecting their responses. Social and Environmental education has very little
effect on the responses and these seem to be concentrated on those questions related to the
stakeholders that Islamic accounting should consider important as users of its information.
Similarly the place of education also seems to have little effect on the responses, although the
participants are almost evenly split between those educated in Malaysia and those educated in
Non-Muslim countries. This may be due to the fact the participants who studied overseas for
their post-graduate qualifications (see 8.5.2 above) obtained a Master degree, which in the UK
is only of one-year duration. This period may not have been enough to influence their
disposition towards Islamic accounting because they may have obtained their undergraduate
education in Malaysia over a period of four years. The significant effect of place of education
seems to be concentrated on information that should be conveyed by Islamic accounting and
the objectives of Islamic business organisations. Islamic qualifications seem to have no effect at
all on the responses. However, this may be due to the fact that the sample only contained about
12 out of 186 participants with Islamic qualifications higher than school level, hence we may
need a sample with a broader spread of qualifications to see any effect. The effect of technical
assistance tells the same story that only one question on the objectives of Islamic accounting
seems to be significant. Here again the relevant sample is small - only 24 out of 206
participants, who responded, worked in public practice and out of this only 12 received technical
assistance. Hence, it is not possible to make any suggestions regarding the effect of technical
assistance on the disposition towards Islamic accounting. Due to the above findings, the
academics and accountants will be separately analysed. However, due to the exploratory nature
of the study, the cause-effect relationships of other independent variables will not be analysed
further.

8.7 CONCLUSION
In this chapter, the relationship of the research design, the scales used and the statistical
tests applied were discussed. The validity and reliability of the responses were tested and
discussed. Since the distribution of the responses did not follow a normal distribution, both non-
parametric and parametric tests will be applied in hypothesis testing in the next chapter. The
findings related to dependent variables, which consisted of questions in sections 1 to 3 of the
IAQ, were presented. The findings related to the aggregate scores, consisting of groups of
questions for each section, and the whole questionnaire were discussed. The results indicate
strong support for Islamic Accounting although some aspects of conventional accounting such
as those related to conventional accounting principles and the traditional accounting objectives
related to efficient allocation of resources and maximisation of profits still find support among a
substantial number of participants.
The findings related to the dependent variable were presented and regrouped for further testing.
The Kruskal-Wallis one way analysis of variance of ranked means shows that only education,
working sector and professional category seem to have significant effect on the responses
regarding disposition to Islamic accounting. Social and environmental accounting education
effects only a few of the variables. Since this is an exploratory study of the subject, the cause
effect relationships between dependent and independent variables will not be analysed further.
However, the hypotheses (hypotheses 1 to 10) regarding the dependent variables as stated in
the previous chapter, will be tested in the next chapter.