CHAPTER 7: RESEARCH DESIGN AND DATA COLLECTION

“So ask the learned if you do not know”

(Al-Qur’an 16:43)

7.0 INTRODUCTION
Research data may be categorised as primary and secondary data. Primary data are

data generated by the researcher using data gathering techniques, some of which will be

discussed below. Secondary data are those that have been generated by others and are

included in data-sets, case materials, computer or manual databases or published by various

private (e.g. Annual Reports of companies) and public organisations or government

departments (official statistics by the Statistical Office). International Organisations such the

International Monetary Fund and the World Bank and the United Nations and Islamic

Conference Organisations publish economic statistics of member countries or on a worldwide

basis.

In this research primary data collected by the researcher are used. As discussed in

Chapter 2, one way of extending knowledge in Islam is to ask those who are knowledgeable in

the field and to seek their consensus (ijma). Asking people who know is a Qur’anic imperative

(Al-Qur’an, 16:43). There is a dearth of empirical work in Islamic accounting research. Doubts

have also been expressed, in view of the economic and political situation and apparent

unethical behaviour of the Muslim world, whether there is an Islamic ethos among the Muslims

at all. If these doubts were true, especially amongst the educated and professional groups such

as accountants, the whole exercise would be merely theoretical. In the event, extending Briloff’s

quote (Gambling & Karim, 1991), time would be better spent developing accountants with

Islamic principles rather than developing Islamic accounting principles. There is therefore the

need to gather primary data, which is done in this research.

 This chapter proceeds as follows: In the next section (section 7.1), data gathering

techniques and methodology are discussed in general followed by specific data gathering

techniques. The reasons for the methods chosen in this project are given in Section 7.2 along

with the reasons for the choice of the research environment. This is followed in section 7.3 by a

discussion of: the construction of the primary research instrument used in this project - the

Islamic Accounting Questionnaire, the characteristics of the population and sample surveyed,

and the problems encountered during the survey. This is followed in section 7.4 and section 7.5

by a discussion on the construction of the second and third questionnaires respectively. These

are the finance and the non-finance personnel questionnaire on the behavioural consequences

of conventional accounting. This chapter is concluded in section 7.6.

7.1 DATA GATHERING TECHNIQUES: MATCHING METHODOLOGY

AND METHODS.
Research data may be collected in various ways. Some of these methods depend on the

methodology and the theoretical assumptions used in the research. There is a tendency for

researchers in the functionalist, positivist paradigm to collect hard objective numbers e.g. Share

prices, accounting numbers etc by observation, experimentation, extraction from published

sources, questionnaires and structured interviews. They emphasise quantitative techniques

over qualitative methods. “Softer” humanistic researchers in the interpretative and radical

humanist paradigms use the latter generally.

Although purists in either paradigms stick to their own methods, it is not a case of ‘neither the

Twain shall meet’ as researchers have been encouraged to mix and match (Tomkins & Groves,

1983). This researcher has followed this route.

Further, “ triangulation”- a notion introduced from military studies by Denzin (1978) (as

quoted by Tomkin & Groves, 1983), has been suggested as a way to make research studies
more robust and rigorous by verifying results through different methods, thus ensuring that the

results are not a function of the research method.

The theoretical paradigm adopted by the researcher as explained in Chapter 5 (Section

5.3.5) is the ‘Islamic’ paradigm, which is a spiritual extension of a middle position of the

subjective/objective dimension divide and towards an interpretive approach. For this paradigm,

long-term participant observation in an organisational setting, multi-stage interviews and case

studies would be appropriate data collection methods. However the researcher has chosen to

use questionnaires because of the difficulties in obtaining access to organisations and more

specifically, to obtain evidence of consensus among the respondents on Islamic Accounting

issues. A short description of data gathering techniques used in this project is given next.

7.1.1 Questionnaires and the survey method

Questionnaires have, according to Sharp & Howard (1996, p 145), “over the past

century, become a common method of gathering information.” It can be defined as “a pre-

formulated written set of questions to which participants record their answers, usually within

largely closely defined alternatives.” (Sekaran, 1992, p 200). In the USA, the term “Survey” is

used for this data collection method (Nachmias & Nachmias, 1996, p224). Creswell (1994)

informs us that a survey design - through the data collection process of asking questions,

provides a quantitative or numeric description of some fraction of the population i.e. a sample

which can be in turn generalised to the population from which the sample was drawn.

In general, questionnaires are useful, where the researcher cannot observe the

phenomenon directly or is impractical to do so. It allows the researcher to reconstruct the

phenomena through the experience and perceptions of the participants who have observed the

phenomena (Nachmias & Nachmias, p 224). In addition, certain research including the present

one, intends to elicit the thoughts and perceptions of people who have certain qualities e.g.
education, experience, situation in life etc. who have the knowledge and also the ability to

precipitate changes in their environment.

Questionnaires can also be divided into perception and factual questionnaires (see for

example, Mahmud, [n1]1997), although this division involves ontological positions which are not

acceptable to some academics. Perception questions ask questions concerning the feelings,

thought, knowledge and opinion of participants, which are quite subjective. Factual questions

ask questions of fact. Even in perception questionnaire, there is usually a ‘personal details’

section, which is factual.

Questionnaires can also be categorised by the method of delivery i.e. Postal

Questionnaire, Personally Administered Questionnaire and telephone and its recent extension -

emailed questionnaires. In the researcher’s opinion, the main advantages of these methods are

structure and timeliness.

Although questionnaires can be both open ended or closed ended, both types provide

structure to the process of data collection, the closed ended one being more specific and less

prone to verbosity and interpretation than the open ended questionnaire. As compared to

participant or process observation, where only general points can be watched for, the

questionnaire structures the data and makes it easier for later analysis especially when nominal

or ordinal scales are used to capture data. These can be used in computerised statistical

analysis, which makes the research more robust and rigorous especially in the light of

positivists.

The timeliness of data gathering is another feature especially of postal or telephone

questionnaire surveys. Controlling for the response rate, more data can be collected in a shorter

period of time by using questionnaires than by interviewing sequentially or observing over long

periods of time.
7.1.2 Postal Questionnaires
In this process, the questionnaires are mailed to the sample participants, usually with a

pre-paid self-addressed envelope to encourage response. A large geographical area can be

covered quickly and cheaply by this method. It is also very timely, as many questionnaires are

being answered in parallel. This can be contrasted to a situation where the researcher would

have to sequentially administer questionnaires or interviews. This enables a larger sample to be

obtained in a short space of time. Although in theory the researcher could employ an army of

interviewers to administer questionnaires, this is a costly affair and is not practical for a PhD

project. In terms of reliability, posting questionnaires avoid accusations of incorporating

researcher bias as compared to administered questionnaires.

Another advantage is greater anonymity due to the absence of the interviewer,

especially when sensitive questions are asked, e.g. ethical practices. “People in the sample are

more likely to respond to sensitive questions when they do not have to face an interviewer or

speak to someone directly” (Sekaran, 1992, p225).

In this particular research, the identity of the individual members of the Malaysian

Institute of Accountants to whom the questionnaires were posted was kept confidential by the

institute. Many participants did not disclose their addresses and names in the questionnaires.

For the questionnaires which were handed out to the working MBA students, many did not want

to identify their organisation, perhaps to avoid accusations of disloyalty, as they had to respond

to questions on the behaviour of their managers and companies,. Hence anonymity has been

important for many participants in this research.

Finally, questions requiring considered answers (as in the case of the Islamic Accounting

Questionnaire used in this research) are better mailed to enable the participants to give some

thought to the questions. In this research, some academics did not give back the questionnaires
immediately, as they wanted to think about the issues for a few days. Where the questionnaires

were administered, the participants spent considerable time answering the questionnaires often

debating points with the researcher, sometime as much as two hours for what would have taken

30 minutes, if the answers were not given much thought.

The negative side to postal questionnaires is that the response rate is usually small

which requires a second or even a third mailing. The ever increasing number of research and

posting of junk mail means that many questionnaires end up straight in the dustbin. A further

more important disadvantage of this method is that different participants may interpret the

questions differently and certain questions can be completely misunderstood by many or all of

the participants. To avoid this problem, questions would have to be simple (see for example,

Mahmud, 1997 listing variables in his perception questionnaire). In this research, however, it

was very difficult to keep the questions simple, especially for the Islamic Accounting

Questionnaire and this may have affected the understanding and interpretation of some of the

questions. Another problem associated with this questionnaire is the language ability of the

participants especially if a foreign language such as English is used in countries where English

is not the native tongue of the participants. Again the researcher faced this problem in the case

of the non-finance behavioural questionnaires sent to personnel of the Islamic business

organisations visited due to their lower education and English proficiency.

7.1.3 Personally Administered Questionnaires

Here, the researcher personally administers the questionnaire to the participants, usually

at the participants’ workplace or residence. This has the advantage of a faster response, as the

researcher and his team can get the questionnaires completed quickly as compared to the

postal method, where the participant might postpone filling up or returning the questionnaire.
This method is especially suitable, where the researcher can get the participants and /or his

organisation to co-operate to allow the researcher access, in a survey confined to a local area.

Advantages of this method include: (i) doubts regarding the meaning of the questions

can be clarified to ensure that the participant is answering the questions in the sense that the

researcher intended, (ii) the importance of the research can be personally presented to the

participants and its significance explained to them to motivate honest answers by emphasising

their contribution to the research, (iii) it requires fewer skills than interviewing, and hence

relatively low skilled assistants can be recruited to perform this task to speed up the research,

and (iv) it ensures better response rates because there is a ‘personal face’ to the questionnaires

as personal persuasion usually increases interest.

The main disadvantage seems to be that the researcher may introduce his personal bias

by giving facial or verbal expressions, which may put the participant at unease. Further in

explaining questions differently to different people, participants may be in fact answering

different questions as compared to those whom the questionnaire was mailed.

7.1.4 Interviews

7.1.4.1 Definition:
Nachmias & Nachmias (1996,) defines an interview as a “face-to-face, interpersonal role

situation in which an interviewer asks participants questions designed to elicit answers pertinent

to the research hypotheses” (p 232). However, Sekaran (1992) reminds us that interviews need

not be face-to-face as it can be conducted through the telephone or can even be computer

assisted.
7.1.4.2 Classification of Interviews
Interviews can be classified as structured or unstructured (or non-directive interview)

although Nachmias & Nachmias (1996) identifies a third category- the focused interview , which

is a variation of the structured interview. In the structured interview, the format is more rigid and

assumes that the researcher knows exactly what information is needed and has a list of pre-

determined questions he intends to ask of the participants. The same questions are

administered to every interviewee, although in certain cases depending on the circumstances or

participants’ answers, the researcher may elicit additional information by asking additional

questions not on his schedule. “Through this process new factors might be identified and a

deeper understanding might result” (Sekaran 1992, p 192).

In the nonstructured or non-directive interview, the researcher does not have a schedule

listing a set of pre-specified questions , nor are the questions asked in a specific order. The

researcher does not direct the interviewee and thus the interviewee is encouraged to relate his

or her experiences and to reveal their attitudes and perceptions on the topic of interest. In this

method, the interviewer has an opportunity to probe various areas and to raise specific queries

during the interviews.

7.1.4.3 Advantages and Disadvantages of interviews versus Postal Questionnaires.

The main advantage of face to face interviews is that the researcher can adapt the

questions as necessary, clarify doubts and ensure that the responses are properly understood

by repeating or rephrasing the questions. (Sekaran, 1992, p197). Probing during interviews can

elicit additional information and detail, which can provide deeper insights. The interview also

results in a higher and more complete response rate than mailed questionnaires. This may be

the only way to get information from people who cannot read or write or understand technical

language. One further advantage is that during interviews, the researcher can collect

information on the environment of the interviewee e.g. request for annual reports, organisation

charts, brochures, which are normally entertained as opposed to requests through the mail.
 The disadvantages of the interview include cost and possibility of bias. It is very costly to

conduct many interviews over large geographical areas as it may involve training interviewers,

transportation and accommodation out of town. The very flexibility of an interview is also an

opportunity for researcher bias to influence the data collected. Facial or verbal cues may

influence the answers the participants give.

A further disadvantage of the interview would be lack of anonymity. Participants may

feel threatened or intimidated by the interviewee, as he knows many personal details of the

interviewee such as name, position, organisation, telephone number and addresses. This is

especially true, if the topic of the research or particular questions is sensitive.

7.1.5 Telephone Surveys

Telephone surveys may consist of polls, interview or questionnaire survey conducted

over the telephone. Compared to mailed questionnaires or personal interviews, they can cover a

wider geographical area in a shorter time. However the disadvantage is the higher cost

compared to mailed questionnaire but there can be substantial cost savings compared to

personal face-to-face interviews.

Anonymity of the telephone survey varies; the lack of face to face contact can both be an

advantage and disadvantage. Personal cues cannot be given or received, hence there cannot

be an accusation of researcher bias. However, this is not conducive to getting a greater insight

into the perceptions, feelings and thoughts of the interviewee. Further, interviewees may not be

easy with a faceless researcher as they may fear lack of confidentiality of their views.

In this research, the length of the questionnaire and the nature of the questions which

required some thought was not suitable for administration over the phone. Hence the telephone

was used only to fix appointments for interviews to hand over questionnaires and make

presentations to academics, in some cases before handing the questionnaires to staff.

7.2 METHODS AND THE RATIONALE FOR THE METHODS
7.2.1 The Data Collection Methods: From The Ideal To Reality
Initially, the researcher intended to divide the data collection into three parts; i.e. an

Islamic Accounting Questionnaire; delivered by mail and in person and a case study combined

with interviews. Unfortunately, the economic situation in Malaysia, where the research data was

collected, deteriorated since 1997. This made companies unwilling to discuss ethical matters

when their survival was at stake. Further, Malaysia faced political problems with the sacking of

the Islamist Deputy Prime Minister Anwar Ibrahim, and the subsequent riots and uprising by the

Muslim population in 1998; this made some companies who were Islamically inclined

inaccessible to the researcher. This was especially true for companies whose directors had

strong connections with the ex deputy prime minister. In fact, the Islamisation of the economy

and politics were to some extent due to the effort of the ex-deputy Prime Minister (especially the

setting up of the Malaysian Islamic Bank and the International Islamic University). If not for the

fact that the CEO of one of the Islamic Companies studied was personally known to the

researcher it would have been impossible even to get the finance and non-finance

questionnaires answered.

The Islamic companies set up by opposition Muslim political parties were very careful

about inviting outsiders to access their organisations due to fear of infiltration by Government

spies. Hence, due to lack of access for case studies, the data collection method was changed to

delivered questionnaires on behavioural aspects of conventional accounting for finance and

non-finance personnel.

To summarise, the main data collection methods used in this research are:

(a) The Islamic Accounting Questionnaires which were (i) mailed to members of Malaysian

Institute of Accountants, (ii) delivered to accounting academics in Universities in Malaysia, (iii)

delivered to companies through colleagues and friends and (iv) delivered to audit firms.
(b) The Finance and Non-Finance Questionnaires which were sent to (i) part time MBA

students of the International Islamic University who were working full time as executives in

various sectors and (ii) employees of Tabung Haji , Abrar Group and some other companies

and (iii) University Technology Mara Executive MBA students who were also full time

executives.

Before the contents of the above questionnaires are discussed in detail, the choice of

Malaysia as the research environment needs some elaboration.

7.2.2 The Choice of Malaysia as the Research Environment

This study is an exploratory study of Islamic accounting. It is intended to be the first of a

series of studies, which as a whole may culminate in findings, which are generalisable to the

whole Muslim world. However due to financial and time constraints, an international survey was

not possible in this PhD project, thus the reason for focusing in a particular country. The findings

are therefore meant to be generalisable only to Muslim academics and Muslim professional

accountants in Malaysia, in the case of the Islamic accounting questionnaire.

7.2.2.1 Some background information on Malaysia

Malaysia is or was recently seen to be a model Muslim country (although not an Islamic

state) because of the economic and political stability and the infusion of Islamic values in both

government and private life. Malaysia has only a 55% Muslim population (constituting of about

50% Malay Muslims and 5% other Muslims – mainly Indian Muslims). The Non- Muslim

population consist of 30% Chinese (mainly Buddhists and Taoists) and 10% Indians (who are

mainly Hindu) and 5% others. However, the political and military machinery is dominated by the

majority Malays (who are almost 100% Muslim) who govern the country by means of a multi-

party coalition. Malaysia is a constitutional monarchy with a two-tiered parliament, the lower
house is elected by all citizens of Malaysia, Muslim and Non-Muslim. Islam is the official religion

defined by the constitution.

The Malays are an ethnic group who covers the Malay Archipelago consisting of

Malaysia, Indonesia, Brunei, Singapore and Southern Philippines and Southern Thailand. They

are predominantly Muslim although due to recent missionary activity in Indonesia, about 10% of

the population there are Christian. One of the unique characters of Malaysia is the definition of

Malay in its federal constitution. It defines Malay as a Muslim who practices Malay customs,

speaks the Malay language and was resident in Malaya or an offspring of such resident in 1957

when the country received independence from Britain. This technically means that an Indian or

Chinese who has embraced Islam and follows Malay customs is classified as Malay. Although

not many Chinese and Indian Hindus have chosen this option, there are many born Indian

Muslims and a few Chinese converts through inter-marriage who have. Hence the Malay

classification can be a proxy for Muslim. (See section 7.3.4.2 for the importance of this).

Although officially a secular state, the government has been increasingly infusing Islamic

values, which it claims are universal. The Shari’ah (or more accurately Mohammedan Law – a

leftover from the British era) in a much diluted form is enforced by a parallel system of Shari’ah

courts. The Shari’ah is enforced only on Muslims in personal law areas only. In criminal cases,

it is the civil courts (which enforce the British common law and local statutes) which have the

upper hand. However there have been recent calls by Muslims to implement the Shari’ah as the

official law of the land although this has been resisted by the government and non-Muslims

alike.

7.2.2.2 Islamic revivalism in Malaysia

In the 1960’s and 1970’s, Malaysia like other newly independent countries was born and

governed in the secular mould of the British. However Islamic revival throughout the world,
especially in the light of military and economic failures in other Muslim countries led first to an

ethnic and later a mixed ethnic-religious assertion in politics, government and the economy by

the Muslim Malays. Many political and social movements arose in Malaysia in the name of

Islam. The Angkatan Belia Islam Malaysia (ABIM – Malaysian Muslim Youth Movement) was

one such Islamic social welfare organisation which included the ulemas (Muslim scholars),

intellectuals, students, farmers, government servants from both the government political party

and opposition Islamic political party (PAS- Pan Malaysian Islamic Party). The leaders of this

organisation were influenced by the writings and actions of the Islamic Brotherhood of Hasan al

Bana (d. 1948) of Egypt, and other renown Islamic scholars of the 20 th Century, which were

basically trying to implement Islam in the modern world in all aspects of life. Its most popular

President, Anwar Ibrahim was co-opted into the Government in the 1980’s and was tipped to be

the next Prime Minister of Malaysia until his recent downfall in 1998. Due to the resurgence of

Islam in Malaysia, the government was forced to concede to the Muslims by opening new

mosques, Islamic schools, implementing more religious education in the curriculum and having

more Islamic religious programs on the radio and TV.

When Anwar Ibrahim was co-opted into the government, he began a long career, first as

the culture Minister (during which more Islamic elements were incorporated into culture rather

than Hindu influenced dances), the Agriculture and the Education Minister and finally the Deputy

Prime Minister. He managed to get the Islamic bank and the university going along with the

introduction of compulsory Islamic subjects in all universities for Muslim students and the

controversial introduction of Islamic civilisation as a compulsory subject for Non Muslims at the

Universities in Malaysia. The government promoted a parallel Islamic Money Market and

Financial System. The wearing of Islamic headscarf and costume by Muslim females were

allowed or even encouraged.

 Although these developments were seen as purely cosmetic by the more extreme

elements in the Islamic movement who called for a full implementation of the Shari’ah. This non-

violent gradual Islamisation process was encouraged and admired by many in the Muslim world.

Together with the rapid economic success of Malaysia and a more or less equitable distribution

of wealth, Malaysia was seen as a model Muslim country.

7.2.2.3 Islamisation of business life

There is an increasing Islamic eagerness among the Muslims to practice Islam in all

sectors of life including business. The Malaysian government as far back as the late 1980s

made it a policy of instilling Islamic values in Government (at least cosmetically). Economists

and businessmen who at least cosmetically adopted Islamic lifestyles increasingly took up the

instilling of Islamic values or Islamisation. There were some efforts to instill Islamic values in

businesses by the newly privatised companies with Muslim heads (e.g. Tenaga, Renong and

Berjaya Corporations) although they were mainly ritualistic and lacking in substance. However,

there are many Muslim businessmen who wanted to conduct their business in accordance with

the Shari’ah. There were also Islamic organisations such as Lembaga Tabung Haji (a statutory

funds investment organisation), Abrar Corporation (financial conglomerate) and Pusat Pungutan

Zakat (Zakat collection company) which are Islamic by their incorporation charters.

Islamic banking and finance became a popular topic for academic and business

discussion. The importance of the Islamic banking industry from an accounting perspective is

indicated by the fact that the Malaysian Institute of Accountants formed a working committee on

Islamic Accounting and Finance to set standards for Islamic banks and similar institutions. Even

secular educated and secular minded professionals were turning more towards Islam (at least

outwardly).
7.2.2.4 Malaysia as the Country of Choice for this Project.
In summary, Malaysia is a suitable place for the research project because: (i) the

increasing awareness of Islam and intention of the people to implement in the economic,

business, social and political aspects of life, (ii) the leading position of Malaysia in Islamic

banking and finance and the Islamic money market, (iii) the existence of large Islamic and

Muslim Business organisations, (iv) the economic state of development with a robust Stock

Exchange, a modern banking system, and continued industrialisation and progress towards a

knowledge based-economy (e.g. the Multimedia super corridor), and (v) a developed

accountancy profession based on Anglo-American Accounting system.

In addition, the researcher comes from Malaysia and hence language, communication

and logistic problems, which may crop up if the research were conducted in other countries

were reduced. Also, the fact that Malaysia is or was until recently seen as a model for Muslim

economic development and a blueprint for gradual Islamisation increases the probability of

adoption of any development in Islamic accounting by other Muslim countries.

7.2.3 Questionnaires and Interviews from an Islamic perspective.

The Qur’an in many of its verses, encourages learning, thinking and observation. It

encourages Muslims to observe phenomena (both celestial and social) and learn from history

and creation1[1]. There is also a specific command in the Qur’an asking Muslims to question and

“ask those who are knowledgeable, if you do not know” (Qur’an, 16:43). Hence, questionnaires

may be regarded as a legitimate device in Islam if addressed to knowledgeable persons or

specialists in the area. Further obtaining consensus (ijma’) of scholars (‘ulema) is an accepted

method of developing Islamic law. The Ulema in modern times could possibly be extended to

subject specialists who also have some knowledge of Qur’an and Usulul Fiqh (Principles of

Islamic Jurisprudence).
1[1]
For example: “Behold, in the creation of the heavens and the earth, and the alternation of Night and Day- there
are indeed signs for men of understanding.” (AL-QUR’AN 3:190)
 In this research, Accounting is viewed not a technical subject but as a social construct,

constructing reality and being constructed by it. Accounting exists in the context of a society. In

an Islamic society, the essence is a moral – ethical foundation based on scripture and its

interpretations by ulema (Muslim theologians, lawyers and intellectuals combined into one) or

literally “the knowledgeable people”. Traditionally ulema are those who are well versed in

Qur’anic and related Islamic knowledge. In the so-called “golden ages of Islam” when the

Muslim world was the centre of civilisation and learning, many of the intellectuals of the day

were ulemas. However, due to historical reasons, the educational system bifurcated into secular

and religious education in the Muslim world, especially after colonisation of Muslim lands.

Islamic resurgence in the 1970’s plus other factors such as oil wealth (Noreng, 1997),

made Muslim intellectuals rethink their objectives and led to a new breed who can be called

Islamists; these spearheaded many Muslim welfare organisations. These Islamists were mostly

highly educated in the Western and local secular universities and through Anglo-American

professional institutions (e.g. ACCA), but rejected the superiority of the West except in its

science and technology. They combined the fundamental principles of Islam (e.g. they are not

apologetic on the issue of polygamy but defend it on rational principles) with the modern science

and technology seeking development with an Islamic face. They studied Islam part-time or took

some courses in Islam with traditional Muslim teachers as well as modern educated ones.

While it cannot be said, that all Muslim professionals (especially accountants and

accounting academics) are Islamists, the researcher suspects that there are a large number

with Islamic tendencies (as shown by their affiliation to Islamic political and social welfare

parties). These professionals are not afraid of claiming to be good Muslims as well as

professionals and intellectuals. This is especially true in Malaysia where the political

environment is favourable and conducive to such identification unlike some other Muslim
countries. Hence responses by Islamic intellectuals can be a basis for the production of

knowledge (especially accounting knowledge) in Islam.

A further method of knowledge production is through consensus or ijma. Ijma originally

referred only to the consensus of the Companions of the Prophet Muhammad (pbuh). Later

traditional scholars accepted the ijma of the ‘pious predecessors (or salaf saleheen) i.e the

companions’ companions and their companions and very pious ulemas who led schools of

jurisprudence called Imams. The Prophet’s traditions, however refers to the consensus of the

ummah or the people. This was restrictively interpreted as all the people. However Kamali

(1991) for example, opines that, as this is impossible, the consensus of a majority of the ulema

or intellectuals would be sufficient. This approach is adopted in this project.

If a representative sample of Muslim academics and professionals who have some Islamic

knowledge can be shown to agree on certain aspects of Islamic accounting, this can then

become part of Islamic Shari’ah Muamala (or Islamic Transaction/Business Law). This project

through questionnaires hopes to explore the nature and extent of agreement or disagreement

amongst this group and is thus important from an Islamic legal perspective.

7.3 THE ISLAMIC ACCOUNTING PERCEPTION QUESTIONNAIRE (IAQ)

This was the main device used for the greater part of data collection for this research. It

consisted of 4 parts, the objective of the questionnaire and rational for each part, its construction

and structure are explained below:

7.3.1 The Objective of the Questionnaire

The objective of this questionnaire was to collect data on the perceptions of accountants

and those involved in accounting (accounting academics and Malaysian Muslim professional
 accountants) on Islamic and conventional accounting, as well as on the socioeconomic

responsibilities of Muslim and Islamic organisations. Specifically, the questionnaire was

designed to answer the following four research questions listed in Figure 7-1.

(a) Are the socio-economic principles under which Islamic business organisations
operate different from those of capitalist business organisations?
(b) Are the Islamic sources adequate to be used for developing an economic and
accounting system?
(c) Is conventional accounting appropriate for Islamic business organisations
and Muslim users to fulfil their objectives?
(d) What are the objectives and characteristics of Islamic accounting?

FIGURE 7-1: RESEARCH QUESTIONS UNDERLYING THE ISLAMIC ACCOUNTING

QUESTIONNAIRE.
In addition, several hypotheses are formulated under each research question herein,

which will be tested (see Chapter 9). To facilitate the search for these answers, the Islamic

Accounting Questionnaire (referred to herewith as the IAQ) was divided into four sections

consisting of: (Section 1) the ethical moral context of Islamic and Muslim business

organisations, (Section 2) suitability (or otherwise) of conventional Anglo-American accounting

for Islamic organisations and Muslim users, (Section 3) the objectives, nature and

characteristics of Islamic accounting, and (Section 4) personal & organisational details.

For the most part, a 5 point Likert scale (Strongly Disagree to Strongly Agree) as well as

a 5 point ranking scale (Not at all to Very Much so) was used in the three main sections of the

questionnaire. The fourth section was mainly “fill in the blanks” type of questions with

suggestions in brackets. Some questions required only a tick in the boxes. The last part of the

Questionnaire had an open ended comment box for participants to comment on the topic

followed by notes on some definitions.

To maintain anonymity the name and company of the participants were not asked for although a

box was left to give this information should the participants require a summary of the results.
7.3.2 The Construction of the Questionnaire
There are many text books on the methods of constructing questionnaires and scales

(e.g. Sekaran, 1992;Nachmias & Nachmias, 1996). These authors suggest that the wording of

the questions, the order in which they are presented and the language used must be carefully

constructed. Most questionnaires use one word (the variable intended to be measured) or a few

words which operationalises the concept to be measured.

This advice was born in mind as the questionnaire was developed. However, due to the

explanatory nature of this study, this was not always possible, as the variables were not capable

of being expressed in one or a few words. Most questions especially in section 1 and 2 were

rather long. Although the researcher tried, short straightforward questions were not possible.

The researcher had to define some terms or had to give assumptions as to the state of the

environment to give more precise meaning to the answers. The Questionnaire went through

seven versions before settling down on the 8th version, which was fine tuned. The questionnaire

was discussed with fellow PhD students (who mainly consisted of international students, Muslim

and Non-Muslim, who were not native English speakers) and faculty in the department of

Accountancy and Business Finance at the University of Dundee.

The sixth and seventh drafts of the questionnaires were pilot tested in the department.

The original questionnaire was very long winded with multiple issues in one question. The initial

seventeen page questionnaire was reduced to eight pages including the notes as it was thought

that it was simply too long and would affect the response rate. Further, some notes, which were

placed before each section and were, thought to be directing the participants to answer the

question according to the researcher’s preference; these were either modified or deleted. All

definitions were placed on the last page of the questionnaire to be referred by the participants in

case of need.
Although the researcher did not pilot test the questionnaire in Malaysia, several were

administered to some faculty at the researcher’s home university. Question 1.4 in the Islamic

Accounting Questionnaire seemed to give some problems to the respondents. However, the

questionnaire had already gone out by then and it was too late to change. Hence, this particular

question has been left out in the calculation of scores and hypothesis testing.

7.3.3 The Structure of the Islamic Accounting Questionnaire.

As stated in section 7.3.1, The Islamic Accounting Questionnaire (IAQ), was structured

to elicit answers to certain research questions in three main areas; ethics/values of Islamic

business organisations, suitability of conventional accounting and objectives and characteristics

of Islamic Accounting. Each area of the Questionnaire and the rationale for it are described in

detail in the following sections.

7.3.3.1 Section 1: The ethical/ moral context of Islamic and Muslim Business
organisations.
(Abdelgader, 1994) states that Islamic accounting is fairness and just accounting based

on the principles of Islam. However fairness and justness depends on the social and ethical

context especially of business organisations, since these organisations are those that use

accounting to the utmost and in which accounting has the most significant impact on society.

With globalisation, the Muslim world is being forcibly integrated into the world business structure

and order. Some parts of this order are not acceptable from an Islamic perspective. For

example, the primacy of interest, the concept and structure of the modern business corporation,

the concept of maximising profits and the stark materialism accompanying the adoption of

modern business techniques including accounting.

There is an extensive literature on business ethics in the West, which attempt to deal

with the excesses of capitalism (e.g. Donaldson, 1982). The modern corporation has also been
criticised by those in the critical paradigm (Cooper & Hopper, 1990). However, since the

corporation was never known in Muslim history but an implant from outside, there have been

relatively few discussion of business ethics of Muslim and Islamic corporations from an Islamic

perspective. There have also been arguments that globalisation means that if certain companies

adopt ethical policies not consistent with the mainstream they will be forced out of business

because of competition.

In this atmosphere, it was thought that it is important to know the perception of Muslims

on the Islamic ethical position of Muslim and Islamic Business Organisations. In the absence of

such perceptions, Islamic accounting might not be meaningful, as problems encountered in

accounting are mainly those of accounting systems in large organisations such as the

corporation.

Islamic organisation is defined in this research as one, which was set up specifically with

Islamic economic and social objectives, and operates within the Shari’ah. Muslims should own it

mainly but not exclusively. Muslim Business organisations, on the other hand are those

corporations and businesses set up by Muslims or controlled by them but which may have high

non Muslim participation. Although this type of organisation was not set up with specific Islamic

objectives, the Muslim owners or managers, depending on their level of commitment to Islam

may wish to conduct their business in an Islamic manner to the extent the business environment

allows.

This section therefore is intended to answer two of the research questions indicated in

Figure 7-1. The first research question is:

Are the socioeconomic principles under which Islamic business organisations operate

different from those of capitalist business organisations?

 To facilitate answering this question, several questions were asked of the respondents in

this section (see Figure 7-2) including whether the Muslim Business Organisations should

operate within the Shari’ah, given that doing so may in conflict with modern business principles.

This section also asked the participants whether the Shari’ah should be interpreted in a literal

manner and not inline with its intent. This was considered important because Islamic banks

have been interpreting the Shari’ah in a literal manner, which enables them to provide interest-

like financial instruments. While this falls technically within permissible limits, it does not address

the objective for which interest was prohibited. It was felt that if there was to be any real benefits

to be derived from an Islamic economic system and the corresponding Islamic accounting

system, a purposive, objective oriented approach to the interpretations of Islamic Law was

required. This is not a novel ideal as scholars such as Al Shatibi (Masud, 1997) and Imam Ibn

Taymiyyah (Islahi, 1988) had already undertaken such interpretations,. Using the concept of

maslaha (public welfare) and maqasid al-Shari’ah (the objective of the Shari’ah), they undertook

interpretations which were more in line with the spirit of the Shari’ah (see Chapter 2). Some

questions in this section were on the objectives of Islamic Business Organisations on gray and

controversial areas e.g. the environment, profit maximisation, stakeholder management, and

employee wage payments.

The next group of questions in this section were on the investment policies of Islamic

business organisations in the financial market instruments which are controversial not only in

Islam but in the West, such as options and futures, short selling and contra trading. There was

also a straightforward question on whether Islamic business organisation, should participate in

the interest based debt market which is clearly prohibited. This was designed to test whether

the participants held positions, which were regarded as bending over backwards to

accommodate the ‘realities’ of a globalised market.

 ISLAMIC ACCOUNTING QUESTIONNAIRE

SECTION 1: Focus of Islamic and Muslim Business Organisations

Please tick (Ö) the appropriate box. If you are unable to give an answer, please leave the boxes
blank. If necessary, please refer to notes 1-3 at the end of this questionnaire.

Strongly Neither Strongly

No. Statement Agree Agree Agree nor Disagree Disagree
Disagree
1. The Shari’ah should constrain the
activities of Muslim Business
Organisations.
2. Islamic and Muslim Business
Organisations should promote the
attainment of falah (success) and
social welfare and not just concentrate
on profits.
3. The Objectives of Islamic Business
Organisations (IBO’s) should include:
a) Ensuring all stakeholders are
treated in a just and fair manner even
if this means profits are lowered.
b)Avoiding damage to the
environment even in the absence of
adequate legal requirements.
c)Maximising profits for
shareholders.

4. In the face of global competition,

Islamic business organisations
should adopt a technical
interpretation of the Shari’ah rather
than one which is in line with its
objectives and intent .
5. If necessary , please refer notes 8-11
at the end of this questionnaire.
Islamic business organisations
should participate in:
(a) Interest based Debt market.
(b) Futures and/or Options market.

(c) Short selling.

(d) Contra Trading.

6. Islamic business organisations should
pay sufficient wages to its employees
for them to live reasonably, even if
this means reducing shareholder
profits.
7. The socio-economic principles in the
Qur’an and Sunnah can be developed
into a business and/or legal
framework to meet the current needs
of :-
a) corporate industrial and
commercial
organisations
b) financial institutions.

c) voluntary and non-governmental

organisation
d)government institutions and
agencies

FIGURE 7-2: SECTION 1 OF THE ISLAMIC ACCOUNTING QUESTIONNAIRE

These questions lead to the following hypotheses, which will be tested by the researcher in

Chapter 9:

Hypothesis No.1:

Null Hypothesis: Malaysian Muslim accountants and accounting academics believe that
Islamic business organisations concentrate more on profits as compared to
the attainment of social welfare
Alternative
Hypothesis: Malaysian Muslim accountants and accounting academics believe that
Islamic business organisations concentrate more on the attainment of
social welfare than on profits.

Hypothesis No.2:

Null Hypothesis: Malaysian Muslim accountants and accounting academics believe that
Islamic business organisations participate in activities, which are not in
line with Islamic socio-economic principles.

Alternative
Hypothesis: Malaysian Muslim accountants and accounting academics believe that
Islamic business organisations do not participate in activities which are
not in line with Islamic socio-economic principles.

The last part of section 1 of the IAQ is intended to answer the second research question:

Are the Islamic sources adequate to be used for developing an economic and accounting

system?

Specifically the participants were asked their perceptions as to whether the principles in

the Qur’an and Sunnah could be developed into a workable business and legal framework to

meet the requirements of modern business organisations. This question was mainly asked, not

to find out whether this is demonstrably provable, but to elicit the beliefs of mainly Muslim

professionals. If the answers to these questions were positive, this would be an indication of a

belief in the practicality of Islam in business and economic life in the current era and not

obsolete or irrelevant to the needs of today. If there is no widespread belief in this, then
secularisation of Muslims can be shown to have been successful and there is no point in looking

for solutions to the socioeconomic problems of Muslims (including the development of an

alternative Islamic accounting) from Islamic law and traditions.

These questions lead to the following hypotheses, which will be tested by the researcher in

Chapter 9:

Hypothesis No.3:

Null Hypothesis: Malaysian Muslim accountants and accounting academics believe that an
economic framework cannot be developed from the socio-economic principles of
the Qur’an and Sunnah to meet the current needs of Islamic organisations.

Alternative
Hypothesis Malaysian Muslim accountants and accounting academics believe that an
economic framework can be developed from the socio-economic principles of the
Qur’an and Sunnah to meet the current needs of Islamic organisations.

7.3.3.2 Section 2: Suitability (or otherwise) of Conventional Anglo-American Accounting

for Islamic organisations and Muslim users.
The researcher has argued that conventional accounting is not suitable for Islamic and

Muslim business organisations due to its inappropriate objectives, characteristics and

consequences (Chapter 3). Section 2 of the IAQ (see figure 7-3) was designed in order to elicit

the perception of the Malaysian Muslim Accountants and Accounting Academics on the following

research question:

Is conventional accounting appropriate for Islamic business organisations and Muslim

users to fulfil their objectives?

The first part of this section referred to the basis, objectives, and “unIslamic”

consequences of conventional accounting information and to inquire whether conventional

accounting needs a major overhaul if at all. The second part of section 2 was intended to elicit
the extent to which the participants felt that conventional accounting information (i) satisfied

Islamic requirements or (ii) had “unIslamic” consequences.

The third part of section 2 asked the participants to rank the extent to which some

conventional accounting concepts thought not suitable from an Islamic perspective were

appropriate or otherwise for Islamic organisations. There was also an open-ended question in

which the participants were asked to insert other conventional accounting principles that were

thought to be inappropriate.

These questions lead to the following hypotheses, which will be tested in Chapter 9:

Hypothesis No.4:

Null Hypothesis: Malaysian Muslim accountants and accounting academics believe that
conventional accounting provides information, which directs Muslim users
towards Islamic behaviour

Alt Hypothesis: Malaysian Muslim accountants and accounting academics believe that

conventional accounting provides information, which directs Muslim users

towards unIslamic behaviour.

Hypothesis No.5:

Null Hypothesis: Malaysian Muslim accountants and accounting academics believe that Financial
Statements provided under conventional accounting provide appropriate
information for Muslim users.

Alt. Hypothesis: Malaysian Muslim accountants and accounting academics believe that Financial
Statements provided under conventional accounting provide inappropriate
information for Muslim users.

Hypothesis No. 6:

Null Hypothesis: Malaysian Muslim accountants and accounting academics believe that the
conventional accounting concepts of historical cost, prudence and monetary
measurement are suitable for Islamic organisations

Alt. Hypothesis: Malaysian Muslim accountants and accounting academics believe that the
conventional accounting concepts of historical cost, prudence and monetary
measurement are not suitable for Islamic organisations.
 ISLAMIC ACCOUNTING QUESTIONNAIRE
SECTION 2 :Suitability of Conventional (Anglo-American) Accounting for Islamic
Organisations
Please indicate the extent to which you agree with the following statements by
ticking (Ö) the appropriate box. If you are unable to give an answer, please leave the
boxes Blank.
No. Statement Strongly Neither Strongly
Agree Agree Agree Disagree Disagree
nor
Disagree
1. The fact that Western
cultural values underlie
conventional accounting
principles may make them
inappropriate for use by
Islamic business
organisations.
2. The focus given to money
and profits by conventional
accounting fosters
materialism, individualism
and competition among
Muslim users.
3. Information produced by
conventional accounting
cannot lead to welfare
(falah) in the Islamic
perspective through the
efficient allocation of
resources.
4. Conventional accounting
needs major modification
to enable it to provide the
appropriate information
which will allow Muslim
users to make the
appropriate decisions to
ensure the attainment of
Islamic objectives.
Please indicate the extent to which conventional accounting is appropriate or otherwise,
to the requirements of Islamic business organisations, by ticking (Ö) the appropriate box.
(1 signifies “Not at all” and 5 signifies “Very much so”)
1 2 3 4 5 Don’t
No Statement Not at Very Much Know
all so
 5. Financial Statements prepared in
accordance with conventional
accounting principles:
a) provide appropriate
information to enable Islamic
business organisations (IBO)
to properly disclose their
Islamic accountabilities ( e.g.
Shari’ah compliance) to all
their stakeholders.
b) b) impede the fair and proper
allocation of wealth between
stakeholders e.g. as between
shareholders , managers and
employees.
c) hinder the making of the
appropriate decisions needed
to control Islamic
organisations to ensure the
attainment of their Islamic
objectives.
6. If necessary please refer to notes
4-6 at end of questionnaire.
The following accounting
concepts are appropriate for
Islamic organisations:
a) Historic Cost.
b) Prudence/conservatism.
c) Money Measurement.

FIGURE 7-3: SECTION 2 OF THE IAQ

7.3.3.3 Section 3: The Objectives, Users, Nature and Characteristics of Islamic

Accounting.
The researcher discussed the possible objectives and principles of Islamic Accounting in

Chapter 6. Section 3 of the IAQ is intended to elicit the responses of the participants regarding

the objectives, the possible nature and characteristics of Islamic accounting information, the

type of information Islamic accounting should provide, as well as the relative importance of

stakeholders apart from shareholders from an Islamic perspective. It is intended to enable the

following research question to be answered:

 What are the objectives and characteristics of Islamic accounting?

This section consisted of four main parts:

The first part (see figure 7-4) asked the participants to tick one of 4 choices or give their own

view as to what they thought was the main objective of Islamic accounting. The choices were

obtained from a reading of the Islamic accounting literature (chapter 6) and the conventional

accounting literature (chapter 3). The choice basically was between decision usefulness,

stewardship, an Islamic version of accountability (Islamic Accountability as proposed in Chapter

6) and social accountability through the Islamic institution of Zakat.

The second part of this section (see figure 7-5) listed several subsidiary objectives of

Islamic accounting information and asked the participants to rank the importance of each.

ISLAMIC ACCOUNTING QUESTIONNAIRE

SECTION 3: OBJECTIVES, NATURE AND CHARACTERISTICS OF ISLAMIC

ACCOUNTING
1. Which of the following should be the MAIN objective of Please Tick only One
of the following Boxes:
Islamic Accounting?
a) To provide information on the amount, certainty and timing
of expected cashflows in order for shareholders to make
decision to buy, hold or sell shares. (decision usefulness)

(b) To provide information which will enable shareholders to

evaluate how efficiently management have safeguarded and
enhanced their assets.(stewardship)

c) To provide information that will enable all stakeholders to

ensure that the organisation has discharged its accountability to
them in accordance with the shari’ah and to induce economic
behaviour in line with Islamic objectives and values.
(Accountability)
 d)Provide information to enable the proper calculation and
distribution of Zakat hence reducing the possibility of
creative accounting and thereby automatically fulfilling the
needs of other users. (Social accountability through Zakat
Accountability)

e) Other, please state:

FIGURE 7-4: IAQ: SECTION 3 (PART 1)

Please indicate the extent to which Islamic accounting should aim at the following
objectives by ticking (Ö) the appropriate box.
1 2 3 4 5 Very Don’t
No. Statement Not at Much Know
all so
2. The objectives of Islamic accounting
should be to provide information:-
a) in order to maximise efficient
allocation of capital to the most
effective uses.
b) to increase shareholder wealth.

c) so that all users (including

shareholders, employees and
others) get their fair share of the
wealth generated by an organisation.
d) for the government to assess Zakat
properly in order that Zakat
beneficiaries can get their proper
rights.
e) so that activities of the organisation
can be controlled to be in
accordance with the Islamic
Shari’ah.
f) to create an environment conducive
to solidarity within the organisation
and co-operation between various
stakeholders.

FIGURE 7-5: IAQ: SECTION 3 (PART 2)

The third part of this section (see figure 7-6) asked the participants to rank the

importance of other stakeholders such as Employees, Government, Community,

Customers/Consumer groups and a unique group (Benevolent Loan Creditors) as compared to

shareholders. Given the recent emphasis of other stakeholders other than shareholders in the

social accounting literature (e.g. Gray et al., 1996), it was thought appropriate to give more or

equal importance to other shareholders an Islamic accounting system (see Chapter 6). Here a

five scale (from Not important at all to Much more important) was used with an additional

column for a Don’t Know response.

ISLAMIC ACCOUNTING QUESTIONNAIRE

3. As compared to Not Less As More Much Don’t
shareholders, importan Importan importan importan more Know.
please rank the t t t t importan
importance of at all. t
the following
stakeholders as
users of Islamic
accounting
information.
a)
Employees/Trad
e Unions.

b) Government.

c) Community.

d) Benevolent
Loan (Qard
Hasan)
Creditors.
e) Customers /
Consumer
groups.
FIGURE 7-6: IAQ SECTION 3, PART 3

The fourth part of section 3 (see figure 7-7) listed various types of information which

Islamic accounting could provide and asked the participants to rank the importance of these.

The list contained information normally ignored by conventional accounting but which was

thought to be important to Muslims.

 This part ended with a check question on the disclosure of interest income by Islamic business
organisations. Since interest is prohibited in Islam; the participants were expected to tick the
boxes labelled “Prohibited Transactions- Interest Income”. If participants had ticked sundry
income box, the ability of the participants to answer the questionnaire would have been doubtful
as their Islamic knowledge might have been suspect.

ISLAMIC ACCOUNTING QUESTIONNAIRE

Please indicate the importance you attach to the information which should be provided by
Islamic Accounting by ticking (Ö) the appropriate box.
1 2 3 4 5 Don’t
No. Statement Not important Very Know
at all Important
4. Islamic accounting should
provide information on:
a) impact of the organisations
activities on the Environment.
b)Internal Employee-Manager
relationships and working
conditions.

c) Distribution of salaries,
perks and wages among
different levels of managers
and employees .

d)prohibited (haram) activities

or financing undertaken by the
organisation.
e)social impact on the
community.

f) allocation of wealth between

National and Foreign
interests.
5. Please tick one of the appropriate boxes:
Interest received by an Islamic business organisation should be classified as:

Interest income Prohibited Transactions -

Interest income

Sundry Income

FIGURE 7-7: IAQ, SECTION 3, PART 4.

 The fifth part of section 3 (See Figure 7-8) listed some questions on the characteristics

that Islamic accounting should take. These questions were framed after taking into account

suggestions from the critical accounting and social accounting literatures (chapter 3) and

reviewing their literatures from an Islamic perspective (chapter 6). In addition, some specific

Islamic-oriented questions taken from the Islamic accounting literature were also asked.

ISLAMIC ACCOUNTING QUESTIONNAIRE

(e) Please tick (Ö) the appropriate box. If you are unable to answer, please leave the
boxes blank .
Strongly Neither Strongly
No. Statement Agree Agree Agree Disagree Disagree
Nor
Disagree
6. ‘Accounting’ in the
Islamic context should
NOT be restricted to a
mere monetary account-
rendering.
7. Islamic accounting (IA)
needs to de-emphasise the
focus given by
conventional accounting
to cash flow, profits and
financial position.
8. IA should provide wider
holistic information on
the activities undertaken
(or not undertaken) by the
Islamic organisation.

9. IA should attempt to
recognise and measure
externalities.
(if necessary . please see
note 7 at the end of the
questionnaire)
10. IA should use current
values in the balance
 sheet in order for Zakat to
be calculated fairly.
11. IA should recognise
unrealised profits in order
to attribute an equitable
share of profit/loss as
between present and
future shareholders.
12. Accounts and annual
reports of large Islamic
business organisations
should be shari’ah audited
to ensure that the
organisation has
conducted its activities in
accordance with the
Shari’ah.
13. Islamic accounting should
integrate non-financial
information reflecting
significant activities
which cannot be reliably
measured in monetary
terms.
FIGURE 7-8: IAQ, SECTION 3, PART 5
.

The above questions in section 3 of the IAQ will be used to test the following hypothesis in

Chapter 9:

Hypothesis No.7:

Null Hypothesis: Malaysian Muslim accountants and Accounting academics believe that
decision-usefulness is the main objective of Islamic accounting.
Alternative
Hypothesis: Malaysian Muslim accountants and Accounting academics believe that
decision-usefulness is not the main objective of Islamic accounting.

Hypothesis No.8:
Null Hypothesis: Malaysian Muslim accountants and accounting academics believe that

Islamic/Social objectives of Islamic accounting are of equal importance to

Economic objectives of Islamic accounting.

Alternative
Hypothesis: Malaysian Muslim accountants and accounting academics believe that
Islamic/Social objectives of Islamic accounting are more important than
economic objectives of Islamic accounting

Hypothesis No.9:

Null Hypothesis: Malaysian Muslim accountants and Accounting academics believe that
shareholders are the most important users of Islamic accounting information.
Alternative
Hypothesis: Malaysian Muslim accountants and Accounting academics believe that
shareholders are not the most important users of Islamic accounting
information.

Hypothesis No.10:
Null Hypothesis: Malaysian Muslim accountants and Accounting academics believe that
Islamic accounting emphasises socio-economic information as much as
conventional accounting.

Alternative
Hypothesis: Malaysian Muslim accountants and Accounting academics believe that Islamic
accounting emphasises socio-economic information more than conventional
accounting.

7.3.3.4 Section 4: Personal & Organisational Details.

The objective of this section was to obtain certain characteristics of participants, which

are thought to have a bearing on the type of responses given. These are known as independent

variables in a positivist framework trying to find cause and effect relationships. The questions

were “fill-in- the blank” types with some suggestions in parenthesis (see figure 7-9). This

suggested the type of response to fill in while allowing the participants flexibility to answer other

than what was suggested. In some questions, the participants were asked to tick or not to tick

one of the boxes with answers provided.

ISLAMIC ACCOUNTING QUESTIONNAIRE

SECTION 4: Personal & Organisational Details

Please fill in the blanks.

1. I work as ____________________________________(job title) in the

________________ _ sector (e.g. Govt./education/commerce/public practice).
2. I have ________ years of working or teaching experience in accounting.
3. My highest degree/professional qualifications is a ____________ (e.g.
BA/MA/PhD D)
majoring in ____________________ from _________________ (country).
4. My highest Islamic qualifications is
______________________________(certificate/sanawi/jazah/
SPM/STPM/PMR/other )
from________________________ (country).
Please tick appropriate box for questions 5 -7 , if relevant.
5. I have formally studied social or environmental accounting.

Yes No
6. If you work in public practice, does your firm get technical assistance from a
multinational associate accountancy firm?

Yes No

7. Please tick this box if you are NOT a Muslim

FIGURE 7-9: IAQ, PART 4: PERSONAL AND ORGANISATIONAL DETAILS

7.3.4 The Population and Sample Statistics of Participants Surveyed.
There were two populations of participants for this questionnaire i.e. Muslim Accounting

academics in Malaysian Universities and Malaysian Muslim professional accountants.

7.3.4.1 The Accounting Academics
Malaysia has thirteen universities of which ten are publicly funded and three are private.

All these universities offer courses in business or accounting. The oldest university is University

Malaya, set up in 1957 as the premier university in Malaysia under the British system. It has the

oldest accounting degree course in the country and is research oriented. The University with the

largest Accounting faculty is Universiti Teknologi Mara with 99 staff in the School of

Accountancy. The private universities are relatively new with fairly small number of accounting

staff. All the public universities except Universiti Teknologi Malaysia have Bachelor of

Accounting or Management degree courses leading to membership of the Malaysian Institute of

Accountants, which is the statutory professional accountancy body in Malaysia. Universiti

Teknologi Malaysia and the private universities are working towards setting up a degree and are

in the process of getting recognition from the professional institutes. They have already started

the courses, in some cases by setting up twinning arrangements with foreign universities.

The accountancy syllabuses of the universities are geared towards the MIA professional

status and hence are very technical in their approaches, perhaps with the exception of the

International Islamic University, which has an Islamic curriculum. Most universities sited their

accounting department in the Faculty of Business or Economics. Some, such as Universiti

Putra Malaysia and Universiti Malaya have both a department of accounting and a department

of finance. In such cases, some questionnaires were also given to finance department faculty.

It must be noted that all students in Malaysian universities undertake courses in Islamic

civilisation as part of their curriculum. This is a deliberate policy of the Malaysian government

although there has been some public debate in this area. Islamic revival is particularly apparent

in Universiti Kebangsaan Malaysia, and University of Technology Mara, which have had Islamic

accounting seminars recently. Besides the Universities, there are many private colleges offering

professional and degree courses in Accounting with twinning arrangements with foreign Anglo-
American universities. This research did not include academics from such institutions mainly

because most staff and students are non-Muslim and the curriculum of such courses do not

have local content at the moment.

The population of Accounting Academics of Malaysian Universities was defined as

faculty members of the Accounting Department/School or Management School of the respective

universities as the case may be. In the case of universities with separate finance departments

under the same faculty, the finance department faculty was chosen as well. In certain

Universities such as Universiti Teknologi Malaysia, an accounting department does not exist

separately but only operates as part of the Management School. In these cases, the lecturers

teaching accounting subjects were chosen. In the case of the International Islamic University,

the Economics and Management Faculty had three departments at the time of the survey, which

were Accounting, Economics and Business Administration. In this university, there were many

accounting educated lecturers in the other departments. As such lecturers with accounting

knowledge were surveyed from all three departments of the faculty.

The sample was selected as follows. In some cases, the questionnaires were given to

the Departmental of Faculty Head/Dean to be given to the lecturers. To ensure a better

response, the researcher went around the department (where the faculty were few) to hand the

questionnaires with a personal request to the faculty member to answer it. In some faculties,

such as in the Universiti Utara Malaysia and Universiti Teknologi Mara, the researcher selected

only participants who were accounting lecturers as there were many law and business lecturers

attached to the accounting department who were teaching non-accounting subjects and who did

not have an accounting background. This was done either in consultation with the Head of

department or by going through the university prospectus to see what subjects the lecturers

thought. This partly accounts for the low number of lecturers surveyed in universities having

numerous faculty members. In the case of the Universiti Teknologi Mara, the total number of
 staff included those at branch campuses in other states, which were not visited. As such, the

low number of lecturers reflects those relevant lecturers surveyed in the main campus only.

Table 7-1 shows the Number of accounting academics in each University, the number of

Questionnaires sent and the responses received.

University Accountin Quest. No. of Response % of

g Delivered Responses Rate (%) pop.
Faculty tested

University Malaya 34 13 6 46 17.6

University Kebangsaan
Malaysia 34 15 9 60 26.4
Universiti Putra Malaysia 14 12 6 50 42.8
International Islamic
University 72 25 20 80 27.7
Universiti Sains Malaysia 18 15 9 60 50.0
Universiti Utara Malaysia 59 30 25 84 42.4
Universiti Teknologi
Malaysia 20 10 7 70 35.0
Universiti Sabah Malaysia 27 0 0 0 0
Universiti Sarawak
Malaysia 15 0 0 0 0
Universiti Teknologi Mara 99 15 7 47 7.0
Sub-Total for public
Universities. 392 135 89 66 22.7
Universiti Telekom
Malaysia 20 10 9 90 45.0
Universiti Tenaga Nasional 24 7 2 29 8.3
Tun Abdul Razak
Multimedia University 5 5 1 20 20.0
Sub-Total for private
Universities 49 292 190 54 24.5
Grand Total 441 157 101 64 22.9
TABLE 7-1: POPULATION AND SAMPLE STATISTICS OF ACCOUNTING
ACADEMICS IN MALAYSIAN UNIVERSITIES SURVEYED.

The high response rate of 64% (to the nearest %) was encouraging and is felt to be due

to personally delivering the questionnaires to the head of department or lecturers concerned

rather than posting them.

7.3.4.2 The Accounting Professionals

The second main group of participants surveyed were Muslim professional accountants

in Malaysia. There are two recognised professional accounting bodies in Malaysia; the MIA and

the MACPA2[2]. For this project, the population identified was only Members of the Malaysian

Institute of Accountants (MIA). This is the statutory cum professional accountancy body in

Malaysia set up by the Accountants Act, 1967. It had 12127 members as at 31 st December

1998. The word Accountant is defined by statute in Malaysia as a person who is a member of

the Malaysian Institute of Accountants. The Malaysian Institute of Accountants does not conduct

its own professional accounting examinations, although it intends to do so in future. One can

become a member by graduating from a local university whose undergraduate degree is

recognised by the MIA and getting the required quantum and type of experience. The other

route is by becoming a member of a professional accountancy body (mostly UK, Australian and

2[2] The Malaysian Association of Certified Public Accountants (MACPA) is the second professional accountancy body in Malaysia. The MACPA is widely recognised in the Malaysian profession,

government and industry. It conducts its own professional examinations which are considered as difficult as the examinations of the Institute of Chartered Accountants in England & Wales. The pass

rate is very low. So far merger talks held between the MIA and MACPA to unite the profession in Malaysia have failed.
New Zealand professional accountancy bodies) listed in the Accountants Act 1967 and

registering with the MIA.

The reasons why only MIA members were chosen for this research are; (i) there are very

few Muslim Accountants in the MACPA, (ii) a Muslim accountant who was a member of MACPA

would most probably be an MIA member as well, and (iii) most MACPA members register

themselves as MIA members to get formal statutory recognition as an accountant in Malaysia

and (iv) the survey of Muslim Accountants in the Big four firms would also get some MACPA

members inside the sample. Hence, the Muslim MIA membership can be a proxy for the

professional Muslim Accountant population in Malaysia.

Table 7-2 below shows the number of Muslim MIA members surveyed, the response rate

together with the Muslim MIA population statistics.

Sector No. of No of No of Responde

Muslim Questr Questrs.Ma nts as a
MIA s. iled %
Membe deliver through Responses of
rs ed MIA populatio
n

D % MI % Tot %
el A al
Public 2 2
Practice 231 35 90 11 31 23 6 34 7 14.7
Commerc
e& 3 4
Industry 558 12 90 12 100 34 8 46 5 8.2
Public 2 2
Sector 325 0 90 0 0 25 8 25 8 7.7
Unclassif
ied 726 0 0 0 0 0 0 0 0 0
Total 3 3
1840 47 270 23 55 82 0 105 7 5.7

TABLE 7-2: MALAYSIAN PROFESSIONAL ACCOUNTANTS SAMPLE SURVEYED.

 The total number of Malay (presumed to be 100% Muslims) MIA members as at 31 st

December 1998 was 1840 out of a total of 12127 MIA members constituting only about 15% of

total membership. Of this 270 (14% of the population) were surveyed through the MIA. This

consisted of 90 Muslim Accountants each working in the public, pubic practice and industry

sectors respectively. The number of responses received totalled 82 representing a 30 %

response rate (to the nearest %). According to MIA, the normal response rates for research

surveys were 10%. Hence, the project response rate was much above normal.

A further 42 Questionnaires were delivered to audit firms (through staff partners) and company

accountants (through personal contacts) from which a further 23 responses were obtained. In

total, the 105 responses obtained constitute about 5.7% of total Muslim MIA members. In other

words the sample used in this research constituted about 5.7% of the Qualified Muslim

Accountants in Malaysia.

7.3.5 Method of Delivery and Difficulties Encountered

The main method of delivery to MIA members was by mail. Although MIA publishes a list

of members, their addresses are not published. Hence, the researcher approached the MIA by

fax and in person to get a list of members with their addresses. The MIA refused to reveal the

addresses stating that it was confidential despite the fact the researcher was a member.

However after several appeals and phone calls, they agreed to a compromise. MIA would

extract a stratified random sample of 270 members categorised by sectors and (race/religion)

and would post the researcher’s questionnaires directly to the participants. The researcher

placed the questionnaires together with stamped self-addressed reply envelopes and cover

letters in stamped envelopes, which were delivered to the MIA for addressing and onward

mailing to the participants. Thus the MIA dispatched them directly to members. The researcher

was unable to obtain the addresses of the participants. The questionnaire was dispatched in the
first week of November 1998. Responses started coming in after a week to the researcher’s

home university in Malaysia.

It was agreed that if the response rate were not good, the MIA would allow the

researcher to phone the members who had not sent in the responses. However this was difficult

because, some participants did not identify themselves. It was suggested by MIA that a second

mailing be sent based on the extra set of labels they printed. However due to staff problems and

year-end work, MIA could not do this. Hence there was no follow up to the mailed

questionnaires.

In addition to the above mailed questionnaires, the researcher personally delivered

some questionnaires to Muslim members of the big four firms (i.e. Ernst & Whinney, Price

Waterhouse Coopers, KPMG Peat Marwick and Arthur Andersen) to increase the response rate.

A Muslim partner in the firms was contacted, an appointment was made to see him. The

researcher met the partner concerned, explained the research to him, and after obtaining

information on the number of Muslim qualified accountants in the firm, gave a similar number of

questionnaires to the partner or manager concerned. The partner or manager distributed the

questionnaires to his colleagues and collected the questionnaires on the researcher’s behalf.

The researcher later picked up the questionnaires, after a week or two by mutual appointment.

In addition to this method, some questionnaires were sent to accountants working in

companies through the researcher’s contacts who were working in the companies. Malaysian

Airlines, Telekoms and TV3 (a Muslim owned TV company) were contacted in this way. The

researcher also administered the questionnaire to the Chief Accountant of Bank Islam Malaysia

Bhd., who now also heads the retail banking division.

7.4 THE FINANCE QUESTIONNAIRE ON THE BEHAVIOURAL EFFECTS
OF CONVENTIONAL ACCOUNTING.
This is a short three-page questionnaire given to finance and accounting personnel to find

out whether the conventional accounting resulted in the participants behaving in an Islamic

manner. If this were true, there would be a stronger case for an alternative Islamic accounting.

Although not grouped into different sections, the questions could be combined into three main

areas; (i) investment behaviour (ii) financing behaviour and (iii) operations behaviour.

7.4.1 The Objective of the Finance Questionnaire.

The argument for an Islamic accounting was two fold: two theoretical (Chapters 3 and 4)

and one practical (chapter 5). It was argued in chapter 2 that the Western philosophical

assumptions that underlie conventional accounting make it unsuitable for Islamic organisations

who have world views and objectives that reflects those of an Islamic society (Chapter 2). From

an Islamic perspective, several additional problems crop up. From a capitalist perspective,

profit maximisation or satisfaction must be carried out irrespective of moral considerations as

long as it is legal (Friedman, 1982). Even when social and moral considerations are discussed

(e.g. Gray et al., 1996, Tinker, 1985), the moral and social aspects are not necessarily the same

as that of Islam.

A special issue that is not considered as immoral or illegal in the capitalist or Marxist view is the

question of taking and giving interest (although early Marxists frowned at interest). In addition

the payment of Zakat is not an issue in Western social and critical literature which is very

important in Islam. The finance and the non-finance questionnaire (explained in the next

section) address these concerns.

The finance questionnaire intends to find out if Muslim Accountants and Financial Managers

behave in a manner inconsistent with Islamic values due to the influence of conventional

accounting- specifically:
 (i) Whether Muslim managers make short and long-term investments in interest-based

instruments, which are prohibited by Islam.

(ii) Whether in making investments, materialist and capitalist values as encouraged by

conventional accounting e.g. profit maximisation, high capital gains were demonstrated.

(iii) Whether Muslim managers take into account social and environmental concerns in line

with the broader objectives of the Shari’ah.

(iv) Whether Muslim managers use sources of finance which are allowed in Islam as opposed

to those, which are most profitable (the usual pecking order).

(v) The company’s policy on Zakat payment and distribution.

(vi) The commitment of various groups in a company to Islamic values.

(vii) Whether managers feel that the information provided by conventional accounting for

Islamic investment decisions.

7.4.2 The Structure and Construction of the Finance Questionnaire

The finance questionnaire was divided into 2 sections. The first section consisted of

questions related to the research questions indicated in the previous section. This section can

be grouped into several classes

Some questions related to short term investment decisions.

Question 3 had 9 sub-questions, which listed what the manager looked for when making direct

or stock market investments.

Questions 4-7 asked the participants to rank the importance of environmental, social as well as

Islamic factors when making investment decisions.

Question 8 listed six financing instruments (Islamic and non-Islamic) and asked the managers

to rank the extent of their use.

Question 9 asked the managers to what extent they made use of Islamic or conventional

banking.

Questions 10 – 11 asked the managers the basis on which Zakat was computed, if at all.

Question 13 asked managers if conventional financial statements met their Islamic investment

needs.

Question 14 asked managers the Islamic commitment of 7 employee groups in their company.

A five-point scale ranging from 1 (Not at all) to 5 (To a great extent) was used. A sixth column

was used for a Don’t Know response. The questions were mainly factual.

Section 2 of the questionnaire asked personal details such as job title, experience, Islamic and

secular education and the religion of the participants to correlate responses in section 1 of the

questionnaire. Section 2 was open ended (no choices were given) except for two questions

where choices were given to indicate the type of answers required.

Both the finance and non-finance questionnaires went through three drafts at the Department of

Accountancy and Business Finance at the University of Dundee. It was also pilot tested with the

post graduate Ph.D. students of the Department.

7.4.3 Method of Delivery and Difficulties Encountered

Initially the questionnaires were intended to be given to finance managers of the Muslim

and Islamic business organisations. In practice, it became difficult to access Muslim and Islamic

business organisation on a large scale. An unexpected opportunity presented itself to the

researcher when he was conducting the empirical study in Malaysia. The researcher’s
employer, the International Islamic University (IIUM) was conducting part-time MBA courses.

Many of the students were Muslim managers or accountants and finance personnel working in

Muslim and Non Muslim organisations. Therefore, instead of going to the companies to meet

the managers, it was thought that it would be easier to meet them in class and request them to

fill up the questionnaire.

With the co-operation of the Director of the Islamic Management Centre, which conducted the

MBA course, the researcher met the students in their classes. The nature of the research was

explained to them and they were requested to fill in the questionnaires, which took about 10

minutes. Three such classes were visited. Both the finance and non-finance questionnaires

were given at the same time to different individuals depending on their work area. Some finance

questionnaires were received later. The questions were straightforward, there was no need for

much clarification.

The finance questionnaires were also given to managers in the Tabung Haji Group Divisional

Managers and Managers of subsidiary companies as well to some managers in Abrar Unit Trust

and Abrar Discounts Sdn. Bhd. The researcher also contacted the executive MBA director of

University Teknoloji Mara and handed some questionnaires to his department. However, as the

program was in recess, only one response was received.

7.4.4 Sample Statistics and Response Rate for the Finance Questionnaire
Table 7-3 below shows some statistics on the questionnaires distributed, number of

responses and response rate. The population is the Muslim managers working in commerce

and industry or the public sector in Malaysia. However, it is difficult to get the size of the

population, as not all the Managers are members of any one organisation or professional

grouping.
Organisation/ Fin.Quest Responses Response
Distributed Received Rate (%)

Tabung Haji 10 10 100

Abrar Discounts 4 1 25
Abrar Unit Trust 2 2 100
Europipes 1 1 100
TV 3 2 0 0
Telekom 1 0 0
Executive MBA student IIUM 20 17 85
Executive MBA students MIT 2 1 50

Total 42 32 73
TABLE 7-3: :FINANCE QUESTIONNAIRES SAMPLE
7.5 NON-FINANCE QUESTIONNAIRE ON THE BEHAVIOURAL
EFFECTS OF CONVENTIONAL ACCOUNTING.
This questionnaire was given to Muslim and some non-Muslim employees in the middle

and lower management as well as clerical employees in various Muslim and Islamic

organisations. The objective of this questionnaire was to find out whether conventional

accounting systems, especially the budgeting system has any dysfunctional effects on Muslims

(and some Non Muslims) in Islamic and Muslim business organisations.

As discussed in chapter 4, various studies from Argyris (1952) to (Roberts & Scapens,

1985;Roberts, 1991) have indicated that the accounting system may result in dysfunctional,

confrontational and dominating behaviour. Accounting system through information inductance

(Prakash & Rappaport, 1977) may affect the behaviour of users inside the organisation. These

effects do not only concern employees in the accounting and finance departments but

throughout other functional areas of the organisation. This questionnaire was targeted at

functions other than accounting. If the results indicate dysfunctional behaviour from an Islamic

perspective, then it would show that conventional accounting has negative pervasive effects

throughout Muslim and Islamic business organisations. A stronger case would then be made for
different Islamic Accounting especially management accounting systems for Muslim and Islamic

organisations.

7.5.1 The structure of the Non-Finance Questionnaire

The two-page questionnaire was divided into 2 sections. Section 1 asked the

participants how their behaviour or their superior’s behaviour was affected by the accounting

and budgeting systems. Section 2 was on personal details regarding the participants’ job,

experience, religion, and secular and Islamic educational qualifications.

Section 1 starts with questions on how head office policies are determined and whether

accounting numbers are used to assess performance.

The next set of questions are intended to elicit the nature and effects of the budgeting

system on their Islamic and social behaviour. The third set of questions were the same as those

used in the finance questionnaire regarding the commitment of various employee organisation

groups to Islamic values. The fourth set of questions asked about the Islamic culture in the

organisation.

A 5 point Likert scale from Strongly Disagree to Strongly Agree was used throughout

section 1 of the questionnaire.

7.5.2 Sample Statistics for the Non-Finance Questionnaire, Delivery and

Difficulties Encountered.
The questionnaire was initially intended to be used in case studies. However, because

the researcher could not gain access to as many companies as he hoped, the questionnaire

was handed over mostly to working Muslim and Non Muslim executive MBA students, in

addition to executives in Islamic organisations (Lembaga Tabung Haji, Abrar Unit Trusts and

Abrar Discounts Sdn. Bhd. In these companies, the questionnaires were handed to the
managers of companies, who in turn gave it to their managerial and clerical employees. Most of

the questionnaires were returned to the researcher on the same day while a few were collected

at a later date.

Table 7-4 shows the sample surveyed and the response rates for this questionnaire.

Organisation Non-Finance Number of Response

Questionnaires Responses Rate (%)
given
Tabung Haji 20 15 75
Abrar Group 10 3 30
Trust
UNITAR 1 1 100
TV 3 5 0 0
Telekoms 7 0 0
Europipe 2 0 0
Executive MBA 55 46 83.64
Students
Total 100 65 66
TABLE 7-4:NON FINANCE QUESTIONNAIRE SAMPLE AND RESPONSES

7.6 CONCLUSION
The researcher believes that the Islamic Accounting Questionnaire survey was successful

in that 17% of the Malaysian Muslim Professional Accountant population was surveyed and

responses representing 5.7% of the population were received.

As in all research, the researcher did not achieve 100% of what he wanted to achieve in

the data collection phase. The failure to gain access to Muslim business organisations was

disappointing, as there was no opportunity to gain deeper insights into the behavioural

consequence of conventional accounting in Islamic and Muslim business organisations.

However, this could be the subject of future research.

The research would have been richer as Muslims in business organisations which are

not specifically Islamic would face more tensions with their values and accounting. However the

results of the finance and non-finance questionnaires given to the working MBA students does
provide a clue to the type of results which could be expected. This would be a suitable area for

further research. The misunderstandings in Question 1.4 in the Islamic Accounting

Questionnaire was another set back which did not allow full confidence in the results obtained

for this question, which was the reason for its exclusion in computing the aggregate scores.

However, this did not affect the overall reliability and validity of the results as the concepts

measured were tested by multiple questions.

In the next chapter (chapter 8) a descriptive analysis of the IAQ is undertaken and

findings and interpretation presented. In Chapter 9, this is followed up with the testing of the

hypotheses presented in this Chapter. The final empirical chapter 10 presents the descriptive

analysis of and the findings from the behavioural accounting (finance and non-finance)

questionnaires before the thesis is concluded in Chapter 11.