Accounting problems of Islamic

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17 Νοε 2013 (πριν από 3 χρόνια και 9 μήνες)

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Accounting problems of Islamic
banks

Analysis of

The Islamic instruments

Unique
accounting problems


Islamic banks face unique accounting problems both from
a technical point
of view
and philosophical point of view.
Some of these accounting problems are:


1. The ethical accountability requirements (Gambling,
1994;Shahul &
Yaya
, 2003
) ).


2. The problems of profit recognition and allocation due to
Islamic
banking mechanics
(
Abdulgader
, 1990;
Karim
,
1998a),


3. The inappropriateness of International Accounting
Standards (
Hamid

et al
., 1993
;
Karim
, 1999)


4. The hybrid nature of some Islamic financial instruments
(
Obiyathullah
, 1995
;
Karim
, 1999), and


5 Profit sharing




Abdulgader

(1990) studied profit recognition
and allocation problems in
Islamic Banks
in
Sudan and Egypt.


His
study examined the practices of four
existing Islamic
Banks (each of which had
many branches all over Sudan) and found
that
the
profit recognition and allocation practices
of the three banks were
not uniform.





In the first example, the banks separated the investment account funds from
the
shareholders
and other depositors’ funds.


In
this case, the investment
account funds
were invested separately, after allowing for
reserve requirements.


This lead
to a separate fund account being established for Investment
account holders
and accounted for separately from the others.


Hence
separate
financial statements
were prepared for this fund account. Further the
profit
were
recognised

only when the projects were liquidated; implying that the
projects were
short
-
term. After deducting the bank’s share of profits, the depositors
share of
profits was distributed to individual depositors according to the amount
and
period
of the deposit.


In the second case, all funds whether from shareholders, current and
savings accounts
and investment accounts were all pooled and invested in
various projects
. In this case,
the profits earned by the bank excluding those from
fee paying banking
services were
made proportionate to average deposit in
each type
of account.


The
share of the current and savings account depositors went
to the
shareholders, as
the depositors were not entitled to any profit. (In the case
of Malaysia
, the banks
distribute part of this profit as a gift to savings and
current account
holders).


From
the proportion attributable to the investment
account holders
, the bank’s share is
deducted and the balance distributed to
the investment
account holders in proportion
to deposit and period held. Except
for expenses
directly related to investments, all other
expenses are borne by
the bank
and not by the investment account holders as under the
Mudaraba

contract
, the
bank is only entitled to its share of profits.




In the second case it was difficult to determine each party’s share in
investment and
profit as all
funds are pooled. The actual amount of investments for
each class
of deposits as opposed to the
actual amount of deposits cannot be known.


In calculating the share of profit due to investment account holders, the
bank
estimates the portion
of the depositors account invested by the following steps
on each
months’ balance:


1) The actual deposit in each class of account (and shareholders funds
available for
investment) is
multiplied by the available percentage (
100
-
reserve percent
) to obtain amount available for
investment. The reserve ratio is


different for each account. Investment accounts have a lower reserve
ratio than
other accounts.


2) The actual invested funds for each class of account is apportioned using
the amount
available per
step 1 divided by total deposits available for
investment multiplied
by total amount invested in the
month.


3) The monthly amounts are added up for twelve months to get yearly amounts.


4) The total profit is then apportioned to the accounts on the basis of
total assumed
investments
.


The
above method, although rational and equitable on the face of it
presents some
difficulties
.


As the investment account depositors are mainly interested
in profit
as they bear the risk, the above
allocation does not give any preference
to this
.

Since
savings and current deposits in Islamic banks are not meant to
earn profits
, they should not have a
claim to profits on an equal basis (although
in actual
fact, profit attributed to these deposits goes to
the shareholders).




Thus, as in the example from table 5
-
1 shows, the amount
from the
investment account
, assumed as invested is only
$53,070/$77228 = 68%, whereas
current account
deposit
invested is also assumed to be 68%.


Since
investment
account holders
assume that their
deposits will be invested, it is clear that their
funds should
be accorded priority in the distribution of profits.


Hence
in 1985,
the
Shari’a

Supervisory Board of the Faisal
Islamic bank recommended that
all investment
account
deposits less a liquidity reserve be assumed to be invested.


Using the new formula, the investment account deposit
assumed to be
invested would
be £77228 x90%= £69505
(to take account of liquidity ratio of 10%
as
investment
account can be withdrawn on short notice although not on
demand).


The amount allocated to current accounts and shareholders
is found as
a balancing
figure.
Hence
the profit allocated to
investment funds would be higher.




Despite this apparent improvement, the profit attributed to investment
accounts will
vary between different Islamic banks depending on the
proportion of
current and
savings account deposits.


For
example, if Bank A has more current
and savings
account deposits than
Bank B, assuming equal amount of
investment deposits
, Bank B will be giving
a higher share of profits to its investment
account holders
.


Another
problem, is although, current and savings account
holders expect
no return, the shareholders are effectively using these deposits
as financial
leverage in earning profits for themselves without giving anything
in
return
to these depositors except guarantee of capital. Perhaps, in this case,
the
central
bank should regulate the Islamic banks and insist on a payment of a
gift to
these accounts (after building up sufficient reserves to cater for
losses). This
is legal
and recommended (and
practised

in certain countries) in
Islamic
law provided
they are not predetermined.


In contrast to the above situation, some Islamic banks do not pool the funds
from investment
accounts and treat them as a separate entity. In order to
provide
a portfolio
instead of matching each deposit to an actual
investment, the
deposits are
pooled into many projects.


However
, this method is more risky for
the depositor
because the portfolio
may not be well diversified. In certain banks
, limited
Mudaraba

certificates
are issued which link the securities, issued in
fixed denominations
for a fixed
period of time, to a particular project. These
certificate holders
are entitled
to profits when the project is liquidated. They bear all
the losses
if any.




This second type of profit allocation where the funds are not
pooled solves
the problem
of allocating profits between the various
types of depositors. However,
it still
has the problem of matching
profits because in Islam, the venture has to
be
realised

to return
capital before profit is calculated (
Udovitch
, 1970).


Hence
, if
a depositor
withdraws his funds before project is
liquidated, then he will not
beentitled

to share in the profits. The
problem of capital gains and losses
betweenaccounting

period also
presents problems as it does in conventional historic
cost
accounting
. Perhaps a
realisable

income model (Edwards & Bell,
1961) would
be more
appropriate.


Another problem posed by Islamic banks is the nature of
investment and
savingsdeposits
. Are investment deposit holders,
equity holders? (
Karim
, 1999).


Should they
have say in the administration of banks (i.e. voting
rights)? It can be
seen that
investment account holders are neither
a liability nor equity and to
classify them
as such according to
conventional accounting principles would amount
to
unfair
disclosure
.



Investment accounts have both the characteristics of debt
and
equity
.




They are short or medium term equity holders. Equity holders have
longterm

relationship
with the banks. They can vote in annual general meetings
and take
part
in the management of the bank through their directors. By contrast
the relationship
of investment account holders vary between short and medium term.


However since they share in the profits and bear all risks associated with
their
investment
, they should neither be treated as
current
and savings
account holders
nor fixed deposit accounts holders. Perhaps, they should have
limited voting
rights
like debenture holders, especially in the case of limited
Mudaraba

certificate
holders
to ensure that their interests are taken care of properly.


Investment accounts cannot be classified as current liability as are fixed
deposit
holders
in a conventional bank. Perhaps a separate balance sheet should
be prepared
for them, or they should be shown between equity and
current liabilities
.


Another problem associated with investment projects relating to
investment
accounts
is whether they should be consolidated or equity accounted?
Presently only
profits received from the projects are incorporated into the accounts.


This
isinconsistent

with the ruling that Islamic banks are not lenders but managers
of
the
investment account holders. Conventional banks do not manage the
projects
they
finance except to monitor periodic reports
.



Islamic banks as managers
of investment
account holders and as partners in case of
Musharaka

financing would
have to take a more active role in appraising, monitoring
and
even directing
major decisions in ventures they finance. When they do this,
the
problem
of consolidating results and assets of financed ventures comes in.




Karim

(1999) observes that, in the application of
funds, most Islamic banks
use the
murabaha
-
financing
instrument.


Since
the source of financing
includes investment
accounts, the profit recognition method used will
also affect
profit allocation
to these accounts.


As
Karim

(1999) notes, there are at least
five
different methods of profit recognition used by
Islamic banks in
recognising

profits
in
murabaha

transactions where the price of the goods
financed
are received
in
instalments

which may
traverse several accounting periods.




These include
:



Recognising

profits in full when customer takes delivery.


∙ Pro
-
rata the profits according to due dates of
installments
.


∙ Pro
-
rata the profits according to receipt of the monthly payments.


∙ At the liquidation of the transaction i.e. on the last payment date and


∙ Once the capital has been recovered.


Karim

(1999) notes that “the use of any of the above profit recognition
methods


affect the returns credited to investment account holders”(p33) as the
duration
of the
depositors’ investment is generally different from the
duration of
the
murabaha

contract above.


In
addition, there is no conventional
accounting standard
to prescribe the
disclosure of different profit allocation bases (which
has been
discussed
above) which Islamic banks use to allocate profits between
the various
account holders.


Hence
, applying conventional accounting
standards (
e.g. IAS), where they
are available, to Islamic banks will result in
noncomparable

financial
statements rather than induce comparability as there
no standards
which
meet the specific Islamic banking requirements.


This
is
the rationale
behind the formation of the Accounting and Auditing
Organisation

for Islamic
Financial Institutions (
Pomeranz
, 1997;
Karim

1999) which has
some accounting
and auditing standards for Islamic banks
and Financial Institutions

Capital Adequacy Ratio


As a result of the recent third world debt crisis, there have been
increasing
demands
for more capital regulation in the banking industry.


One
of the
most important
measures facilitating this regulation is the capital
adequacy
ratio (
CAR
).


This
ratio is a measure of a bank’s risk exposure and is usually
calculated
by finding
the percentage of capital to total balance sheet assets. The CAR
of commercial
banks is an important accounting measure used to assess
the adequacy
of the
bank’s capital in relation to deposits to cover credit risk


(Llewellyn, 1988). Regulators use the CAR as an important measure of
the safety
and soundness on banks as the capital of such institutions is viewed as
a buffer
or
cushion to absorb losses (
Karim
, 1998b)


The increasing pressure from regulators to maintain an adequate ratio has
led
some
banks to adjust accounting measures to reflect a good ratio. Hence
,
accounting
practices have major implications for this ratio.


The Basle Accord of the Basle Committee on Banking Supervision
implemented
since
1992, sets out an agreed framework for measuring capital adequacy
and the
minimum standards to be achieved by the representative countries.


The accord
is intended to “strengthen the soundness and stability of the
international banking
system and “to be fair and have a high degree of consistency
in
its application
to banks in different countries with a view to diminishing an
existing source
of competitive inequality among international banks”.




The minimum acceptable Capital Adequacy Ratio (CAR) according to the
Basle Accord
is 8%.


The
majority of countries in which Islamic banks operate
have taken
steps
to introduce the Basle framework. However because the
framework of
Islamic banking is different, the Basle framework geared for
conventional
banking
cannot be applied as it would lead to Islamic banks not meeting
the requirements
, although this would not imply any more credit risk
than
conventional
banks.


As
Karim

(1998) observes, only share capital and reserves attributable to
them would
be considered as capital. Islamic banks issue neither
preference
shares nor
subordinated debt as they contravene the
Shari’a
.
Since current
account holders
of Islamic banks are not entitled to any
return, the revenue
generated from
them is exclusively the right of the
shareholders. The investment
account
deposits cannot be considered as
equity or liability but a unique type
of Instrument
which gives the
depositors right to share in the profits but bear all
the losses
. Hence, since
both deposit accounts are not paid

a
predetermined return
, they
do not
constitute a financial risk to the bank as (in the case of
investment
accounts
) all the losses can be passed on to the account holders. Although
the


shareholders funds would have to bear the losses of capital on
investments
from current
account deposits, the risk of loosing the capital
is much less than
loosing both
capital and the pre
-
determined interest
which must be paid to
conventional bank
account holders.




Karim

(1998) illustrates this point through four possible scenarios,
each depending
on the way investment accounts are treated by
Islamic banks
and regulatory
authorities:


In scenario 1, Investment accounts are added to the core
-
capital
(tier 1).
This would
increase the CAR and help Islamic banks follow a
strategy of
attracting high
investment accounts and low equity
capital, as Islamic banks do not
share losses
only profits from the
investment account fund invested. If the amounts
of deposit
accounts were restricted in the calculation of capital, the bank
would
be forced
to pursue a strategy of raising equity and
restructuring its assets to
more safe
areas like Government
investment certificates.


Scenario 2, which allows for deduction of the investment accounts
from the
risk weighted assets
would similarly increase CAR and
compensate for assets
with high
-
risk
weightings. Here, shareholders
continue to encourage
investment accounts
compared to savings
accounts.


In scenario 3, investment accounts are added to Tier 2 capital
element. In
this case
, since tier 2 capital is restricted to 50% of the
total of tier1+tier 2 capital,
this would
mean that when investment
accounts equals equity, there is no benefit
to the
CAR calculation.
This would mean, after this threshold, Islamic banks
would have
to
raise shareholder equity.




In scenario 4, no adjustment is made to the CAR calculation in
respect
of investment
accounts. Islamic banks with CAR below 8%
would have to
increase their
shareholders equity as the use of
investment accounts confers
no advantage
in the calculation of
CAR. Another way out would be to
restructure their
assets to
include lower risk weighted assets. Given the nature of
Islamic
financial
instruments,
Karim

(1998) observes that the latter option
would be
more feasible
in an Islamic bank given the nature of
financial instruments used
by Islamic
banks.


Although it is up to regulatory authorities of the various countries
to adopt
the appropriate
rules, Central bankers of Muslim countries
with their
conventional economic
and banking training seem not
too creative in this matter.


In
the case
of Sudan
(
Abdelgader
, 1990), the Central Bank wrongly
subjected the funds
of investment
accounts to their credit ceiling
targets meant to control
consumption credit
and inflation.
Investment accounts, of course, were meant to finance
long term
,
high return investments. Since the Islamic banks could not invest
most
of the
funds, profitably it stopped accepting investment
deposits altogether
, defeating
the purpose for which the bank was
set
-
up.




Karim’s

(1998b) analysis, although constructive and insightful,
nevertheless
only skimmed
the surface of the implications of the
Basle convention for accounting
of Islamic
banks. His analysis is
limited to the financial strategy of shareholders
in leveraging
the
use of investment accounts.


It
does not
analyse

the
CAR standards
implication for the
investment strategy in terms of achieving
the investment
objectives
of Islamic banks i.e. to substitute profit
-
sharing
contracts for
risk
based contracts which would bring about the
theorised

objectives
of Islamic
banking.


As
already indicated, one of the problems of the Islamic
banking is
that Islamic banks have opted for the easy use of credit
-
based
Islamic instruments
(
murabaha
) which do not change the basis of
Islamic banks
from conventional
counterparts to any large degree
(
Abdelgader

1990; Ahmed
,
1994b). An appropriate indigenous
Islamic capital adequacy ratio standard
could have
a marked
difference in increasing both investment accounts and
more profit
-
loss
financial instruments.




For example, if investment accounts could be added to the core capital
or
deducted
from total risk weighted assets, (scenario 1 and 2), this could
increase the
promotion of investment accounts. Further as the Islamic
banks do not
bear any
losses arising from the loss of investment deposits
(except arising
from negligence
), the investment account investments (not
deposits) could
be deducted
from risk weighted assets or given a 0 or low
risk weighting
depending on
the nature of the instrument. A reverse risk
weighting score could be given.


For example,
musharaka

and
mudhraba

investments would be given a
lower risk
-
weighting
then those used for
murabaha

or
ijara

investments.
This
would increase
CAR and at the same time encourage Islamic banks to
manage
their portfolio
carefully, as their earnings will depend on high
return /
high
-
risk investments
. This is so because banks earn only a share
of profits and
cannot charge
expenses to the investment account deposit
holders except for
direct expenses
. Hence this is one way, an appropriate
Islamic financial
standard based
on an accounting number could induce
behaviour

towards
attaining Islamic
objectives.


Another instance would be to consolidate the investments at current
costs.
Since Islamic
accounting seems to
favour

current values (Clark et al.,
1996; see
also this
would reduce CAR. However, if the bank’s share of
unrealised

capital
gains is
added to capital and the current value of
investments (from the
investment account
funds) were excluded from the
risk weighted assets, this would
boost CAR, encouraging such investments.




A development from this would be an

Islamicity
” ratio computed using
an inverted
risk weighted value of assets.


The
higher the ratio, the higher
the
Islamicity

of financial instruments used and would give
the user an indication
of
the extent to which
the Islamic banks are using the funds in
profit
-
sharing instruments
and other social areas in
which it should be used.

Confounding International Accounting
Standards


The accounts of Bank like other business
organisations

are increasingly
subject to
both national and international accounting standards, which are
increasingly being
globalised in the form of International Accounting
Standards. Unfortunately
, recent
studies on the cultural impact on
national accounting systems seem to
be motivated
only towards removing
non
-
European and non
-
American
impediments in
the way of international
harmonisation

of accounting (
Hamid

et al., 1993).


The researchers
do not contemplate that
harmonisation

may entail
imposing
Western and
European accounting practices and the theories
behind them upon
nations whose
commercial and accounting practices
are based on alternative ethical
or cultural
paradigms. Thus:




But the focus has been more to identify what practices and



underlying
theories have to be changed to fit into the Western



paradigm
, rather than to discover whether those not



conforming
to it might give insights to alternative,
theoretically

defensible
accounting processes”.






(
Hamid et al., 1993, p132)




This may not only distort international comparison (see for example,
Choi

et al
.,
1983
) but also upset the socio
-
economic balance of the recipient countries.


Hamid

et al. (1993) observes that although,
harmonisation

is pursued under
the
pretext
of transporting developed accounting practices to countries with
lesser
developed
practices, such ascription of development to the West, commits
theworld

to a dominant allegiance to Judaic
-
Christian influences and
ignores
traditions
founded in Eastern philosophies
.


Thus
, any implications of
accounting
being required to conform to the
philosophies underlying Islam,
which transgresses
national boundaries, for
example, are dismissed without enquiry
. Islamic
banking in particular only
permits financial support and offers
banking facilities
to Islamic compliant
businesses. One could therefore
reasonably presume
that the prevalence of
stricter Islamic banking would lead to
higher business
compliance with Islamic
principles. This would in turn increase the
need for
an alternative Islamic
accounting to meet the needs of these
organisations
.


Hamid

et al. (1993) further argues that the prohibition of
riba
, which is
the
cornerstone
of Islamic banking has important implications for the
harmonisation

of
accounting procedures as implementing international
accounting
standards entail
enforcing many accounting procedures where
interest based
calculations are
essential.


For
example, standards on pension benefits (SFAS 87 & 88
),
amortisation

of
long
-
term debt (APB 12), lease
capitalisation

(SFAS 12),
interest on
receivables
and payables (APB 21) and their International
Accounting Standard
equivalents
all invoke discount calculations based on the time value
of money
.




Karim

(1999) also point out many problems of using International
Accounting Standards
for Islamic banks. For example, many Islamic
Banks use
murabaha

financial
instrument. In this cost plus contract,
the
Shari’a

imposes the
condition that
the bank must possess the
title to the goods before delivery to customer.


The purchase order made by the customer may or may not be
binding on him.


Hence the valuation of such stocks is a problem in the accounts.
Should the
bank value
at lower of cost and NRV as per current
accounting standards or at
current market
value as per
Zakat

accounting requirements.


IAS’s do not have any standards to deal with the status of
investment accounts
, as
they are neither equity nor debt in the
conventional sense. There are also
no disclosure
requirements to
disclose the bases of profit allocation
between shareholders
and
investment account holders. The use of different methods
by
different Islamic banks has resulted in the incomparability of their
performances.


Profit recognition difficulties have already been alluded to in the
section 5.5.1
. The
adoption of IAS would not make the Islamic
banks accounts comparable
but might
achieve the opposite effect.




International Auditing Standards also do not provide for the
idiosyncrasies of
a
Shari’a

Review or audit which is required of
Islamic banks. Neither do
they provide
guidelines on the
qualifications, independence and competence
of
Shari’a

Auditors or
Shari’a

supervisory board of Islamic banks. It is no
wonder that
Muslims have come up with their own alternative to the IASC in the
form
of the
Accounting and Auditing
Organisation

for Islamic
Financial
Institutions (
AAOIFI).


This
organisation

has issued two Financial Accounting
Concepts
Statements
, ten Financial Accounting standards and five Auditing
standards
for Islamic
banks (
Karim
, 1999).


The
organisation

has also issued exposure
drafts on
Shari’a

Audit,
and Islamic Insurance Company disclosure standards.


If the current Islamic resurgence permeates Islamic businesses,
then there
is definitely
a need for the development of Islamic
accounting and an
International
organisation

to develop Islamic
Accounting Standards for all
Islamic
organisations
. Perhaps, the
AAOIFI will evolve into such a body.

Non
-
Financial Disclosure


While, the technical problems associated with
accounting for Islamic banks
have been
emphasised

and the AAOIFI been established to deal with it, it
should
not be
forgotten that Islamic banks are much
more than institutions which
avoid interest
.


All
business and non
-
business Islamic
organisations

have Islamic
ethics as
their founding basis.


As
such these institutions must account to their
owners
and
other stakeholders as to the extent to which they
have complied with
the ethical
dictates.




This involves non
-
financial as well as financial disclosure. Khan (1994a)
observes that an Islamic bank would have to disclose:



(
i
) The avoidance of prohibited transactions.


(ii) The extent to which their activities have contributed to the economic
and


social development of various poor sectors of society by offering financing


and interest
-
free loans to for example, farmers and small traders.


(iii) The ethical standard which they have reached in the treatment of


employees and depositors and entrepreneurs.


(iv) Segmental information on the financial instruments used and the
efforts


made by the bank to move away from interest
-
like instruments such as


murabaha
.


(v) The extent to which they have safeguarded the environment and


conserved energy.


(vi) The collections and disbursement of
Zakat

from the bank’s operations,


and


(vii) The social and the religious contribution to local community




Conventional accounting places emphasis on financial outcomes,
thus conventional
accounting users (e.g. shareholders) may switch
to debt
financing when
economic conditions make debt financing
attractive.


They
also may
switch to
other business activities, which promises
the best financial returns to them.


However, as
Hamid

et al. (1993) notes, whether equity or debt
financing promises
the best financial returns to owners or
managers, is not the
motivating factor
in Islamic commerce
undertaken according to the Islamic tradition.


Instead success
in the hereafter by following God’s commandments
in
economic transactions
on earth would be the foremost thought
of Muslim users.


Hence Islamic
accounting would provide information which ensures
their confidence
in the
integrity of Islamic banks and other
organisations
. It should
provide assurance
that the
organisation

has
invested their money within the
constraints
of the
Shari’a
, no
exploitation or injustice has been done to any quarter and
their
money
has made a contribution to uplifting the community.

Conclusion


In this chapter, the objectives of various forms of Islamic
organisations
,
their discussed
. The development and operations of Islamic banks were
discussed
at some
length to
emphasise

the different paradigm of Islamic
business.


Hence
,
the discussion
of the accounting problems related to different
financial instruments
, profit
sharing and the problems of imposing
international banking,
accounting and
auditing standards on Islamic is
meant as an example of the differences
and difficulties
Islamic
organisations

pose for conventional accounting.


It
is
hoped that
this has demonstrated the practical need for the
development of
Islamic Accounting Islamic
accounting as can be seen from
this chapter, is not only a matter
of modifying
conventional accounting to
fit the needs of Islamic institutions
-

a
major overhaul
is called for.


It
is not a matter of extrapolating the
conventional accounting
principles
to
specialised

entities e.g. in the case of accounting
for plantations
,
insurance companies or space exploration.


The different philosophical assumptions underlying Islamic
organisations

and their different operating
mechanism, some of which find no parallel in
the
conventional business
and accounting practices, suggest a more
radical accounting




Benefits of an Islamic Accounting System for Islamic banks and
other
organisations

would include:


∙ Motivating employees, shareholders, managers and participants to be


accountable to society and God and to take a pro
-
active role in
ensuring
ethical economic activity instead of motivating them through higher
financial returns
to increase their greed and material possession.


∙ Ensure the accountability of Islamic
organisations

to their stakeholders
and
thereby
ensuring the accountability of Muslims to God in their
economic
activities
.


∙ Ensure the specific socio
-
economic objectives for which Islamic
organisations

have
been established are achieved and to disclose the
reasons why they
are not
. The holistic nature of an Islamic accounting
system would not deflect
the users
from their ethical objectives as
conventional accounting,
by concentrating
on the financial return, might do.


∙ The development of Islamic accounting and auditing standards would in
time ensure
comparability between different
organisations

which would
promote the
allocation of resources (financial, manpower, government
support)
to those
organisations

which better promote the interests of
Islamic societies
.


From the above, it can be seen, that Islamic
organisations

can benefit
immensely from
the development of an Islamic accounting system. Failure to
develop one
, on
the other hand, may contribute to their failure