The Shari'ah and its Implications for Islamic Financial Analysis An Opportunity to Study Interactions Among Society, Organization, and Accounting

Abstract

I. Relevance of the Issue
By far the majority of articles in the world's leading accounting journals
take as given the culture and religions of the Western world. Articles appear
from time to time that make distinctions among accounting practices in
different Western or ex-Commonwealth countries, but in so doing there is
usually no need to re-examine whether the basic building blocks of accounting
and finance are consistent with the cultures of those countries; that is taken as
self-evident. A few authors have pressed further to show that it is inappropriate
to impose unmodified Western accounting practices on developing
countries, while many others have illustrated the difficulties in harmonizing
international accounting standards when they have to be applied to countries
with different environmental business and social foundations.
This line of development is followed in these pages to examine the situation
in countries adhering to strict Islamic principles where the cultural
background to business, and in particular the influence of religious law, are
quite different from that in Western countries. It will be shown that differences
between the Islamic and Christian religions imply different societal rules of
business behaviour, which further imply differences in operating financial
organisations, as well as in accounting for them and conducting financial
analysis. In fact, the impact of religious principles are so different in these ...