QUESTION: Why is there a need for Islamic Accounting?

ANSWER: Islamic accounting can be defined as the accounting process which provides appropriate information (not necessarily limited to financial data) to stakeholders of an entity which will enable them to ensure that the entity is continuously operating within the bounds of the Islamic Shariah and delivering on its socioeconomic objectives. Islamic accounting is also a tool, which enables Muslims to evaluate their own accountabilities to God. We need Islamic accounting because we are a muslim. As a muslim we must do our duties based on Islamic Shariah. Then, as a muslim, Islamic Accounting also is important because it can enables Muslims to evaluate their own accountabilities to God. If we are a responsible Muslims, we must do our duties with honest, trustworthy because such information must be free from any influence and cannot be provided for the interest of certain parties. In Islamic accounting system, accounting rules emphasis on morality and ethics based on the concept of hisbah. Accordingly, an accountant or Muhtasib must have the trust properties, real, responsible, fair and honourable in the discharge of his duties as a trustee. Besides that, the sources of Islamic accounting are based on the Quran

and Sunnah. All aspects of accounting that involves the procedures and activities must permitted by Islamic law. With this sources, Islamic Accounting can be different with conventional accounting where conventional accounting is include all data, transaction or information that not permitted by Islamic law like riba. As we know, riba is prohibited in Islam. So, any transaction, data or information that includes riba is not permitted. Then, Islamic accounting also concerned with truth and honesty with other people and then emphasizes the principle of accountability and also moral of people. So, that why an accountants must be a responsible, trustworthy, and have a high of moral. It is because an accountant is an individual who performs accounting tasks for individuals or companies. The exact material that an accountant handles varies depending on the size of the company and the accountant's specialization, but generally includes financial records, taxes, and

responsibility for the issuing of financial reports. So, an accountant must be someone that not takes any interest for him or herself. Besides that, we need Islamic Accounting because we need to record Islamic financial transaction that free from any haram sources. For example, if we do any transaction,we dont know whether the transaction that we doing is included with the transaction that not permitted in Islam. So, in Islamic Accounting, the transaction that maybe has includes with haram transaction will be deduct in income statement and this is different with conventional accounting where the income that not halal is also included as a income. Islamic accounting also is based on the current value. It is different with conventional accounting where conventional accounting mainly uses historic cost to measure and values assets and liabilities which restricts this model due to assumptions of the monetary unit and its inflation. From an Islamic point of view, both financial and non-financial measures regarding the specific events and transactions are measured and reported. To calculate the amount of Zakat, assets need to be measured in contemporary terms, not in historical cost. The dual system of asset valuation using both historical cost and market selling prices is likely to enable Islamic organizations to accommodate contracts and to discharge their social obligations. So, the conclusion is, Islamic Accounting is important and needed in our life.