“Islamic Accounting :
Their Position in International Standard Harmonization”
Rendy Anggita Putra
“Islamic Accounting : Their Position in International Standard Harmonization”
According to (Susela, 1999) said the development of accounting theories is are affected by several factors including political and economic interests of certain people or group in community. Therefore, it can be also called if the accounting is a significant tool to illustrate the interests and perspectives of the various stakeholders. Islamic industry of finance has obtained tremendous growth in last few years, both in number of assets that manage by industry and in the diversity of financial ...view middle of the document...
The optimum performance of accounting is basically an accumulation of experience by a society, community, or organization that obtained from the study, implementation and development of accounting in accordance with the social condition, cultural and economic aspects that encountered. Therefore, many experts (Hove, 1986; Briston, 1990; Wallace, 1990), which argued that the application of accounting developed countries to developing countries, would be unsuitable and irrelevant. In this case for a certain society which bound by religious principles such as the Muslim community.
Moreover, along with the increasing sense of religiosity of Muslim society in running the sharia Islam in social-economic life, many business institutions in Muslim communities has run their business operations with based on Islamic principles. In order to manage these Islamic institutions, it is become necessary for recording all transactions and financial reporting with certain characteristics in accordance with Shari’a. This recording transactions and financial reporting applied to Islamic business institutions is then developed into shari’a accounting or Islamic Accounting.
Islamic industry of finance has obtain tremendous growth in last few years, both in number of assets that manage by industry and in the diversity of financial products. This trend has exceeded the prediction and requires a separate accounting framework to accommodate some of unique factors in Islamic transactions. A global system that can rule the industry will become significantlly important for the Islamic finance sector in order to meet the needs of continued growth (Vinnicombe, 2012).
Currently the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) roomates established March 27, 1991 in the State of Bahrain is a regulation governing body of accounting standards in the world. Harmonization of Shari’a accounting standards has continue to be made by the AAOIFI as it is also done by the International Accounting Standards Board (IASB) for conventional accounting harmonization. According to (Vinnicombe, 2012), AAOIFI’s goals is not different with IASB in order to achieving synergy of accounting implementation to facilitate consistent reporting of Islamic financial statements. In its implementation, AAOIFI is also working with the IASB and other international organizations to ensure the development of Islamic finance is not lagging behind the pace of conventional accounting standards improvement. According to (AAOIFI, 2011) the membership of AAOIFI is not restricted only for Muslim nations, but also welcome from non Muslim countries from, for example, the United Kingdom and Australia.
In its development, financial reporting in Islamic accounting adds some different additional reports than conventional accounting to accommodate the unique transactions of Islamic economics. In that regard, paper have objective to explore the main important values of Shari’a accounting...