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Islamic Ethics Three

The document discusses the importance of integrating Islamic ethics into the accounting profession, highlighting the responsibility of accountants to society and the need for higher moral standards. It outlines the AAOIFI's Code of Ethics, which provides a framework for ethical conduct based on Islamic principles, and emphasizes the necessity of incorporating ethics into accounting education. The principle of maslahah is presented as a key mechanism for prioritizing ethical considerations in accounting practices.

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2 views20 pages

Islamic Ethics Three

The document discusses the importance of integrating Islamic ethics into the accounting profession, highlighting the responsibility of accountants to society and the need for higher moral standards. It outlines the AAOIFI's Code of Ethics, which provides a framework for ethical conduct based on Islamic principles, and emphasizes the necessity of incorporating ethics into accounting education. The principle of maslahah is presented as a key mechanism for prioritizing ethical considerations in accounting practices.

Uploaded by

mo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Islamic Ethics

And Accounting
Introduction

• In general, Accountants have a responsibility to the society to


clearly communicate information for decision-making.

• There is a growing concern that accountants, on many


occasions to fail to provide the required information
demanded by the society.

• It is also growing concern over the apparently low moral


standards of some accountants.
Cont..

• Many accounting scholars suggested that the education


system should bear some of the blame.

• This chapter suggests that the direction of accounting


profession should be on religious ethical development
and value in developing accounting ethics.
Ethics and Accounting

• The word “ ethics” is derived from the Greek work “


ethos” which means the character, spirit and attitudes
of a group of people or culture.

• Ethics relate to morals and the treating of moral


questions.

• Ethics also indicates a philosophical reflection on moral


belief.
Cont..

• Some of accountant practitioners regarded accounting as


neutral and value-free, a reporting function which requires
the application of complex technical requirements but not
moral involvements.

• Ethics should be cohesively implanted in accounting


practices, because ethics clearly signal and distinguish right
from wrong, good from bad, and justices from injustices.
The role of accountant in Financial Market

• Accountants are also accepted as gatekeepers of financial markets.

• Without accountants to ensure quality and integrity of financial


information, the markets for capital would be by far less efficient,
the cost of capital would be higher, and the standard of living would
be lower.

• Therefore, accountant can be considered as a moral discipline as it


requires accountants to have a responsibility to the society.
AAOIFI’s Code of Ethics for Accountants
• Islamic ethical conduct for accountants was developed by the
Accounting and Auditing Organizations of Islamic Financial
Institutions (AAOIFI) in 1998.

• The rules of ethical conduct stated in this code shall apply to


internal accountants, internal auditor and external auditor of
Islamic Financial institutions.

• The basic assumption of this code is that Muslim accountants will


be motivated to comply with due to religious beliefs and as a
means of obeying Allah’s orders.
The Structure of The AAOIFI’s Code of
Ethical conduct

• It consists of three sections:

1. Sharia’ah foundations of accounting ethics: delineate seven basic foundation

 Integrity

 Vicegerency

 Sincerity

 Piety

 Righteousness

 Allah-Fearing

 Accountability to Allah
Cont..

• From these seven foundations, AAOIFI developed six basic ethical


principles;

a. Trustworthiness

b. Legitimacy

c. Objectivity

d. Professional competence

e. Diligence,

f. Faith-driven conduct and professional conduct and technical standard


2. The principles of ethics for accountants.

• The code provides ethical principles such as


trustworthiness, legitimacy, objectivity, professional
competence, diligence, faith driven conduct.

• The following table summarises the AAOIFI’s ethical


principles and rules ethical conducts for accounts
Incorporate Islamic Ethics in Accounting Education

• A critical evaluation of the AAOIFI’s code of ethical:

The AAOIFI’s code of ethical conduct can be of use as a


guide to Muslim accountants and accounting students.
However, the code of ethical conduct cannot and does not
intend to provide an operational guide for, or impart ethical
awareness among accountants and accounting students
Cont..

• The AAOIFI’s code serves as a collection of Islamic


ethical concepts and principles but lacks an operational
guide on how to impart the Islamic principles into the
Islamic financial institutions.

• This is where the principle of maslaha can operate as


an ethical filter mechanism.
Islamic Ethical Principle of Maslahah and
Accounting ethics

 It is imperative that accounting education has to incorporate ethics

as part of an integrated curriculum.

 From an Islamic perspective accountants need to free themselves

from the secular worldview which treats ethics as an ulterior aspect

of professional and worldly life.


Cont..

• In order for accountants to be able to act as moral


arbiters, they need to be imbued with an Islamic ethical
filter mechanism.

• This is where the Islamic legal principle of masalahah


as the basis of setting proper priorities for the work to
be undertaken by accountants.
Cont..
• There are three areas which constitute the primary objectives of
Shari’ah (maqasid al-shari’ah): namely;

1. To educate the individual

2. To establish justice,

3. To realize benefit (maslahah) to the people.

• The majority of Islamic Jurists are in agreement that


there is no law in the whole Shari’ah that does not seek
to secure maslahah.
• Maslahah in its relational sense means a cause, a
means, an occasion or a goal which is good.

• Maslahah, as a principle of legal reasoning to


argue that ‘good’ is lawful and that ‘lawful’ must
be good.
The second element of Maslahah
• Maslahah is in the sense of ‘protection of interest’.

• This protection of masalih(plural of maslahah) can


be classified into three types:

A. Namely the essentials (darurriayt): are defined as


those on which the loves of the people depend which
consists the following five: din(religion), nafs(family),
mal(property), aql(intellect), and nasl (offspring).
B. The complementary interest (hajjiyat)

• The complementary interests (hajjiyat) in Islamic jurisprudence


are secondary necessities that enhance the quality of life and ease
human affairs without being as critical as the essential benefits
(daruriyyat).

C. The embellishments (tahsinniyat) refers to interests,


whose realization leads to improve and the attainment of
that which is desirable such as cleanliness avoiding
extravagance
Cont..

• In order for the maslahah to be valid, it must fulfil


certain conditions one of which is that is must be
genuine (haqiqiyyah).

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