Developing  Accountancy Thought

In The Islamic Civilization

Researcher / Samer Kantakji, Ph.D.

Civilization is the most sublime thing which the nations have achieved in their doctrines and aspects of their mental and intellectual activities regarding building, sciences, knowledge, art and others. They could elevate them in their life course to agree with it and its various capacities.


Moslems have set up their civilization depending on Islam and Arabic language that included all civilization aims. They made use of other countries' civilizations and acquired a lot of those countries' sciences. The Islamic civilization is distinguished with integrity and comprehensiveness. It included:

·        Rule and administration system that included caliphate, ministry, judiciary, injustice, price control, police, terrorism, rulers, post, accountants' council (Dewan), and military aspects.

·        Sciences and arts with all their kinds: religion, linguistics, sociology, natural sciences, mathematics, astronomy, medicine pharmacology and translation.

·        Building and arts such as architecture, decoration and artificial sciences.

·        Economics situations as agriculture, industry, trade and money.


Thus, the role of money in this civilization was quoted from the concept of Islam to have a function. Islam took care of money role and clarified it as important as a basic need such as (hunger, fear) to most people. God says: (Bakkara: 155-Be sure We shall test you with something of fear and hunger, some loss in goods or lives or the fruits (of your toil), but give glad tidings to those who patiently persevere).


Islam, also, specified this importance and showed the necessity of not using it wrongly (getting money without a right, the bribery) as God says: (Bakkara:188-And do not eat up your property among yourselves for vanities, nor use it as bait for the judges, with intent that ye may eat up wrongfully and knowingly a little of (other) people's property).  God emphasized that misusers of money are equal to dealers with interest (getting money without a right); they are on the wrong side of war. Repentance is to leave interest and satisfy with the capital to achieve justice (Bakkara: 279-If ye do it not, take notice of war from Allah and His Messenger: but if ye turn back, ye shall have your capital sums; deal not unjustly, and ye shall not be dealt with unjustly).


However, accountancy terms began crystallizing; the first and most important is the capital and the way of circulating it among people. But, Islam has not given the rein to money but restricted it to a social role as God says: (Bakkara: 280-If the debtor is in a difficulty, grant him time till it is easy for him to repay. But if ye remit it by way of charity that is best for you if ye only knew). God shows the politeness of the religion and the social dimension of money role He has added an unfamiliar concept that is almsgiving and distinguished it with easiness. So, the term "almsgiving" is equivalent in form to "dead debts" but exceeds it in meaning and goal. Money alone has no social role without being with God's jurisprudence (Bakkara: 63-And (moreover) He hath put affection between their hearts: not if thou hadst spent all that is in the earth, couldst thou have produced that affection, but Allah hath done it: for He is Exalted in might, Wise).


After that the text of recording and borrowing came immediately after it, which is the longest in Quran where God says: (282-O ye who believe! When ye deal with each other, in transactions involving future obligations in a fixed period of time, reduce them to writing let a scribe write down faithfully as between the parties; let not the scribe refuse to write: as Allah has taught him, so let him write. Let him who incurs the liability dictate, but let him fear his Lord Allah, and not diminish aught of what he owes. If the party liable is mentally deficient, or weak or unable himself to dictate, let his guardian dictate faithfully. And get two witnesses, out of your own men, and if there are not two men, then a man and two women, such as ye choose, for witnesses, so that if one of them errs, the other can remind her. The witnesses should not refuse when they are called on (for evidence). Disdain not to reduce to writing (your contract) for a future period, whether it be small or big: it is juster in the sight of Allah, more suitable as evidence, and more convenient to prevent doubts among yourselves but if it be a transaction which ye carry out on the spot among yourselves there is no blame on you if ye reduce it not to writing. But take witnesses whenever ye make a commercial contract; and let neither scribe nor witness suffer harm. If ye do (such harm), it would be wickedness in you. So fear Allah; for it is Allah that teaches you. And Allah is well acquainted with all things). The text has showed the wide bases of accountancy origins where God shows us the way of writing (let not the scribe refuse to write: as Allah has taught him). Later, God emphasized this at the end of the text by saying (So fear Allah; for it is Allah that teaches you). It is noted that the text clarified the following accountancy terms: 'debt', 'debt quantity', 'debt', 'debt writer',' fair in writing', 'dictator',  'special cases', 'witnesses', ' writing aim', 'exceptions' and 'neutrality'.


Islamic Sharea has had the priority in inventing financial systems never used before but made it as a religions prescription duty ' worshipping'. So, these systems are distinguished with a material and spiritual systems. Each of these systems has its private mathematical style.


Alms (Zakah) has its specific places and sheets. It has special banks to be used properly. So, Islamic accountancy was used in the concept of specialization (specialization in income and expenditure). Later, Sharea gave a developed financial concept, not applied before; it is to settle the outcomes (material and cash) and spend them in the place they are obtained from while the surplus is transferred to (Money House) the safe. The outcomes were organized in cash lists and material ones. They dealt with duality problem in alms realization


The system of Mawareeth (legacy) brought a dynamic mathematical style, which the whole humanity has not witnessed such a thing before. It realized a distributive justice among people. It maintained the rights of each person regarding his/her importance in the family. It, also, has broken down the accumulation of wealth, big or small, (Nissa: 7-whether the property be small or large, a determinate share) while keeping the private ownership.  So, a very accurate, familial and social link is achieved.


As a sequence, it could melt money in its social role so it gave money its important right to gladden people not to overcome them. These systems and other ones will be dealt with Longley later.


Islam, since its dawn, has been interested in private and general rights and maintained it strongly. Islamic established firmly a wall called the allowed and ill-gotten. It obliges every member to get this knowledge to clarify the separating limits. It was told about Omar (peace be upon him) in (23A.H=645 A.D.) that while wandering in the markets he said: "No one sells in our market except those who know, otherwise, he deals with interest willy-nilly. Al-Gazali (505A.H-1127A.D) specified a chapter about reviving religion success called chapter of (Science of Earning) in which he mentioned that seeking Earning Science is a duty on every earning Moslem because seeking knowledge is an obligation for every Moslem. However, seeking knowledge is for the needed. The earner needs earning science. Al-Gazali exceeded this by describing the Moslem investor as (no one attains economy rank unless he restricts in his earning to the way of rightness).


The importance of accountancy researches lies in supporting the accountancy knowledge to reach definitions agreed on. Thus, clear concepts are determined having the general approval from the surrounding society.


The researcher sees that Islamic Sharea has surrounded accountancy and founded a fertile mind which people applied for 14centuries and more under similar titles as: Writing Money, Earning Science and others. It can not be perceived that a state lasted more than ten centuries had issued sciences and knowledge in all fields to the world while its sciences are being still taught in the biggest and best Western universities. However, this state has forgotten to put or develop accounting and economic systems of its own. It is unbelievable that a store big or small can run without an accounting system .so, how we can imagine that a state ruled the world more than ten centuries without economic or accounting systems. Al-Nowayri (733 A.H=1355 A.D) had referred to the first professional accountancy block in history .This block showed that accountancy is limited to its policies and applying them. (The meeting was held by a group of the seniors of this profession who started it since their childhood till their elderly age. Some of them said that was new and innovative. How can such things be restricted?


Then the importance of this research lies in:

1.     The appearance of Islamic banks and financial establishments that attained a remarkable success.

2.     The appearance of accountancy standards and auditing for the Islamic financial establishments issued by accountancy and auditing board for Islamic financial establishments. That proved the possibility of applying the Islamic accountancy standards in the Islamic society.

3.     Answering the accusation of the West to the Moslem and Arabs in particular that are retarded in economics and accountancy and have to submit to the standards and principles which their professional establishments and associations specify  

4.   Collecting the intellectual participants of the Moslem accountants scattered in the books of jurisprudence and Islamic history.   


The research aims at fixing the Islamic accountancy thought scientifically according to the age technologies to be a reference for businessmen, accountants, the interested and every Moslem.


As the accountant is the weigher of gaining actions, he decides the reserves, depreciation, and provisions. Besides, he prepares the final accounts starting from the accountancy thought he has (Aaraf: 85-give just measure and weight), (Israa: 35-Give full measure when ye measure, and weigh with a balance that is straight) and (Rahman: 8-In order that ye may not transgress (due) balance). As a result he should not be biased to any partners, participants or administration (Motafifin: 1-Woe to those that deal in fraud).

The research, on one hand, neither aims at interpreting the current accountancy principles and concepts in an Islamic style, nor seeks subjugating them by force. On the other hand, the research will not interpret discretion of jurists and imams in an accountancy style that agrees with the current theories and concepts. However, Islamic Sharea rules the ages not ruled by them.


As no accountancy theory has gained the general approval up till now, comprehensiveness has a specific range in the general accountancy tradition. Islamic society is similar to other ones in its specialties, properties and principles.


The research, also, aims at attaining the scientific rules of accountancy traditions and principles which our scholars followed along the ages. The whole universe has witnessed for the Islamic civilization because it helped in inventing most societies. However, the Islamic society has its own view about accountancy. It needs data related to it on which the accountants and beneficiaries act as to the financial and accountancy data especially after the appearance and development of many Islamic economic sectors such as Islamic banks, Islamic insurance companies, Islamic financial houses and Islamic investment companies. Those need a theoretical structure on which they rely the economic and financial life within an Islamic legitimate method.


The research, also, aims at re-correcting the accounting history and do justice to the Arabs and Moslems by showing their participations and active role in this science. Instead of mentioning the beginning of history of accountancy since     the Italian Lucas Bashilio, we have to remember Al-Kalkashandi, Al-Nowayri, Al-Gazali, Abu-Ja'afar Al-Demashki, Al-Marodi, Al-Khuwarizmi and many other Moslem celebrities who recorded accountancy intellectually and practically since nearly (900) A.D. i.e. before Lucas Bashilio before (700) years at least. Al-Nowayri [(733) A.H.= (1355) A.D.] had written the first integral accounting reference in the human history.


He said:" Some of my colleagues have asked me to put a summary through which the accountant knows how to account and which enlightens him how to report about gaining and taxing. Thus, I presented this summary, in which I mentioned about writing industry as little as a drop of sea water and as a few as its gems to answer his question and realize his hopes. These are necessary for a accountant to know its shape and duties. When I wrote down this industry, I neither found a book about its art nor a translated chapter or a compiled reference. I have not noticed a reference about it, not even listened to a statement about it. No one uttered a word or had the rein of diction in order to be my ideal and follow his method in excellence and be as useful as he is. But, I found it closed and covered where each writer was satisfied with his knowledge and limited to his understanding. When I reviewed the idea and revised it, its doors were opened and disclosed. So, I mastered it after making it soft. Later, the idea had the way of success and began writing what I put and aligned what I classified. I derived the term "Dewan" (accountants' council) and what kinds stem from it. Besides, I mentioned the first "Dewan" was in Islam and its reason. I reported what the accountant may need regarding accountancy and its cases, and what general accepted rules and idiomatic laws settle down. I mentioned what the accountant may report about gaining and taxing and what mathematic cases end at and attribute what troubles arise to them - God willing."


The research, also, aims at deducing the Islamic accountancy standards that enlighten the way of accountants and Islamic businessmen and all earners away from the standards subject to interest ties put for its owners' sake only. That helps in searching and developing accountancy thought according to the Islamic Sharea rules and laws; and according to the environment in which jobs need accountancy. That leads to increasing the trust in data and financial lists' users in the accountancy information issued by the establishment that follow the Islamic accountancy thought.


Every society has its school of thought where knowledge is obtained. The conduct of the society depends on its concepts and principles. Accountancy science is one of the social ones developed by means of practical exercise. Then, scientific founding movements came to put a frame for the concepts, suppositions and principles. Scientific and professional groups supervised them.


The researcher sees that Islamic Sharea has planned on the society level as a whole by fixing:

A-    Invariable facts formulated the accountancy thought and rules morally and conductively. These facts are acquired from Quran Sunna and consensus, for instance:

·        Writing and recording when dealing financially whether small or big (Bakkara:282- Disdain not to reduce to writing (your contract) for a future period, whether it be small or big).

·                                Witnessing when current selling (Bakkara:282- And get two witnesses, out of your own men, and if there are not two men, then a man and two women, such as ye choose, for witnesses, so that if one of them errs, the other can remind her).

·                                Real money ownership is to God and man is responsible for that (Noor: 33- give them such a deed if ye know any good in them; yea, give them something yourselves out of the means which Allah has given to you).

·                                The allowed and ill-gotten.

·                                The necessity of learning (Younos: 5-It is He Who made the sun to be a shining glory and the moon to be a light (of beauty), and measured out stages for it; that ye might know the number of years and the count (of time).

·                                Recoding the just true value without decreasing anything (Bakkara:282- Let him who incurs the liability dictate, but let him fear his Lord Allah, and not diminish aught of what he owes).

·                                I specified qualities for the outcoming information:

1.     Information truth.

2.     Comparison ability (unification).

3.     Accuracy and approximation "overconcern" Al-Gazali.

·        Neutrality (Bakkara: 282-But take witnesses whenever ye make a commercial contract; and let neither scribe nor witness suffer harm. If ye do (such harm), it would be wickedness in you).

·        Revenue is subject to wining or losing justly.

·        Confessing profit when producing (Anaam:141-It is He Who produceth gardens, with trellises and without, and dates, and tilth with produce of all kinds, and olives and pomegranates, similar (in kind) and different (in variety): eat of their fruit in their season, but render the dues that are proper on the day that the harvest is gathered. But waste not by excess: for Allah loveth not the wasters).

B-   I allowed elastic procedures accommodates with every time and place which I expressed the discretions. These were reflected in the accountancy systems that dominated in the Islamic state in the form of accountancy policies changeable according to the discretions such as limiting the tyranny in using the right of Abi Hanafi in return for the conductor in his money without limits.

Thus, the researcher seeks showing the Islamic accountancy character to the Moslem society according to Islamic Sharea by means of these approaches:

·        Historic approach aims at theoretical and practical exercising of accountancy thought in the Islamic history and knowing it to prove the degree of its maturity.

·        Interpreting approach aims at showing appropriateness range of accountancy standards of the other societies to Islamic Sharea.