The Role of Islamic accounting Principles in providing A Faithful Presentation of Business Transactions.

1.0 INTRODUCTION (OVERVIEW)

Generally accounting, or accountancy, is the measurement, processing and communication of
financial information about economic entities. Accounting is the most important part in business and
economy that processes information of business and economy activities into financial statement and
financial reporting to be presented to the decision-makers. Basically Islamic accounting is same as
conventional that can be defined as the accounting process but islamic accounting will provides
appropriate information 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 also enables Muslims to evaluate their own accountabilities to God.

The accounting definition of a business transaction, according to the online Business Dictionary, is "an
economic event that initiates the accounting process of recording it in a company's accounting system.
In other way to get the stable company. The process of accounting must be done in good manner to
produce good financial statement and financial reporting to make precise decision to manage financial
aspect of business and to present proper accountability. Faithful presentation can be achieved by
presenting the transactions and events in the way they are reasonably expected to be reported in the
financial statements.

In Conventional accounting, it could be possible for the accountant to do the fraudulent practice
because the objective of conventional accounting is how to make decision to get the maximum profit by
using the minimum cost and when the success of the company is measured through profit that the
company can gets, not through the welfare of the shareholders and society that the company can
give.The most famous case of fraudulent practice pertaining to accounting process is the Enron and
Arthur Anderson scandal that lead to the bankruptcy of those big company in 2000s. After the Enron
and Arthur Anderson scandal happened in 2000s, there are so many changes that have been made in
accounting and auditing system, especially about ethics in accounting and auditing in order to improve
the relevance, faithfulness, reliability, and usefulness of financial statement and financial reporting.

Many occasions accountants fail to do their jobs ethically or even do fraudulent and the reason is the
apparently low moral standard of some accountants and they do not understand the meaning of their
accountability. So, in Islam Allah has settled up about the characteristics of human based on Shariah
foundations which an accountant must have to reduce the possibilities of fraudulent such as Integrity,
Sincerity, Piety, Righteousness and Accountability before Allah.

Integrity in which an accountant must be competent and adequately qualified. Allah states: Truly the
best of men to employ is the man who is strong and trustworthy.(Al-Quran, Al-Qasas:26). Sincerity in
which an accountant must obey Allah in performing his /her duty and not influenced by anything, so his
/her work, can become a form of worship of Allah. making your devotion sincere such as He created
you in the beginning, so shall ye return. (Al-Quran, Al-Araf: 29). Piety in which an accountant must fear
Allah in secret and public by doing Allahs commandments and avoiding Allahs prohibitions so an
accountant performs righteous deeds not evil deeds. Fear Allah, and let every soul look to what
(provision) he has sent to forth for the morrow. Yea, fear Allah: for Allah is well acquainted with (all) that
ye do (Al-Quran, Al-Hasyr: 18).

Then, Righteousness in which an accountant should strive to accomplish the high degree of
righteousness and perfection in his/her duty in the possible manner inasmuch as Allah has given us
intelligence to perform our duties in this world. He instructs you, that ye may receive admonition.
(Al-Quran, An-Nahl: 90). Accountability before Allah, accountant must first, primary, and foremost fear
Allah as the supreme authority before the shareholders and the stakeholders because in Islam, an
accountant personally will be accountable to all his/her deeds in this world at the Judgement Day. Not
one of the beings in the heaven and the earth but must come to the Most Gracious as a servant. He does
take an account of them (all), and hath numbered them (all) exactly. And every one of them will come to
Him singly on the Day of Judgment. (Al-Quran, Maryam: 93-95). We can conclude that Islamic
Accounting is the accounting processes that have to comply with Shariah or Islamic Law to ensure fair
and just financial transaction between parties to fulfill accountability purpose.