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7.0 INTRODUCTION
Research data may be categorised as primary and secondary data. Primary data are
data generated by the researcher using data gathering techniques, some of which
will be discussed below. Secondary data are those that have been generated by
others and are included in data-sets, case materials, computer or manual databases
International Organisations such the International Monetary Fund and the World
Bank and the United Nations and Islamic Conference Organisations publish
In this research primary data collected by the researcher are used. As discussed in
Chapter 2, one way of extending knowledge in Islam is to ask those who are
knowledgeable in the field and to seek their consensus (ijma). Asking people who
in Islamic accounting research. Doubts have also been expressed, in view of the
economic and political situation and apparent unethical behaviour of the Muslim
world, whether there is an Islamic ethos among the Muslims at all. If these doubts
were true, especially amongst the educated and professional groups such as
accountants, the whole exercise would be merely theoretical. In the event, extending
Briloff’s quote (Gambling & Karim, 1991), time would be better spent developing
principles. There is therefore the need to gather primary data, which is done in this
research.
Chapter 7 Page 288
This chapter proceeds as follows: In the next section (section 7.1), data gathering
gathering techniques. The reasons for the methods chosen in this project are given in
Section 7.2 along with the reasons for the choice of the research environment. This is
followed in section 7.3 by a discussion of: the construction of the primary research
encountered during the survey. This is followed in section 7.4 and section 7.5 by a
These are the finance and the non-finance personnel questionnaire on the
section 7.6.
Research data may be collected in various ways. Some of these methods depend on
the methodology and the theoretical assumptions used in the research. There is a
Although purists in either paradigms stick to their own methods, it is not a case of
‘neither the Twain shall meet’ as researchers have been encouraged to mix and
match (Tomkins & Groves, 1983). This researcher has followed this route.
(as quoted by Tomkin & Groves, 1983), has been suggested as a way to make
Chapter 7 Page 289
research studies more robust and rigorous by verifying results through different
methods, thus ensuring that the results are not a function of the research method.
setting, multi-stage interviews and case studies would be appropriate data collection
methods. However the researcher has chosen to use questionnaires because of the
short description of data gathering techniques used in this project is given next.
Questionnaires have, according to Sharp & Howard (1996, p 145), “over the past
usually within largely closely defined alternatives.” (Sekaran, 1992, p 200). In the
USA, the term “Survey” is used for this data collection method (Nachmias &
Nachmias, 1996, p224). Creswell (1994) informs us that a survey design - through
description of some fraction of the population i.e. a sample which can be in turn
In general, questionnaires are useful, where the researcher cannot observe the
the phenomena through the experience and perceptions of the participants who have
research including the present one, intends to elicit the thoughts and perceptions of
Chapter 7 Page 290
people who have certain qualities e.g. education, experience, situation in life etc. who
have the knowledge and also the ability to precipitate changes in their environment.
Questionnaires can also be divided into perception and factual questionnaires (see
for example, Mahmud, 1997), although this division involves ontological positions
which are not acceptable to some academics. Perception questions ask questions
concerning the feelings, thought, knowledge and opinion of participants, which are
Although questionnaires can be both open ended or closed ended, both types
provide structure to the process of data collection, the closed ended one being more
specific and less prone to verbosity and interpretation than the open ended
general points can be watched for, the questionnaire structures the data and makes it
easier for later analysis especially when nominal or ordinal scales are used to
capture data. These can be used in computerised statistical analysis, which makes
the research more robust and rigorous especially in the light of positivists.
questionnaire surveys. Controlling for the response rate, more data can be collected
In this process, the questionnaires are mailed to the sample participants, usually with
area can be covered quickly and cheaply by this method. It is also very timely, as
questionnaires, this is a costly affair and is not practical for a PhD project. In terms of
especially when sensitive questions are asked, e.g. ethical practices. “People in the
sample are more likely to respond to sensitive questions when they do not have to
In this particular research, the identity of the individual members of the Malaysian
confidential by the institute. Many participants did not disclose their addresses and
names in the questionnaires. For the questionnaires which were handed out to the
working MBA students, many did not want to identify their organisation, perhaps to
of their managers and companies,. Hence anonymity has been important for many
Finally, questions requiring considered answers (as in the case of the Islamic
Accounting Questionnaire used in this research) are better mailed to enable the
participants to give some thought to the questions. In this research, some academics
did not give back the questionnaires immediately, as they wanted to think about the
issues for a few days. Where the questionnaires were administered, the participants
spent considerable time answering the questionnaires often debating points with the
researcher, sometime as much as two hours for what would have taken 30 minutes,
The negative side to postal questionnaires is that the response rate is usually small
which requires a second or even a third mailing. The ever increasing number of
research and posting of junk mail means that many questionnaires end up straight in
the dustbin. A further more important disadvantage of this method is that different
participants may interpret the questions differently and certain questions can be
questions would have to be simple (see for example, Mahmud, 1997 listing variables
keep the questions simple, especially for the Islamic Accounting Questionnaire and
this may have affected the understanding and interpretation of some of the
questions. Another problem associated with this questionnaire is the language ability
countries where English is not the native tongue of the participants. Again the
usually at the participants’ workplace or residence. This has the advantage of a faster
response, as the researcher and his team can get the questionnaires completed
quickly as compared to the postal method, where the participant might postpone
filling up or returning the questionnaire. This method is especially suitable, where the
researcher can get the participants and /or his organisation to co-operate to allow the
Advantages of this method include: (i) doubts regarding the meaning of the questions
can be clarified to ensure that the participant is answering the questions in the sense
that the researcher intended, (ii) the importance of the research can be personally
Chapter 7 Page 293
fewer skills than interviewing, and hence relatively low skilled assistants can be
recruited to perform this task to speed up the research, and (iv) it ensures better
The main disadvantage seems to be that the researcher may introduce his personal
bias by giving facial or verbal expressions, which may put the participant at unease.
fact answering different questions as compared to those whom the questionnaire was
mailed.
7.1.4 Interviews
7.1.4.1 Definition:
although Nachmias & Nachmias (1996) identifies a third category- the focused
the format is more rigid and assumes that the researcher knows exactly what
the participants. The same questions are administered to every interviewee, although
researcher may elicit additional information by asking additional questions not on his
schedule. “Through this process new factors might be identified and a deeper
schedule listing a set of pre-specified questions , nor are the questions asked in a
specific order. The researcher does not direct the interviewee and thus the
attitudes and perceptions on the topic of interest. In this method, the interviewer has
an opportunity to probe various areas and to raise specific queries during the
interviews.
The main advantage of face to face interviews is that the researcher can adapt the
questions as necessary, clarify doubts and ensure that the responses are properly
during interviews can elicit additional information and detail, which can provide
deeper insights. The interview also results in a higher and more complete response
rate than mailed questionnaires. This may be the only way to get information from
people who cannot read or write or understand technical language. One further
advantage is that during interviews, the researcher can collect information on the
environment of the interviewee e.g. request for annual reports, organisation charts,
brochures, which are normally entertained as opposed to requests through the mail.
The disadvantages of the interview include cost and possibility of bias. It is very
costly to conduct many interviews over large geographical areas as it may involve
data collected. Facial or verbal cues may influence the answers the participants give.
Chapter 7 Page 295
addresses. This is especially true, if the topic of the research or particular questions
is sensitive.
can cover a wider geographical area in a shorter time. However the disadvantage is
the higher cost compared to mailed questionnaire but there can be substantial cost
Anonymity of the telephone survey varies; the lack of face to face contact can both
conducive to getting a greater insight into the perceptions, feelings and thoughts of
the interviewee. Further, interviewees may not be easy with a faceless researcher as
In this research, the length of the questionnaire and the nature of the questions which
required some thought was not suitable for administration over the phone. Hence the
telephone was used only to fix appointments for interviews to hand over
Initially, the researcher intended to divide the data collection into three parts; i.e. an
Islamic Accounting Questionnaire; delivered by mail and in person and a case study
the research data was collected, deteriorated since 1997. This made companies
unwilling to discuss ethical matters when their survival was at stake. Further,
Malaysia faced political problems with the sacking of the Islamist Deputy Prime
Minister Anwar Ibrahim, and the subsequent riots and uprising by the Muslim
population in 1998; this made some companies who were Islamically inclined
inaccessible to the researcher. This was especially true for companies whose
directors had strong connections with the ex deputy prime minister. In fact, the
Islamisation of the economy and politics were to some extent due to the effort of the
ex-deputy Prime Minister (especially the setting up of the Malaysian Islamic Bank
and the International Islamic University). If not for the fact that the CEO of one of the
Islamic Companies studied was personally known to the researcher it would have
been impossible even to get the finance and non-finance questionnaires answered.
The Islamic companies set up by opposition Muslim political parties were very careful
Government spies. Hence, due to lack of access for case studies, the data collection
To summarise, the main data collection methods used in this research are:
(a) The Islamic Accounting Questionnaires which were (i) mailed to members of
(b) The Finance and Non-Finance Questionnaires which were sent to (i) part time
MBA students of the International Islamic University who were working full time as
executives in various sectors and (ii) employees of Tabung Haji , Abrar Group and
some other companies and (iii) University Technology Mara Executive MBA students
Before the contents of the above questionnaires are discussed in detail, the choice of
generalisable to the whole Muslim world. However due to financial and time
constraints, an international survey was not possible in this PhD project, thus the
reason for focusing in a particular country. The findings are therefore meant to be
Islamic state) because of the economic and political stability and the infusion of
Islamic values in both government and private life. Malaysia has only a 55% Muslim
population (constituting of about 50% Malay Muslims and 5% other Muslims – mainly
Indian Muslims). The Non- Muslim population consist of 30% Chinese (mainly
Buddhists and Taoists) and 10% Indians (who are mainly Hindu) and 5% others.
However, the political and military machinery is dominated by the majority Malays
(who are almost 100% Muslim) who govern the country by means of a multi-party
lower house is elected by all citizens of Malaysia, Muslim and Non-Muslim. Islam is
The Malays are an ethnic group who covers the Malay Archipelago consisting of
Thailand. They are predominantly Muslim although due to recent missionary activity
in Indonesia, about 10% of the population there are Christian. One of the unique
Malay as a Muslim who practices Malay customs, speaks the Malay language and
was resident in Malaya or an offspring of such resident in 1957 when the country
Chinese who has embraced Islam and follows Malay customs is classified as Malay.
Although not many Chinese and Indian Hindus have chosen this option, there are
many born Indian Muslims and a few Chinese converts through inter-marriage who
have. Hence the Malay classification can be a proxy for Muslim. (See section 7.3.4.2
Although officially a secular state, the government has been increasingly infusing
Islamic values, which it claims are universal. The Shari’ah (or more accurately
Mohammedan Law – a leftover from the British era) in a much diluted form is
Muslims in personal law areas only. In criminal cases, it is the civil courts (which
enforce the British common law and local statutes) which have the upper hand.
However there have been recent calls by Muslims to implement the Shari’ah as the
official law of the land although this has been resisted by the government and non-
Muslims alike.
In the 1960’s and 1970’s, Malaysia like other newly independent countries was born
and governed in the secular mould of the British. However Islamic revival throughout
the world, especially in the light of military and economic failures in other Muslim
countries led first to an ethnic and later a mixed ethnic-religious assertion in politics,
Chapter 7 Page 299
government and the economy by the Muslim Malays. Many political and social
movements arose in Malaysia in the name of Islam. The Angkatan Belia Islam
Malaysia (ABIM – Malaysian Muslim Youth Movement) was one such Islamic social
students, farmers, government servants from both the government political party and
opposition Islamic political party (PAS- Pan Malaysian Islamic Party). The leaders of
this organisation were influenced by the writings and actions of the Islamic
Brotherhood of Hasan al Bana (d. 1948) of Egypt, and other renown Islamic scholars
of the 20th Century, which were basically trying to implement Islam in the modern
world in all aspects of life. Its most popular President, Anwar Ibrahim was co-opted
into the Government in the 1980’s and was tipped to be the next Prime Minister of
Malaysia until his recent downfall in 1998. Due to the resurgence of Islam in
Malaysia, the government was forced to concede to the Muslims by opening new
and having more Islamic religious programs on the radio and TV.
When Anwar Ibrahim was co-opted into the government, he began a long career, first
as the culture Minister (during which more Islamic elements were incorporated into
culture rather than Hindu influenced dances), the Agriculture and the Education
Minister and finally the Deputy Prime Minister. He managed to get the Islamic bank
and the university going along with the introduction of compulsory Islamic subjects in
all universities for Muslim students and the controversial introduction of Islamic
The government promoted a parallel Islamic Money Market and Financial System.
The wearing of Islamic headscarf and costume by Muslim females were allowed or
even encouraged.
Although these developments were seen as purely cosmetic by the more extreme
elements in the Islamic movement who called for a full implementation of the
Shari’ah. This non-violent gradual Islamisation process was encouraged and admired
Chapter 7 Page 300
by many in the Muslim world. Together with the rapid economic success of Malaysia
and a more or less equitable distribution of wealth, Malaysia was seen as a model
Muslim country.
There is an increasing Islamic eagerness among the Muslims to practice Islam in all
sectors of life including business. The Malaysian government as far back as the late
There were some efforts to instill Islamic values in businesses by the newly privatised
companies with Muslim heads (e.g. Tenaga, Renong and Berjaya Corporations)
although they were mainly ritualistic and lacking in substance. However, there are
many Muslim businessmen who wanted to conduct their business in accordance with
the Shari’ah. There were also Islamic organisations such as Lembaga Tabung Haji (a
and Pusat Pungutan Zakat (Zakat collection company) which are Islamic by their
incorporation charters.
Islamic banking and finance became a popular topic for academic and business
perspective is indicated by the fact that the Malaysian Institute of Accountants formed
a working committee on Islamic Accounting and Finance to set standards for Islamic
banks and similar institutions. Even secular educated and secular minded
In summary, Malaysia is a suitable place for the research project because: (i) the
economic, business, social and political aspects of life, (ii) the leading position of
Chapter 7 Page 301
Malaysia in Islamic banking and finance and the Islamic money market, (iii) the
existence of large Islamic and Muslim Business organisations, (iv) the economic
state of development with a robust Stock Exchange, a modern banking system, and
the Multimedia super corridor), and (v) a developed accountancy profession based
communication and logistic problems, which may crop up if the research were
conducted in other countries were reduced. Also, the fact that Malaysia is or was until
recently seen as a model for Muslim economic development and a blueprint for
The Qur’an in many of its verses, encourages learning, thinking and observation. It
encourages Muslims to observe phenomena (both celestial and social) and learn
from history and creation1. There is also a specific command in the Qur’an asking
Muslims to question and “ask those who are knowledgeable, if you do not know”
developing Islamic law. The Ulema in modern times could possibly be extended to
subject specialists who also have some knowledge of Qur’an and Usulul Fiqh
1
For example: “Behold, in the creation of the heavens and the earth, and the alternation of Night and
Day- there are indeed signs for men of understanding.” (AL-QUR’AN 3:190)
Chapter 7 Page 302
construct, constructing reality and being constructed by it. Accounting exists in the
based on scripture and its interpretations by ulema (Muslim theologians, lawyers and
ulema are those who are well versed in Qur’anic and related Islamic knowledge. In
the so-called “golden ages of Islam” when the Muslim world was the centre of
civilisation and learning, many of the intellectuals of the day were ulemas. However,
due to historical reasons, the educational system bifurcated into secular and religious
Islamic resurgence in the 1970’s plus other factors such as oil wealth (Noreng,
1997), made Muslim intellectuals rethink their objectives and led to a new breed who
These Islamists were mostly highly educated in the Western and local secular
rejected the superiority of the West except in its science and technology. They
combined the fundamental principles of Islam (e.g. they are not apologetic on the
issue of polygamy but defend it on rational principles) with the modern science and
technology seeking development with an Islamic face. They studied Islam part-time
or took some courses in Islam with traditional Muslim teachers as well as modern
educated ones.
While it cannot be said, that all Muslim professionals (especially accountants and
accounting academics) are Islamists, the researcher suspects that there are a large
number with Islamic tendencies (as shown by their affiliation to Islamic political and
social welfare parties). These professionals are not afraid of claiming to be good
unlike some other Muslim countries. Hence responses by Islamic intellectuals can be
Muhammad (pbuh). Later traditional scholars accepted the ijma of the ‘pious
predecessors (or salaf saleheen) i.e the companions’ companions and their
companions and very pious ulemas who led schools of jurisprudence called Imams.
The Prophet’s traditions, however refers to the consensus of the ummah or the
people. This was restrictively interpreted as all the people. However Kamali (1991)
for example, opines that, as this is impossible, the consensus of a majority of the
this can then become part of Islamic Shari’ah Muamala (or Islamic
nature and extent of agreement or disagreement amongst this group and is thus
This was the main device used for the greater part of data collection for this research.
It consisted of 4 parts, the objective of the questionnaire and rational for each part, its
Specifically, the questionnaire was designed to answer the following four research
(a) Are the socio-economic principles under which Islamic business organisations
operate different from those of capitalist business organisations?
(b) Are the Islamic sources adequate to be used for developing an economic and
accounting system?
(c) Is conventional accounting appropriate for Islamic business organisations
and Muslim users to fulfil their objectives?
(d) What are the objectives and characteristics of Islamic accounting?
In addition, several hypotheses are formulated under each research question herein,
which will be tested (see Chapter 9). To facilitate the search for these answers, the
Islamic Accounting Questionnaire (referred to herewith as the IAQ) was divided into
four sections consisting of: (Section 1) the ethical moral context of Islamic and
For the most part, a 5 point Likert scale (Strongly Disagree to Strongly Agree) as well
as a 5 point ranking scale (Not at all to Very Much so) was used in the three main
sections of the questionnaire. The fourth section was mainly “fill in the blanks” type
of questions with suggestions in brackets. Some questions required only a tick in the
boxes. The last part of the Questionnaire had an open ended comment box for
To maintain anonymity the name and company of the participants were not asked for
although a box was left to give this information should the participants require a
There are many text books on the methods of constructing questionnaires and scales
(e.g. Sekaran, 1992;Nachmias & Nachmias, 1996). These authors suggest that the
wording of the questions, the order in which they are presented and the language
used must be carefully constructed. Most questionnaires use one word (the variable
measured.
This advice was born in mind as the questionnaire was developed. However, due to
the explanatory nature of this study, this was not always possible, as the variables
were not capable of being expressed in one or a few words. Most questions
especially in section 1 and 2 were rather long. Although the researcher tried, short
straightforward questions were not possible. The researcher had to define some
terms or had to give assumptions as to the state of the environment to give more
precise meaning to the answers. The Questionnaire went through seven versions
before settling down on the 8th version, which was fine tuned. The questionnaire was
discussed with fellow PhD students (who mainly consisted of international students,
Muslim and Non-Muslim, who were not native English speakers) and faculty in the
The sixth and seventh drafts of the questionnaires were pilot tested in the
department. The original questionnaire was very long winded with multiple issues in
one question. The initial seventeen page questionnaire was reduced to eight pages
including the notes as it was thought that it was simply too long and would affect the
response rate. Further, some notes, which were placed before each section and
were, thought to be directing the participants to answer the question according to the
researcher’s preference; these were either modified or deleted. All definitions were
placed on the last page of the questionnaire to be referred by the participants in case
of need.
Chapter 7 Page 306
Although the researcher did not pilot test the questionnaire in Malaysia, several were
respondents. However, the questionnaire had already gone out by then and it was
too late to change. Hence, this particular question has been left out in the calculation
Questionnaire and the rationale for it are described in detail in the following sections.
7.3.3.1 Section 1: The ethical/ moral context of Islamic and Muslim Business
organisations.
(Abdelgader, 1994) states that Islamic accounting is fairness and just accounting
based on the principles of Islam. However fairness and justness depends on the
organisations are those that use accounting to the utmost and in which accounting
has the most significant impact on society. With globalisation, the Muslim world is
being forcibly integrated into the world business structure and order. Some parts of
this order are not acceptable from an Islamic perspective. For example, the primacy
of interest, the concept and structure of the modern business corporation, the
concept of maximising profits and the stark materialism accompanying the adoption
There is an extensive literature on business ethics in the West, which attempt to deal
with the excesses of capitalism (e.g. Donaldson, 1982). The modern corporation has
also been criticised by those in the critical paradigm (Cooper & Hopper, 1990).
Chapter 7 Page 307
However, since the corporation was never known in Muslim history but an implant
from outside, there have been relatively few discussion of business ethics of Muslim
and Islamic corporations from an Islamic perspective. There have also been
arguments that globalisation means that if certain companies adopt ethical policies
not consistent with the mainstream they will be forced out of business because of
competition.
Islamic organisation is defined in this research as one, which was set up specifically
with Islamic economic and social objectives, and operates within the Shari’ah.
Muslims should own it mainly but not exclusively. Muslim Business organisations, on
the other hand are those corporations and businesses set up by Muslims or
controlled by them but which may have high non Muslim participation. Although this
type of organisation was not set up with specific Islamic objectives, the Muslim
conduct their business in an Islamic manner to the extent the business environment
allows.
This section therefore is intended to answer two of the research questions indicated
respondents in this section (see Figure 7-2) including whether the Muslim Business
Organisations should operate within the Shari’ah, given that doing so may in conflict
with modern business principles. This section also asked the participants whether the
Chapter 7 Page 308
Shari’ah should be interpreted in a literal manner and not inline with its intent. This
was considered important because Islamic banks have been interpreting the Shari’ah
While this falls technically within permissible limits, it does not address the objective
for which interest was prohibited. It was felt that if there was to be any real benefits to
Islamic Law was required. This is not a novel ideal as scholars such as Al Shatibi
(Masud, 1997) and Imam Ibn Taymiyyah (Islahi, 1988) had already undertaken such
interpretations,. Using the concept of maslaha (public welfare) and maqasid al-
Shari’ah (the objective of the Shari’ah), they undertook interpretations which were
more in line with the spirit of the Shari’ah (see Chapter 2). Some questions in this
The next group of questions in this section were on the investment policies of Islamic
not only in Islam but in the West, such as options and futures, short selling and
business organisation, should participate in the interest based debt market which is
clearly prohibited. This was designed to test whether the participants held positions,
globalised market.
Chapter 7 Page 309
Please tick (√) the appropriate box. If you are unable to give an answer, please leave the boxes blank.
If necessary, please refer to notes 1-3 at the end of this questionnaire.
These questions lead to the following hypotheses, which will be tested by the
researcher in Chapter 9:
Hypothesis No.1:
Hypothesis No.2:
Alternative
Hypothesis: Malaysian Muslim accountants and accounting
academics believe that Islamic business organisations
do not participate in activities which are not in line with
Islamic socio-economic principles.
The last part of section 1 of the IAQ is intended to answer the second research
question:
Are the Islamic sources adequate to be used for developing an economic and
accounting system?
Specifically the participants were asked their perceptions as to whether the principles
in the Qur’an and Sunnah could be developed into a workable business and legal
question was mainly asked, not to find out whether this is demonstrably provable, but
to elicit the beliefs of mainly Muslim professionals. If the answers to these questions
business and economic life in the current era and not obsolete or irrelevant to the
can be shown to have been successful and there is no point in looking for solutions
These questions lead to the following hypotheses, which will be tested by the
researcher in Chapter 9:
Hypothesis No.3:
Alternative
Hypothesis Malaysian Muslim accountants and accounting academics
believe that an economic framework can be developed from
the socio-economic principles of the Qur’an and Sunnah to
meet the current needs of Islamic organisations.
The researcher has argued that conventional accounting is not suitable for Islamic
and consequences (Chapter 3). Section 2 of the IAQ (see figure 7-3) was designed in
order to elicit the perception of the Malaysian Muslim Accountants and Accounting
The first part of this section referred to the basis, objectives, and “unIslamic”
conventional accounting needs a major overhaul if at all. The second part of section
2 was intended to elicit the extent to which the participants felt that conventional
consequences.
Chapter 7 Page 312
The third part of section 2 asked the participants to rank the extent to which some
were appropriate or otherwise for Islamic organisations. There was also an open-
ended question in which the participants were asked to insert other conventional
These questions lead to the following hypotheses, which will be tested in Chapter 9:
Hypothesis No.4:
Hypothesis No.5:
Hypothesis No. 6:
the participants regarding the objectives, the possible nature and characteristics of
to be answered:
The first part (see figure 7-4) asked the participants to tick one of 4 choices or give
their own view as to what they thought was the main objective of Islamic accounting.
The choices were obtained from a reading of the Islamic accounting literature
(chapter 6) and the conventional accounting literature (chapter 3). The choice
The second part of this section (see figure 7-5) listed several subsidiary objectives of
Islamic accounting information and asked the participants to rank the importance of
each.
Chapter 7 Page 315
Please indicate the extent to which Islamic accounting should aim at the following objectives by
ticking (√) the appropriate box.
1 2 3 4 5 Very Don’t
No. Statement Not at all Much so Know
2. The objectives of Islamic accounting should be
to provide information:-
a) in order to maximise efficient allocation of
capital to the most effective uses.
b) to increase shareholder wealth.
The third part of this section (see figure 7-6) asked the participants to rank the
than shareholders in the social accounting literature (e.g. Gray et al., 1996), it was
Islamic accounting system (see Chapter 6). Here a five scale (from Not important at
all to Much more important) was used with an additional column for a Don’t Know
response.
b) Government.
c) Community.
The fourth part of section 3 (see figure 7-7) listed various types of information which
Islamic accounting could provide and asked the participants to rank the importance of
these. The list contained information normally ignored by conventional accounting but
This part ended with a check question on the disclosure of interest income by Islamic
participants had ticked sundry income box, the ability of the participants to answer
the questionnaire would have been doubtful as their Islamic knowledge might have
been suspect.
Sundry Income
The fifth part of section 3 (See Figure 7-8) listed some questions on the
characteristics that Islamic accounting should take. These questions were framed
after taking into account suggestions from the critical accounting and social
The above questions in section 3 of the IAQ will be used to test the following
hypothesis in Chapter 9:
Chapter 7 Page 319
Hypothesis No.7:
Hypothesis No.8:
Null Hypothesis: Malaysian Muslim accountants and accounting academics
believe that Islamic/Social objectives of Islamic accounting
are of equal importance to Economic objectives of Islamic
accounting.
Alternative
Hypothesis: Malaysian Muslim accountants and accounting academics
believe that Islamic/Social objectives of Islamic accounting
are more important than economic objectives of Islamic
accounting
Hypothesis No.9:
Hypothesis No.10:
Null Hypothesis: Malaysian Muslim accountants and Accounting academics
believe that Islamic accounting emphasises socio-economic
information as much as conventional accounting.
Alternative
Hypothesis: Malaysian Muslim accountants and Accounting academics
believe that Islamic accounting emphasises socio-economic
information more than conventional accounting.
which are thought to have a bearing on the type of responses given. These are
effect relationships. The questions were “fill-in- the blank” types with some
suggestions in parenthesis (see figure 7-9). This suggested the type of response to
Chapter 7 Page 320
fill in while allowing the participants flexibility to answer other than what was
suggested. In some questions, the participants were asked to tick or not to tick one
Yes No
6. If you work in public practice, does your firm get technical assistance from a multinational associate
accountancy firm?
Yes No
There were two populations of participants for this questionnaire i.e. Muslim
accountants.
Chapter 7 Page 321
Malaysia has thirteen universities of which ten are publicly funded and three are
private. All these universities offer courses in business or accounting. The oldest
under the British system. It has the oldest accounting degree course in the country
and is research oriented. The University with the largest Accounting faculty is
Universiti Teknologi Mara with 99 staff in the School of Accountancy. The private
universities are relatively new with fairly small number of accounting staff. All the
Universiti Teknologi Malaysia and the private universities are working towards setting
up a degree and are in the process of getting recognition from the professional
institutes. They have already started the courses, in some cases by setting up
The accountancy syllabuses of the universities are geared towards the MIA
professional status and hence are very technical in their approaches, perhaps with
the exception of the International Islamic University, which has an Islamic curriculum.
Economics. Some, such as Universiti Putra Malaysia and Universiti Malaya have
Malaysian government although there has been some public debate in this area.
recently. Besides the Universities, there are many private colleges offering
foreign Anglo-American universities. This research did not include academics from
such institutions mainly because most staff and students are non-Muslim and the
respective universities as the case may be. In the case of universities with separate
finance departments under the same faculty, the finance department faculty was
accounting department does not exist separately but only operates as part of the
were chosen. In the case of the International Islamic University, the Economics and
Management Faculty had three departments at the time of the survey, which were
many accounting educated lecturers in the other departments. As such lecturers with
accounting knowledge were surveyed from all three departments of the faculty.
The sample was selected as follows. In some cases, the questionnaires were given
better response, the researcher went around the department (where the faculty were
few) to hand the questionnaires with a personal request to the faculty member to
answer it. In some faculties, such as in the Universiti Utara Malaysia and Universiti
Teknologi Mara, the researcher selected only participants who were accounting
lecturers as there were many law and business lecturers attached to the accounting
department who were teaching non-accounting subjects and who did not have an
accounting background. This was done either in consultation with the Head of
department or by going through the university prospectus to see what subjects the
Chapter 7 Page 323
lecturers thought. This partly accounts for the low number of lecturers surveyed in
Teknologi Mara, the total number of staff included those at branch campuses in other
states, which were not visited. As such, the low number of lecturers reflects those
Table 7-1 shows the Number of accounting academics in each University, the
The high response rate of 64% (to the nearest %) was encouraging and is felt to be
Malaysia; the MIA and the MACPA2. For this project, the population identified was
only Members of the Malaysian Institute of Accountants (MIA). This is the statutory
cum professional accountancy body in Malaysia set up by the Accountants Act, 1967.
It had 12127 members as at 31st December 1998. The word Accountant is defined by
Accountants. The Malaysian Institute of Accountants does not conduct its own
degree is recognised by the MIA and getting the required quantum and type of
body (mostly UK, Australian and New Zealand professional accountancy bodies)
listed in the Accountants Act 1967 and registering with the MIA.
The reasons why only MIA members were chosen for this research are; (i) there are
very few Muslim Accountants in the MACPA, (ii) a Muslim accountant who was a
member of MACPA would most probably be an MIA member as well, and (iii) most
in the Big four firms would also get some MACPA members inside the sample.
Hence, the Muslim MIA membership can be a proxy for the professional Muslim
Table 7-2 below shows the number of Muslim MIA members surveyed, the response
2
The Malaysian Association of Certified Public Accountants (MACPA) is the second professional
accountancy body in Malaysia. The MACPA is widely recognised in the Malaysian profession,
government and industry. It conducts its own professional examinations which are considered as
difficult as the examinations of the Institute of Chartered Accountants in England & Wales. The pass
rate is very low. So far merger talks held between the MIA and MACPA to unite the profession in
Malaysia have failed.
Chapter 7 Page 325
The total number of Malay (presumed to be 100% Muslims) MIA members as at 31st
December 1998 was 1840 out of a total of 12127 MIA members constituting only
about 15% of total membership. Of this 270 (14% of the population) were surveyed
through the MIA. This consisted of 90 Muslim Accountants each working in the
public, pubic practice and industry sectors respectively. The number of responses
received totalled 82 representing a 30 % response rate (to the nearest %). According
to MIA, the normal response rates for research surveys were 10%. Hence, the
A further 42 Questionnaires were delivered to audit firms (through staff partners) and
were obtained. In total, the 105 responses obtained constitute about 5.7% of total
Muslim MIA members. In other words the sample used in this research constituted
The main method of delivery to MIA members was by mail. Although MIA publishes a
list of members, their addresses are not published. Hence, the researcher
approached the MIA by fax and in person to get a list of members with their
addresses. The MIA refused to reveal the addresses stating that it was confidential
Chapter 7 Page 326
despite the fact the researcher was a member. However after several appeals and
phone calls, they agreed to a compromise. MIA would extract a stratified random
sample of 270 members categorised by sectors and (race/religion) and would post
the questionnaires together with stamped self-addressed reply envelopes and cover
letters in stamped envelopes, which were delivered to the MIA for addressing and
onward mailing to the participants. Thus the MIA dispatched them directly to
members. The researcher was unable to obtain the addresses of the participants.
The questionnaire was dispatched in the first week of November 1998. Responses
It was agreed that if the response rate were not good, the MIA would allow the
researcher to phone the members who had not sent in the responses. However this
was difficult because, some participants did not identify themselves. It was suggested
by MIA that a second mailing be sent based on the extra set of labels they printed.
However due to staff problems and year-end work, MIA could not do this. Hence
some questionnaires to Muslim members of the big four firms (i.e. Ernst & Whinney,
Price Waterhouse Coopers, KPMG Peat Marwick and Arthur Andersen) to increase
the response rate. A Muslim partner in the firms was contacted, an appointment was
made to see him. The researcher met the partner concerned, explained the research
to him, and after obtaining information on the number of Muslim qualified accountants
and collected the questionnaires on the researcher’s behalf. The researcher later
companies through the researcher’s contacts who were working in the companies.
Chapter 7 Page 327
contacted in this way. The researcher also administered the questionnaire to the
Chief Accountant of Bank Islam Malaysia Bhd., who now also heads the retail
banking division.
find out whether the conventional accounting resulted in the participants behaving in
an Islamic manner. If this were true, there would be a stronger case for an alternative
Islamic accounting. Although not grouped into different sections, the questions could
be combined into three main areas; (i) investment behaviour (ii) financing behaviour
The argument for an Islamic accounting was two fold: two theoretical (Chapters 3
and 4) and one practical (chapter 5). It was argued in chapter 2 that the Western
for Islamic organisations who have world views and objectives that reflects those of
(Friedman, 1982). Even when social and moral considerations are discussed (e.g.
Gray et al., 1996, Tinker, 1985), the moral and social aspects are not necessarily the
A special issue that is not considered as immoral or illegal in the capitalist or Marxist
view is the question of taking and giving interest (although early Marxists frowned at
interest). In addition the payment of Zakat is not an issue in Western social and
Chapter 7 Page 328
critical literature which is very important in Islam. The finance and the non-finance
The finance questionnaire intends to find out if Muslim Accountants and Financial
Managers behave in a manner inconsistent with Islamic values due to the influence
(i) Whether Muslim managers make short and long-term investments in interest-
demonstrated.
(iii) Whether Muslim managers take into account social and environmental concerns
(iv) Whether Muslim managers use sources of finance which are allowed in Islam
as opposed to those, which are most profitable (the usual pecking order).
The finance questionnaire was divided into 2 sections. The first section consisted of
questions related to the research questions indicated in the previous section. This
Question 3 had 9 sub-questions, which listed what the manager looked for when
Questions 4-7 asked the participants to rank the importance of environmental, social
Question 8 listed six financing instruments (Islamic and non-Islamic) and asked the
Question 9 asked the managers to what extent they made use of Islamic or
conventional banking.
Questions 10 – 11 asked the managers the basis on which Zakat was computed, if at
all.
investment needs.
company.
A five-point scale ranging from 1 (Not at all) to 5 (To a great extent) was used. A sixth
column was used for a Don’t Know response. The questions were mainly factual.
Section 2 of the questionnaire asked personal details such as job title, experience,
Islamic and secular education and the religion of the participants to correlate
responses in section 1 of the questionnaire. Section 2 was open ended (no choices
were given) except for two questions where choices were given to indicate the type
of answers required.
Both the finance and non-finance questionnaires went through three drafts at the
was also pilot tested with the post graduate Ph.D. students of the Department.
opportunity presented itself to the researcher when he was conducting the empirical
(IIUM) was conducting part-time MBA courses. Many of the students were Muslim
Chapter 7 Page 330
managers or accountants and finance personnel working in Muslim and Non Muslim
was thought that it would be easier to meet them in class and request them to fill up
the questionnaire.
With the co-operation of the Director of the Islamic Management Centre, which
conducted the MBA course, the researcher met the students in their classes. The
nature of the research was explained to them and they were requested to fill in the
questionnaires, which took about 10 minutes. Three such classes were visited. Both
the finance and non-finance questionnaires were given at the same time to different
received later. The questions were straightforward, there was no need for much
clarification.
The finance questionnaires were also given to managers in the Tabung Haji Group
managers in Abrar Unit Trust and Abrar Discounts Sdn. Bhd. The researcher also
contacted the executive MBA director of University Teknoloji Mara and handed some
questionnaires to his department. However, as the program was in recess, only one
Table 7-3 below shows some statistics on the questionnaires distributed, number of
responses and response rate. The population is the Muslim managers working in
commerce and industry or the public sector in Malaysia. However, it is difficult to get
the size of the population, as not all the Managers are members of any one
Total 42 32 73
This questionnaire was given to Muslim and some non-Muslim employees in the
middle and lower management as well as clerical employees in various Muslim and
Islamic organisations. The objective of this questionnaire was to find out whether
dysfunctional effects on Muslims (and some Non Muslims) in Islamic and Muslim
business organisations.
Scapens, 1985;Roberts, 1991) have indicated that the accounting system may result
through information inductance (Prakash & Rappaport, 1977) may affect the
behaviour of users inside the organisation. These effects do not only concern
other than accounting. If the results indicate dysfunctional behaviour from an Islamic
perspective, then it would show that conventional accounting has negative pervasive
effects throughout Muslim and Islamic business organisations. A stronger case would
Chapter 7 Page 332
The two-page questionnaire was divided into 2 sections. Section 1 asked the
participants how their behaviour or their superior’s behaviour was affected by the
accounting and budgeting systems. Section 2 was on personal details regarding the
qualifications.
Section 1 starts with questions on how head office policies are determined and
The next set of questions are intended to elicit the nature and effects of the
budgeting system on their Islamic and social behaviour. The third set of questions
were the same as those used in the finance questionnaire regarding the commitment
A 5 point Likert scale from Strongly Disagree to Strongly Agree was used throughout
because the researcher could not gain access to as many companies as he hoped,
the questionnaire was handed over mostly to working Muslim and Non Muslim
Tabung Haji, Abrar Unit Trusts and Abrar Discounts Sdn. Bhd. In these companies,
the questionnaires were handed to the managers of companies, who in turn gave it to
their managerial and clerical employees. Most of the questionnaires were returned to
the researcher on the same day while a few were collected at a later date.
Chapter 7 Page 333
Table 7-4 shows the sample surveyed and the response rates for this questionnaire.
7.6 CONCLUSION
The researcher believes that the Islamic Accounting Questionnaire survey was
was surveyed and responses representing 5.7% of the population were received.
As in all research, the researcher did not achieve 100% of what he wanted to achieve
in the data collection phase. The failure to gain access to Muslim business
The research would have been richer as Muslims in business organisations which
are not specifically Islamic would face more tensions with their values and
accounting. However the results of the finance and non-finance questionnaires given
to the working MBA students does provide a clue to the type of results which could
another set back which did not allow full confidence in the results obtained for this
question, which was the reason for its exclusion in computing the aggregate scores.
However, this did not affect the overall reliability and validity of the results as the
In the next chapter (chapter 8) a descriptive analysis of the IAQ is undertaken and
findings and interpretation presented. In Chapter 9, this is followed up with the testing
of the hypotheses presented in this Chapter. The final empirical chapter 10 presents
the descriptive analysis of and the findings from the behavioural accounting (finance