FAR 600FAR 600

ARTICLE 1 : ACCOUNTING SYSTEMS AND RECORDING PROCEDURES IN THE EARLY ISLAMIC STATE

ROS ARIZA ABD ARIS 2011714333SHAZLIANA CHE HASHIM 2011900615NUR SHAIDATUL AZREEN AHMAD SHAHARIBUDIN 2011369375WAN NOR ADILAH MOHD NAZRI2011937305 NOR DIYANA MOHD IBRAHIM MERICAN 2011381029

The life before Islam were

founded

Tribes

Bribery & Riba’

Worship idolsWorship idols

Islam was founded in Makkah

Principles of brotherhood was introduced

All Muslims act as brothers

Al-Quran as guidance

Islam was founded in Makkah

Principles of brotherhood was introduced

All Muslims act as brothers

Al-Quran as guidance

The introduction and organization of zakat in 624 A.D

Encouraged accounting for the purpose of zakat calculation and payment

This development was enhanced with the formal introduction of accounting books, concept and

procedures during the time of second Caliph, Omar Bin Al-kattab

Quran requires the writing and recording of debts and business transactions.

The development and practice of accounting in Muslim society thus reflected Islam as a

comprehensive code of spiritual and material life.

The term Al-Amel, Mubasher, Al-kateb or Kateb Al-Mal were the common titles for

accounting/bookkeeper and account clerk.•Used interchangeably in different

parts of the islamic state.

Al-khawarismi used the term “Muhasabah” for the function of accounting and Muhaseb for Accountant.Al-khawarismi consists of:

Types of records maintained in the Dewans & the book use to record amountTechnical terms that were common in Muslim society regarding the duties of secretaryAccounting system that were implemented during the 4th Century hijri’ahHis book were considered the most influential work of its time

•Al- Mazenderany was one of the early Muslim scholars who documented the practice of

accounting in Muslim society.

INTRODUCTION

1. STABLE ACCOUNTING (ACCOUNTING FOR LIVESTOCK)

2. CONSTRUCTION ACCOUNTING

3. RICE FARM ACCOUNTING (AGRICULTURAL ACCOUNTING)

4. WAREHOUSE ACCOUNTING

5. MINT ACCOUNTING

5. MINT ACCOUNTING

• Required immediate conversion of gold & silver received by the mint authority to bullion or coins

• Do not allow raw materials (gold/silver) & finished products (bullion/coins) to be held on premises for any length of time for security reason

5. MINT ACCOUNTING

Revenue of the mint calculated either 5% of the cost of gold or silver

Revenue of the mint calculated either 5% of the cost of gold or silver

6. SHEEP GRAZING ACCOUNTING

• Form of farm accounting • Initiated & implemented by gov authorities in the Islamic state• Used by private entrepreneurs to measure the profit & loss for

the purpose of zakat• Animals given to the grazier or shepherd were recorded in

bokk designed for the purpose• Revenue received either in cash or in kind was also recorded• Proper classification & adequate disclosure was also a feature

of farm accounting as it required the separate classification of male sheep, female sheep, goats and their offspring

7. TREASURY ACCOUNTING

• Used by government • Required daily recording of all treasury receipt & payment• This systems would have included inventory needed by

government and/or Sultan such as gold, silver, medicine, etc• Required the provision of separate columns for cash

transaction• Non-cash transaction classified according to :-

– Nature– Colour– Other specification

7. TREASURY ACCOUNTING

RECORDING PROCEDURES IN MUSLIM SOCIETY

• The development and implementation of accounting systems in the Islamic state was supported by mandatory recording procedures

• The procedures enabled officials to adequately monitor activities and discover any deficit or surplus in the state treasury arising through imbalanced books.

• 2 cases reflecting the effectiveness of these internal controls:-– Deficit of one Derham in the Baitul Mal – Deficit resulted from unrecorded expenses.

• The development and implementation of accounting systems in the Islamic state was supported by mandatory recording procedures

• The procedures enabled officials to adequately monitor activities and discover any deficit or surplus in the state treasury arising through imbalanced books.

• 2 cases reflecting the effectiveness of these internal controls:-– Deficit of one Derham in the Baitul Mal – Deficit resulted from unrecorded expenses.

Examples of recording procedures developed and applied by gov. authorities & individual

entrepreneurs in the Islamic state

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