Accountability for Islamic Bank and Insurance Companies: Bangladesh Perspective

Mohammad Monirul Islam, Nusrat Sultana

Abstract


This paper is aimed to scrutinize the existing financial reporting system and find out accountability of commercial organization based on Islamic Shariah. Bangladesh is the second largest Muslim populated country in the world. Islamic bank, insurance, and other commercial organizations based on Shariah are increasing day by day. Financial statements are preparing by them following the regulatory guideline and International Financial Reporting Standards. As per requirement, all the banks and insurance companies are required to comply with the standards to uphold the stakeholders’ interest. Since the objective of Muslims and the Islamic economic system is to achieve Falah, Islamic businesses and Muslim businessmen should so conduct their business activity to achieve this Falah, as the business activity is part of a human activity and cannot be separated from other daily activities. Hence, the principles of profit and wealth maximization and the incessant concern with shareholder value, on which capitalist businesses are based, are questionable from an Islamic framework. This is especially so since Islam has comprehensive ethical principles for business. Accounting should support this activity by providing information to achieve Falah. Since accounting cannot achieve Falah directly but only by directing user behavior toward activities (mainly in the economic arena) which will lead them to achieve Falah, there needs to be an intervening variable, especially related to accounting, which Islamic accounting is based on. Since the authors have considered decision-usefulness of conventional accounting to be unsuitable for the purposes of Islamic accounting, the authors will not consider it further as an objective of Islamic accounting. Instead, the authors suggest “Islamic accountability” as the concept, which can help operationalize Falah in the socioeconomic arena. This is an extension of the concept of accountability and primary stewardship developed in the conventional accounting literature.

Aus. J. Isla. Finan. & Busi. Vol 3(1), April 2017, P 23-28


Keywords


Accountability; Islamic bank; Insurance companies

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