1.0 SUMMARY OF THE ARTICLE There are six main sections in the article.

The first section is the introduction where the author discussed the purpose of this paper, which is to discuss whether or not we should be different accounting for different religion. Recent emergent of Islamic accounting took attention of other people (on-Muslims). Author highlighted some of the issues regarding, when accounting historians and researchers examine other places and other peoples. The first issue according to the author is western views of the Islamic world, which were formed by the concept of Orientalism, to such an extent that the very concept of the West was formed in opposition to the concept of the Orient, Orientalism (Said, 2003). Orientalism originally was developed in Britain and France to provide a rationale for colonization. By definition Orientalism means images of the life, history and topography of Turkey, Syria, Iraq, Iran, the Arabian Peninsula, Jordan, Israel, Lebanon, Egypt, Libya, Tunisia, Algeria, Morocco and sometimes modern Greece, the Crimea, Albania and the Sudan. In the second half of the 20th century, a form of American Orientalism emerges, in which the Orient is increasingly cast as the Other as an alien and hostile civilization fated to clash with the West Huntington (2002). Said (2003, pp. 300-301) identifies four dogmas of Orientalism: 1. There is an absolute and systematic difference between the West and the Orient, rather than mutual influences and commonalities. 2. It is better to study the Orient through abstract thought rather than direct evidence. 3. The Orient is eternal, uniform and incapable of defining itself, requiring the West to say what the Orient actually is. 4. The Orient is to be feared and hence needs to be controlled. Second issue, according to the author, is the term Islamic Accounting. I would agree with author on this issue as some people even associate terms such as Muslim or Islam with terrorism, which is the image created by westerns. According to the author, researches of Islamic accounting, wonder if Islam mandate any particular form of accounting or is it a form of shorthand meaning accounting in parts of the world where Islam is the majority religion during periods when Islam has been dominant. As we all know the main source of Islamic accounting is Quran and the Sunnah. As we will see later, these sources have been mined for their references to accounting and record keeping. From a geographical perspective, the notion of Islamic accounting may be a problematic one. Geographically, Islamic accounting would cover North Africa and a large part of Sub-Saharan Africa, the Middle East, the territories of the Ottoman Empire, the Indian sub-continent, much of South-East Asia and Indonesia, as well as large parts of the former Soviet Union. Why should we expect there to be any degree of commonality between accounting in these different part of the world.
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Modern literature of Islamic accounting The modern literature of Islamic accounting started back in 25 years ago when the interlinked economic, social and political changes since the late 1960s. It has substantially increased the wealth held by Muslims and at the same time, providing a greater desire to use this wealth in ways consistent with the principles of Islam. This was due to the awareness by the Muslims on the need to have an Islamic Financial Institutions that comply with Shariah and riba free. Subsequently, there were rapid growths of Islamic financial institutions in the Middle East. Nevertheless, only a few countries have claimed full Islamization for their economies. Others such as Malaysia introduced an Islamic windows whereby the existing conventional banks opened Islamic services and facilities to cater the demand for Islamic financial products. In addition, the author view that the development of universities in Muslim countries such as IIUM, also has been contributing to the Islamic accounting literature in recent years, whereby significant group of accounting scholars produce journals and research papers in order to share their thought on the subject. Many Muslim researchers who have been contributing to the Islamic accounting literature have studied in countries such as the UK and Australia, and the literature has been influenced by such diverse accounting ideas as social and environmental accounting on the one hand and continuously contemporary accounting (CoCoA) on the other. The history of Modern Literature of Islamic Accounting In this section, the author discussed the significant modern literature that focuses on Islamic accounting. It started in 1981 and from time to time, more scholars and researchers put their thought either in papers, journal or article to improve the c urrent literature and new ideas. Based on the discussion on this sub-topic, there are few main issues being discussed extensively. There are as follows: a) Importance of Islamic Accounting As early as 1981, Abdel Majid (1981) had formed a tentative theory for the accounting practices of Islamic banks, which were beginning to emerge at that time as a significant force. He concluded that there is a sense that Islamic accounting needs to be different from Western accounting.In 2001, Lewis touched on the objective of Islamic accounting which was to be accountable to Allah. He argued that the Islamic concept of social accountability makes it clear that the Islamic accountants prime obligation is to the ummah (the Islamic community). The effect of Islam on accounting and social accountability is essential in Islamic accounting.

b) Importance of computation of zakah The basic information of an Income Statements is to show the performance of an entity by way of looking at the profit or loss of a company. In Islam, any income we received is subject to zakah payment and an entity should do the same too. In 1986, Gambling&Karim discussed the measurement principles underpinning zakah, but they did not develop a comprehensive Islamic accounting theory yet. c) The need to have additional Shariah reporting to the stakeholders Khan (1994) in his paper argued that the information needs of an Islamic society are quite different from those of a capitalist society. He provided a framework for Islamic accounting based on the proprietary theory. In 1996, Idris tested perceptions of preparers of financial statements regarding the items that should appear in the annual reports of Islamic banks. He found that the Shariah supervisory report ranked as slightly important, as did the statement of changes in zakah and charity funds. A year later Baydoun and Willett (1997) discussed the effect of religion on cultural values. They claimed that Islamic community has the right to know about the effects of the operations of an organisation on its well-being. Thus, more qualitative information regarding the business is also essential for the Muslim society rather than the numbers in the Financial Statements. Baydoun and Willett (2000) then proposed Islamic corporate reports should include a value added statements because they considered that an Islamic society would wish for greater awareness of the social impact of firm activities. They argued that Islamic reports should contain much more extensive data about social costs and benefits created by the Islamic organisation. d) the emerging concern on the Islamic accounting postulates There are a lot of literatures discussed on the Islamic accounting postulates and comparison with the conventional accounting was being discussed. For example, Gambling &Karim (1991) argued, the concept of conservatism is not relevant for Islamic financial reporting purposes, nor is the use of historical cost, which is justified basically by the concept of conservatism. In addition, the classification of assets in the Balance Sheet should be done in a way that identifies what wealth is subject to zakah. More arguments on this topic will be discussed in the next section. e) perception of society on Islamic accounting Sulaiman (1998) in her paper, tested Baydoun and Willetts argument on the current value of Balance Sheet and value added statements would serve the needs of Muslims to a greater extent. The author found no difference in the perception of the usefulness of both current value Balance Sheets and value added statements between Muslims and

non-Muslim. In addition, even Muslims (other than zakah officers) did not consider the current value Balance Sheet to be particularly useful for calculating zakah. Maali (2005) investigated the influence of Islamic principles in determining the accounting practices of Jordan Islamic Bank when this bank was established in the late 1970s. He found that the significance of religious considerations for these practices substantially reduced over time. The Islamic View of the Concepts and Elements of the Accounting Theoretical Framework Based on the article, there are two alternative ways of developing an Islamic conceptual framework for accounting. Firstly, is to establish concepts and objectives in a deductive manner from fundamental Islamic principles. The other approach is to start with the concepts established in contemporary accounting and test them against Shariah. In practice, AAOIFI adopted the second approach (Karim, 1995, p.289), on the basis that not all accounting issues would be affected by the provisions of Shariah as some transactions and accounting concepts have any religious implications. In this section, elements from the Western conceptual framework for financial reporting will be investigated in the light of Shariah. The elements selected are those extensively discussed in the literature on Islamic accounting. i. OBJECTIVITY

The Islamic view of accountability is based on two main themes. The first of these is the concept of tawhid i.e., Muslims are accountable to for their actions during their lives. The second main theme is the concept of ownership in Islam. God has appointed man his viceregent (khalifa) on earth and entrusted him with stewardship of Gods possessions. Islam also emphasises on social justice, i.e., payment of zakah. The implication for businesses is that they should provide information to help Muslims undertake their religious duties (Maali et al, 2006). ii. ACCOUNTING UNIT (SEPARATE ENTITY) There are two extreme views regarding the limited liability for an entity. Khan (1994, p. 9) notes that there is an ethical problem associated with dealing with a company as a separate entity, as the owners are not liable for the companys debts in the event of insolvency, but have the rights to residual profits. However, Adnan and Gaffikin (1997), Abdul-Rahman (1996), Attiah (1989), and Shihadah (1987) argue that separate legal entities are acceptable. AAOIFI, in Statement of Financial Accounting No. 2, accepts the concept on the basis that trust foundations and mosques have long existed as separate legal entities in Islamic society (AAOIFI, 1999a, p.58). iii. GOING CONCERN

This concept holds that in the absence of evidence to the contrary it is assumed that the business will continue into indefinite future (Alexander and Britton, 1999). Hendriksen (1982) has pointed out that the concept supports the use of historical costs instead of liquidation values in certain situations. Adnan and Gaffikin (1997) reject its initial concept where the definition of the concept impaired in the sense that businesses are assumed to continue into indefinite future thus acknowledges that there is something other than God that will live continuously or indefinitely. AAOIFI justified this assumption in its Statement of Financial Accounting No. 2 on the basis of the mudaraba contract, which are formally for specific periods, but are assumed to continue until one or all of the parties involved decide to terminate the contract. Zaid (1995) claims that Islam recognises the concept because continuity is one of the bases on which Muslim life is built as well as relates to the business as source of zakah iv. PERIODICITY Financial reports depicting changes in the wealth of the firm should be disclosed periodically (Belkaoui, 2000). This concept is related to the going concern concept. The Prophet Mohammad said No zakah is payable on property till a year passes on it (Sunan Abu-Dawud 9:1568). As Muslims are required to calculate the amount subject to zakah every year, this provides the basis for acceptance of the periodicity concept. Attiah (1989) refers to the Bayt Al-Mal, an establishment found in the early Islamic Caliphate states, which combined the functions of finance ministry, central bank and tax authority. Attiah notes that the budget of Bayt Al-Mal was prepared on an annual basis, and the employees in the Islamic state were paid annually. v. MONEY MEASUREMENT

Accounting is a measurement and communication process of the activities of the firm that are measurable in monetary terms (Belkaoui, 2000). Paton and Littleton (1942) argued that accounting uses money price because it is a convenient common denominator by which diverse objects. The money measurement concept has two shortcomings: First, accounting only considers information quantifiable in terms of money (Alexander and Britton, 1999). Secondly, despite the fact that the purchasing power of the monetary unit is usually not stable over time. The first view is that failing to make inflationary adjustments in times of inflation exploits the lender. The other view is that adjusting for the change in purchasing power is a form of riba, which is prohibited by Islam. vi. CONSERVATISM Accountants should report the lowest of several possible values for assets and revenues and the highest of several possible values for liabilities and expenses. This concept is justified on the basis that it prevents management bias. Belkaoui (2000) describes it as an exception or modifying principle in the sense that it acts as a constraint to the presentation of relevant and reliable data. Hendriksen (1982) describes it as at best, a very poor method of treating the existence of uncertainty in valuation and income, and at worst, it results in a

complete distortion of accounting data. Adnan and Gaffikin (1997) claimed that conservatism concept contradicts the Quran. vii. HISTORICAL COST Assets are recorded at the amount of cash or cash equivalents paid at the time of their acquisition and liabilities are recorded at the amount of proceeds received in exchange for obligation (Alexander and Britton, 1999). The argument for the use is that it is easily verifiable and objective. Its main shortcomings appear from the effect of price change, arising both from general changes in purchasing power and relative changes in the prices of specific items. Gambling and Karim, 1991; Hamid et al, 1993; Gambling, 1994; Sulaiman, 2000 prefer the use of current values rather than historical cost, on the basis that zakah computation requires current values. Baydoun and Willett (2000) conclude that Islamic financial statements should include two balance sheets. viii. MATCHING Expenses should be recognised in the same period as the associated revenues. The matching concept is related to the accrual concept. Some scholars link the matching concept to the use of current cash equivalent values for the computation of zakah. Zaids links the matching concept to the going concern concept and suggests that the matching concept is necessary to decide the actual wealth subject to zakah. AAOIFI justified its adoption of this concept by arguing that it is supported by the Islamic concept of assigning the responsibility of the cost to the recipient of benefit (AAOIFI, 1999a). ix. TIMING OF RECOGNITION The time when an item of benefit should be recognised and recorded in the accounts is determined by the reasonably ascertainable generation of the benefit, not by the date of actual cash receipt of the benefit. The accrual method of accounting is commonly accepted as the most scientific and accurate method of handling accounts (Husband, 1926). However, the proponents of cash accounting have criticised the accrual basis, mostly because of the arbitrary and subjective judgments associated with it. For example, a true calculation of wealth, is on the basis for the computation of zakah. Lewis (2001) argues that the accrual basis is not acceptable for two reasons: first, if adopted, firms will pay zakah on wealth not yet received, and secondly, the mudaraba contract requires distribution only of cash profits according to the Shafai school of thought. x. FULL DISCLOSURE

No information of substance or of interest to the average investor will be omitted or concealed (Belkaoui, 2000). Full disclosure implies the presentation of all relevant information. The full disclosure principle is a broad, open-ended construct leaving several questions unanswered or open to different interpretations (Belkaoui, 2000). The answers to questions such as to whom should the firm disclose, fair to whom, and how much disclosure seem clearer from the Islamic perspective, because of the clearer concepts of accountability and ownership. The concept of disclosure is related to the concept of
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accountability. The Quran emphasises the disclosure of truth: And cover not Truth with falsehood, nor conceal the Truth when you know (what it is) (Al-Baqarah 2:42). 5.0 Islamic Bank Transaction: Accounting Implications. The concept of Islamic banks is the banks that follow the Islamic Shariah in their business. The bank is prohibited to deal in interest (riba), gambling (gharar) and uncertainty (maysir). But it requires transactions to be lawful (halal).According to Archer and Karim 2001, there are two ways how Islamic banks mobilize their funds, which are mobilizing funds for their own operations and in providing finance for their clients operations that comply with the shariah. Islamic bank use Mudaraba contract in mobilizing funds from their depositors. Originally, the mudaraba contract involved capital provider that contribute capital to the venture, then the other party (mudarib) contribute labour. The two parties would share the profits according to pre-agreed ratio and if there any loss the capital provider would bear all the financial loss. In current practice, the transaction occurs between depositor (capital provider) and bank (mudarib). Profits being distributed according to predetermine ratio, but in case of losses, the depositors bear the losses and the bank receives nothing for its effort. The transaction is similar as an investment deposit (Suliman,1996). For financing activities, Islamic bank utilize either mark-up instruments such as mudaraba, ijara and salam, or profit loss sharing instruments such as mudaraba and musharaka. Islamic bank appoints a religious auditor (shariah consultant) and Shariah Supervisory Board to make sure that the transactions is lawful (halal). Author was highlighted the six main accounting implications of Islamic Banking as follows: 5.1 Reporting of investment account Early attempts to accommodate the mudaraba contract within contemporary banking practice suggested that deposits should be guaranteed (e.g. Al-Sader, 1974; Hmoud, 1982).It is highly criticized because normally Islamic bank operate under the non-guarantee convention. Some scholars of Islamic accounting (e.g. Karim, 2000a; Janahi, 1994) claim that conventional accounting principles do not deal properly with investment deposits, mainly because these deposits are not guaranteed and the depositors are not given a specific rate of return on their deposits. Janahi also stated that multinational Islamic financial institutions in different countries have different reporting treatments. Karim (2001) recorded that there are three different reporting practices in different countries in which Islamic bank operate, which are reporting investment account as liabilities, equity or off balance sheet accounts. AAOIFI proposed reporting treatments for investment accounts. There are two classified investment account comprised unrestricted and restricted account. Unrestricted account should be reflected separately from liabilities and equities. For restricted account it is requires a similar off-balance sheet treatment to that of IAS30. Then, the bank does not have the right
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to use or dispose of these investments, except within the conditions of contract between the bank and the holders. These investments are not the assets of the bank and should not be reflected in its balance sheet. 5.2 Distribution of Profit between Bank and Investment Account Holders The original form of mudaraba contract is based on the concept of tandeed or the liquidation of project financed by the mudaraba funds in order to determine and distribute profits. If the parties engaged in mudaraba contracts and they distribute profit before liquidation, the uncertainty may occur .The author highlighted the new form of mudaraba issue which in Islamic Bank, depositors will deposit and withdraw money at different point of times. These activities are not practical for depositors to wait until liquidation to distribute profits. Al-Arabi, (1996) and Hmoud (1982) suggested that Islamic bank should calculate profits generated from investments during the year and to consider this is as tandeed hukmi (constructive tandeed or face liquidation). These profits, subject in some cases to provisions for possible losses, are distributed between the bank and the depositors. The bank will not actually liquidate the investments, but considers them as new investments in the new financial period. 5.3 Allocation of Administration Expenses and Revenues from other banking operations. Abdel-Magid (1981, p.100) argued that one major accounting problem associated with investment deposits is the determination of expenses that are properly chargeable against revenues and gains earned on investment. Karim (1996) and Archer et al. (1998) pointed out that Islamic banks tend to use two methods of profit allocation. First, the pooling method, in which revenues and expenses are shared by the shareholders and investment account holders. Second, the separation method is the bank separates the revenues and expenses of investment operations from those of other banking services. Investment account holders only share the revenues and expenses related to the investment operations in which their funds are utilised. There are two different methods to accommodate modern practices suggested by Hmoud (1982) which is depositors should be charged only with expenses related to their investment and should participate only in the revenues generated from their funds. Then, Al-Arabi (cited by Zaid, 1996) depositors are seen as participants in the bank and should share the revenues and expenses of other banking operations. 4) The agency problem of investment deposits. Mudaraba contract creates and extensive agency problem for depositors in which Islamic bank do not promise of deposit or any returns and the profit is shared per agreed ratio. This may represent as an incentive to the bank to increase the expenses attributable to investment account holders for the benefit of shareholders. Shareholders have ability to

monitor the activities, but the investment account holders do not have such rights. Bank or the management as consider agents will control their actions. The issue on agency problem that suggested by Archer et all (1998), the investment account holders must place trust in the monitoring of management by shareholders which is no conflict of interest, parties funds are mixed and invested in the same portfolio, and the expenses and revenues are shared between them. Besides that, shareholders have the right to withdraw their fund if not satisfied with the return. Al-Dheehaniet all (1999) found that the increase in deposits enable the Islamic bank to increase both its market value and its shareholders rate of return without financial risk to the bank. 5) Valuation of Asset and Liabilities Related to Investment Accounts The issue of revaluation of asset and liabilities which regards both historical and current cost, AAOIFI proposed the use of equivalent cash value expected to be realised or paid rather than historical cost, which implies that the unrealised holding gains would be distributed. Karim (1995) argued that this position has attracted strong resistance from some Shariah scholars who believe that the distribution of unrealised holding gains violates Shariah principles. From an Islamic perspective, profit only arises from effort, and profit is realised when the firm receives the money, or is entitled to it. Profit cannot be created by making assumptions and evaluations; hence it requires liquidation (Hmoud, 1996,). 6) Revenue Recognition for Murabaha Financing. The issue of revenue recognition from murabaha is very important for Islamic banks. The mark-up price over the original cost of items to the bank cannot be considered as interest, since interests are forbidden. Thus, the author highlighted that the separation of a mark-up into profit margin and interest charges are not suitable from the Islamic perspectives. There are five (5) different methods for recognize gross profit on murabaha (Archer and Karim 1997) that were being used by Islamic banks. There are based on delivery of item, pro rata on the due dates of the monthly payments and receipts. It also considered the capital (the original cost) has been recovered, with the later payments (after cost recovery) considered to represent profits; and only when all the payments have been received. The methods are acceptable because it is based on liquidation or cash basis (Al-Jalf,1996). It also acceptable by AAOFI since it is long term and profit should be distributed over the period of financing. But in first methods, it is not adopted by AAOFI but Hmoud(1996), who originally introduced murabaha to Islamic banking was criticized that the first alternative was recommended on the basis of, the profit is seen as the increase in capital from sales transaction. 6.0 The Substance of Islamic Bank Transactions The basis of Islamic Banking products claim to be difference from conventional bank but the account treatment for some products would considered similar undertaken by
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conventional bank. The transaction involve the deposit system based on Mudaraba, Murabaha financing, Musharaka financing, Ijara financing.

6.1 Are deposit liabilities in substance? Mudaraba is a profit sharing based on profit ratio that has been agreed by both parties; capital contributor and entrepreneur. The entrepreneur does not guarantee any repayment or any return due to the investment. If there any loss incurred during the contract, the capital contributed will be affected. In this case the principle amount will be deducted. However, Islamic bank has guaranteed the repayment and any return due to the mudaraba deposit account. The account has been treated as liabilities due to the nature of deposit account which similar to the conventional bank which treated all deposit accounts as liabilities. Referring to (Karim, 2001, p.185), some Islamic banks report investment accounts as liabilities, justifying this treatment on the basis that these deposits, in economic reality, are similar to the deposits in conventional banks. In FRSi para 42 stated: The liabilities of an IFI usually comprise deposits from customers, deposits and placements of other financial institutions, bills payable, and other liabilities. Deposits from customers comprise Mudarabah and non-Mudarabah deposits. Non-Mudarabah deposits include savings, current and Negotiable Islamic Debt Certificates and other similar instruments. Mudarabah deposits consist of deposits accepted by an IFI in the form of investment and other profit-sharing deposit accounts. In FRSi has obliged the islamic bank to present the mudarabah deposit account to be part of the liabilities which is in nature there will be repayment. Even if an Islamic bank is not legally liable to pay back the deposits except in the case of misconduct by the bank. The bank may find it has to repay the deposits on demand and offer an appropriate rate of return because of competitive pressures (Kuran, 1995). AAOIFI required unrestricted deposits to be reported in the balance sheet in a third category between liability and equity. It justified excluding them from liability on the basis that the Islamic bank is not obligated in case of loss to return the original amount of funds (AAOIFI, Statement of Financial Accounting No. 2, Para. 29).

6.2 Are murabaha sales really loans?

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Murabaha is a sales contract based on cost plus mark up. Both parties should be clearly informed of the cost and mark up. Murabaha financing is very important to Islamic banks as it dominates their financing activities. Some scholar argued that the practice of murabaha financing in Islamic bank is similar to the conventional loan. This is due to the IAS18 has divided the finance charge from the profit margin where the finance charged should be recognized on proportioned basis and the profit margin should be recognized when the risk and reward transferred to the customer. However, in mudaraba concept, mark up are not divisible into facility charges and mark up. Murinde and Naser (1998) argued that Mortgage financing provided by a UK branch of one of the largest Islamic banking corporations found out that the mark up used is similar to a pre-determined rate of interest.

6.3 Is musharaka financing really a type of joint venture?

Musharaka financing is quite similar to the joint ventures usually undertaken by investment and industrial banks (Khan, 1994, p.66). The argument is wether it is possible to adapt IFRS to cater for musharaka financing. Shariah has outlined that loses has to be shared on pro-rata basis and the undistributed profit should be treated differently as musharaka recievable. The equity method as proposed by the IFRS has reported the investment by it carrying amount which included both cost and undistributed profit. Archer and Karim, (2001) proposed that the equity method could still be used by splitting the carrying amount in the financial statements into two components: the cost element and the share of undistributed profits

6.4 Is ijara really just a type of lease?

Shariah has made it compulsory to the owner or in this case lessor to bear the maintainance cost of the lease asset. In practises the Ijara concept has been adopted the conventional lease concept which is the responsibility of the asset has been transferred to the lessee. The way the lease asset has been treated similar to the conventional lease where the lease asset has been seperated from property of the bank into different account. In other word, the act of transferring the responsibilty to the lessee where the account is similar to the recievable account. During the lease period the lessor who poseses the lease asset not the lessee. Then, the one who has possession of an asset is responsible for it (Gambling and Karim, 1991; Ismail and Latiff, 2000).
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6.5 Substance or form? Substance over form has been widely discussed over by the scholars. Reffering to the meaning of substance over form is an accounting principles used to ensure that financial statements give a complete, relevant and accurate picture of transactions and events. Emphasizing on whether the report forms really represent the substance of the transactions. The issue of accounting for transactions of Islamic does not truly represent the mechanism of the transactions. In the creation of AAOIFI, there is no substance over form in the reliability concept. Reliability means that, based on all the specific circumstances surrounding a particular transaction or event, the method chosen to measure and/or disclose its effects produces information that reflects the substance of the transaction (AAOIFI, 1999a, p.69). some argued that AAOIFI is indirectly recognised substance over form in realiability concept. In addition, there are some concerns on the religious grounds of Islamic bank. The similar transactions undertaken by conventional bank might not be similar undertaken by Islamic bank. Some argues that if the substance of the transactions in conventional bank is similar to the Islamic bank the IFRS could come into picture to account for the transaction. However, economic reality is part of social reality, which is an intersubjective social construction. This may differ internationally owing to many factors, including religion. Thus, religion would affect the construction of reality of these transactions, so what is perceived as being a similar transaction in a Western context, might not be perceived as a similar transaction in an Islamic context (Hameed and Archer and Karim). Furthermore, the adoption historical cost concept from conventional account would much consider inappropriate. The issue of using current value has been raised during the establishment of AAOIFI. Practically, valuation at current value is required for purposes of zakah computation, and, as argued by AAOIFI in its statement of concepts, valuation at current value is better for equal treatment of investment account holders. However, the current value concept would affected murabaha where it should be recorded as historical cost to avoid unrealised profit or loss.

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Conclusion There are different objectives for Islamic accounting, as the concept of accountability is broader from the Islamic perspective. However, many of the concepts discussed are the subject of disagreement between Islamic scholars, as regards their acceptability from the Islamic perspective. There is also disagreement on the use of historical or current values, and on the use of the accrual or cash basis. The accounting treatments adopted by Islamic banks have a similar problem, which is related to the problem of the different interpretations of Shariah by those advising on the relevant accounting treatments for Islamic banks. Even though a lot of literature has discussed the need for special accounting regulations for Islamic banks, few have started to use the AAOIFI standards. Many of the banks apply the accounting treatments suggested their Shariah Supervisory Boards, and because of the different opinions of Shariah Boards, it is not possible to predict the adoption of uniform accounting standards for all Islamic banks in the near future. Much of the recent research into the practices of Islamic banks concludes that transactions of Islamic banks are similar to those of conventional banks in substance, even though their description and legal form may be different. 2.0 COMMENTS The article covers a wide range of Islamic finance issues from the accounting conceptual framework to the financial products in great length.For example, author addresses many issues regarding the accounting implications in Islamic Banking. There are a lot of discussion especially disagreement on the use of historical and current values which give clear understanding about the issue. In addition, author also put complete and adequate citation and acknowledgement of sources of current and past issue. The arrangement of points or ideas also in sequence and systematic. The writer to some extent did mention on certain literature reviewed and referred to but with little consideration on the meaning intended to deliver by the original writers. For example, in the case of the going concern concept, the writer stated that the Islamic scholar particularly mentioned reject the applicability of the concept due to the unacceptability of the indefinite assumption of business entity to be in existence for indefinite future. On the other hand, the real intention of the original writer of the article claimed the concept of going concern to be unacceptable only when the assumption taken without the extended definition of the concept which is in the absence of evidence to the contrary, Thus this will impaired the original article credibility as would have been misunderstood by the readers. This is critical paper on Islamic accounting, rather than trying to solve the issues.

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3.0 RECOMMENDATIONS We are proposing that the article should also include the materiality concept such the concept is very much related to Islamic finance in the sense that the payment of zakat should be calculated for and payable to as and when specific amount (nasaab) of assets and income established. In addition, author should justify should some issue regarding the accounting implications especially for current practices in Islamic Banking. Besides that, although all Islamic Banks use different accounting treatment, it is not possible that the uniformity of accounting standard will realize for all Islamic banks around the world with regards to the needs and the harmonization as well as for the public interest(maslahah ummah). Although the Islamic banking and finance as whole seems as a baby compared to conventional finance. But, Islamic Banks and other Islamic financial institutions have better performance than the conventional. Of course, there will be challenges such as highlighted by Christopher Napier (2007) and critics along the road. However, that is our duty to Allah (s.w.t) to achieve the establishment of pure Islamic financial system in current development of Islamic finance as a good sign of that.

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