Assignment PIA

KOLEJ PROFESIONAL MARA BANDAR PENAWAR SESSION: 1 2022/2023

ASSESSMENT COVER SHEET
Course: Principles of Islamic Accounting Code: ACC 2682
Program: Diploma in Accounting Semester: 5 & 6
Assessment Type: ASSIGNMENT 1 Overall marks: 50, Weightage: 10%
LEARNING OUTCOMES & ITEM SPECIFICATION
CLO CLO PLO Domain Assessment criteria CLO A2 PLO5
Domain 2
CLO 2: A2 PLO 5 Present the following
Present Islamic communicate items based on the

worldview in business effectively in document provided
environment. (A2, written form or
PLO5) verbally in 1.1 Islamic worldview of √ √ √
disseminating accounting
information to 1.2 History of Islamic
colleagues and accounting
clients. 1.3 Objectives of Islamic √ √ √
accounting
1.4 AAOIFI’s code of √ √ √
ethics for accountants
1.5 Islamic ethical √ √ √
principle
of Maslahah and
accounting ethics.

VERIFICATION
Prepared by: Course Coordinator (CC) Verified by: Subject Matter Expert
(SME)

................................................
................................................. (NORA’INI BINTI
(NOR RAJWANI BINTI AWANG) AWAB)

PRINCIPLE OF ISLAMIC ACCOUNTING
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ASSIGNMENT : S1 2022/2023

KOLEJ PROFESIONAL MARA BANDAR PENAWAR

ASSIGNMENT COVER SHEET

COURSE : PRINCIPLES OF ISLAMIC ACCOUNTING
COURSE CODE : ACC 2682
SESSION : 1 2022/2023
Lecturer’s name : Madam Suraya Bahar
DATE ASSIGN : Week 2 – Monday 21/3/2022
DATE DUE : Week 3 – Tuesday 29/3/2022
(before 4.30pm)

Student’s details

Name ID
Luqmanul Hakim Bin Norazman PDA-2007-099
Farah Natasha Binti Nazrul Azam PDA-2007-066
Nurul Asyiqin Binti Jamaludin PDA-2007-078
Nur Hazimah Binti Mazlan PDA-2007-077
Class: DIA 6E
Acc2682/S1_22/assignment_1
ACC2682
Table of content
No Content Page
1 Acknowledgement 4
2 Part A 5-8
3 Part B 9 - 12
4 Link video presentation 13
5 Reference 14
6 Rubric 15
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ACKNOWLEDGEMENT
Assalamualaikum W.B.T, first and foremost we want to thank Allah SWT for giving
us the chance and strength to finish this ACC 2682 course Assignment during this
semester. No doubt there are problems faced throughout the journey to finish this
assignment but God willing we are able to solve them all.
Moreover, we wish to express our gratitude to Madam Suraya Binti Bahar, our
Principle of Islamic Accounting lecturer for providing us the opportunity to work on
this assignment to test our understanding in this course. Not to forget the guidance
and encouragement gave for us to carry on the assignment. Alas, helping us in
enhancing our group work morale and preparing us in workforce after study.
We also sincerely want to thank our parents and friend for support and
encouragement they give throughout the process of completing the assignment. Not
to forget the group member among ourselves, thank you for the collaboration, idea
contribution, energy and time spend given only to complete the assignment and task
given. We hope nothing but succession of our ACC 2682 course Assignment
outcome.
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Part A
Question 1
Differentiate the Islamic worldview and the Conventional worldview of accounting.
Islamic worldview Conventional worldview

The accounting system provides The accounting systems which identifies,
necessary financial and non-financial measures and records the financial
information to the stakeholders of an aspects of an entity and communicates
entity, which will ensures that the entity the information without any compliance
is continuously operating within the to Islamic shariah to its interested users.
bounds of Islamic Shariah.
The origin of accounting comes from The origin of accounting comes from the
Allah (SWT) which is designed to respect economic rationality. It is a human made
the rights of others and avoiding misuse system that aims to help economic
of other people’s property. Hadith is the decision making whose ultimate purpose
second source and Islamic doctrine. is efficiently allocate scarce resources in
However, it is also the indispensable part some profitable ways.
of Islamic accounting.
The objective is to ensure transparent, The objective is to ensure optimum
adequate and accurate financial utilization of scarce resources restricted
information of an organization and the to profitable activities through available
process is compatible with the Shariah information in the market which is
law as well as social and economic incompatible with Shariah law.
regulations.
Adopts production method that are not Maximum production for maximization of
detrimental to society and also employs personal satisfaction is a regular practice.
production resources in a less waste way
and safe for those for future production.
This method has nothing to do with
capitalist economy.
There are certain regulations regarding There are no such regulation to impose
service or income distribution and circulation of wealth in a society and the
according to the regulations, the national capital is shared for the benefit of a
income is shared by the entire segment certain group
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of society, whether or not capable of

earning money.
Question 2
(a) What is a code of ethics?
Generally, code of ethics is defined as a guideline, principles or value sketched to

assist the professionals to conduct their business, operation or job in a good
manner. In code of ethics or ethical code, it emphasizes an organization to practice
professionalism, honesty and integrity. Code of ethics also defined as set of moral
rules that can tame or educate humans value nature to distinguish what is right or
wrong action.
Code of ethics in Islamic accounting created because of the existence of

accountants with low morale which could affect accountancy field as a whole. Code
of ethics in Islamic accounting is developed by Auditing Organizations of Islamic
Financial Institutions or AAOIFI which established in the year of 1998. This Bahrain
based international non-profit organization is fundamentally responsible for
development and issuance of standards for Islamic finance industry globally. AAOIFI
has issued a total of 100 standards that derived from Islamic Syari’ah rules and
principles. The standards include accounting, auditing, ethics and governance for
international Islamic finance field.
Basically, this ethical code was developed to motivate Muslim accountants to

comply it due to religious belief which obeying the musts and resist those that
forbidden. There are seven basic foundations outlined in the Islamic Syari’ah which
integrity, vicegerency, sincerity, piety, righteousness, God-fearing and obedience to
Allah. Based on these seven foundations, AAOIFI created six ethical principles which
consists of trustworthiness, legitimacy, objectivity, professional competence and
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diligence, faith-driven conduct and professional conduct and technical standards

which then develop the guiding rules for accountants.
As mentioned earlier, AAOIFI developed Islamic based ethical codes in

accounting however it lacks in guidance to operate the ethical codes in order to
make impact in Islamic financial institutions. Therefore, the principle of Maslahah is
used as ethical framework to resolve issues encountered by accountants in
performing their duties.
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(b) Distinguish between AAOIFI code of ethics and MIA code of ethics.
AAOIFI MIA
Develop standards in Develop standards in
accounting, auditing, Coverage accounting, auditing,
ethics and governance for ethics and governance for
international Islamic Malaysian finance only
finance
 Trustworthiness  Integrity
 Legitimacy  Objectivity
 Objectivity  Professional
 Professional Fundamental Principle competence and
competence and due care
diligence  Confidentiality
 Faith-driven  Professional
conduct and behavior
professional
conduct
 Technical standards
Derived from Islamic Derived from ethical
Syari’ah rules and Adaption codes for Professional
principles Accountants issuance by
the International
Federation of Accountants
(IFAC)
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Part B
Question 3
(a) In what way can the Islamic concept of `piety’ assist the accountants to
become ethical?
Riba and excessive gharar are Islamic prohibitions that involve lending and
borrowing money at interest, as well as the selling of risk. For example, Islamic
money should not be utilized to fund a brewery since the underlying activity, alcohol
drinking, is banned by Islam. Similarly, due to riba and excessive gharar restrictions,
the money cannot be utilized for lending money at interest or selling risk.
The AAOIFI's code of ethical behavior for accountants outlines an ethical framework
based on Islamic Shariah norms and principles for accountants. The primary premise
of this code is that Muslim accountants will be driven to follow it for religious reasons
and as a method of fulfilling Allah's commands and abstaining from those that He
forbids. Accountants will also be driven to follow the ethical concepts outlined in
professional codes of ethics, as long as the latter do not conflict with Shariah norms
and principles. The guideline also attempts to assist accountants acquire ethical
awareness by bringing ethical concerns in professional activity to their notice.
The Shariah underpinnings of accounting ethics, the principles of ethics for

accountants, and the norms of ethical behaviour for accountants are the three
components of the AAOIFI's code of ethical conduct. Integrity, viceregency, honesty,
piety, righteousness, Allah-fearing, and responsibility to Allah are the seven main
principles of Shariah accounting ethics. AAOIFI defined six key ethical principles
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based on these seven foundations which is trustworthiness, legitimacy, objectivity,

professional competence and diligence, faith-driven conduct, professional conduct
and technical standards, and faith-driven conduct. Finally, they produced guiding
norms for accountants in their professional activity for each of the six ethical
principles.
(b) What are the rules of ethical conduct based on the Islamic principles of
‘trustworthiness’? Do you think these ethical rules are sufficient to discipline
accountants?
Ethics is typically defined as a collection of moral principles concerned with

the nature of value and how humans can discriminate between what is good and
what is wrong in their actions. The term ethics is thought to be a normative field
since it only prescribes what should be done in life and what should be avoided
(Carroll, 1998). The idea of normative values here is that the concept of doing good
or evil, right or wrong, is only contemporaneous in nature, whereby good or bad
might differ from one person to the next, and from one country to the next. At this
stage, the nature of ethics is quite speculative; it may be good for someone and it
may not be good for someone else.
On the contrary, in Islam, becoming ethical is not a question of "as long as

society approves," because being ethical is definitely not a function of following the
ideas of others. In reality, it can diverge from what is defined as ethical depending
on religious views. Whatever Muslims do in Islam, they must meet Islamic
standards, and it should only suggest one's connection with God (Al-Tawhid) by
exercising entire submission that is done freely as absolute obedience to Allah's
established rule (Al-Faruqi, 1986; Al-Attas, 1978). Thus, religion-defined ethics is
ultimate in nature, and Islam is a religion that may set high ethical standards and
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give tremendous reasons for ethical behaviour in all facets of human life, including
accounting.
Muslims derive their ethics from two basic sources: the Qur'an and the
Sunnah of the Prophet Muhammad (p.b.u.h). The term Khuluq is closely associated
with ethics in the Qur'an (good nature). It refers to continuing to be a good
character in one's own deeds for Allah (S.W.T) or in actions involving other people.
According to Abdul Rahim (2013), the human activity of life is determined by akhlaq
(plural of khuluq). Such character will result in positive human activities, which will
be acquired via instruction and practise. The term "ethics" derives from the Greek
word "ethos." Ethos refers to the precise ideals, norms, rules, spirit, and attitude
that individuals believe in and use to live their life.
Muslims were encouraged by Islam to be ethical toward others. Goodness
may be defined as the attitude of not hurting anybody by word or deed, forgiving
those who have injured him or her, forgetting the sins done, and returning bad with
good. This is due to the fact that the notion of goodness and morality is increasingly
centred on some fundamental beliefs and principles for Muslims to live ethically. As a
result, the Qur'an prescribes concepts of goodness such as khayr (goodness), birr
(righteousness), 'adl (equilibrium and justice), trust (Amanah), benevolence
(Ihsaan), and others. In Islam, the concept of trust (Amanah) is the most
fundamental kind of din in reciprocal relationships for Allah and human "secular"
relationships such as societies. According to the Qur'an, "every soul will be (kept) in
pledge for its deeds." (Qur'an, verse 74:38)
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In the theological context, Muslims are driven to fulfil their trusteeship

obligations as holders of amanah (Trustee of God) on earth, and they must accept
responsibility for their conduct (Abdul Rahman, 2010). According to Al-Attas, the
notion of amanah is likewise associated with the phrase of obligation (1978) Being
indebted is not only associated with Muslims' responsibility to the creator (God), but
the notion of amanah is also associated with being in debt and under obligation
naturally with dunya (other people). As a result, anything Muslims do must bear
accountability beyond worldly existence to life in the afterlife.
This ethical rules are sufficient to discipline accountants since the

accountant's profession involves a human problem in which they face a sophisticated
moral dilemma while compiling and conveying financial information. The role of
Islamic ethics is essential for accountants to perform their duties both professionally
and morally. Accountants are responsible for communicating facts not only for the
organisations they represent, but also for society as a whole. In Islam, accountants
are encouraged to do an outstanding job since they possess amanah and are on the
lookout for Allah's rewards. Thus, the effort to express certain Islamic rules for
accountants as a source of conduct and accordance with Islamic principles is highly
needed. Islamic ethics as a reference for accountants to provide the excellent work
to fulfil Shari’ah requirements.
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Link video presentation

https://youtu.be/HVoRcygMBWY
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Reference
1. Role of Islamic ethics towards ethical ... - jgi.ump.edu.my. (n.d.). Retrieved

March 27, 2022, from
https://jgi.ump.edu.my/index.php/en/volume-2-issue-1-december-2018/95-
role-of-islamic-ethics-towards-ethical-accounting-practice/file
2. MIA. (2019). By Laws (On Professional Ethics, Conduct and Practice) Of The
Malaysian Institute Of Accountants.
3. Wahyuni, I & other contributors. (2018). Role of Islamic Ethics Towards Ethical
Accounting Practice (Vol 2). Penerbit UMP Press.
4. Abdul Rahman, AR. (2003). Ethics in Accounting Education: Contribution of The

Islamic Principle of Maslahah. IIUM Journal of Economics and Management.
5. No Author. (2020). About AAOIFI. AAOIFI.

https://aaoifi.com/about-aaoifi/?lang=en
6. No Author. (n.d). Ethics. MIA.

https://www.mia.org.my/v2/ppt/ethics/ethics.aspx
7. Hayes, A. (2022, February 8). Codes of ethics: Types and examples. Investopedia.
https://www.investopedia.com/terms/c/code-ofethics
8. (PDF) conventional accounting vs. Islamic Accounting: A ... (n.d.). Retrieved March
28, 2022, from
https://www.researchgate.net/publication/349044369_Conventional_Accounting_vs_I
slamic_Accounting_A_Comparative_Study
9. Conventional accounting vs islamic accounting - the debate revisited.pdf - The current issue
and full text archive of this journal is available: Course Hero URL
https://www.coursehero.com/file/78617066/conventional-accounting-vs-islamic-
accounting-the-debate-revisitedpdf/
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Group members:
1. Luqmanul Hakim Bin Norazman
2. Farah Natasha Binti Nazrul Azam
3. Nur Hazimah Binti Mazlan
4. Nurul Asyiqin Binti Jamaludin
RUBRICS
SEMESTER: 1 2022/2023

Developing Standard Exemplary Total
No Criteria / Score Points
3 - 6 7 - 8 9 - 10
Scored
1 Content Lacks depth limited Only some topics In depth and
treatment of are thoroughly thorough
assigned topics. discussed and given discussion of
Demonstrates an in-depth assigned topics. /10
limited evidence treatment. Shows Shows strong
of research. moderate evidence evidence of
of research. research.
2 Organization and Shows minimum Shows adequate Very well planned,
Clarity of planning, some planning, some logical
presentation sections are sections need presentation and
/10
disorganized and clarification and well understood by
confusing improvement the audience
logical presentation
3 Delivery Nervous, Voice projection is Relaxed,
selfconscious and satisfactorily varied selfconfident.
monotone voice in volume and Voice projection
inflection flutuates in volume /10
and inflection and
sustain interest
4 Visuals and Makes use of AV Makes use of AV AV materials are

imagery slides materials but does materials and well done and are
not enhance the enhances the used to make
/10
presentation presentation to a presentation more
limited extend interesting and
meaningful
5 Time Did not finish in a Hurriedly finishs on Finishes within the
management timely manner time prescribed time
with appropreate /10
pacing

TOTAL SCORED /50

15
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Lecturer: Madam Suraya Bahar Date: 29/3/2022
16

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KOLEJ PROFESIONAL MARA BANDAR PENAWAR SESSION: 1 2022/2023

KOLEJ PROFESIONAL MARA BANDAR PENAWAR

Differentiate the Islamic worldview and the Conventional worldview of accounting.

Islamic worldview Conventional worldview

of society, whether or not capable of

Generally, code of ethics is defined as a guideline, principles or value sketched to

Code of ethics in Islamic accounting created because of the existence of

Basically, this ethical code was developed to motivate Muslim accountants to

diligence, faith-driven conduct and professional conduct and technical standards

As mentioned earlier, AAOIFI developed Islamic based ethical codes in

The Shariah underpinnings of accounting ethics, the principles of ethics for

based on these seven foundations which is trustworthiness, legitimacy, objectivity,

Ethics is typically defined as a collection of moral principles concerned with

On the contrary, in Islam, becoming ethical is not a question of "as long as

In the theological context, Muslims are driven to fulfil their trusteeship

This ethical rules are sufficient to discipline accountants since the

Link video presentation

1. Role of Islamic ethics towards ethical ... - jgi.ump.edu.my. (n.d.). Retrieved

4. Abdul Rahman, AR. (2003). Ethics in Accounting Education: Contribution of The

5. No Author. (2020). About AAOIFI. AAOIFI.

6. No Author. (n.d). Ethics. MIA.

4 Visuals and Makes use of AV Makes use of AV AV materials are

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