“Religion is more than a belief; it constitutes a way of life, involving unique practices and perspectives in accounting.” – Meredith Young
This, Young concludes in her thesis that examines cultural impacts on accounting.
From Egyptian papyrus to Incan knots, accounting has taken shape in different forms across cultures and time.
Let’s look at how religion influences accounting systems, styles, and mediums.
The Sacred and the Profane
In the early Church of England, acts and behaviors were identified as either sacred or profane, holy or sinful.
Handling money – and money, in general – were of the profane variety.
Matthew 6:24 reads:
“No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.”
Upon this verse, the Church’s belief is based. Accounting was viewed as profane and should not commingle with religious laws and principles.
Of course, modern Christians are unlikely to hold this view, but it still exists in the Church of England.
The Islamic perspective does not divide acts into two parties.
Rather, a person’s acts ready him or her for higher religious acts, which should be done according to those Allah set forth in the Quran.
A primary tenet of the Islamic faith is accountability.
Not only should one be accountable for his debts, but he will ultimately have to account to Allah for his deeds on Judgement Day.
There, a Muslim will receive a book of deeds – a record of all good acts done in one’s life.
Rewards or punishments are awaiting all in response to this record.
And what constitutes a “good deed”?
Abiding by Islamic law, to the letter, for one.
Some of these laws revolve around accounting.
In Albaqarah, Verse 282, the Quran states:
“O you who believe! When you contract a debt for a fixed period, write it down. Let scribe write it down in justice between you. Let not the scribe refuse to write as Allah has taught him, so let him write…”
Financial transactions are regulated according to Islamic practice. Muslim accountants must uphold these laws.
One example is interest. According to Islamic law, charging interest is prohibited.
Moreover, a tax called “zakat” is imposed on certain property types and is intended to be charitably redistributed.
Islamic companies must comply to the standards published by the Islamic Financial Accounting Standard Board (IFASB).
As one might expect, there is often a conflict between Western accounting standards and practices and Islamic accounting, which can pose cross-cultural issues where business is involved.