120 The American Journal of Islamic Social Sciences 1 1: 1 

Book Review 

On Islamic Accounting: Its Future 
Impact on Western Accounting 

By Toshihzy Hayashi. Niigata-ken, Japan: Institute of 
Middle Eastern Studies, International University of 
Japan, 130 pp. 

Islamic accounthg is an emerging field of study. With the estab- 
lishment of several Islamic banks, interest in this area has increased. The 
present booklet is a master’s thesis, submitted to the Intemational Univer- 
sity of Japan, consisting of four chapters and five appendices. Chapter 
one reviews western accounting and its evolution. Its main argument is 
that western accounting developed in response to the needs of evolving 
capitalism. Due to social assumptions of the primacy of self-interest and 
the profit motive, accounting serves the needs of business and not those 
of society. Society makes only an indirect use of a business entity’s ac- 
counting statements. 

In chapter two, the author introduces the basic concept of Islamic ac- 
counting. According to him, Islamic accounting is more responsive to a 
society’s needs. The accounting statements prepared in an Islamic frame- 
work provide essential information needed by the society. For example, 
they are useful for calculating zakat. Chapter three deals with the actual 
accounting of zakat. The author examines the controversy of whether 
zakat should be treated as a cost or as part of the appropriation account 
in a mudiirubuh arrangement. He supports the contention that it should 
be treated as a cost. The last chapter summaries the debate and concludes 
that western accounting should make use of the Islamic accounting con- 
cept’s of responding to the needs of a society rather than a business. 

The book is a welcome addition to the meager literatw on the sub- 
ject. The author has examined some primary sources in order to base his 
argument, although he has also relied on secondary source. But the reader 
does not find what he expects for, with the exception of one major obser- 
vation about the scope of accounting in the Islamic and western frame- 
works, there is little on the differences between the two concepts. For 
example, he does not compare their assumptions, standards, procedures, 
and methods. Perhaps these questions were not part of the book‘s scope. 
However, I think such a discussion would be of interest to many readers. 



Book Reviews 121 

While examining the concept of accounting in Islam, the author de- 
votes too much space to relating accounting with accountability on the 
Day of Judgment. In the end, he could not show how this makes a differ- 
ence as far as business is concerned 

On page 49, he quotes Sh. I. Shahata as saying: 

In the holy Qur'an, there are many theories on the nature of 
accounting, its aim, ideology, and principles, and these theories 
on the accounting indices, and data collection, its circulation and 
its feedback system for the purpose of indicating the financial 
situation at the end of an accounting period...." 

This is an important claim, but the author does nothing to substantiate it. 
The author has dragged the Islamic institution of bisbuh into the 

concept of Islamic accounting, although the two are not related. In brief, 
the message of chapter two, which is the main conceptual chapter, is not 
at all clear. 

In chapter three, Hayashi introduces the concept of zakat calculation 
in Saudi Arabia along with its underlying accounting principles. This is 
a useful discussion and provides some new ideas. However, the author 
gets bogged down in the discussion on treating zakat as a cost of part of 
the divisible profit in a mz4iZrubuh business. He supports the position of 
treating it as a cost, but ignores the fact that if zakat is treated as a cost, 
it will become a business expense likely to be passed on to the c o m e t s  
(i.e., an indirect tax). Some items, which will have zakat included as part 
of their price, will be bought by those petsons who are eligible to receive 
this assistance. Thus zakat's very purpose will be defeated. It is therefore 
difficult to agree with the author on this question. 

In conclusion, the present book is a valuable attempt at discussing 
these issues. Students of Islamic accounting can derive some benefit and 
inspiration from it. 

Muhammad Akram Khan 
B-4 Audit Officets Residences 

Gulberg-111 
Lahore, Pakistan