Management Accounting From An Islamic Prespective

4033 words - 16 pages

CONTENTSIntroduction 2The Process Of Decision Making 3Shura 4Ethics And Decision Making 6Resolution Of Ethical Conflict 8Blaming The Wrong On Others 10Truthfulness 12Continuous Improvement 14Accountability 17Conclusion 19INTRODUCTIONIslam is a religion, which is proclaimed by Prophet Mohammad (s.a.w) with the revelation and permission of Allah (s.w.t) fourteen centuries ago. The divine guidelines outlining all the aspect of human behavior were conveyed to the people through the Prophet (s.a.w). Through such divine guidance, the Prophet (s.a.w) himself became one of the finest example that human can ever see.The aim of this paper is to explore the relationship between management accounting and the Islamic concepts. The Islamic concepts discussed will be taken from Quran, sunnah and opinions from Islamic scholars. Several views, such as the process of decision making, ethics during decision making, truthfulness, etc. of management accounting will be discussed in this study.The paper will further highlight what the modern management accounting prefers during controversial situations and the Islamic perspectives on such instances or the Islamic ways of problem solving.THE PROCESS OF DECISION MAKINGAccording to Daft (2003), decision making is the process of identifying problems and opportunities and then resolving them. He further saying, this process involves efforts both before and after the actual choice. Robbins and Coulter maintains a decision is based on the choice made from two or more alternatives . Daft argues that effective decision making often depends on whether managers involve the right people in the right ways in helping them solve problems. One model that provides such a style is called leadership participatory styles. Hilton (2000) identifies the six process involved in making decision.1. Clarify the decision making problem2. Specify the criterion3. Identify the alternatives4. Develop a decision model5. Collect data6. Select alternativesIn case of management accounting, there are several instances where decision-making has to be applied. Such instances includes, budgeting, identifying which products are to be produced or which serviced are to be provided to the society and how much of them are to be provided. In case of budgeting, as Hilton highlights the idea of participation is to involve employees throughout the organization in the budgetary process. He further noted such participation can give employees the feeling that 'this is our budget," rather than all-too-common feeling that "this is the budget you imposed on us". As a Muslim, one has to be very careful to apply the Islamic principles when taking such decisions within the organization as the process involves many people. The foundation of Islamic decision-making is called Shura. This process of Islamic decision making does not contradicts with the Western scholars, but it compliments and moves a step further than the modern decision making process.SHURAShura is an Arabic...

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