PROSIDING_IPAFEM 2015_Glasgow_UK

Abstract

The development of Islamic accounting in Indonesia has drawn both positive and negative response. For the supporters of the latter, Islamic accounting is merely a change of terminology as used in conventional accounting such as murabaha(cost-plus sale), ijara(lease) and qard al hasana(beneficence loan). They even maintain that Islamic accounting only mimics conventional accounting practices, without offering a distinctive concept of a new accounting discipline. Therefore, Islamic accounting does not provide a valid ground to claim as a unique accounting discipline. This study argues that embryonic development of Islamic accounting has existed in the Dutch colonial times (1596-1942). It can be traced from the work of an Islamic scholar and influential figure Syeikh Muhammad Arsyad Al-Banjari(lived 1710-1812) who introduced the basic principles and practice of Islamic accounting at that time. It could happen because a majority of Indonesians has embraced Islam as their religion since 1400. That view is supported by accounting theorists who noted that it is difficult to disentangle accounting from socio-religious values as demonstrated by the early development accounting in Italy initiated by a Franciscan monk in 1494. The study aims to investigate the historical root of Islamic accounting in Indonesia in the pre-Indonesian independence time, particularly during the Dutch colonial era. In retracing and revealing the early development of Islamic accounting in Indonesia, the study employs a bibliographic data sources strategy and institutional theory is chosen to be its theoretical lens. Findings of the study reveal that early form of Islamic accounting had been developed by Syeikh Muhammad Arsyad Al-Banjari, as he explained in his book entitled Sabilal Muhtadin ([1780], 2005). The book contained a detailed procedure and calculation on how muslims (Islamic adherents) should pay his/her zakat (compulsory alms) to charity based on muslims’ wealth. In terms of institutional isomorphism, Al- Banjarihighlighted the importance of normative isomorphism adoptionby zakat organisations for boosting their organisational capacity in managing zakat fund. Contribution of this study will offer an assurance to the muslim community that the current development of Islamic accounting in Indonesia has historical root long before Indonesian independence (1945). Thus, the rapid development of Islamic accounting in the present days is not intended to imitate what has been achieved by conventional accounting, since the two disciplines have their own world-views.