This article develops a theory about the form and the content of the financial information that should be contained in Islamic financial statements. The theory suggests that the presence of the Islamic religion as a cultural variable affects the way certain accounting measures are interpreted and the manner in which accounting information should be disclosed. Two important criteria for disclosure in Islamic accounting are identified: a form of social accountability and a rule of full disclosure. This leads to a modification of the form of the conventional Western set of financial statements, which are referred to in the paper as Islamic corporate reports (ICRs). The specific recommendations are that ICRs should contain a value-added statement as the focus of performance of the accounting entity and a current value balance sheet in addition to the historic cost balance sheet. It is argued that ICRs, extended in this way, would better serve the needs of users wishing to act in accordance with the Islamic code.
In this paper we discuss the state of corporate governance in five countries, Kuwait, Bahrain, the United Arab Emirates, Qatar and Oman, of the Arabian Gulf. The countries are similar in culture and part of a locality with characteristics which make it distinctive in terms of wealth, state of social, economic and political development and their economic dependence on hydrocarbon resources. We construct a measure of corporate governance using the OECD's 2005 survey data, which included these and many other countries in the sample. We anayze the resulting measures in the light of ongoing institutional developments in each country. Our findings are that Omasn appears as a clear leader followed by Kuwait and the United Arab Emirates, based on our corporate governance measurement scale. Bahrain and Qatar rank least highly. We discuss some of the underlying reasons for these results.
It has been suggested recently that the accounting systems used in developing countries may be irrelevant to their needs because they originate in Western countries with different cultural values. The accounting literature on this point, however, is vague in its assessment of exactly what aspects of Western accounting systems fail to meet the test of relevance. Furthermore, it is not clear whether the differences between the needs of users in various countries are differences in kind or only differences in degree. This article analyses these issues by introducing technical considerations in addition to the behavioural ones usually discussed and by separating out problems of accounting measurement from problems of accounting disclosure. This distinction is used to argue that it is the specific disclosure rules of particular calculations inherent in Western accounting systems rather than the transaction cost database that are most likely to fail to satisfy the needs of users in developing countries. The effect of the importation of the French Unified Accounting System to Lebanon is examined and an amended version of the Hofstede‐Gray cultural accounting framework is used to clarify the concept of cultural relevance.
The general nature of basic accounting measurement procedures is analysed from the perspective of their representational faithfulness rather than, as is normally nowadays done, from the perspective of relevance to user decision models. The character of accounting numbers is examined using an axiomatic framework based in statistical theory to demonstrate that statistical properties of the numbers are created by the process of preparing, constructing, the numbers. These properties, deriving from the process of constructing the numbers, are there regardless of the uses to which the numbers may be put, and therefore knowledge of them informs not only preparers of the numbers but also those who decide whether and how to disclose them to others, and those who make use of them for any purpose.The article argues, with axiomatic analysis and examples, that accounting numbers are statistics having properties such as distribution and variance that affect their usefulness in general and that may be examined separately from any use. Such an examination is helpful partly because it then avoids confounding the understanding of accounting measures' technical nature with issues of disclosure choice and use. The necessary axiomatic framework is presented briefly to establish its perspective on measurement questions, then the value of the framework for examining vexing accounting issues is illustrated with examinations of accrual accounting and matching, cross-sectional and time-series allocation, and accounting-relevant market values.
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