Islamic perspective of management accounting decision making techniques

Zayyad Abdul-Baki, Ahmad Bukola Uthman, Atanda Aliu Olanrewaju and Solihu Aramide Ibrahim

Journal of Islamic Accounting and Business Research, 2013, vol. 4, issue 2, 203-219

Abstract: Purpose - – This paper aims to argue that the methodologies adopted by the conventional management accounting in selecting between or among two or more alternative courses of action, both in the long-term and the short-term decision making endeavours conflict with the overall objective ( falah) of Islamic enterprises. Design/methodology/approach - – The paper explores relevant literatures (including theQur'anand theHadeeth) to ascertain the objective of an Islamic enterprise and suggest an alternative approach, in making a choice among alternative courses of action, that aligns with the Islamic socio-economic objective ( falah). Findings - – The paper suggests that both in long-term and short-term decision making endeavours, cost-benefit comparison (where cost includes negative externalities) rather than discounted cashflow techniques or contribution margin should be adopted in making a final choice among alternatives to achievefalah. Research limitations/implications - – The paper has not considered other objectives that may be pursued by an organisation beside profit maximization whether short-term or long-term. Practical implications - – The paper expands the frontiers of knowledge in Islamic accounting by exposing the inadequacy of the conventional management accounting decision making methods. Originality/value - – This paper explores the Islamic perspective of the conventional management accounting which is rare among scholars of accounting.

Keywords: Falah; Cost-benefit; Islamic accountability theory; Decision making; Third party impact; Management accounting (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jiabrp:jiabr-05-2012-0031

DOI: 10.1108/JIABR-05-2012-0031

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