Sustainability of Islamic Finance: The Role of Islamic Accounting in The Current Era

Progress in competing in the global market in 2018 demonstrated Indonesia's sustainable industrial development. At that time, the food and beverage industry had the highest Manufacturing Value Added (MVA) value of ASEAN countries at 4.5%, with a contribution to national GDP in 2018 of 6.3%, followed by the chemical industry at 2.9%, the machinery and metal industry at 2.08%, transport equipment at 1.76%, and textiles at 1.1%. (Erdianto, 2018). In maintaining the progress of this industry, innovation and quality human resources are needed in order to maximise productivity growth that has an impact on strengthening the Indonesian economy, one of which is by utilising current technological developments (Ong & Mahazan, 2020).

Accounting is one of the professions affected by the changing business environment caused by the industrial revolution. Accounting has always been associated with computers, and recent technological advances that have significantly increased the use of computers in the world of work and expanded the list of activities that require computers. (Collier, 1984; Carr, 1985; Coopers &Lybrand, 1985; Akhter &Sultana, 2018). Even so, Akhter & Sultana (2018) argue that, although accounting is closely related to computerisation and technological advances. However, technology will not eliminate this profession, but will transform it with new, more difficult tasks. Moreover, they found that adaptability, critical thinking, communication skills, technology skills, and judgement are the skills that accountants need in the long run.

Islamic accounting principles, which have been around since the 1500s, have greater benefits than conventional accounting aspects, as they contain all the values necessary to carry out the accounting process. In addition, these Islamic accounting principles can improve the welfare of both parties of the business, both from internal and external parties.

We realise that the accounting process influences decision-making relating to business and economic transactions. For responsibility in the hereafter, even Allah has His own accountants, Rakib and Atid, to record everything that humans do in this world. And Surat Al-Baqarah verse 282 states how important accounting is in this life. Here are the principles of Sharia accounting rules according to the explicit understanding of the verse:

1. Precise, complete and transparent recording of financial and business transactions by responsible accountants.
2. Written contracts should be made as evidence especially for debt contracts.
3. Written contracts should have a minimum of 2 honest witnesses to provide a check and balance mechanism, guarantee proper accountability, and ensure contracting parties actually honour their financial obligations.
4. Materiality is important to ensure the correct recognition of financial amounts and business transactions, both rights and obligations of the contracting parties.
5. Fear of God (Allah) for all transacting parties to ensure fairness and transparency in accounting for financial and business transactions.

From the verse, only accounting in Islamic perspective aims to ensure fair financial transactions between parties to fulfil accountability to parties such as management and society, where the most important accountability is to Allah swt. However, the objective of conventional accounting is to provide financial information about the reporting entity to users to help them make decisions about how to allocate limited resources to gain the most profit. Therefore, accountants may allow fraud.

The urgency of implementing Islamic accounting in the modern era is definitely very necessary so that an organisation or company can carry out its financial activities properly to achieve the interests of falah. And provide benefits to the company's CSR.