The Nexus of Accounting and Dispute Resolution in Islamic Banking and Finance Law
DOI:
https://doi.org/10.13135/2421-2172/8927Keywords:
Accounting for Islamic finance, AAOIFI standards, Islamic finance reporting practices, Sharia-compliance, Legal certainty, Accounting and auditingAbstract
This paper examines the impact of accounting for Islamic finance in dispute resolution within Islamic banking and finance (IBF) law. The global expansion of the IBF industry has heightened the necessity for robust dispute resolution mechanisms capable of addressing complex financial arrangements. These mechanisms must reconcile conventional legal frameworks with Islamic commercial law, requiring interdisciplinary expertise in both finance and jurisprudence. A significant challenge arises from the inadequate integration of accounting practices with Islamic finance dispute resolution. Financial records, essential for validating contractual adherence to Sharia principles, are often misinterpreted or underutilized in legal contexts due to a lack of expertise among judges, lawyers, and accountants in both Islamic finance and its accounting standards. The study adopts a legal approach, employing an analytical design to examine the fundamental principles and processes of dispute resolution in Islamic finance. The legal analysis will involve a comprehensive review of relevant legal sources, including Islamic law, national laws and regulations, court judgments, legal opinions, and industry standards. The study shows that the promotion of legal certainty will require a strong base of legal and Islamic finance professionals and the competence and awareness of accountants, lawyers, and judges to understand the principles of IBF. The study also shows that financial records, statements, and documentation have a significant role in resolving disputes. Accounting records can provide evidence of transactions and terms agreed upon. Properly documented and transparent accounting practices can help clarify the nature of the dispute and contribute to finding a fair and efficient resolution in the context of Islamic financial disputes.
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