Comparison of zakat calculation methods in terms of Islamic accounting standards

This comprehensive study provides an in-depth analysis of fundamental accounting standards that play a critical role in zakat calculations and are of significant importance within the framework of Islamic financial accounting. This study specifically focuses on two major accounting standards: Financial Accounting Standard 39 (FAS 39) issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and Technical Report i-1 (TRI 1) published by the Malaysian Accounting Standards Board (MASB). This research introduces innovative accounting models for zakat calculation based on the principles of the Hanafi school, emphasizing the necessity of adapting accounting models to these principles and integrating dominant teachings. It develops a framework that ensures the integrity of determining zakat bases by examining various dimensions, such as liquidity, commercial and industrial transactions, and personnel income. From a methodological perspective, this study adopts a qualitative approach, combining rigorous theological analysis and comprehensive case studies to deeply investigate the theological foundations, accounting principles, and calculation methods related to these standard. The findings highlight significant differences in the identification, classification, and treatment of assets and transactions subject to zakat, resulting in notable variations in calculated zakat amounts. Ensuring the accurate adjustment of both the balance sheet and the income statement is crucial in zakat calculations. It is imperative to avoid items that contradict the Sharia rules, and a Sharia-compliant review of the income statement is necessary to ensure the accuracy of zakat calculations. An interest-free balance sheet and zakat-based adjusted net income are significant contributions of this study, as this method ensures that the financial position and financial performance are in accordance with Sharia principles. Furthermore, this thesis examines the contemporary challenges faced by Zakat and offers an innovative perspective on the opportunities and barriers to its effective implementation. By contributing to the academic literature, this research provides a meticulous and detailed analysis of the impact of Islamic accounting standards on zakat, and presents strategic recommendations to optimize the understanding and implementation of zakat in modern Islamic financial environments. These recommendations serve as crucial guides for practitioners, academics, and policymakers, aiming to facilitate a better understanding and application of zakat in contemporary Islamic financial contexts.