Question:

As accountants we are faced with a moral dilemma with regard to certain aspects of our work. Thus we write to you seeking guidance in this matter. Please advise us with regard to the following: According to the well known Hadith, Rasulullah (SAW) has invoked the curse of Allah upon four categories of people due to their association with interest. Among them is the one who has written the interest transaction. Concerning the above, what is the position of an accountant who prepares the financial statements of clients? In the course of this preparation, he has to record amongst other transactions, the interest transactions of his clients in their books. It should be noted that he is generally never present at the time of the transaction (except rarely which also can be avoided). Does the accountant in the course of recording such interest in the financial statements of clients also fall within the ambit of this Hadith? The accountant in reality merely prepares an analysis of the year's transactions and reports on the profit/loss and the assets and liabilities of the business i.e. the financial position of the business for a particular period. Hereunder are some of the different types of transactions which accountants routinely record. Please advise us with regard to each one of them as to whether they fall within the ambit of the said Hadith.

Question 1: An accountant is working for a company. The company charges its debtors interest on their overdue accounts. The accountant is instructed by the directors, as part of his functions, to make appropriate entries in the records of the company in terms of which interest is charged on certain overdue accounts. The question arises whether it is permissible in Shariah for such an accountant to:- * Become involved in this manner in the charging, recording and execution of interest on overdue accounts. * Remain employed with such an employer who charges interest on overdue accounts. * Receive a salary that can be considered as halal in Shariah from such a company, a small portion of whose income is represented by interest collected from debtors.

Question 2: The accountant working for a company writes the cheques of the company. At times the amount recorded on the cheque includes an amount of interest. What is the position of the person who issues out such cheque? Also what is the position of the signatories to such cheque? It must be noted that the accountant himself was not an original party to the transaction of loan which gave rise to the interest obligation. In certain circumstances, even the signatory was not an original party to the transaction.

Question 3: A motor vehicle salesman sells a vehicle to a customer. The customer finances the vehicle through the bank upon which he pays interest. The salesman in most instances has to assist the customer in completing the application for finance to the bank by filling in the details on behalf of the customer. Some application forms also have a place for the signature of the person who assisted the customer in completing his application. Will this assistance to the customer be prohibited? Does the salesman also become a witness to this interest transaction merely by assisting to complete the application? It should be noted that the financing transaction is distinct from the sale transaction and it is solely between the customer and the bank.

Question 4: A client comes to the accountant seeking advice of the best option with regard to undertaking a certain business venture or the acquisition/purchase of an asset. Among the various options which the accountant advises him on is the position of financing via a bank whereupon he will be charged interest. What is the position of advising with regard to such an option? If the client is a non-Muslim, will it make any difference?

Question 5: A person working for a non-Muslim company invests surplus funds, on instruction, in interest bearing securities. What is his position in relation to the said Hadith?

Question 6: If the client's business activities are mostly of a nature which the Shar¡ah has declared forbidden, such as he sells liquor, or trades in meat not slaughtered according to Islamic rites, can the Muslim accountant undertake to do his books?

Question 7: A Muslim accountant works for a non-Muslim company which deals generally in halal merchandise, but also sells some haram items, such as liquor, etc. Is he committing any Sharee violation in recording the transactions pertaining to the haram items? Question 8: What advice can you give to accountants in general pertaining to their profession?

Answer:

Having read and considered the questions that you have sent all the cases you mention should be avoided, though the level of unlawfulness will vary between them. Q. 1 and 7 would be merely Makruh, provided one is not directly writing down a transaction that has Riba in it. You will be more aware of the different areas in the accountancy field, and will know of areas one could work in without becoming involved in prohibited things.

Mufti Mohammed Sajjad

Wallahu Aalam bis-sawab

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The answer to this question is the opinion of the scholar and does not reflect the opinion of other scholars of As-Suffa Institute and As-Suffa Institute as an organisation.