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Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
INTRODUCTION
The issue of accountab...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
ACCOUNTABILITY AND RESPONSIBILITY
A...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
One can easily infer that the diffe...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
accountability should be such that ...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
Stewart (1984) is of the view that ...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
accountability is blended with the ...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
Accountability is in fact an obliga...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
In nutshell, in the present time th...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
making and not the calculative form...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
accountability lies in a hierarchic...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
the mark or in case of any mismanag...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
INTERNAL SOURCES
Internal sources o...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
the view that if accountee is able ...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
information disclosure. Scholars of...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
ACCOUNTABILITY CONTEXT INSTRUMENT
T...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
neighbourhood, environment, ethics,...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
qiyas, is simply the use of analogi...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
4. Religion
5. Ownership
Several ve...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
Muslim scholars suggest an Islamic ...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
This is the teaching of Islamic cul...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
Second, integrity (nazaha): “O you ...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
above them on the Day of Resurrecti...
Governance - Accountability Practices and Islam
Authored by Farooq Omar
April 15, 2016
In this study researcher uses follo...
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Governance - Accountability Practices and Isalam ---1(1)

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Study reflects the base line knowledge from studying and reviewing the corporate governance and accountability through the lens of Islamic prescribed legislation codes of conduct

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Governance - Accountability Practices and Isalam ---1(1)

  1. 1. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 INTRODUCTION The issue of accountability has ever been focus of attention in the organizational context since mid-nineteenth century. As corporations develop across continents, accountability has become the buzzword of the time (Day and Klein, 1987). There are different theories that captured the significance of this element. CG started while focusing on the accountability of agents regarding principal and all other stakeholders. According to Sinclair (1995), no one can deny the need of accountability. In spite of this fact it quite difficult to define and implement accountability. Accountability is under the influence of environment in which it is practiced. So it becomes very difficult to understand its complex nature and to define it (Mulgan, 2000). The focus of this study is exploring the theoretical foundations for in-depth understanding of perceptions of stakeholders towards CG in KSA. The structure of the whole draft is as follows:  Section 1 links accountability and responsibility  Section 2 focus upon the definitions of the accountability  Section 3 discuss and explain different forms of accountability  Section 4 explores different fields of accountability  Section 5 gives comparison of accountability in public and private sector  Section 6 shows the accountability context instrument  Section 7 discusses accountability in Islamic perspective  Section 8 gives the accountability view in SA  Summary
  2. 2. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 ACCOUNTABILITY AND RESPONSIBILITY Accountability and responsibility are correlated. Different scholars regard accountability as one face of responsibility (Jones, 1977; Thynne & Goldring, 1987; Harmon & Mayor, 1986; Sinclair, 1995). Responsibility can be viewed as a motivational force for accountability. According to Gray et al (1987), the responsibility for actions of accounting organization comes at the first phase, followed by accountability. Sinclair (1995) highlights the idea of accountability by saying that there are different meanings of accountability for different groups and it depends upon the different ideologies, different languages, and different motifs. The nut of the nutshell is that accountability can unfold in the form of sense of responsibility for performing actions by responsible people. DEFINITIONS OF ACCOUNTABILITY The meanings of accountability have been changed over the period of time and can be seen in three different phases, namely:  The basic meaning or the broad use  The narrowest meaning or the specific characteristics of the word to meet a particular need  The most developed meaning or that which fulfills current needs and requirements The broadest meanings of accountability cover the history of the world and its linguistic connotation. According to some reports, the word “accountability” appeared in the Code of Hammurabi, King of Babylonia, around 2000 BC; which hint at some undesirable actions and their outcomes (Bird, 1973; Webster’s Online Dictionary, 2010). According to Webster’s Online Dictionary (2010), the term “accountability” came from the terminology originated from money lending systems, which first spread out in ancient Greece and later on in Rome.
  3. 3. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 One can easily infer that the different aspects of accountability can be seen in accounting and especially in book keeping (Bovens, 2005). Now-a-days, this concept of accountability is an integral part of almost every area including politics and social science (Mulgan, 2002). There are different meanings of accountability, according to the different levels of scholarship. For instance auditors treat accountability in financial and numerical terms while others take it as a subset of ethics (Sinclair, 1995). Seeing from the eyes of Sinclair (1995), accountability connotations have changed over the period of time, point to the significance of language as an ideology agent in shaping meaning and understanding. Oxford Advanced Learner’s Dictionary of Current English denotes the word “accountability” as “responsible for your decisions and actions and expected to explain them when you are asked” (Hornby et al, 2000). Whereas, the Macmillan English Dictionary for Advanced Learners denotes it as “in a position where people have the right to criticize you or ask you why something happened” (Rundell and Fox, 2002). Webster’s Online Dictionary (2010) gives “answerability” and “responsibility” as synonyms of “accountability”. Different belief systems describe “accountability” as “honesty, openness, adequate disclosure and careful, effective application of resources” (Greiner, 1990). There is an inbuilt potential of fairness in the concept of accountability. This concept is correlated with public interest and is the foundation of ethical basis for accounting (Williams, 1987; Pallot, 1991). There are some definitions which focus on the information role and the way of information transferring. For instance, Rosenfield (1974) demonstrates accountability as a process of reporting responsibility of personal actions under an authority relationship between concerned parties. In this scheme of things the role of law, contract, and custom binds accountability thread between two parties. Accountability is a kind of obligation in performing action that one has or has not performed (Jones, 1977). Kaler (2002) regards accountability as the provision of answers while reporting or giving an account. In corporate or business context, this is a mean of understanding accountability that links it to financial auditing as well as to accountancy in general. Resultantly theoretical framework of
  4. 4. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 accountability should be such that which ensure to answer the questions such as Who is accountable? To whom? For what? (Perks, 1993). In the accountability relationship there are two parties, first is an accountor and second is an accountee for their deeds and their outcomes (Ijiri, 1975). With reference to timeframe on action, accountability is a way of explaining or justifying what has been done, what is being done currently, and what is planned for the future. Providing information about past action, present and future is utmost necessary (Jackson, 1982). In other words, it can be explained as duty, as a requirement, or being responsible of providing an account of action for which he was responsible. It is a kind of reckoning about the responsibility (Gray et al, 1987). Burchell (1982) sees the accountability as a requirement of resourceful people which explains and justify how they use the power. Hatch (1980) views accountability as the best utilization of resources for those purposes for which they were given. System of rules enforce accountability for the provision of rights to accountee, and this system is thoroughly recognized in civil law, internal rules, company acts, conventions, customs, ethical codes and professional standards. There are two types of law that guard the mutual relationship of interested parties to companies:  Public law maintains the minimum standards and gives maximum flexibility to relationship between company and its constituents  Private law maintains agreements between companies and other stakeholders like suppliers, customers, investors, employees, and society. There are two cores of accountability, namely: external and internal. The external core is meant for general categories of relationship, while internal core deals with specific relationship. Moreover, external codes are implicit, and internal codes are explicit. Crane and Matten (2004) define corporate accountability in terms of answerability in some way for the outcomes of actions. The AA1000 Series gives definition of accountability as composition of transparency, responsiveness, and compliance.
  5. 5. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 Stewart (1984) is of the view that aims of accountability include i) To ensure that improper usage of responsibility does not happen. ii) To ensure that improper gains from firm’s resources does not happen. iii) Preventing mismanagement Colley (2003) suggests that firms can increase their investor confidence with the help of strong accountability. On the other hand, with a weak system of corporate accountability can cause very severe losses for the firms as well for their stakeholders (Keasey et al, 1997). In the mid-nineteenth century, there was very narrowest meaning of accountability in the business world with a split of roles of management and owners. This idea is being fully explained by agency theory in which agents are accountable to the principals. Cadbury gives a detailed account of accountability relationship as: There is a formal relationship between the shareholders and board of directors. In this formal relationship shareholders elect their directors who report on their stewardship to the shareholders. These shareholders appoint the auditors whose role is to provide an external check on financial statements of directors. Being owners of the company shareholders elect their directors who take the responsibility of running the business and held accountable for the business success. The main issue confronting corporate governance is strengthening the accountability of boards of directors for shareholders (Cadbury). In the managerial model which is a kind of specialist environment, accountability is an act of holding authorized managers answerable for high growth or outcomes of specific type (Sinclair 1995). Accountability seen by Knell (2006) is the authority requirement, a way of exercising responsibility for justifying and explaining their actions to those who nominate them to act on their behalf. (2006, P.32) one can easily infer from this discussion that
  6. 6. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 accountability is blended with the meanings of cost effectiveness, efficient use of resources and the autonomy of managers (Sinclair, 1995). In the face of developing sophistication of business worked, it is more important to make wider meaning so that all parties who are directly or indirectly involved can be take into account. Accountability now takes the comprehension view of the basic meaning. Ijiri (1983), Tricker (1983), Gray et al. (1986), 1987, 1988, 1991, 1996 and 1997), Williams (1987) and Pallat (1991) all view accountability in more broader terms as a social concept beyond the limits of economic issues. This view considers the societal needs and interests at large. Accountability has its roots in the right to know (Ijiri, 1983, Gray et al., 1991, Gray, 1992) and established on the grounds of ‘show me’ principle rather than the belief of ‘trust me’ (Zairi & Peters, 2002). Accountability is related to the need to give information to those who are in dire need of it. In other words, easy access to information should be given to those who have a right to information. (Gray et al., 1988, 1991). Moreover, access should also be given to those passive users who are having right to information but are not using it at the moment. (Burchell et al., 1982, Gray, 1983, Gray et al., 1991). Democratic component becomes the focal point of the broader view of accountability. The Australian House of Representatives standing committee (1990) defines it as follows: In Australian democratic system, accountability is central features. It is a sign of ensurance from those authorities of public resources that they have used to resources with compliance and in an effective and efficient manner (cited in Sinclair, 1995,) P. 221). Gray et al (1991) is of the view that the accountability foundations can be seen a reflection and necessity for operating the forms of democracy. The broad view also includes the concept of stewardship.
  7. 7. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 Accountability is in fact an obligation to present and answer the details of their responsibilities about how they executed those responsibilities. In this relationship of stewardship two parties are involved. First party is steward or accouter who is obliged to ensure and give an account of his responsibility execution while principal or accountee is that party to whom account is presented. Establishing stewardship will be only possible when a steward whole heartedly accepts resources and responsibilities which are entrusted upon him by principal (Gray & Jankins, 1993, P. 55). Hupkes et al (2005) emphasizes upon the four functions which should be fulfilled by accountability. 1. By providing public oversight 2. By maintaining and enhancing legitimacy 3. By enhancing agency governance 4. By improving agency performance In addition, a party’s role may be of an accountee and an accounter simultaneously, and it depends upon the nature of relationship; for instance management accountability can be seen how successfully they provide employees a good & safe working environment. On the other hand employee’s accountability can be viewed in terms of their performance of manager’s missions (Gray et al 1996).
  8. 8. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 In nutshell, in the present time there is need to develop the meaning of accountability to express the actual needs of time. In the CG terms, accountability is a basic concept that acts as the foundations in improving the governance system and ensuring a reasonable fairness level. In the preset time not only corporations are growing rapidly but society’s norms are also changing at a rapid pace. Therefore, in the face of those high delta changes that conceptualize the accountability has been transfigured (See figure). FORMS OF ACCOUNTABILITY There are two accountability systems namely formal & informal. These two accountability systems are complementary to each other (Roberts & Scapens, 1985). Roberts (1991) very gracefully explains the mutual relationships between these accountability systems and labels them as hierarchical (formed) and socializing forms (informed) of accountability. Hierarchical accountability form centers on accounting in its calculative power & calculative function. Role of accounting information becomes the reflector of producer’s activities (1991, P. 363). On the other hand, socializing form of accountability is an act of narrative sense
  9. 9. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 making and not the calculative form of accounting. Seeing from the example of institutional point of view, accountability appears in different classification such as 1. Political with reference to ministers & parliament 2. Legal to court system 3. Administrative to non-parliamentary bodies. 4. Public / consumer with reference to public The study of Sinclair (1995) with 15 semi-structured interviews with chief executives in Australian public sector finds out accountability classification as follows. Political, professional, personal, public and managerial specific. POLITICAL ACCOUNTABILITY The origin of political accountability in Athenian democratic and Westminster traditions, in which responsibility is vested upon the public servant (Sinclair, 1995. P. 225). According to Sinclair accountability is a chain of accountability that connects public servant with CEO and makes him accountable not only to minister but also to Cabinet, parliament as well as to electors (1995, P.225). Political accountability is in fact a relationship between a representative (public administrator) and their potential constituents (to whom they are accountable). The list of potential constituent consists of general public agency heads, elected officials, special interest groups and generation of time to come. (Romzer & Dubnick, 1987). PUBLIC ACCOUNTABILITY According to thynne & Goldring (1987) public accountability is more informal & directly accountable to not only public but also to community groups and other individuals. Stewart (1984) analyzed the very complicated nature of public accountability and coined two terms bonds and ‘Links’ of accountability. According to him, existence of bond of
  10. 10. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 accountability lies in a hierarchical relationship and a demand for accountability. While, a link to accountability will exist where there is no bond but only an obligation or custom to account. In public accountability, the role of answering is very much central. Different mechanisms such as newspapers, reports to hearings are extensively used about public difficulties with reference to administrative activities. (Sinclair, 1995, P.226). In this scheme of things, corporations need a beforehand approval to operate effectively in community. Even public accountability also depends upon the prior approval. Society gives its consent to business corporations to operate in society. We can see that in fact corporations held accountable to the society for all their actions as well as for all their action – mechanism. (Anshen, 1980. Trocler. 1983). MANAGERIAL ACCOUNTABILITY O’ Loughlin (1990) illustrates the idea of managerial accountability which is also called administrative, bureaucratic or system of accountability. It is insurance of the stability of hierarchical relationship between superiors and subordinates, which is we weberian legitimate authority model. This managerial accountability happens when a person is located within the web of hierarchy and his superior calls him to account for the results / outcomes of his assigned duties (Sinclair 1995, P.227). Superior gives order to subordinates and assess them in terms of their quality work and speedy output. (Romzek and Dubnick, 1987, O Longhlins 1990). There are different variety of assessment tools of superiors by which theory judge and assess their subordinates. For example close observation, strict monitoring and rules & regulation (Romzik and Dubnick, 1987). Stewart (1984) coined the term of commercial accountability which is infact the accountability of agents to their principals. Shareholders have complete trust on directors for managing their investment and directors held accountable for discharging their responsibility accordingly. If the situation is not up to
  11. 11. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 the mark or in case of any mismanagement or corruption or dishonesty or inadequate account, shareholder can withdraw their whole investment or sack the directors. Directors can play very important role in monitoring all financial matters. According to Keasey et al a lot of informed commentators are of the view that inspite of the fact that there is an increasing financial reporting regulation day by day along with independent auditors of financial statements, our system is not operating up to the mark and is showing many signs of corruption & dishonesty. PROFESSIONAL ACCOUNTABILITY The idea of professional accountability highlights the deep sense of duty as a professional expert by which one occupies a respectable position and status in society (Sinclair, 1995, P.229). Now-a-days professional accountability gives value & respect to professionals and provide them power within & outside organizations. People trust them and grant them complete autonomy in taking strategic decision on their own (Romzek & Dubnick, 1987). PERSONAL ACCOUNTABILITY The idea of personal accountability is being loyal to one’s conscience in basic human values. In this loyalty and self-consciousness, one finds pleasure in self-respect, individual dignity and with deep sense of responsibility affects the lives of others positively (Harmon and Mayer, 1986). According to Sinclair (1995), sense of accountability is one’s driving force which is supported by the internal ethical and moral values. Why personal accountability is forceful and obligatory, because it is enforced by psychological control and not by any external pressures. Moreover, it can be enhanced & reinforced by organizational culture. One can find two sources of control while viewing the managerial, political and professional types of accountability namely: inside control & outside control. Regarding personal accountability, source of control generates from inside the person. Later one it can be managed or influenced by the forces of culture and religion.
  12. 12. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 INTERNAL SOURCES Internal sources of control is directly dependent upon formal hierarchical structures & informal social relationships. External sources of control is due to the formal structures which are the results of legal contracts and power-play of interested parties outside the organization (Romzek & Dubnick, 1987). ACCOUNTABILITY IN ORGANIZATIONS It is claim of Mulgan (2002) that Sinclair’s personal & professional forms of accountability were introduced by the researcher instead of being volunteered by respondents. According to him it is very hard to separate personal & professional values. It can be observed that codes of professional ethics typically encompass values of honesty, Justice & fairness. (2002, P.560) Sinclair types of accountability are not mutually exclusive but are complementary to each other. According to Gray et al (1996) five types of accountability are the foundations of accountable & transparent organizations which results in: Many organizational aspects become visible. According to Parksh & Rapport (1977, cited in Grey et al., 1996), large amount of information revealed will cause information inductance. One party can influence the behavior of society as well as the company with the relevant information.  Transparency which is the outcomes of accountability can be introduced with its results of actions in closer conjunction. It is the closeness between organizational actors and the results of their actions which can decrease the clash of interest and increase the exercise of responsibility (Rauls, 1971). According to Gray et al (1996), accountability that is the outcome of responsibility will cause an increase in the responsibility. There are difficulties which become obstacles in implementing accountability (Tricker, 1983, Roberts and Scapens, 1985). Tricker (1983) is of
  13. 13. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 the view that if accountee is able enough to enforce accountability, there can be no accountability. According to him if an account voluntarily decides to disclose information that an assumed accountability may demand, and the accountee cannot enforce that disclosure, then such a disclosure should be thought of as an ex-gratia disclosure. In contrast, Gray (1992) is of the view that accountability can occur even it cannot be enforced. According to Robets and scapens (1985) accountability relationship is the reflection of a social process. In this social process accountee is more powerful and imposes his values on the accouter. Here one can see that accountability relationship is a way of exploitation. Gray (1992) in his criticism says that as accountability approach is concerned with accountee or stakeholders who are unable to enforce their accountability upon accountor, there is no chance of exploitation. Gray et al (1991) by using accountability frame work within developing & developed countries all issues relating to the flow of information can be solved. According to them introducing accountability frame work in developing countries is more valid. In addition, Samuels (1990) claims that it is being argued that whether decisions are in the market place or administrative there is a need, particularly in developing countries for greater information. The government of developing countries requires reevaluation of the measurement process and the disclosure techniques currently used… it is appreciated that to take such actions is a political move. It means asking for a greater level of accountability (9.70). Deans (1989) is of the view that in many countries, role of accounting as a medium for discharging accountability has been neglected. Different field DIFFERENT FIELD OF ACCOUNTABILITY The nature of accountability topic is very complex and it can be interpreted in many different ways (Sinclair, 1995). The scholars of accounting connect accountability to financial
  14. 14. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 information disclosure. Scholars of HRM and psychology are interested in accountability relationships, the effect on decision based frameworks and organizational behavior (See Ammeter et al, 2004). Auditors consider accountability in financial and numerical terms, while political scientists in political obligation, legal scholars as a constitutional arrangement & philosophers see accountability as a subset of ethics. In business, accountability focuses upon those dangers which causes from the lack of effectives accountability for CEO’s (Cadbury, 1992). In this accountability type accounting system is used for delivering information to stakeholders. In fact, accountability thoughts are shapers of accounting system. One can infer that corporate accountability or organizational accountability is a significant field of interest for researcher’s investigation. ACCOUNTABILITY IN THE PUBLIC & THE PRIVATE SECTORS According to Mulgan (2002) in private sector there is more accountability than other sector due to its aim of maximization profit for its stakeholders. There are number of objectives that private sector has to achieve, including. 1. To ensure that the interests of all shareholders are being served according to the functions of free market system and it depends on internal & external monitoring systems (Benston, 1982). 2. To perform as a control mechanism by monitoring, evaluating & controlling organization’s mangers and measuring their performance, through outcomes (Munro, 1996). 3. To manage the risk which a company tends to face (Cadbury, 1992). In private organizations, annual report is employed for accountability as the main instrument (Midgley, 1932). It is also used to see whether profit reporting is reliable and accurate.
  15. 15. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 ACCOUNTABILITY CONTEXT INSTRUMENT The above discussion shows that accountor’s role is to satisfy the needs of accountees. Accountor is responsible to report both shareholders & stakeholders, because each needs different types of information. To meet the requirements of stakeholders and shareholders there are different accountability vehicles such as corporate social reports, environmental reports, sustainability report, and financial statements. (Carnaghan et al, 1996, Solomon, 2010). These report are very significant according to different users and their different needs. For example BOD’s want to see the improved company performance, owner want to see how efficiently resources are used. ACCOUNTABILITY IN ISLAM In other cultures, there is no word which exactly reflects the concept of accountability, but in Islamic culture accountability acts as a fundamental base in between the human beings and others. In broader sense it is central to Islam. It is a dominant theme in Muslim’s faith (Lewis, 2006) because accountability to God and society both is the central for all individuals’ actions. Islam stresses upon accountability relationships between individuals & community (ummah) as well as between people and Allah (God). According to Lewis Arabic word ‘sharia’ has the literal meaning the way to the source of life and in technical term it is a legal system which sets the code of behavior called for by the Quran and hadiths (Authentic Traditions). Sharia is of instructions that govern the everyday life activities of good Muslims (Serour et al; 1995). There are two sides of human life under sharia: Worship & transactions. Those relationships which are between Muslims and their creator is (a part of worship is called ‘ibadat’. On the other hand those relationships between people and others is a part of transactions is called ‘moa-amalat’ (Bahjat, 1994, Al-Qaradari, 2001). According to Islamic culture religion is treatment and in Islam, religion & treatment are insperable companions. This means that all types of treatments such as finally, society,
  16. 16. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 neighbourhood, environment, ethics, business, economics and politics. The status of these transactions is very lofty within ‘Sharia’ and these are defined in terms of rights & duties of the participants. In ‘sharia’, it is mandatory for all Muslims to strictly follow the regulations of ‘ibadat’ and ‘moa-amalat’. All participant are answerable to Allah for these regulations. Shearia’s role is to organize all the matters of one’s life and to set the framework for Islamic rules (Al-Qaradani 1973). As Allah affirms in the Holy Quran. “This day have I perfected your religion for you, completed my favor upon you, and have chosen for you Islam as your religion” (Quran: 5/3). Sharia has two bases of sources i. Primary sources ii. Secondary sources Primary sources include Quran (word of God) Sunna and Hadita (Authentic traditions & Sayings of Prophet) Ijma (unanimous opinion of Islamic Scholars of Analogy (Qiyas) intelligent reasoning Secondary source is called istihsan. These are those causes which are not covered by primary sources. Muslims are recommended to obey views of Propher’s companions (Serour et al., 1995, Iqbal and Lewis, 2002). El Mallakh (1982). El Mallakh (1982) illustrates the source of Saudi law based on sharia as: The Quran, the holy book of Islamic religion…the sunna is the recorded statements and actions of the prophet Mohammed…ijma is the consensus of the Ulama [religious scholars] which serve as legal precedents. The last source of the law in the kingdom,
  17. 17. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 qiyas, is simply the use of analogies in reaching decisions when the other three sources cannot be of any help (1982, p. 44). It is important to note that Sharia is flexible. It permits to adapt to timely needs of circumstances with reference to different times & different locations. Sharia accommodates those honest views that do not contradict or spoil the spirit of primary sources (Serour, 1994). Human actions are classified into 5 categories by Sharia. 1) Obligatory (fasting & praying) 2) Recommended (marriage) 3) Permitted (breaking fasting when sick) 4) Disapproved but not forbidden (divorce) 5) Absolutely forbidden (killing) (serour et al., 1995, P. 560). In the development of science of fiqh (jurisprudence), number of guiding principles has been established to drive rulings. Role of fiqh can be seen in different examples such as harm should be removed, the lesser of two harms should be chosen and priority of public interest over individual interest. In nutshell ‘sharia’ law is established for preserving & protection of the following 1. Self 2. Mind 3. Honor
  18. 18. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 4. Religion 5. Ownership Several verses of Holy Quran clearly indicate this. Come, I will recite what your Lord has prohibited to you. [He commands] that you not associate anything with Him, and to parents, good treatment, and do not kill your children out of poverty; we will provide for you and them. And do not approach immoralities - what is apparent of them and what is concealed. And do not kill the soul which Allah has forbidden [to be killed] except by [legal] right. This has He instructed you that you may use reason (Quran, 6:151). And do not approach the orphan’s property except in a way that is best until he reaches maturity. And give full measure and weight in justice. We do not charge any soul except [with that within] its capacity. And when you testify, be just, even if [it concerns] a near relative. And the covenant of Allah fulfill. This has He instructed you that you may remember (Quran, 6:152). Regarding insurance in our contemporary situation, we can clarify the working of sharia. Neither the Quran nor the Sunna mentions insurance, but
  19. 19. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 Muslim scholars suggest an Islamic form or way of Insurance which is in fact based on the four primary sources of sharia explained previously. In ‘sharia’ the concept of accountability is a fundamental pillar and one perspective of Islamic culture. Istakhlaf (trust) is one of them in which man is considered the vice gerent of Allah on earth so Allah Almighty says: “Indeed, I will make upon the earth a successive authority” (Quran, 2:30). Three factors form the concept of istekhlaf. First, the entrustor is Allah, who is the owner of everything, as he says in the Quran: “To Allah belongs whatever is in the heavens and whatever is in the earth” (Quran, 2:284). renovation of earth as per the instructions of Allah (Al-jira 1996).
  20. 20. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 This is the teaching of Islamic culture that teaches us that we are not the owner of what is in our hands but just a vice gerent appointed by Allah and so we must use all the things according to the will of Allah, without damaging the society & environment. An individual is accountable for all that which is entrusted & delegated to him/her. As this is illustrated in the Quran. “And stop them; indeed, they are to be questioned" (Quran, 37:24). “So by your Lord, We will surely question them all, About what they used to do (Quran, 15:92; 93). In Islamic culture & perspective Muslim managers must understand their duties and they are required to make full disclosure in order to discharge their accountability. Thus, Baydoun and Willett (2000, p. 81): Private accountability and limited disclosure are insufficient criteria to reflect the ethical precepts of Islamic law. Consistency of disclosure practices with Islamic law requires application of the more all-embracing criteria of social accountability and full disclosure. Individuals who take a role of accountability in Islam should have an acceptable level of diverse characteristics and these are emphasized by a number of Quranic verses. These are: first, honesty (amana): “O my father, hire him. Indeed, the best one you can hire is the strong and the trustworthy” (Quran, 28:26).
  21. 21. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 Second, integrity (nazaha): “O you who have believed, fulfill [all] contracts” (Quran, 5:1) Third, justice (adil): “And do not argue on behalf of those who deceive themselves. Indeed, Allah loves not one who is a habitually sinful deceiver” (Quran, 4:107). Fourth, ability (qudra): “And do not give the weak-minded your property, which Allah has made a means of sustenance for you, but provide for them with it and clothe them and speak to them words of appropriate kindness” (Quran, 4:5). does something, for him to do it well” (Al-Albaani, 1995, p. 106). Any individual who is accountable of any duty must have the following characteristics as emphasized by following Quranic verses. First, almuhasbah is derived from the root word ‘count’, and one of its meanings is to hold a responsible person to account (Al-Ifriqi, 1970). Allah says “But those who fear Allah are
  22. 22. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 above them on the Day of Resurrection. And Allah gives provision to whom He wills without account” (Quran, 2:212). Second, almusa alah expresses the ability to question someone. A number of Quranic verses emphasize this meaning: for example, Allah said “And indeed, it is a remembrance for you and your people, and you [all] are going to be questioned” (Quran, 34:44). from the principal who holds the party accountable to respond. In the Quran, the text which clarifies this meaning is translated as “And when My servants ask you, [O Muhammad], concerning Me - indeed I am near. I respond to the invocation of the supplicant when he calls upon Me. So let them respond to Me [by obedience] and believe in Me that they may be [rightly] guided” (Quran, 2:186). However, alestejwab is mostly used within the context of political affairs.
  23. 23. Governance - Accountability Practices and Islam Authored by Farooq Omar April 15, 2016 In this study researcher uses following three words which fully convey the meanings of accountability. Almuhasbah, almusa alah and alestejwab. ACCOUNTABILITY IN SAUDI ARABIA KSA is just like a heart of Islamic world and contains two highest Muslim countries Makkah & Medina. Since its establishment KSA is following sharia and considered as the hub of Islamic beliefs and values as the country constitution, which depends on Quranic teaching, Hadith, Ijma and Qiyas. In extracting instructions from these authentic resources the accountability in true Islamic sense is well established & practiced in KSA in its intent and spirit. SUMMARY The idea of accountability has ever been popular in human civilization from ages. There are different explanations in different cultures & civilizations from different perspectives. This chapter explains & explores the theoretical bases of accountability which helps to clarify stakeholder’s perceptions towards Corporate Governance in KSA. This chapter explains the meanings definitions of accountability & responsibility along with different forms, different fields of accountability. Comparative study of public & private accountability is also the part of this study along with the concept of accountability in Islam & Saudi Arabian practice of accountability which open more research avenues to study the different parameters associated with CG, in particular the leadership practices in its true spirit and what actually being followed by different Islamic countries.

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