Islamic Accounting & Financial Reporting Assignment

Islamic Accounting & Financial Reporting - Assignment Example The risks towards one’s life, wealth and health are growing as numbers of incidents and thefts are growing in all parts of the world but these threats are more severe in the case of Islamic countries where terrorism and unlawfulness is rising all the time (Lapidus, 1996). The whole idea behind Islamic Takaful insurance is to legalize and Islamize the notion of insurance (Maysami & Williams, 2006). The conceptual framework of Takaful insurance is not a new one because Prophet Mohammad had implemented it fourteen centuries ago. However, the featured concept is based on mutual cooperation of all the policyholders (Wahab, Lewis, & Hassan, 2007). The funds are gathered and then deserving policyholder is paid by all others so that he or she can get through a rough time. The responsibility of each policyholder to pay the suffering partner is found to be stemming from ethics and humanity. No legal measures are taken in order to bind policyholders to help each other. The Islamic teachi ngs promote charity and genuine concern for others and the emphasis on the need to assist those Muslims who are going through rough times increase manifold in Islamic teachings and Quran. The policyholders usually do not help those partners who did not help them in the difficult period of life and it is also considered totally acceptable by Muslim Scholars as human relations are based on rule of reciprocity. The Takaful insurance challenges the presence of interest which according to teachings of Islam promotes exploitation and social inequality in the society. Moreover, it is imperative to note that Takaful insurance is not a very powerful tool of moneymaking right now and therefore, the companies engaged in this business have to get themselves ensured with other conventional service providers in order to remain afloat in the industry. Additionally, most of the Muslim capitalists do not consider the notion of Takaful insurance viable in nature because according to them, it ignores