Accountancy And Interest

Question

I am a qualified accountant in London. Being an accountant some way or the other you have to do bookkeeping for interest accounts or other accounts which have an interest element in them. There is hardly any institution here which is 100% free from interest or interest related accounts even if they are trading in permissible commodities. There is interest involved in acquiring machinery, premises, cars, loans and others for a business in every organization. The financial system in almost all the countries seems to be somehow based on interest. I would like you to tell if my earnings as accountant are ḥalāl in this situation. I put my confusion below:

Is it ḥarām to calculate and record transactions which are fully or partially related to interest (I do not like it but I have to do this as an accountant) when I am not involved in transactions myself but my company. It does not represent the majority of my work. And is it ḥarām to check or audit such transactions? As an accountant in my situation which part of Hadīth (Sahih Muslim, No. 3881) applies to me, the one who witnesses or the one who records interest or both or none?

Jabir said that Allah's Messenger (sws) cursed the accepter of interest and its payer, and one who records it, and the two witnesses, and he said: They are all equal.

There are rare Islamic institutions. Even the people who build and run these institutions do not come from 100% Islamic institutions otherwise they will not have the practical exposure to manage such institutions. Secondly Islamic institutions are required to be linked with e.g. central banks which are not Islamic. Is it still ḥalāl to work there? Is it ḥalāl to teach accounting qualifications which are not 100% Islamic e.g. teaching about interest as a part of the course? If I have a ḥalāl business I will have to have my accounts and audit done to pay the tax. Would it be ḥalāl to go to such accountants then as I do not think there is any Islamic accounting or auditing firm in the world?

There is hardly any recognized and established Islamic accounting qualification. Islamic institutions to work in are very limited in number. Even to get a job there you need education and experience from institutions which will not be 100% Islamic. If it is still not ḥalāl to work as an accountant there then Muslim ummah will have to give up accounting knowledge to a large extent as there are not enough Islamic platforms available to get 100% Islamic either accounting knowledge and jobs. For instance if I have a child I will never want him to be an accountant because there is no certainty that he will be able to get 100% Islamic accounting qualification and then a 100% Islamic accounting job.


Answer

It is important to first fully understand and appreciate a religious law and only then try to apply it to our life. The law about interest in the Qur'an is very clear. According to this law, receiving interest is ḥarām and those who do this knowing it is ḥarām are committing a grave sin.

Now in implementing this law, it is obvious that the whole system of interest collection needs to be uprooted and thrown away. Obviously part of this system are those who facilitate the process of interest taking (in any way) and those who pay the interest. It is in the process of removing the whole system that the Prophet (sws) - as narrated in Ahadith - condemned a number of tasks that were related to interest. When there is a campaign to remove the interest system, it is clear that anyone who in any way contributes to this system is working against the campaign and is therefore condemned.

So what I intend to say by the above is that it is in principle receiving interest that is ḥarām in any circumstances. Other tasks related to receiving interest will become condemnable as they are seen to be contributing into ḥarām.

After understanding the above we can now look at the practical situation that you described i.e. having a job that involves transactions that are on the basis of interest.

As you also indicated in your question, we are living in an economic world that is unfortunately based on interest. Interest has been injected into the whole aspects of our life in a way that we can hardly find any job or transaction that has nothing to do with interest. Simple example is that all the power suppliers work with banks and banks are normally working on the basis of interest. We as customers are contributing to the business of power suppliers who are in turn contributing to the banking business. It is therefore not exaggeration to say that by having a contract with a power supplier, we are contributing into interest system.

While the above situation is not at all desirable, it is certainly also unavoidable as far as individuals are concerned. If at any time in future there was a state led campaign to eliminate interest system then like the time of the Prophet (sws) any contribution to this system will be unjustified. However as long as the system is governing our lives and there is no intentions to systematically remove it, then we need to be pragmatic.

Accordingly it can be recommended that as far as possible we need to stay farther and farther from anything that involves interest based transaction in this totally interest based system. We however cannot say that it is ḥarām to be in a position that somehow facilitates interest based system.

I again emphasize that disregard of what economic system we are living in, receiving interest is definitely ḥarām.

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