• Transactions & Dealings >> Interest & Insurance

    Question ID: 48157Country: India

    Title: Auditing journal entries which record interest

    Question: When auditors check the books of accounts of businesses they sometimes have to check whether interest has been calculated correctly, whether the proper amount of interest has been paid or not. Is this checking haraam? Also sometimes while advising businessmen auditors compare the costs the businessmen will incur if they use a certain source of finance to fund their business such as debentures, loans, equity shares etc. A portion of the costs consists of interest that will have to be paid. Is this calculation also haram? The loan has not been taken yet. In classes 11 and 12 students opting for Commerce stream are taught accounts. They are also taught to calculate interest and are tested for the same in their exams. Is the fictitious recording of interest done to answer a question haram?

    Answer ID: 48157

    Bismillah hir-Rahman nir-Rahim !

    (Fatwa: 1746/1351/B=12/1434) It is haram to write interest based accounts. You can give advice to the businessmen about debts as some debts are free from interest. He will be responsible for taking interest based loan. It is lawful to reply the questions pertaining to interest in commerce subjects. It is a kind of account knowledge which may be used at other places as well. In reply he may include words which involve interest free accounts e.g. the lawful profit may be distributed in this way or if the growth or profit is out of mudharabah then it will be distributed in this way. Thus such a person will not be part of the interest based accounts. (Extracted from Imdad al-Fatawa 1:167-168)

    Allah (Subhana Wa Ta'ala) knows Best

    Darul Ifta,

    Darul Uloom Deoband, India