Basic Mechanism of Islamic Banking

As a financial intermediary, the basic mechanism of Islamic banks is to receive deposits from investors (depositors) on the side of his liability (obligation) to then offer financing to investors on the asset side, with a pattern or financing schemes in accordance with Islamic Shari'a. On the liability side, there are two main categories, namely interest-free current and savings accounts and investment accounts based on the principle of PLS ​​(Profit and Loss Sharing) between the bank by the depositor. While on the asset side, that includes all forms of usury-free financing patterns and sharia standards, such as mudaraba, musharaka, istisna, greetings, and others.
To achieve the objective nature of accounting standards, the basic structure of investment activity to us to into two parts, the first, unrestricted investment accounts (investment accounts without limitations) and the second, which is restricted investment accounts (investment accounts with limitations). The purpose of the first point is the Islamic banks have the freedom to invest the funds it receives in various investment activities without being limited by certain provisions, including using it in conjunction with the bank owner's equity. While intent on the second point is the bank only acts as a manager who does not have the authority to mix funding received by the bank without the approval of owner's equity investors. Besides both cases, Islamic banks must also reflect its function as a zakat fund managers, and other charitable funds including funds qard hasan. Meanwhile, in the aspect of recognition (recognition), measurement (measurement), and recording (recording) each transaction in the accounting system of Islamic banks have in common with the processes that occur in conventional systems.
To maintain consistency, both internal and external bank, and to ensure compliance with Islamic law, then we need to define the purpose of standardization of financial accounting in Islamic banking. It is also an attempt to provide a general guide in determining the number of options based on the existing alternatives. The purpose of this financial accounting system is the first, to determine the rights and obligations of all interested parties, such as the depositor and the bank owners. Then the second is to ensure the security and safety of assets of Islamic banks, including guarantees the right of the bank concerned and the rights of other stakeholders. Third, ensure improved management and the productive capability of Islamic banks to always aligned with the goals and policies that have been specified. And the fourth is to provide financial reports that are useful for the users ¡ª such as shareholders, owners of accounts, fiscal authorities, etc. ¡ª allowing them to make legitimate decisions in conducting negotiations and transactions with the Islamic bank.
In order for a financial statement is completely accountable, then the quality of the information provided must meet several criteria, among others: (i) the principle of benefit, especially for the wearer, (ii) the relevance of financial reports with the aim of reporting, (iii) confidence level, (iv) comparability, which means that can be compared based on a specific time period, (v) consistency, which means that the methods used are consistent and not easily changed, and (vi) easy to understand, and no multi-interpretation. In addition to these six things, the information provided should also cover some aspects. First, the information available should be able to describe the achievement of existing goals and consistency with the Shari'a. If the banks do the deal on the transaction that is forbidden, for example related to the system of usury, it must be explained in detail about the separation of recording the transaction. And second, it should be able to help outsiders to evaluate the bank's capital adequacy ratio, investment risk, liquidity, and various other financial aspects of banking. This is very important to do, so that the credibility of the bank accountable.
At present, various efforts have been made to establish auditing and accounting system that is standard for the Islamic banking. Among them are the efforts made by the AAOIFI (Accounting and Auditing the Organization for Islamic Financial Institutions), based in Bahrain. Since its establishment in 1991, this institution has provided a significant contribution. But of course, much remains to be done by experts and practitioners of Islamic banking. This is due to greater challenges, including how to compete in a healthy and productive with conventional banks.
Among the toughest challenge ahead is how to create a standard accounting methodology to different types or patterns of Islamic banking financing schemes that can be accepted internationally. Then too is the challenge of regulation in general has not shown favoritism toward a more Islamic banking sector. But the writer believes, if all parties remain consistent in upholding the concept of Islamic banking as a whole, then gradually Islamic banking a hope for the future to replace the conventional banking system.
The establishment of Islamic banks was initially triggered by the fact that the presence of some Muslim population in Indonesia are not willing to use conventional banking services, due to incompatibility of their beliefs to the system of banking operations that use the instrument of interest. This is supported by the findings of a survey of BI that get 30 percent of Muslims who do not want to deal with hidden bank.Potensi interest of these groups by Prabowo (2000), would be a loss in the country's people prosper and move the national economy as a whole. Therefore, it appears the thinking of Muslim scholars to set up alternative banks (sharia) in Indonesia, which materialized in the form of the founding of the first Islamic banks namely Bank Indonesia at the end tahun1991 Muamalat. Islamic banks were introduced and emerged in Indonesia since 1992 with pioneer Bank Muamalat Indonesia. Accordingly, the start made the rules relating to the implementation of Islamic banking operations, including rules on accounting for Islamic banking. This rule has been defined in SFAS No. 59 on accounting Islamic banking, but in practice, rules-aturanyang used in the operations of the Bank Muamalat Indonesia does not fully use the rules in accordance with Islamic sharia, such as the concept of trusteeship yadul, profit sharing, cost management and mudaraba of mudaraba. On the one hand, Bank Muamalat Indonesia has fully implement rules set by the government related to the operation of Islamic banks. So, Sharia: Islamic law provisions that regulate human activities that contain both commands and prohibitions related to the vertical interaction relationship with God and horizontal interaction with fellow beings ". Transactions of the Sharia:" transactions made on the basis of sharia. " Entities Sharia: "Entities that implement Islamic transactions as a business based on sharia principles set forth in their statutes."