What is money and the concept of money in Islam different from conventional economics.

                      Surely all praise is for Allah. We praise Him and seek his help. We seek his forgiveness and we seek refuge in Him from the evil of our own souls and from the wickedness of our deeds. Whomever He guides shall never go astray, and whomever He allows to astray shall never find guidance. I bear witness that none has a right to be worshiped but Allah alone, who has no partner, and i bear witness that Muhammad is His slave and His last and final messenger. May, mercy and blessing o f Allah be upon Him and upon His family and His companions and upon those who follow those in piety untill the Day of Judgment Inshaa Allah ameen. 

                     What is money from the Islamic perspective?   Money is serves as an economic lubricant in which the economic is running. Is like an engine without oil and economy will not work without. However, many people understand the meaning of money in it context of its form, as paper money  and coins. The philosophy of money in Islam is that Allah {subhana watala} owned everything in between the heaven and earth including the underground resources. Allah the almighty call money as a tool making man {its} administrator [Al-Hadid, 57:7]

                      And also is any thing that can be accepted as a means of payment of goods and services in an economic system. In fact, in ancient times people used stone, animal skins, salt, and shells as money. At the time of the Prophet (SAW), gold coins (dinars), which come from the Roman and silver coins (dirham’s), which comes from the Persian are the two precious metals are regarded as currency. In the current era, paper money (fiat money) has become a common means of payment used in all countries in the world. This indicate that we can base our concept on only referring paper  money and coins as only forms  only forms of money but we have different types or forms of money.

                     The concept of money in Islamic point view is that to Allah  belongs the dominion of  the heaven and the earth. Now we look at The description of money in the Holy Qur’an and the Sunnah:

                     The , Allah Most High has created the heavens and the earth and everything between them, and He is the Only Owner of everything to be found there, and of everything between them, as well as of everything below the surface of the earth(including the underground resources).

 Allah the Almighty says in the Noble Qur’an:

                      (To Him belong all that is in the heavens and all that is on the earth, and all that is between them, and all that is under the soil.)

[Taha, 20:6] this verse indicate anything that is in between the Heavens and the Earth is only belongs to Allah {subhana watala} the money everything exist from Him alone. And He his right to give whomever He wish without any question.

                       Wealth belongs to Allah the Almighty:

Dear brothers, money are been described in the Noble Qur’an as the Wealth of Allah.

                       Allah the Almighty says:

(And give them something yourselves out of the wealth of Allah which He has bestowed upon you.)

                         [An-Nur, 24:33] So, Allah the Almighty refers to the money owned by people as   His Own Wealth. Money as a means of making people administrators:

Allah the Almighty also calls money a tool for making man (its) administrator.

                          He says in the Noble Qur’an:

(Believe in Allah and His Messenger (Muhammad), and spend of that whereof He has made you trustees. And such of you as believe and spend (in Allah’s Way); theirs will be a great reward.

                                  [Al-Hadeed, 57:7]

                           Everything in the Universe, in the heavens and on earth, and everything under its surface is owned by Allah, both in terms of creation or action (it is under the Power of Allah), and destination (it will return to Allah). Basically, Allah the Almighty owns everything, while man just has the right of dealing (with it), and Allah the Almighty will call him to account on the Day of Resurrection and he will be questioned about his money, the way he acquired and spent it.

                          The Prophet, may Allah bless him and grant him peace, said: The world is sweet and green, and verily Allah is going to install you there as successors in order to see how you acts, [Muslim] we the Human beings must be conscious in dealing with our affairs the right of Allah {subhana watala} and right of  people in an environment. 

                          Money is ascribed to man as benefit and trial:

Actually, in some ayaat, the possession of money is ascribed to man. Dear brother also serves as trials should no any wealth that Allah will account you for in the Day of Judgment. 

                          Allah the Almighty says in the Noble Qur’an:

                          (You shall certainly be tried and tested in your wealth and properties and in your personal selves, and you shall certainly hear much that will grieve you from those who received the Scripture before you (Jews and Christians) and from those who ascribe partners to Allah, but if you persevere patiently, and become Al-Muttaqun then verily, that will be a determining factor in all affairs, and that is from the great matters, [which you must hold on with all your efforts].)[Al-Imraan, 3:186] (You shall certainly be tried and tested in your wealth and properties) The commentators of the Noble Qur’an said that the ownership of wealth and properties is ascribed to man in terms of benefit, trial and test. So Allah the Almighty has granted you the ownership of money in order that you may get benefit from it and to be tested through it.

                                                     Money as one of Allah’s blessings:

                          Dear brothers, money is one of the blessings of Allah the Almighty which shows His Mercy with regard to man.

                                                    Allah the Almighty says in the Noble Qur’an:

                          (Did He not find you (O Muhammad (Peace be upon him)) an orphan and gave you a refuge?* and He found you unaware (of the Quran, its legal laws, and Prophet Hood, etc.) and guided you?* And He found you poor, and made you rich (self-sufficient with self-contentment, etc.)?)

                                  [Ad-Duha, 93:6-8]

                                                   The good (that there is) in money:

                          Dear brothers, money is named in the Noble Quran as something good.

Allah  says :(It is prescribed for you, when death approaches any of you, if he leaves wealth (that which is good), that he make a bequest to parents and next of kin, according to reasonable manners. (This is) a duty upon Al-Muttaqun)

                               [Al-Baqarah, 2:180]

                                              Wealth was also praised by the Prophet, may Allah bless him and grant him peace, who said: How great is the goodness of wealth when put in the hands of a righteous man!

                                           In Conclusion, money is the lifeblood of existence:

It has been transmitted that one of the companions of the Prophet, may Allah bless him and grant him peace, said: How excellent wealth is! Through it i protect my honor and get closer to my Lord.

  This noble companion defined thus the goals of earning money. Allah the Almighty clarified that money is the lifeblood of existence and that people’s sustenance is based on it.

He, Glory to Him, says in the Noble Quran

                    Bibliography

Knowledge in Islam - 130 views

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The characteristics of the human nature - 908 views

The religion is in all aspects of life - 1,073 views

The essence of the Religion - 1,142 views

The civilized concept of success - 1,146 views

Be moderate and steadfast - 1,153 views

Islam and equality between men and women - 9,686 views

Money and Sustenance - 7,597 views

Principles and definitions in the Islamic economy - 4,672 views

How do we live according to the teachings of the Noble Qur’an? - 4,427 views

Human being and desires - 3,967 views

They all float each in an orbit - 3,835 views Al-Imran, 3:186]

[Ad-Duha, 93:6-8]

The human aspect in the life of the Prophet - 3,480 views [Al-Hadid, 57:7]

[Al-Baqarah, 2:180]

[Al-Nisa, 4:5]

[

Al-Isra, 17:26-27]

[Al-Qasas, 28:77]

 

 

How the fraud was carried out in ENRON scandal which took place in 2001 and the measures were adopted by the US after the scandal Congress

                        Surely all praise is for Allah . we praise Him and seek his help. We seek his forgiveness and we seek refuge in Him from the evil of our own souls and from the wickeness of  our deeds . Whomever He guides shall never go astray, and whomever He  allow to astray shall never find guidance. I bear witness that none has a right to be worshiped but Allah alone, who has no partner , and i bear witness that Muhammad is His slave and His last and final messenger . may , mercy and blessing o f Allah be upon Him and upon His family  and His companions and upon those who follow them in piety until the Day of judgement Inshaa Allah ameen. 

                      The  ENRON, The Smartest Guys in The Room,” analyst Jim Chanos asks why, the 7^th largest company in the world at the time, could not supply investors with basic financial statements. Enron acquired other companies to move into electric utilities, finance, risk management, and, toward the end, a telecommunications company this because Enron has no knowledge  in any of these  areas .most of these new  were not successful and Enron expand into Enron development became on to build power plants around the world into Enron Broadband  and Some projects were marginally profitable, other disasters, but the same SPE manipulations were used to set up complex deals so Enron could hide the losses and book nonexistent profits instead. 

                       Trading profits increased with volatility and opportunities expanded when California deregulated energy. Enron used every  statements as we learn in accounting are the fundamental tools through which we communicate a corporation’s financial position but miss imaging the revenue of the company and manipulating accounting features in order to attract the people about   their company are  doing great jobs why they are  faking  them by giving them wrong  figures  that this is the amount of Assets owned by the company  but they  make  an increase of the asset owned by the company. 

                         The main contributing factor to the failure of Enron as a company was greed. It started from the moment that Jeff Skilling incorporated mark to market accounting into Enron’s policies, and then that system was immediately taken advantage of. The initial bonuses paid out to executives were based on speculations in futures that were never realized. The company spent the next ten years trying to generate new revenue streams in order to make their company as successful as they always said it was. Often times these revenue streams were sustained through unethical or even illegal dealings on the part of Enron and the companies they did business with. Greed and cutthroat attitudes were ingrained into Enron’s corporate culture and at every turn employees were manipulating the system in order to make bonuses, or mis-represent numbers from their department. When this is the corporate culture and your corporation is one of the largest in the world, it is difficult for individuals within the company to stand up for their own system of values.  

                            Another problem with Enron that led to its downfall was its management team. Its chief financial officer {CFO} was on the board of Enron and the Raptors, showing the connection between the two and how they would all eventually be brought down together. During the time of the SEC investigation in late 2001, the Wall Street Journal produced an article reporting how the CFO realized millions of dollars in profit on one of his partnerships with Enron (Smith). This caused investors to start to worry about the CFO’s duty to Enron if it has a role in these linked partnerships. The CFO then ended his relationship with these partnerships after pressure from Wall Street and Enron shareholders grew. 

                            The partnership also had written put options on Enron stock and settled early, causing it to realize huge profits. This occurred right before Enron stock’s price declined. If the options had been exercised after the decline, the partnership would have realized losses   In   the subcommittee how he could conduct himself with such blatant this -regard for personal or business ethics he plead the Fifth Amendment and refused further statement. On December 3rd the on August 14, 2001 I believe that the company was in strong financial condition”, two days later the price of Enron stock dropped to $36.85. Skilling was a rat jumping from a ship that he knew was sinking. He resigned without a PR campaign or a plan on August 14th; Ken Lay returned as chief Excusive officer  {CEO } and stated that “The Business is doing Great.

                             Eron was a massive failure because of  it’s  size, and The whistle was finally blown by an Enron insider. An Enron Vice President named Sharron Watkins was given a list of asset accounts to manage when she moved into Fastow’s department. She discovered Fastow’s intricate web of assets and “couldn’t believe Arthur Andersen signed off on it,” the assets she was to manage were owned by banks at the time and were even guaranteed by Enron stock. In an anonymous letter to Ken Lay Watkins disclosed her findings

                             Regulators of Auditors failed: SOX established the Public Company Accounting Oversight Board (PCAOB) with Title I of its act to oversee the auditing of public companies. One way it does this is in its inspections of public accounting firms to ensure its compliance with the auditing standards the  board sets forth. In addressing internal controls, which was the main problem between Enron and Andersen, each accounting firm, has its audit of a company, tests its internal control structure and identifies any weaknesses it finds (“Sarbanes-Oxley Act of 2002”). 

                           SOX, also implemented the requirement that the primary auditor must be rotated periodically so that the same person isn’t continuously auditing the same company throughout its life. This internal control within the accounting firms aims to increase exposure of the companies’ financial statements among partners of the firms (Pearson). Information regarding a company’s internal control structure is required in their financial statements under SOX Section 404 (“Sarbanes-Oxley Act of 2002.

                           The Wall Street Journal printed findings detailing Fastow’s deception and the SEC launched an investigation as a result; I’ll resist commenting further on a government agency failing to act until they see it in the Journal or on CNN. Billions in mark to market profits should have actually been recorded as losses and new financial statements were issued by Enron. By October 23, Enron’s stock price had fallen to $19/share. While Ken Lay addressed the company in order to answer questions and reassure his employees, representatives of Arthur Andersen were shredding documents a few blocks. In one day they destroyed over one ton on financial records. As the company was going under, Ken Lay still managed to sell $26 million of personal stock while all other shareholders were frozen out of their accounts. The next day on October 24^th Enron fired Andrew Fastow   when they learned that his company LJM had siphoned off over $45 Million in profits from his various “raptor accounts.” When asked stock price dropped to a scant $0.40/s   hare and the next day Enron on December 2, 2001. Declared bankruptcy.

                             Auditor failure , Here the Enron become totally bankrupt this is because the staffs and executives sold over $1 Billion in personal stock options in the two years leading up to the collapse of the corporation. When the corporation went bankrupt 20,000 employees working directly for Enron lost their jobs. The average severance pay was $4500 while the top executives collected final bonuses totaling $55 Million. In 2001 employees of Enron Corporation lost $1.2 Billion in retirement funds and retirees lost over $2 Billion in pension funds. Meanwhile executives sold $116 Million in stock as the company was going under.   

                            The Country’s oldest accounting firm voluntarily gave up their license in the wake of handling Enron’s accounting audit function. Employees were fired and lost all of their retirement funds invested in Enron. Over 22,000 Arthur Andersen employees lost their jobs over night and the company’s and therefore the employee’s the opinion that people in general have someone or something and depend on the behaviour and the characters  of the company   were tarnished forever, whether they were involved with the Enron Audit or not. The intangibles such as employees of Enron’s subsidiaries, other shareholders and countless other individuals were likely negatively impacted by Enron’s greed and failure to accurately represent their company.                                     

                                Enron was a massive partly failed because of the lack control to protect the integrity of capital market. Enron utilized an accounting method called mark-to-market, in which it records its balance sheet accounts at market value instead of book value. It had been using this accounting method since 1992, under the permission of federal regulation. Enron was able to count revenue from its long-term contracts as complete, instead of a more revenue-to expenses matching approach such as percentage-of-completion, where revenue is recorded as work is performed. it was then  easy for Enron to manipulate their gains and Losses on these contracts because there was no active market that far in time. It was then recognized that entire amount of the estimated gain in the first year, on the claim that revenue is earned when the contract is entered into. The dangerous of this method of accounting is that when the date of Exercise comes. Where the market will be expecting the opposite while Enron account huge amount of losses. Enron then chose to delay the recognition of losses by hidden them in the net gain on the financial statement or they do not even reporting them at all. Enron was able to appear successfully for long time later failed down.

                                  The measures that were adopted by the US after the scandal congress  some of the measure are As follows :(1) General accepted  Accounting  Principle(GAAP) , (2) Securities and Exchange commission (SEC), (3) American Institude of certified public(AICP) , (4) Financial Accounting Standards   Board (FASB),(5) General  Accepted Auditing  Standard  (GAAS), (6) Public company Accounting  Oversight Board (PCAOB), (7)Special Purpose Entices (SPE) , (8) Chief  Executive  Officer (CEO), (9) Chief Financial Officer(CFO), (10) Auditing  Standard Board (ASB), (11) Internal Accounting  Standard  Board (IASB).

                                The GAAP, the US Congress purposely focused on fairness and not compliance with GAAP. This requirement subjects the officers to individual criminal charges and/or civil liability and thus presumably motivates officers, especially the CEO, to become actively involved in financial reporting processes. Failure to do so, you face the consequence.

                                 The SEC, has pointedly refused to accept the arguments, that stating the European companies have voluntarily chosen to have access to capital markets in the US, and therefore they have voluntarily subjected themselves to US law. Since that time, the Royal Ahold and Parmalat scandals occurred and the objections of the European companies have moderated.

                               furthermore,  Audits in standard  in  US congress  are performed that are in  accordance with Generally Accepted Auditing Standards (GAAS); auditing is not addressed by GAAP after that bin 2002 , the use of auditing method becoming popular and self –regulating Auditing standard  which was establish by Auditing Standard Board (ASB), a senior technical committee of  (ACIPA) . Further more, (ACIPA) also mandatory quality reviews for Auditing Standard firms with the member were directed to the decision of firm and conducted by members of (ACIPA).

                              In conclusion,  Public Company Accounting Oversight Board (PCAOB) . The US Congress created the PCAOB a new body that regulate auditing And treated the other matters which are not directly related to this case. The oversight board will register and inspect Accounting firms that audit Securities and Exchange Commission (SEC) registrants. Large accounting firms will be inspected annually and small firms every three years. Many of the activities regulated by this new oversight board are those that traditionally have been self-regulated by the accounting profession or have been regulated only by states. 

 

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