Comments on paper 'Contemporary accounting practices and Islamic banking'

The M.A. Khan paper being commented on addresses the history of accounting standards in its first portion and in its second portion deals with potential schemes to 'overcome the limitation of ''generally accepted principles of accounting''' in equity finance practices by persons or by corporations. Auditing came into being after the adoption of misleading book keeping by companies. The question of pure dishonesty in accounting representation is not completely dealt with in M.A. Khan's paper. In order to have some protection against dishonesty, the initial contract between the bank and the company ought to include more information regarding costs and expenses. Financing in the medium and long range through Mudarabahs can perhaps avoid some troubles raised by accounting concerns.