Abstract

Mohd Nasir bin Mohd Yatim

This study examined the economic rationale and justification for profit distribution practices in Islamic financial institutions in Malaysia. The classification on the pool of funds mobilised and scrutiny on funds employed were investigated in order to form the basis in the upholding of shari’ah dictates in the practices of distribution of profit by the practitioners of shari’ah-compliant financial institutions. The frameworks identified in this study include the principle of true and fair view financial information, the principle of fairness to mankind and the adoption of fund accounting approach in accounting practices for profit distribution. There appear evidences of unjustifiable practices in the course of distribution of profit by the practitioners in this sector of economy. As such, this study offers a guide aimed at ensuring the up holding the principle of on-going concern of the shariah-compliant financial institutions businesses.