Is Recording Interest-Based Transactions For an Accountant Permissible in the Shafi‘i School?

Answered by Shaykh Muhammad Carr

Question

According to the Shafi‘i School, is it permissible for an accountant to record interest-based transactions related to a company’s loan?

Does the ruling change if the loan is obtained from an Islamic finance institution that allocates default fees to charity?”

Answer

Thank you for your question.

May Allah reward you for striving to ensure that your services align with Shari‘a principles.

Jabir (Allah be pleased with him) reported that,

“The Messenger of Allah (Allah bless him and give him peace) cursed the consumer of usury, its payer, its scribe, and its two witnesses, and he said they are all the same.” [Muslim]

Imam Nawawi states, “This prohibition explicitly forbids documenting usurious transactions and serving as a witness to them.” [Nawawi, Sharh Muslim]

The associated curse applies specifically to the scribe and witnesses involved during the transaction.

However, referencing the transaction later does not fall under this prohibition and cannot be deemed as aiding in sin or transgression unless there is clear evidence indicating nefarious intent.

The ruling outlined above applies to both scenarios. Accounting, by its very nature, is retrospective, involving the recording of transactions after they have occurred, having no bearing on the transaction itself.

I pray this is of benefit and Allah guides us all.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Muhammad Abu Bakr Badhib

Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door to students. As an imam, he has the unique opportunity to serve his community in daily life.

In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari‘a Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.