This fatwa seeks to provide clarity and certainty in regards to the adoption of two different accounting systems: cash basis (declaration of costs and revenue at the time) and accrual basis (declaration of costs and revenue distributed periodically). The fatwa also acknowledges that both systems are applicable for the purpose of distribution of profits in shari'a financial institutes.
The fatwa acknowledges that both systems are permissible under Islam. It notes, however, that an accrual basis system is preferable for recording purposes, while a cash basis system is preferable for distributing profits based on actual receipts. Either way, parties must agree in writing as to which system they wish to adopt.