Objective - This article aims to (1) examine three concepts of practical ethics originating from fiqh muamalah studies, namely al kharaj bi al dhaman, maslaha, and nafaqa, as substitutes for the more philosophical basis of Baydoun and Willett's (2000) Islamic ethics; and (2), apply the three concepts to improve the structure and content of Baydoun and Willett's (2000) value-added statement.

Methodology/Technique - Maslaha-based VAS can improve VAS weaknesses in Baydoun and Willett's (2000) ICRs and be an alternative to the 1993 and 2010 AAOFI income statements.

Findings - The use of the kharaj bi al dhaman, maslaha, and nafaqa concepts could direct the content and structure of financial reports from the "secular" one into sharia and humanistic.

Novelty - The application of the concept of kharaj bi al dhaman substitutes for the matching concept; the idea of nafaqa substitutes for expenses; and the notion of maslaha makes the maslaha-based VAS more powerful, philosophical, conceptual, and practical than the VAS of Baydoun and Willett and the AAOIFI income statement

Type of Paper - Review

Keywords: Al kharaj bi al dhaman, Islamic corporate reports, maslaha, nafaqa, value-added statement.

JEL Classification: M41, M42.

URI: http://gatrenterprise.com/GATRJournals/AFR/vol7.2_4.html

DOI: https://doi.org/10.35609/afr.2022.7.2(4)

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