An exploration of the biblical and theological concepts reveals that finance and accounting principles are founded on the Bible. Double-entry, bookkeeping, financial accounting, managerial accounting, internal control systems, lending, and borrowing are principles that can be traced back to the Bible's history. Finance can be viewed as a moral science that should be used for social good in stewardship, justice, and love precisely. Accounting is a science of stewardship that involves preparing financial information that portrays a true and fair view of a firm's state of affairs ( Muskanan et al., 2016 ). Accounting involves honesty, where professional accountants truthfully account for the financial and non-financial resources of an entity.
'Assets – Liabilities = Capital' is a fundamental bookkeeping equation which is precisely an arithmetic representation of a moral fact ( Muskanan et al., 2016 ). The equation implies that the funds left to a firm after it has settled all its obligations belong to the firm's owners and shareholders in the form of capital. Trying to alter the bookkeeping equation a little gives a different view altogether. 'Assets = Capital + Liabilities' signify that all the resources owned by a company are to be apportioned between the shareholders and the creditors to whom the company is liable ( Muskanan et al., 2016 ). The company has no wealth of its own. Every fund within a corporation is held in custody for shareholders and creditors. All the firm employees are custodians of shareholders' wealth after meeting all its obligations to its creditors. Custodianship is an elementary principal in most of the bible teachings ( Hagerman, 2011 ). Christians believe that they are all custodians of the creator's universe and are supposed to protect all creations and keep the environment safe.
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The Bible's steward-owner relationship is compared to the accountant's principal-agent axiom. The Bible portrays Christians as stewards and God as the owner and creator of heaven and earth ( Muskanan et al., 2016 ). As stewards, Christians are expected to safeguard themselves by basically living in righteousness and holiness while they await their creator's return. Furthermore, Christians believe that their creator will come with a reward to repay every one of them according to their righteousness. On the other hand, the principal-agent axiom in finance demonstrates the contractual relationship between the shareholders and a firm's managers.
Similarly, the managers are responsible for making proper decisions of the firm on behalf of the shareholders while maximizing shareholders' wealth. Management accountants are remunerated for maximizing shareholders' wealth and running the entity competently. Biblical teaching about sin is equivalent to agency problems in accounting ( Correia et al., 2020 ). Whereas agency problems occur when a firm's manager promotes his or her interests rather than the shareholders' interests, evil happens when Christians forego biblical commandments and teachings.
Internal control discussions are provided extensively in the old testament of the Bible ( Hagerman, 2011 ). Internal control refers to the setting up systems within a corporation, which will help mitigate frauds and errors. Fraudulent activities result in a company's significant financial losses, yet establishing proper control procedures helps mitigate against such fraud-related losses. Formulation of appropriate policies, setting up electronic systems and software that monitors actions, holding employees accountable, and backing up asset's security are just examples of control systems established by most firms. The Bible recommends dual custody of assets to Israelites, which is an example of a control system ( Correia et al., 2020 ). The Levites are also seen to track fund totals frequently to ensure that all the monies arrive at their desired destination.
Borrowing and lending is another finance concept that is directly derived from biblical dictums ( Hagerman, 2011 ). Bonds, debentures, and derivatives are just but examples of financial instruments in finance. Financial instruments are resources lent to someone who direly needs them now for compensation in a predetermined future date in a layman's viewpoint. Rewards come in the form of coupon payments or interest on the financial instrument. If the issuers of financial instruments make fair use of the resources, they can benefit both themselves and the lenders at the end of the contract. The Bible's commandment on being a brother's keeper is essentially the principle used in financial instruments by lending financial resources to those needing financial back-up.
Finally, savings is a financial practice that is backed by the Bible. Saving involves setting some finances aside for use when the need arises in the future. The Old Testament scriptures encouraged the Israelites to store some of their harvests for consumption during difficult times ( Correia et al., 2020 ). Savings is similar to retained earnings in accounting, which is plowed back to the entity to support its growth and expansion goals. Growth and expansion missions include advertisements, entry into overseas markets, development of new product lines, end product reengineering, and cost leadership strategies, all of which require massive funding. Thanks to retained earnings and capital reserves principles, which provide the needed finances for company expansion objectives. Furthermore, in accounting practice, losses in a given financial year are offset against profits in subsequent financial years.
References
Correia, C. L., LaShaw, M., & Sloan, D. (2020). Intentional Integration of Faith in Accounting Matters. Christian Business Academy Review , 15 .
Hagerman, R. L. (2011). Accounting in the Bible. The Accounting Historians Journal , 71-76.
Muskanan, M. W., Pandie, D. B., Benu, F. L., & Maukoni, R. (2016). Accounting standards in church financial management “bringing financial practice and theology more intimately intertwined”.
The Bible; King James Version (KJV)
