No abstract

Purpose This paper aims to improve the understanding of the institutional pressures that shape the intention to adopt waqf accounting and reporting. The study seeks to answer two research questions as follows: what are the challenges in the adoption of waqf accounting and reporting in waqf institutions; and how do institutional pressures influence the adoption of waqf reporting in Malaysia. Drawing on the work of DiMaggio and Powell and Scott of institutional theory, this paper provides empirical evidence of institutional pressures on the adoption of waqf reporting in Malaysia and the challenges faced in adopting waqf accounting and reporting. Design/methodology/approach This study uses qualitative research method with an explanatory case study approach. Data are collected through semi-structured interviews with the accountants of State Islamic Religious Council and Customs of Terengganu, an informal conversation with the Deputy Director of Accountant Generals Department of Malaysia and document reviews, mainly the Malaysian Accounting Standard Board Research paper. Findings The findings show that coercive pressure such as government regulation contributes to challenges in the adoption of waqf accounting and reporting. Normative pressures contribute to challenges in formulating standardised waqf accounting and reporting, whereas mimetic pressure contributes to challenges in the comparability of the waqf accounting and reporting among the state Islamic religious councils in Malaysia. In the efforts towards the standardisation of waqf accounting and reporting practice, a similarity of the process of the standard implementation or the institutional isomorphism of the State Islamic Religious Council in Terengganu is strongly influenced from the result of the mandate of its Board members and Fatwa council members (coercive isomorphism and religion logic) and minor influence from the normative isomorphism (the result of the participants’ education and profession) as well as the result of imitating other State of Islamic Religious Councils (SIRCs) because of the ambiguity of the process or certain practice. Research limitations/implications The study contributes to the knowledge by extending institutional theory and the possible role of religion logic in Islamic perspective to organisational behaviour and accounting development in SIRCs. This study is limited to the understanding of the challenges in the adoption of waqf accounting and reporting but could also be applicable to the adoption of other accounting standards or regulations. Practical implications This paper offers key implications for research, in improving the understanding of contextual factors and decision to adopt waqf accounting and reporting. The standard setter needs to be aware of the influence of contextual factors that shape decision towards standardisation of accounting and reporting for waqf. Originality/value The interplay of institutional pressures and implications of religion logic provides an interesting approach to understanding the waqf institutions’ intention to adopt accounting and reporting for waqf.

Assets are an integral component within each institution including MAIN as a responsible institution for WZB assets in Malaysia. However, previous studies conducted on the accounting practices of State Islamic Religious Councils (MAIN) in Malaysia only focused on the aspect of disclosure. Studies on recognition and measurement of assets are very limited. Apart from being transparent for MAIN in exposing all information pertaining to the assets of waqf, zakat, or baitulmal (WZB) based on the Islamic accounting perspective, it is also very important for MAIN to take a serious look at how these assets are recognized as well as measured in the financial statements from an Islamic perspective. Therefore, the main objective of this study is to review the current practice of MAIN in recognizing and measuring WZB’s assets and identifying the challenges or issues arising from MAIN long-standing practice of accounting. More important is whether this practice is in line with the shariah. Overall, there are six categories of assets investigated in this study: Property, Plant and Equipment (PPE), Investment Property (IP), Inventory, Lease Assets, Intangible Assets (IA) and Agricultural Assets. This study has been using a triangulation method whereby researchers conduct interviews with relevant officers and focus group discussions, as well as reviews on basic documents such as Financial Statements (Financial Year 2016) of the related MAIN. The findings reveal the diversity in the practice of recognizing and measuring the six categories of MAIN assets. Recognition of assets is performed at different points of recognition and value for each MAIN in the sample of the study. This shows that the development of Islamic accounting standards for WZB assets is particularly necessary for the use of WZB entities in Malaysia. Keywords: assets recognition, accounting practices, waqf, zakat, SIRCs