Integrated Islamic Financial Accountability Model for Islamic Social Enterprise (ISE)

Abstract

This study aims to present an integrated Islamic financial accountability model, which is different from previous accountability models and frameworks. In this case, all three accountability aspects which are: (i) accountability to whom (accountability groups); (ii) accountability for what (accountability dimensions); and (iii) accountability on how (accountability tools and processes) were integrated into a single model. By using these three accountability aspects, this model is specifically focused on financial accountability area with additional Islamic elements that suits Islamic Social Enterprise (ISE). In order to develop this model, this study applies the comparison method on previous accountability and Islamic accountability models with additional literature inputs from financial accountability aspects and Islamic accountability perspectives. Based on the findings, this study introduces an integrated Islamic financial accountability model specifically for ISE, one of the emerging institution types under the non-profit sector. It is hoped that the integrated Islamic financial accountability model developed in this study will be implemented by the management of ISE in order to discharge their accountability especially to donors, beneficiaries and other stakeholders.

Accountability in Malaysian Islamic Social Enterprises (ISEs): Stakeholder Versus Management Perspectives

“…This study proposed six accountability dimensions: (i) accountability for input; (ii) accountability for output; (iii) accountability for procedures; (iv) accountability for Islamic social objectives; (v) accountability for Islamic economic objectives; and (vi) accountability for other Islamic principles and values (Candler & Dumont, 2010;Kamaruddin & Auzair, 2019a, 2019b. ISE stakeholders and ISE management were required to state their level of agreement on accountability measurements based on these six accountability dimensions.…”

“…Two questionnaires; one for ISE stakeholders and another for ISE management were developed by focusing on accountability in Malaysian ISEs. Based on the literature on accountability for ISEs, this study proposed six accountability dimensions to be tested in order to examine accountability practices in Malaysian ISEs, which were: (i) accountability for input; (ii) accountability for output; (iii) accountability for procedures; (iv) accountability for Islamic social objectives; (v) accountability for Islamic economic objectives; and (vi) accountability for other Islamic principles and values (Candler & Dumont, 2010;Kamaruddin & Auzair, 2019a;2019b;Muhamed et al, 2018). There was a total of 25 items for these six accountability dimensions.…”

“…Islamic organisations like ISE should have Islamic values such as worship or obedience to Allah and operate based on Islamic teachings or shariah principles as stated by Ahmad (1988). Therefore, it can be concluded that ISE is an entity which is driven by both social and business objectives according to Islamic principles and values (Kamaruddin & Auzair, 2019b).…”

“…In this case, another three accountability dimensions derived from the Islamic perspective are proposed as part of the ISE accountability indicators. These include accountability for Islamic social objectives, Islamic economic objectives and other Islamic principles and values (Kamaruddin & Auzair, 2019a, 2019b.…”

“…Accountability for Islamic social objectives comprises four indicators based on the review of literature mentioned, which are: (i) ta'awanu alal birri wattaqwa (Islamic cooperation); (ii) amar ma'ruf nahi munkar (commanding the good and forbidding the evil); (iii) fastabiqul khairat (competitive in doing good deeds); and (iv) maslahah ummah (public interest) (Kamaruddin & Auzair, 2019a, 2019b. Based on Among these four indicators, the most significant indicator agreed by ISE stakeholders was maslahah ummah with a score of 86 percent.…”